NORTHERN GOLD MINING INC.
Annual Information Form
For the year ended March 31, 2012
July 25, 2012
Introductory Notes
Throughout this annual information form (“AIF”), we, us, our, Northern Gold and the Company mean Northern Gold Mining Inc.
All dollar amounts are in Canadian dollars unless stated otherwise.
The information in this AIF is as of March 31, 2012. We prepare the financial statements referred to in the AIF according to International Financial Reporting Standards (“IFRS”), and file the AIF with the appropriate regulatory authorities in Canada. Information contained on our website is not part of this AIF, and is not incorporated by reference.
You can find more information about Northern Gold, including information about executive and director compensation, principal holders of our securities, and securities authorized for issue under equity compensation plans, in our most recent management information circular. You should also read the Company’s audited consolidated financial statements and management’s discussion and analysis (“MD&A”) for the year ended March 31, 2012 which contain additional information. These can be found on SEDAR (www.sedar.com), or you can request a copy by writing to:
Northern Gold Mining Inc.
Chief Governance Officer and Corporate Secretary
20 Victoria Street, Suite 800
Toronto, Ontario CANADA M5C 2N8
Cautionary Statements Regarding Forward-Looking Information
This AIF contains “forward-looking information” which may include, but is not limited to, statements with respect to the future financial and operating performance of the Company, its subsidiaries and affiliated companies, its mining project, the future prices of gold, the estimation of mineral reserves and mineral resources, the realization of mineral reserve and resource estimates, operating and exploration expenditures, costs and timing of the development of new deposits, costs and timing of future exploration, requirements for additional capital, governmental regulation of mining operations and exploration operations, timing and receipt of approvals, consents and permits under applicable mineral legislation, environmental risks, title disputes or claims, limitations of insurance coverage and regulatory matters. Often, but not always, forward-looking statements can be identified by the use of words such as “plans”, “expects”, “estimates”, “intends”, “targets”, “anticipates” or “believes” or variations (including negative variations) of such words and phrases, or may be identified by statements to the effect that certain actions, events or results “may”, “could”, “would”, “should”, “might” or “will” be taken, occur or be achieved. Forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company and/or its subsidiaries to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. Such factors include, among others, future prices of gold; general business, economic, competitive, political and social uncertainties; the actual results of current exploration activities; conclusions of economic evaluations and studies; fluctuations in the value of the United States dollar relative to the Canadian dollar; changes in project parameters as plans continue to be refined; possible variations of ore grade or projected recovery rates; accidents, labour disputes and other risks of the mining industry; political instability or insurrection or war; labour force availability and turnover; the availability of suitable road and port facilities; delays in obtaining financing or governmental approvals or in the completion of exploration and development activities; as well as those factors discussed in the section entitled “Risk Factors” in this Annual Information Form. Although the Company has attempted to identify important factors that could cause actual actions, events or results to differ materially from those described in forward-looking statements, there may be other factors that cause actions, events or results to differ from those anticipated, estimated or intended. Forward-looking statements contained herein are made as of the date of this Annual Information Form and the Company disclaims any obligation to update any forward-looking statements, whether as a result of new information, future events or results or otherwise. There can be no assurance that forward-looking statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking statements due to the inherent uncertainty therein. Subject to applicable law, the Company assumes no obligation to update or revise any forward-looking statement, whether as a result of new information, future events or any other reason.
Basis of Presentation
For the meanings of certain technical terms used and not otherwise defined in this AIF, see the “Technical Glossary”. Some terms with a technical meaning related to mineral matters are defined by the Canadian Institute of Mining, Metallurgy and Petroleum — Definitions Adopted by CIM Council.
TABLE OF CONTENTS
Page
Introductory Notes 2
Cautionary Statements Regarding Forward-Looking Information 2
Basis of Presentation 3
Incorporation 7
General Development of the Business 7
Three Year History 7
2009 7
2010 7
2011 8
2012 8
Acquisitions 9
About Northern Gold 9
Employees 9
Social and Environmental Policies 9
Risk Factors 9
Reliance on Single Project 9
Mineral Exploration, Development and Production Activities Inherently Risky 9
Uncertainty of Mineral Resources and Reserves 10
Uncertainty of Additional Financing and Possible Dilution 10
Expected Continued Operating Losses 11
Dependence on Key Management and Employees 11
Global Financial Condition 11
Volatility of Market Price of Securities 11
Fluctuation of Mineral Prices 12
Possible Failure to Obtain Mining Licenses 12
Risk of Project Delay 12
Infrastructure 12
Environmental Risks 13
Competition 13
Title Risks 13
Obligations and Potential Liabilities with Respect to Acquired Properties 13
First Nations 14
Acquisition of Additional Mineral Properties 14
Insurance Risk 14
Litigation Risk 15
Risks Relating to Statutory and Regulatory Compliance 15
Conflicts of Interest 15
Mineral Projects 15
Garrison Gold Property 16
Description and Location 16
Accessibility, Climate, Local Resources, Infrastructure and Physiography 16
History 18
Geological Setting 19
Property Geology 20
Garrcon Deposit 21
Exploration 21
Mineralization 23
Typical Mineralized Intersections 24
Drilling 25
Sampling, Analysis, Data Verification and Security of Samples 26
Sample Security 27
Data Compilation 27
Analysis 27
Data Verification 29
Metallurgical Testing 30
Mineral Resource and Mineral Reserves Estimate for Garrcon Deposit 32
Preliminary Economic Assessment Study 33
Exploration Plans 34
Jonpol Deposit 35
Exploration 35
Mineralization 36
Drilling 38
Sampling, Analysis, Data Verification and Security of Samples 38
Metallurgical Testwork 38
Mineral Resource and Mineral Reserves Estimate 38
Exploration Plans 39
Estimated Mineral Resources Summarized for the Garrison Gold Property 40
Dividend Policy 40
Share Capital 40
Market for Securities 41
Directors and Officers 41
Securities owned 44
Corporate Cease Trade Orders and Bankruptcies 44
Penalties and Sanctions 44
Personal Bankruptcies 45
Conflicts of Interest 45
Board Committees 45
Term 45
Audit Committee 45
Charter 46
Composition of the Audit Committee 46
Audit Committee Oversight 46
Pre-Approval Policies and Procedures 46
Audit Fees 46
Exemption 47
Promoter 47
Legal Proceedings 47
Interest of Management and Others in Material Transactions 47
Transfer Agent and Registrars 47
Material Contracts 47
Interest of Experts 47
Additional Information 48
TECHNICAL GLOSSARY 49
APPENDIX A 51
Incorporation
Northern Gold was incorporated under the Business Corporations Act (Ontario) as 2101253 Ontario Inc. on May 1, 2006. Articles of Amendment were filed on June 22, 2006 effecting a name change to Northern Gold Mining Inc. The registered and head office of the Company is located at Suite 800, 20 Victoria Street, Toronto, Ontario, Canada, M5C 2N8.
The Company is a “reporting issuer” in Ontario, Alberta and British Columbia as such term is defined in the Securities Act (Ontario) and similar legislation in the other provinces of Canada. Its common shares trade on the TSX Venture Exchange (“TSXV”) under the symbol NGM.
General Development of the Business
Northern Gold is engaged in the exploration and possible development of the Garrison Gold Property, and will pursue a growth strategy that takes advantage of the strengths of its existing management team, particularly with respect to resource project management. In addition to developing its current mineral properties, the Company is pursuing a strategy of evaluating and potentially acquiring interests in other attractive mineral properties that the Company believes will be accretive to its overall growth strategy through staking, joint ventures and purchases.
Three Year History
2009
Ø In January 2009, the Company signed a letter of intent (“LOI”) with ValGold Resources Ltd. (“ValGold”) to acquire up to an 80% undivided interest in the Garrison Gold Property located in Garrison Township, approximately forty kilometers north of our field office in Kirkland Lake, Ontario and one hundred kilometers east of Timmins, Ontario, Canada.
Ø On March 6, 2009, the Company completed a rights offering pursuant to which 4,392,647 rights were exercised for total proceeds of $219,632.35.
Ø In July 2009, the Company issued 4,432, 659 common shares at $0.05 per common share pursuant to a non-brokered private placement for total gross proceeds of $221,633.
Ø In July 2009, the Company issued 6,923,076 flow-through units at a price of $0.065 per flow-through unit pursuant to a non-brokered private placement with Mineral Fields Group for total gross proceeds of $450,000.
Ø In September 2009, the Company entered in to an Option Agreement with ValGold pursuant to which Northern Gold could earn up to an 80% undivided interest in the Garrison Gold Property in two phases, with an option to acquire a 50% undivided interest in the property by making cash payments to ValGold of $1,000,000 over four years, with all or part of the payments being made in Northern Gold stock at Northern Gold’s option, using a 20 day weighted average price. To earn the 50% interest, Northern Gold was required to complete work on the property in the amount of $4,000,000 over four years, with $500,000 being spent on the property in the first year of the agreement and not less than $750,000 to be expended in each of the subsequent years. After earning the 50% interest, the Company was eligible to increase its interest to 80% by making additional cash payments of $1,000,000 over four years, with all or part of the payments being made in Northern Gold stock equivalent, using a 20 day value weighted average price, and by completing additional work on the property in the amount of $4,000,000 over four years. On October 20, 2009, the Company filed a NI 43-101 compliant technical report on SEDAR for the Garrison Gold Property.
2010
Ø In July 2010, the Company issued 9,002,678 flow-through units at a price of $0.14 per flow-through unit for gross proceeds of $1,260,375, and 10,783,696 hard dollar units at $0.115 per hard dollar unit for gross proceeds of $1,240,125 (of which 1,524,783 hard dollar units were sold on a non-brokered basis) for total gross proceeds of $2,500,500 pursuant to a brokered private placement with Bayfront Capital Partners Ltd.
Ø On November 1, 2010, the Company issued 1,110,000 flow-through units at $0.45 per flow-through unit and 7,707,500 hard dollar units at $0.40 per hard dollar unit for aggregate gross proceeds of $3,582,500 pursuant to the first tranche of a brokered private placement with Canaacord Genuity Corp. and Bayfront Capital Partners Ltd. acting as co-lead agents of a syndicate which included GMP Securities L.P. (collectively, the “Agents”). On November 10, 2010, the Company issued 3,150,000 flow-through units at $0.45 per flow-through unit for aggregate gross proceeds of $1,417,500 pursuant to the second tranche of the brokered private placement with the Agents.
Ø On November 5, 2010 the Company filed an NI 43-101 compliant technical report on SEDAR for the Garrcon Deposit.
2011
Ø On April 12, 2011, the Company announced that it had acquired a 96.4% interest in the Linton claim group (“Linton Claim Group”), consisting of eight patented mining claims, increasing the size of the Garrison Gold Property to 476.1 hectares.
Ø On April 19 2011, the Company announced that it had acquired a 100% interest in the Sims claim group (“Sims Claim Group”) consisting of 24 staked mining claims covering 398.7 hectares and strategically located in Harker Township, 3.9km from the Garrison Gold Property.
Ø On May 13, 2011, the Company acquired a 100% interest in the Garrison Gold Property through an agreement with ValGold announced on April 7, 2011, subject to a royalty more thoroughly described in the “History” section, below. In consideration for the sale, ValGold received a cash payment of $325,000 and a promissory note for an additional $325,000 to be paid on or before August 13, 2011, 16 million common shares in Northern Gold, giving ValGold aggregate ownership of approximately 14.8% of the issued and outstanding shares of the Company on a non-diluted basis, and a 2% net smelter royalty, of which half (1%) can be acquired by Northern Gold for $5 million paid to ValGold at any time upon the earlier of thirty-six months following the date of closing and the commencement of commercial production. The remaining 1% can be acquired for a further payment of $10 million at any time upon the earlier of seventy-two months following the date of closing and the commencement of commercial production. Pursuant to the terms of the original Option Agreement with ValGold and at the time of closing the Buy Out, Northern Gold was in the second year of the option agreement and had made $400,000 payments ($200,000 in cash and the issuance of 2.2 million shares in satisfaction of the other $200,000 payment obligation) and had incurred over $3,000,000 in exploration expenditures.
Ø On May 25, 2011, the Company announced it had acquired a 100% interest in the Plato claim group (“Plato Claim Group”) consisting of 24 staked mining claims covering 370.4 hectares.
Ø In September 2011, the Company completed a non-brokered private placement for 25,724,260 common shares for aggregate gross proceeds of $10,870,471, comprised of 11,205,078 on a hard dollar basis at $0.40 for aggregate gross proceeds of $4,482,031 and 14,519,182 common shares issued on a flow-through basis at $0.44 per common share for aggregate gross proceeds of $6,388,440. Lead investors included funds managed by Sprott Asset Management L.P.
2012
Ø On April 30, 2012, the Company acquired the final 3.6% interest in the Linton Claim Group, resulting in a 100% undivided ownership stake.
Ø On June 1, 2012, the Company filed an NI 43-101 compliant technical report on SEDAR for the Garrison Gold Property.
Acquisitions
There were no significant acquisitions during the Company’s most recently completed financial year ended March 31, 2012 for which disclosure is required under Part 8 of National Instrument 51-102 Continuous Disclosure Obligations.
About Northern Gold
Northern Gold holds a 100% interest in the Garrison Gold Property, and associated mineral claims within 10 kilometers of the Garrison Gold Property, located within the Abitibi Greenstone Belt in Ontario, Canada. The main productive structures in this part of the Abitibi Greenstone Belt are the Destor-Porcupine Fault System, which extends from east of Val d’Or, Quebec to west of Timmins, Ontario and the Larder Lake/Cadillac Break which splays off the south side of the Destor-Porcupine Fault System near the community of Cadillac, Quebec. The Company is ideally positioned to take advantage of the existing infrastructure including access roads, water, and electricity servicing the area.