Atlantic Gold NL : Chairman's address to annual general meeting

Chairman's Address to Annual General Meeting

Friday 31 May 2013

It is almost 10 years to the day since Atlantic Gold signed the farm-in agreement with a private Nova Scotia company to formalise its involvement in the Touquoy Gold Project and firmly establish its presence in the forgotten goldfields of Nova Scotia. During that time we have tripled the resource base under our control - to over 1.2 million ounces of gold with acquisition of 100% interest in the Cochrane Hill Gold Project - and advanced Touquoy to what is arguably Nova Scotia's pre-eminent mining development project.
Touquoy is attractive on many fronts - a single open-pit with soft ore, low strip ratio and excellent ore metallurgy, which account in large
part to its relatively low operational costs of less than C$600/oz. From our Definitive Feasibility Study completed in 2010 and updated early in 2012 we see that at the current gold price of US$1350/oz the Project returns a pre- tax net cash surplus of C$190 million, a pre-tax net present value at 8% discount rate of C$105 million and an internal rate of return of 33% with payback in 27 months. It's located close to essential infrastructure and
workforce, and has the strong support of the local community and the provincial government. It's in a first- world environment.
The requisite Mineral Lease has been granted and the all-important Environmental Assessment Approval remains in place. Application for
Industrial Approval, the adjunct to Environmental Assessment Approval and grant of which will complete the permitting process, is currently under review by Nova Scotia Environment. Industrial Approval is expected once legal access to the last remaining private property has been secured.
This particular matter - acquisition of the last 3.5 ha private property - is presently delaying the Project. After careful and considerable deliberation the Nova Scotia Minister of Natural Resources in June 2012 issued vesting orders in relation to the last 14 (of 63) requisite private properties which for various reasons, mostly relating to indeterminate ownership, could not be acquired. All but one of these properties have now been secured. This hold-out former landowner is for the second time appealing the Minister's vesting order under the provisions of the Mineral Resources Act. This second appeal is to be heard on 13 September. The Company has confidence in the Minister's decision and due application of the law, and believes the appeal will be dismissed.
In the meantime we will continue our productive dialogue with a range of banks, investment banks and financiers in relation to project financing with the overriding
objective of minimising the burden on our shareholders.

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We will also continue to investigate attractive opportunities for the discovery and/or acquisition of prospects elsewhere in Nova Scotia with generally similar geological characteristics to the Touquoy Gold Deposit. Such investigations will necessarily be undertaken with due recognition of the need to preserve cash in the period leading up to the financing of the Touquoy Gold Project.
In this regard activities at Cochrane Hill - the next being the requisite substantial resource delineation drilling leading to Feasibility Study - will be muted. This nevertheless remains an attractive wholly-owned project with a resource inventory of
549,000 ounces of gold, and open to the west. Using a gold price of US$1350/oz we estimate, on a conceptual though realistic basis, that Touquoy and Cochrane Hill together would produce about 900,000 ounce of gold with a a pre-tax net cash surplus of C$410 million, a pre-tax net present value at 8% discount rate of C$195 million and an internal rate of return of 34%.
We are very pleased to have such a high calibre mining operator, manager and director as Rod Hanson joining the Board. Rod brings a wealth of relevant experience to the
Company as it moves from explorer to developer to producer.
We are indeed buoyed by the support we receive from the local community, from senior government officials and from elected representatives in Nova Scotia.
A number of new shareholders have participated in the company's funding activities this year and we welcome them and thank them for their support. We thank all shareholders for their support this year and we wish to assure you that your interests are foremost in our minds.
I wish to thank my fellow directors for their thoughtful contribution and support during 2012 and to date in
2013. On behalf of the company, I thank Wally, his staff, and advisors for their exemplary conduct in pursuing the commercial realisation of
Touquoy.

May 2013 commence the realisation of the anticipated achievement that you so richly deserve.
Ronald J Hawkes, Chairman
31 May 2013

Table 1: Summary results of the Definitive Feasibility Study

ORE RESERVES	9.59 Mt @ 1.49 g/t for 454,000 contained ounces
TOTAL PRODUCTION 1	422,000 ounces
ANNUAL PRODUCTION RATE	84,000 ounces

Note 1: Production excludes 26,000 ounces of in-pit Inferred Resources, and any input from the Touquoy West satellite deposits (previously reported Indicated and Inferred Resources of 2.0 Mt @ 1.5 g/t for 99,000 ounces). DFS remains based on original pit design optimised using a gold price of US$950/oz.

Note 2: The DFS is prepared in Canadian dollars. Exchange rates at parity (A$1=C$1=US$1) are used in the Study.

Table 2: Projected conceptual outcomes - 100% Basis

Touquoy and Cochrane Hill Gold Projects combined

THROUGHPUT	19.0 Mt @ 1.5 g/t for 970,000 contained ounces
TOTAL PRODUCTION	900,000 ounces
AVERAGE ANNUAL PRODUCTION RATE	93,000 ounces
PLANT	2.0 Mtpa. Re-located to Cochrane Hill post Touquoy
MINE LIFE	9.7 years
PRE-PRODUCTION CAPITAL COST	$140 million
TOTAL LIFE-OF-MINE CAPITAL COST	$254 million
GOLD PRICE	$1,350/oz
CASH OPERATING COST	$646/oz. Includes royalty payments of $37/oz
NET CASH SURPLUS (PRE-TAX)	$410 million
PAYBACK PERIOD	27 months after first gold pour
NPV (8%, PRE-TAX)	$195 million
INTERNAL RATE OF RETURN	34%

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Table 3: Nova Scotia Ore Reserves and Mineral Resource inventory

TONNES GRADE CONTAINED GOLD

million g/t ounces

ORE RESERVES *

Touquoy

Proved	2.49	1.48	118,000
Probable	7.10	1.47	336,000
Total Reserves	9.59	1.48	454,000

MINERAL RESOURCES

Touquoy

Measured resource	2.8	1.5	130,000
Indicated resource	7.3	1.5	350,000
Inferred resource	1.6	1.5	77,000
Total Touquoy	11.7	1.5	557,000

Touquoy West

Indicated resource	0.9	1.9	54,000
Inferred resource	0.6	2.2	45,000
Total Touquoy West	1.5	2.0	99,000
Total Touquoy Project	13.2	1.5	656,000

Cochrane Hill

Indicated resource	4.5	1.8	251,000
Inferred resource	5.6	1.6	298,000
Total Cochrane Hill Project	10.1	1.7	549,000
TOTAL NOVA SCOTIA	23.3	1.6	1,205,000

* Ore Reserves are included in Mineral Resources, and are not additive. Touquoy Ore Reserves contain no Mineral Resources from Touquoy West. There are an estimated 26,000 additional ounces of gold identified as Inferred Resources within the final pit and which do not form part of the Ore Reserves. For further information please refer to Atlantic Gold NL Annual Report 2012.

Competent person's statement

The geological information in this report relating to Mineral Resources and Ore Reserves has been compiled by W R Bucknell who is a director of Atlantic Gold and a Member of the Australasian Institute of Mining and Metallurgy (AusIMM). Mr Bucknell has consented to the inclusion of this information in the form and context in which it appears. He has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration to qualify as a Competent Person in respect of the 2004 Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves (the JORC Code).