FAQ

1. Is there a large mining and exploration industry in Alaska?

A: Absolutely. The mining industry of Alaska supports approximately 9,000 direct and indirect jobs with a payroll of $350 million in 2010. In terms of exploration, over $225 million was spent on over 74 projects in 2010 and a total of $2.3 billion has been spent on exploration since 1981.

In 2010, $250 million was spent on mine construction on eight existing mines and development projects and the industry generated $3 billion in gross mineral production value from operating mines. In addition to larger mines, a total of 60,000 ounces of gold and platinum, were produced from the State's plus-200 placer mines.

(Source: Alaska Miners Association, January 2011)

2. What are the benefits of the mining industry to the communities and State of Alaska?

A: The mining industry provides some of Alaska's highest paying jobs with an estimated average annual wage of $95,000, double the state average for all sectors of the economy. The types of jobs provided are mostly year-round jobs for residents of more than 120 communities throughout the state, half of which are found in rural Alaska where few other jobs are available.

In 2010, the mining industry in Alaska accounted for over $13 million in local government revenue through taxes. The industry also accounted for $58.9 million in state government revenues through rents, royalties, fees and taxes in 2010. This was an increase of 40% from the previous year.

Mining exports of $925 M accounts for 28% of Alaska's total exports (2009). After the Oil and Gas sector, mining is the second highest contributor to corporate income tax ($59M for 2010).

(Source: Alaska Miners Association, January 2011)

3. Isn't Alaska really cold and snowy? Can you mine in those conditions?

A: While this depends on where in Alaska you are referring to, in general mines in Alaska are operated year-round. An example is the Fort Knox open-pit mine located 40 km northeast of Fairbanks which is in production year round and is an example of how the Livengood can operate. The Livengood project is also located in an area where annual precipitation totals approximately 10 inches.

4. What are the political risks in mining in Alaska?

A: Alaska has a well-established mine permitting system which requires a full understanding of the impacts associated with major projects and a defined permitting path. Recent major mining projects like Fort Knox, Pogo, Rock Creek and Red Dog have utilized this system very effectively. Communities like Fairbanks, Juneau and Nome were founded on mining activity and the industry is an important generator of jobs as well as local and state revenue from taxes. Major risks that could potentially stall mining projects in Alaska revolve around environmental issues such as the proximity to sensitive fish habitats or endangered wildlife as well as the support of the local communities.

5. What are the local communities nearby the Livengood Project site?

A: The largest community near the Livengood project is the City of Fairbanks where many residents are either employed or associated with the mining industry. The nearest community to the project site is Minto, located approximately 60 kilometers to the southwest, where several of the residents work in the natural resource sector. The company has strived to keep these and other communities in the region up to date on its project and its progress with a positive response being returned on all fronts to date.

6. What are the most important factors affecting the development of the Livengood project?

A: Livengood is a large but low-grade deposit and as such requires the ability to extract gold at a low per-tonne unit cost to be viable. The existing infrastructure at the Livengood project is a major positive factor that will reduce initial development costs and project timing. The project has been the site of near continuous placer mining for the last 90 years and mining has been a well-established land use in the area.

There is also limited surface water with no migratory fish or endangered wildlife and no communities to relocate that could generate significant negative impacts.

7. What is the tax rate for mining companies in Alaska?

A: The Alaska State corporate tax rate varies from 0-9% and the State has a Mining License tax rate on net profits of 7% following a 3.5 year tax holiday once production commences. Companies are also subject to normal US federal corporate tax rates. The State of Alaska also allows $20M of exploration expenditure to be recovered against State taxes.

8. Who owns the land on which the Livengood project is located?

A: The Livengood project is a mixture of staked State of Alaska mining claims, leased patented and unpatented State and federal mining claims and a large block of ground leased from the Alaska Mental Health Trust. The company pays annual rental and lease option fees and royalties on the land vary from 0-5% and average about 2.5% for the currently defined deposit.

9. When will you go into production at Livengood?

A: The Livengood project is currently in the Pre-feasibility phase of study which is scheduled to be completed in the first half of 2012. Following the results of this study, the project concept will be developed in consultation with key stakeholders and the permitting process will commence. Following the guidelines of the Alaska mine permitting regulations, the Company anticipating that an Environmental Impact Assessment would be required, a process that takes approximately 3 years to complete. If permits are successfully obtained, the project would subsequently enter a 2-year construction phase with production start-up to follow.

10. How much has International Tower Hill spent on exploration of the project since its discovery?

A: Over 160,000 metres of drilling have been carried out on the Livengood project since 2006 and a total of $53.2 million spent. Given the current resource size of 13.3 million ounces, this represents a discovery cost of approximately $4 per ounce.

11. How many jobs will be created and sustained from this project?

A: The Livengood project is currently envisioned to be a high-volume mining operation similar to the Fort Knox mine operating about 100 kilometers to the southeast, which employees approximately 450 people. The Livengood project is expected to generate approximately 1,000 direct jobs during the construction phase and 400 direct operational jobs for life of mine, currently expected to last approximately 23 years.

12. As the Livengood project is a lower grade deposit, what would be the impact of lower gold prices on the project?

A: The Livengood deposit has the characteristics and configuration to allow for high-volume mining and processing, making it possible to develop and operate the deposit at lower gold prices. An updated Preliminary Economic Analysis completed in August of 2011 utilized a gold price of $1,100 per ounce for the pit design. This analysis has considerable margin between these values and the current gold price.

13. What will be some primary value drivers for the company over the next 12 months?

A: Key developments to watch out for over the next 12 months include:

Completion of Pre-Feasibility Study in H1/2012;
Drilling results from district-scale target testing;
Commencement of Feasibility Studies in eary 2012; and
Permit preparation and submission.

14. I am a new investor and do not understand much mining terminology. Where can I find out more information on the industry lingo?

A: For more information on mining terminology, please see the definitions page.