Milling agreement gives GOWEST green light for production in 2014

Gowest Gold Ltd. intends to begin mine development at its Frankfield East Property towards the end of 2013 with mining operations commencing before 2015.

Gowest is a Canadian gold development and exploration company focused on the delineation and development of its 100% owned, Frankfield East gold deposit, part of its North Timmins Gold Project (NTGP).

Gowest is also exploring additional gold targets on the 93 square kilometre NTGP land package it controls and continuing to evaluate acquisition targets in the vicinity of the Pipestone Fault area, part of the prolific Timmins Gold Camp. On Nov. 20, 2012 Gowest announced an updated NI 43-101 resource which totalled approximately 1.5 million ounces (Au) at the Frankfield deposit.

This updated resource contained approximately 945,000 ounces of gold in the Indicated category (6.0 million tonnes at a grade of 4.9 g/t Au) and 537,000 ounces of gold in the Inferred category (3.7 million tonnes at a grade of 4.2 g/t Au).

 Gowest has entered into a memorandum of understanding with an existing third party processor in the Timmins area, which has sufficient milling capacity to be able to process ore from the Frankfield East gold deposit for a fee. The current plan is to produce a high-grade gold concentrate to be sold through a separate off-take agreement.

Greg Romain, Gowest’s president and CEO, stated “we have been extremely pleased with the ongoing discussions taking place with potential partners. The results of our Preliminary Economic Assessment (PEA) demonstrated the potential at a gold price of $1,500 per ounce for Gowest to generate cash flows of greater than $50 million per year from the production of 95,000 ounces of gold starting within 30 months.

This scenario was achieved with an estimated capital cost of approximately $60 million, giving an internal rate of return on all equity basis of 50% and a payback of 1-2 years. We are now reviewing financing options and completing a more detailed evaluation to further define the optimal parameters for a short term custom milling arrangement. We look forward to providing updates as we move into 2013.”

Comprising of 42 claims on 2,444 hectares, the Frankfield East deposit is open along strike and at depth.

It is located about 42 km northeast of Downtown Timmins in the southwest part of Tully Township, which sits s on the northern border of the city. It is accessed by a 15 km all weather road leading east from Highway 655.

In preparation for negotiating a final agreement with the third party processor in the first half of 2013, Gowest is preparing a number of engineering, metallurgical, and mine development studies aimed at establishing appropriate technical, operational and economic parameters required by all parties. With the baseline environmental study completed at the Frankfield East deposit this past summer, current plans include Gowest securing appropriate mining permits to enable it to begin mine development at Frankfield East towards the end of 2013.

As previously reported, Gowest has focused on a number of potential ways to optimize the economics of mining and processing operations from the Frankfield East deposit. This includes a recently completed commercial test of ore sorting equipment by Commodas Ultrasort Inc., a world leader in the production of ore sorting equipment. This full scale ore sorting test clearly demonstrated significant economic opportunities, including a reduction in the quantities of rock being handled, while more than doubling the gold content in the crushed material sent to the final processing facilities.

 At the same time, other detailed metallurgical studies have also demonstrated the potential for the production of a concentrate from the Frankfield East ore with a grade of more than 90 grams of gold per tonne. Either or both of these approaches will enhance the economics of the already robust third party processing plan.

In 2012, Gowest land position increased to 93 sq km. Environmental baseline work was completed for mine permitting. Positive full-scale ore sorting optimization test was conducted. Resource expansion drilling program confirms gold mineralization to at least 1.4 km along strike and 1.1 km vertical depth (deposit remains open).First Nations Memorandum of Understanding agreement was executed.

Gowest boasts a highly experienced and capable management team and board with a proven track record of success in all key areas including finance, exploration, mine development, business development and gold production.

Gowest. One focus - Gold.