Grays Bay Road & Port Project: Overview and Current Status A - PowerPoint PPT Presentation

Grays Bay Road & Port Project: Overview and Current Status A Presentation at: Cordilleran Round-Up January 25th, 2017

Meeting Objectives • To introduce the Project to interested parties – Overview & background – Introduction of the Project team – Approach to development and operation • To discuss where GN and KIA are in the development process and likely next steps • Help build broader support for the Project

The Grays Bay Road & Port Project Description and Overview

Overview • The total cost of GBRP Project is $487 million • The KIA and GN are co-developers and co-proponents under the terms of an MOU signed July 2016 – KIA’s developer role is managed by its wholly -owned subsidiary, Nunavut Resources Corporation – The KIA and GN have jointly applied to the Federal Government for $365 million in funding for this project • $122 million will come from third-party debt paid back over 30+ years by commercial user fees and support from the GN

Project Location

Project Overview: Trunk Road  Project includes a 227 km all- weather trunk road from a port at Grays Bay to the Jericho Mine site (yellow line)  Trunk road will connect to Yellowknife and the Ekati and Diavik diamond mines via Tibbett-to-Contwoyto Lake Winter Road (turquoise line)

Project Overview: Trunk Road  Current thinking is to ultimately include an additional all-weather portion from Jericho to diamond mines at Lac de Gras (red line)  Discussions are ongoing with GNWT  Part of broader working group  Mine developments will be responsible for developing their own spur roads (Indigo line to MMG’s Izok Lake ore deposit)  KIA might be able to help facilitate

Project Overview: Arctic Deep Water Port

Project Overview: Arctic Deep Water Port • Port at Grays Bay would be the only deep water port in the central/western Arctic • Current design can accommodate two berths and expansion of tank farm, laydown areas and/or warehouses for use by industrial and commercial parties including MMG • Location is ideal given existing depth, rock shoreline, sheltering islands, relatively early ice free season

Project Context and History

Project Context: Background  Formal cooperation between GN, KIA and MMG more than 60 years in the making  Independent efforts to develop ‘world class’ Izok Lake ore body have converged at a point of mutual and collective benefit  KIA’s business model for third party financing of infrastructure development a catalyst in the face of:  GN’s limited financial capacity GN given comfort by KIA’s newfound ability to access federal government  infrastructure funds  MMG’s project feasibility challenge due to infrastructure development costs

Project Context: Project Team  Government of Nunavut:  Jim Stevens, ADM Economic Development & Transportation  Kitikmeot Inuit Association / Nunavut Resources Corporation:  Charlie Evalik, Chair Nunavut Resources Corporation  Scott Northey, Chief Operating Officer Nunavut Resources Corporation  Patrick Duxbury, Northern & Regulatory Affairs Advisor  Tetratech EBA:  Andrew Mitchell  Nunami Stantec:  Erica Bonhomme

Introduction to a Project Co-Proponent The Kitikmeot Inuit Association 13

Kitikmeot Inuit Association: Overview • KIA was originally established in 1976 • Non-profit society • Assumed birthright organization status in 1993 when the Nunavut Land Claim Agreement (“Nunavut Agreement”) was given Royal Assent • Represents over 6,000 Inuit beneficiaries of the NLCA in the Kitikmeot Region living in five communities – Cambridge Bay, Kugluktuk, Gjoa Haven, Kugaaruk and Taloyoak • KIA Mandate: To manage Kitikmeot Inuit lands and resources, to protect and promote the social, cultural, political, environmental and economic well-being of Kitikmeot Inuit

Kitikmeot Inuit Association: Governance • KIA is governed by a nine- member board of directors: Kitikmeot Beneficiaries  Five directors elected from each of Five Directors Four Directors the Kitikmeot communities elected from each elected from the  Four additional directors elected Kitikmeot Kitikmeot Region as Community Officers region-wide  Serve in dual capacity as both KIA nine-member Board Board Members and Officers on Executive Committee

Kitikmeot Inuit Association: Land Management  KIA is directly responsible for the management of surface rights associated with 106,360 km 2 of Inuit Owned Lands (IOL) in the Kitikmeot region  During the NLCA negotiations, many IOL parcels were selected on the basis of geologic potential  KIA has a keen economic interest in the successful exploration and development of Kitikmeot IOL

Kitikmeot Inuit Association: Capacity for Proponency • KIA has been positioning itself as project developer and proponent since 2010: • Established Nunavut Resources Corporation (“NRC”) in 2010  NRC has spent past 7 years executing business model so Inuit can participate economically in the development and operation of essential regional infrastructure  Includes roads, ports, broadband networks, regional airstrips, power plants  Positioning Inuit Beneficiary organizations to apply for funding from Federal Government infrastructure funds and capital markets

Kitikmeot Inuit Association: Capacity for Proponency  NRC’s role as infrastructure developer is managed by Scott Northey:  Served on the Board of NRC since 2010 and COO since 2012  Worked on Bay Street for 21 years (1987 – 2008)  Head of TD Securities Project Finance team (2004 – 2008)  Legacy of structuring innovation with no failed mandates  Deh Cho Bridge: $165mm Real Return Bond (2008)  Confederation Bridge: $323mm Toll Revenue-backed bond (1997)  UMH Hydro: $195mm bond for OPG hydro project (Closed in 2009)  Executed Advisory assignments for Provincial PPP Agencies and invited to join the initial board of PPPCanada

Business Model & Financing Plan KIA’s Model for Inuit Economic Participation in Developing the Grays Bay Road & Port Project 19

Business Model & Financing Plan: Overview  KIA’s model Inuit economic participation based on concepts and principles of public private partnerships (P3’s) that are well understood by investors and lenders in the Canadian marketplace  KIA’s model has been endorsed by PPPCanada staff and P3 Financial market participants  Including TD Securities and former senior mining executives  KIA’s model and its eligibility to apply for federal funding recognized and supported by the Government of Nunavut as part of the GBRP application process

Business Model & Financing Plan: Role of KIA  KIA would “own” the port and the road  KIA would assume role of contracting counter-party  Third party usage fees / toll revenues over and above amounts required for O&M and offsetting GN’s debt obligations (if any) would flow to KIA  Monies flowing to KIA would be deposited in recently constituted Kitikmeot Trust:  Disbursements controlled by Board of Trustees  Trust distributions to support fund social/ cultural programs  Would provide significant public benefit to Inuit of the Kitikmeot region

Approach to Tolling/Usage  Primary Objectives:  Third party use will work around usage by anchor tenants  Status determined by extent and length of usage contract  Access will be managed from port site and potentially from Jericho mine site  Promote usage via attractive costs relative to fly-in costs  Encourage new business development eg. Community re- supply  Charges will be based on distance travelled and volumes/weight carried

The Grays Bay Road & Port Project Current Status and Next Steps

State of Development  The Grays Bay Road & Port Project is advanced from a design perspective:  Result of $35mm+ investment by MMG under Data Sharing Agreement  Project is not as advanced from a permitting and regulatory perspective  Efforts to advance permitting/regulatory process underway  JV between Nunami Stantec and Tetratech EB in place to support permitting efforts

Current Process  The GN and KIA intend to initiate NIRB review process in respect of the Grays Bay Road & Port Project in spring 2017  Expect permitting and review process to take 2 - 3 years  A working group has been established  MOU between GN and KIA in respect of task allocation and funding is in place: Signed on Nunavut Day 2016  MOU between GN and MMG has been executed to provide access to all work done by MMG to date on the Port and Road

State of Regional and Community Engagement  Strong support for the GBRP Project from Kitikmeot communities will be a major factor in NIRB’s review, and for strengthening the case for Federal Government funding  KIA-led community engagement tour took place in late November, early December in the Kitikmeot region  All communities visited  Public meetings held  Focused meetings with hamlet councils, HTOs, High Schools, Regulators and GN departments  Community support to date has been extremely favourable