Oxide Operations Overview

_{*ROM ore stockpile includes mined ore but yet crushed, and low-grade stockpiles.}

• The Camino Rojo Oxide Gold Mine achieved quarterly gold production of 29,058 ounces of gold in Q2 2023 at an average ore stacking rate of 19,669 tonnes per day. The average mining rate during the second quarter was 31,583 tonnes per day with a strip ratio of 0.61. The average grade of ore processed during the first quarter was 0.77 g/t gold, in line with our plan. Mined ore tonnes continue to reconcile well to the block model and process recoveries to date are in line with the metallurgical recovery model.
• Gold sold during Q2 2023 totaled 29,773 ounces.
• Second quarter cash costs and AISC totaled $485 and $698 per ounce of gold sold, respectively.
• The key contributors to the AISC being at the lower end of the guidance range are
  • lower waste tonnes mined as a result from limited access to certain areas of the pit
  • lower blasting costs
  • lower maintenance costs.
• Waste tonnes are expected to remain below average for the remainder of 2023, resulting in lower mining costs for the year and reducing our overall AISC for 2023. The Company is revising its AISC guidance for 2023, reducing the range to $700 to $800 per ounce of gold sold from its original guidance of $750 to $850 per ounce.
• The Company remains on track to achieve its gold production guidance of 100,000 to 110,000 ounces for 2023. Sustaining capital during the second quarter of 2023 totaled $2.1 million. This covered items such as the construction of a dome over the ore stockpile for dust control, the construction of water wells and IT network infrastructure, as well as drilling and evaluation work at the Layback Area.

The Camino Rojo Project is a high quality, oxide heap leach operation in a low-risk jurisdiction. This type of operation leverages Management’s and the Board’s extensive exploration, development and operating experience in Mexico.

• Near-surface oxide gold-silver deposit with a large deeper gold-silver-zinc-lead sulphide zone
• Low complexity, low capital intensity, open pit oxide mine with a straightforward heap leach
• Flat-lying topography
• Well-located in the State of Zacatecas: 3km off a paved highway, excellent regional infrastructure including connection to grid electricity, 50km SE of Penasquito Mine
• Ejido agreements in place; strong community relationships
• Water concessions granted; sufficient water for operations proven

Mineral Reserve Notes:

1.      The Mineral Reserve estimates have been prepared in accordance with the CIM Standards.

2.      Rounding as required by reporting guidelines may result in summation differences.

3.      The estimate of Mineral Reserves may be materially affected by geology, environment, permitting, legal, title, taxation, sociopolitical, marketing, or other relevant issues.

4.      koz = 1,000 troy ounces; t = tonne (1,000 kilograms).

Camino Rojo, Mexico

1.      Michael G. Hester, FAusIMM of Independent Mining Consultants, Inc. (“IMC”) is the qualified person responsible for the Mineral Reserve estimate for Camino Rojo.

2.      The Mineral Reserve estimate for Camino Rojo has an effective date of December 31, 2022. The Mineral Reserve estimate has been updated from the 2021 Camino Rojo Report to account for depletion due to mining activity at the Camino Rojo Oxide Mine and for current gold and silver price and costs. The following table sets out the reconciliation of the Mineral Reserves (in thousands of ounces) at Camino Rojo by category at December 31, 2022 to those set forth in the 2021 Camino Rojo Report.

3.      Mineral Reserves are based on prices of $1,350/oz gold and $18/oz silver.

4.      Mineral Reserves are based on net smelter returns (“NSR”) cut-offs that vary by time period to balance mine and plant production capacities. They range from a low of $5.69/t to a high of $10.00/t.

5.      NSR value for leach material is as follows:

·        Kp Oxide: NSR ($/t) = 29.54 x gold (g/t) + 0.053 x silver (g/t), based on gold recovery of 70% and silver recovery of 11%.

·        Ki Oxide: NSR ($/t) = 23.64 x gold (g/t) + 0.072 x silver (g/t), based on gold recovery of 56% and silver recovery of 15%.

·        Tran-Hi: NSR ($/t) = 25.32 x gold (g/t) + 0.130 x silver (g/t), based on gold recovery of 60% and silver recovery of 27%.

·        Tran-Lo: NSR ($/t) = 16.88 x gold (g/t) + 0.164 x silver (g/t), based on gold recovery of 40% and silver recovery of 34%.

6.      Operating costs – mining $1.95/t mined; process $3.32/t processed; general and administrative (“G&A”) $2.37/t processed; includes a 2% NSR royalty and a 0.5% extraordinary mining duty payable to the Mexican government, as mandated by federal law.

7.      Refining cost per ounce – gold $2.29; silver $2.29.

8.      See “Mineral Properties – Camino Rojo Project – Mineral Reserves” for additional information.

9.      Stockpiles are all derived from Camino Rojo mined material and are calculated using reconciled production figures adjusted for mining accuracy. Stockpile grades are calculated from grade control block grades and depleted by mining accuracy where appropriate. For the stockpile, no cut‐off grade is used for reporting.

Mineral Resource Notes:

All:

1.      All figures are rounded to reflect the relative accuracy of the estimate and therefore numbers may not appear to add precisely. Columns may not sum exactly due to rounding.

2.      Mineral Resources that are not Mineral Reserves do not have demonstrated economic viability. Mineral Resources are inclusive of Mineral Reserves. An Inferred Mineral Resource has a lower level of confidence than that applying to an Indicated Mineral Resource and must not be converted to a Mineral Reserve. It is reasonably expected that the majority of Inferred Mineral Resources could be upgraded to Indicated Mineral Resources with continued exploration.

3.      The Mineral Resource estimates have been prepared in accordance with the CIM Standards.

4.      koz = 1,000 troy ounces; mlb = million pounds (imperial); t = tonne (1,000 kilograms).

Camino Rojo, Mexico

1.      The effective dates of the Mineral Resource estimates for Camino Rojo are: (i) December 31, 2022 for the oxides (leach material); and (ii) June 7, 2019 for the sulphides (mill material). The oxide Mineral Resource estimate has been updated from the 2021 Camino Rojo Report to account for depletion from mining operations at the Camino Rojo Oxide Mine and for current gold and silver price and costs. The following table sets out the reconciliation of the oxide Mineral Resources (in thousands of ounces) at Camino Rojo by category at December 31, 2022 to those set forth in the 2021 Camino Rojo Report.

2.      Michael G. Hester, FAusIMM, of IMC, is the qualified person responsible for the Mineral Resource estimate for Camino Rojo.

3.      Mineral Resources for leach (oxide) material are based on prices of $1,700/oz gold and $21/oz silver.

4.      Mineral Resources for mill (sulphide) material are based on prices of $1,400/oz gold, $20/oz silver, $1.05/lb lead, and $1.20/lb zinc.

5.      Mineral Resources are based on NSR cut-off grades of $5.69/t for leach material and $13.71/t for mill material.

6.      NSR value for leach material is as follows:

·        Kp Oxide: NSR ($/t) = 37.21 x gold (g/t) + 0.063 x silver (g/t), based on gold recovery of 70% and silver recovery of 11%

·        Ki Oxide: NSR ($/t) = 29.77 x gold (g/t) + 0.086 x silver (g/t), based on gold recovery of 56% and silver recovery of 15%

·        Tran-Hi: NSR ($/t) = 31.89 x gold (g/t) + 0.155 x silver (g/t), based on gold recovery of 60% and silver recovery of 27%

·        Tran-Lo: NSR ($/t) = 21.26 x gold (g/t) + 0.195 x silver (g/t), based on gold recovery of 40% and silver recovery of 34%.

7.      NSR value for mill material is 36.75 x gold (g/t) + 0.429 x silver (g/t) + 10.75 x lead (%) + 11.77 x zinc (%), based on recoveries of 86% gold, 76% silver, 60% lead, and 64% zinc.

8.      Includes 2% NSR royalty and a US dollar:Mexican Peso exchange rate of 1:19.3.

9.      Mineral Resources are constrained within a conceptual pit shell in order to demonstrate reasonable prospects for eventual economic extraction, to meet the definition of Mineral Resource in NI 43-101; mineralization lying outside of the pit shell is not reported as a Mineral Resource.

10.    The Mineral Resource estimate assumes that the floating pit cone used to constrain the estimate extends onto land held by Fresnillo. Any potential development of the Camino Rojo property that includes an open pit encompassing the entire Mineral Resource estimate would be dependent on obtaining an agreement with Fresnillo (in addition to the Layback Agreement, which is only with respect to a portion of the heap leach material included in the Mineral Reserve).

11.    See “Mineral Properties – Camino Rojo Project – Mineral Resources” for additional information.

12.    Stockpiles are all derived from Camino Rojo mined material and are calculated using reconciled production figures adjusted for mining accuracy. Stockpile grades are calculated from grade control block grades and depleted by mining accuracy where appropriate. For the stockpile, no cut‐off grade is used for reporting.

13.    Please see Forward-Looking Statements below regarding mineral resource and mineral reserve estimates. Please also refer to the Unconstrained Feasibility Study NI 43-101 Technical Report on the Camino Rojo Gold Project – Municipality of Mazapil, Zacatecas, Mexico dated January 11, 2021 for further details regarding the key assumptions, parameters, and methods used in the mineral resource estimate (including risk factors).