The Company also announces that it has granted a total of 2,350,000 incentive stock options (“Options”) to purchase common shares of the Company (“Common Shares”) to certain directors, officers, employees and consultants of the Company pursuant to the Plan. The Options are exercisable at a price of $1.53 per Common Share for a period of five years. The grant of Options is subject to the approval of disinterested shareholders of the Company at the Meeting in accordance with the policies of the Exchange. The Common Shares issuable upon exercise of the options are subject to a four-month hold period pursuant to the policies of the Exchange which will expire on December 14, 2020.

Highlights for the period:

• Horizonte maintained a strong cash position of 15.6 million British pounds following completion of the $25-million (U.S.) royalty transaction with Orion Mine Finance in Q4 2019;
• Well financed to advance Araguaia toward being construction ready;
• Project financing process currently running to schedule with no negative effects on the process observed as a result of the COVID-19 pandemic, although a delay to the process may occur should a further period of lockdown be implemented;
• Work on Araguaia continued to advance the level of engineering from feasibility stage level through to being implementation ready;
• Sepanta Dorri was appointed to the board as the nominee director for Teck Resources replacing Alex Christopher who stepped down due to other commitments;
• All employees and relevant stakeholders continue to follow strict health and safety policies specifically tailored to COVID-19. Remote working, where practicable, remains in place with all major work streams continuing as planned;
• The group donated 300 food parcels during April and May to the municipalities of Conceicao do Araguaia, Floresta do Araguaia and Xinguara, in light of the socio-economic impact caused by COVID-19;
• Nickel market fundamentals remain robust, with analyst consensus price of $16,133 per tonne at the time Araguaia is forecast to commence production, driven by growth in the electric vehicle battery sector and steady growth in the stainless steel market.

Events after the reporting date:

• A syndicate of five international financial institutions mandated for a $325-million (U.S.) senior debt facility to part finance the development of Araguaia.
• BNP Paribas, ING Capital LLC, Mizuho Bank Ltd., Natixis, New York branch, and Societe Generale will act as the mandated lead arrangers.
• Closing of the facility, targeted for end of the calendar year 2020, remains subject to completion of due diligence, final credit approvals and execution of definitive facility documentation.
• Peel Hunt LLP was appointed as nominated adviser and sole broker to the company.

                       CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
                                         (in British pounds)
                                                                Six months                  Three months
                                                             ended June 30                 ended June 30
                                                       2020           2019           2020           2019
Continuing operations
Revenue                                                   -              -              -              -
Cost of sales                                             -              -              -              -
Gross profit                                              -              -              -              -
Administrative (expenses)                        (1,565,142)      (968,917)      (890,685)      (450,930)
(Charge) for share options granted                        -       (237,171)             -       (107,178)
Change in value of
contingent consideration (loss)                    (391,160)       192,201         91,850       (118,847)
Gain/(loss) on foreign exchange                   1,126,822         (4,049)       185,376         52,192
(Loss) from operations                             (829,480)    (1,017,936)      (613,459)      (624,763)
Finance income                                       90,730         33,791         45,485         20,840
Finance (costs)                                  (1,941,704)      (146,837)    (1,083,712)       (73,589)
(Loss) before taxation                           (2,680,454)    (1,130,982)    (1,651,686)      (677,512)
Taxation                                                  -              -              -              -
(Loss) for the year
from continuing operations                       (2,680,454)    (1,130,982)    (1,651,686)      (677,512)
Other comprehensive income
Items that may be reclassified
subsequently to profit or (loss)
Change in value of available
for sale financial assets
Currency translation differences
on translating foreign operations (loss)         (8,067,677)       465,523     (1,457,805)     1,560,085
Other comprehensive income (loss)
for the period, net of tax                       (8,067,677)       465,523     (1,457,805)     1,560,085
Total comprehensive income
for the period
attributable to
equity holders of the company (loss)            (10,748,131)      (665,459)    (3,109,491)       882,573
Earnings per share from continuing
operations attributable to the
equity holders of the company
Basic and diluted (pence per share) (loss)           (0.185)        (0.078)        (0.114)        (0.047)

These documents have been filed electronically with SEDAR at www.sedar.com and will be available on the Corporation’s website www.dynacor.com.

(All figures in this press release are in Ms of US$ unless stated otherwise. Earnings per share and cash-flow per share are in US$. All variance % are calculated from rounded figures. Some additions might be incorrect due to rounding).

Impacted by the COVID-19 crisis, Dynacor, following thirty six (36) consecutive quarters of profits, recorded a net loss of (-$0.7 M) (-$0.02 per share) compared to a net profit of $0.7 M ($0.02 per share) for the three-month period ended June 30, 2019 (“Q2-2019”).

During the quarter, the Corporation concentrated its effort to monetize its inventory and receivables, reducing its risks and solidifying its overall financial situation. The Corporation increased its cash position by $4.5 M, from $16.1 M at March 31, 2020 to $20.6 M at June 30, 2020 and resumed its operations before the end of the period.

Due to the very good financial results of Q1-2020, the net income for the six-month period ending June 30, 2020 is $1.7 M compared to $1.9 M for the same period of 2019.

Q2-2020 OVERVIEW AND HIGHLIGHTS

In Q2-2020, due to the ongoing COVID-19 worldwide crisis and the state of emergency declared in Peru, the Corporation had to stop its ore purchase activities and temporarily shut-down its processing operations during almost three months. This exceptional context obviously impacted the Corporation quarterly financial and operational results. Considering its solid financial situation and the gradual resumption of its activities, the Corporation pursued its dividend policy and declared in June, a 0.015$ CA per share dividend which was paid in July.

Operational

• Volume of 3,244 tonnes processed compared to 22,737 tonnes in Q2-2019;
• Gold production of 1,897 ounces compared to 18,095 ounces in Q2-2019.

Financial

• Cash on hand of $20.6 M in Q2-2020 compared with $6.7 M at year-end 2019;
• Sales of $8.0 M, compared to $22.7 M in Q2-2019;
• Expenses related to the safeguard of all our production and ore purchase department employees in view of the resumption of activities amounted to $0.5 M during the quarter;
• Net loss of (-$0.7 M) or (-$0.02 per share), compared to a net profit of $0.7 M in Q2-2019;
• EBITDA ⁽¹⁾ of (-$0.1 M), compared to $1.9 M in Q2-2019;
• Cash flow from operating activities before change in working capital items of (-$0.03 M), compared to $1.6 M in Q2-2019.

Cash return to Shareholders

• Quarterly dividend of CA$0.015 per share and totaling $0.4 M (CA$0.6 M) paid in July 2020.

⁽¹⁾ EBITDA: “Earnings before interest, taxes and depreciation” is a non-IFRS financial performance measure with no standard definition under IFRS. It is therefore possible that this measure could not be comparable with a similar measure of another corporation. The Corporation uses this non-IFRS measure as an indicator of the cash generated by the operations and allows investor to compare the profitability of the Corporation with others by canceling effects of different assets bases, effects due to different tax structures as well as the effects of different capital structures.

RESULTS FROM OPERATIONS

Extract from Statement of net income and comprehensive income (unaudited)

		Three-month periods ended June 30,			Six-month periods ended June 30,
(in $’000)		2020			2019				2020			2019
Sales		8,007			22,697				38,876			45,616
Cost of sales		(7,975	)		(20,139	)			(33,895	)		(40,268	)
Gross operating margin		32			2,558				4,981			5,348
General and administrative expenses		(746	)		(1,150	)			(1,837	)		(2,107	)
Other projects		(13	)		–				(141	)		–
Operating income		(727	)		1,408				3,003			3,241
Income before income taxes		(755	)		1,325				2,892			3,106
Net income and comprehensive income		(685	)		757				1,700			1,937
Earnings per share
Basic		(-$0.02	)	$	0.02			$	0.04		$	0.05
Diluted		(-$0.02	)	$	0.02			$	0.04		$	0.05

Total sales amounted to $8.0 M compared to $22.7 M in Q2-2019. The $14.7 M decrease is explained by the decreases in ounces sold (-$17.2 M) partially offset by higher selling prices ($2.5 M).

All expenses incurred during the quarter, including fixed operation costs, were accounted as part of cost of sales, which explains the low gross operating margin.

Reconciliation of non-IFRS measures

(in $’000)		Three-month periods ended June 30,			Six-month periods ended June 30,
		2020		2019			2020		2019
Reconciliation of net income and comprehensive income to EBITDA
Net income and comprehensive income		(685	)	757			1,700		1,937
Income taxes		(70	)	568			1,192		1,169
Financial expenses		31		25			49		65
Depreciation		599		616			1,239		1,261
EBITDA		(125	)	1,966			4,180		4,432

CASH FLOW FROM OPERATING, INVESTING AND FINANCING ACTIVITIES AND LIQUIDITY

Operating activities

During Q2-2020, the cash flow from operations, before changes in working capital items, amounted to (-$0.03 M) ($3.2 M for the six-month period ending June 30, 2020), compared to $1.6 M in Q2-2019 ($3.5 M for the six-month period ending June 30, 2019). This decrease between quarters is primarily explained by the decrease in gross operating margin due to lower gold production.

During Q2-2020, total cash from operating activities amounted to $5.0 M ($18.1 M for the six-month period ending June 30, 2020) compared to $0.4 M in Q2-2019 ($1.8 M for the six-month period ending June 30, 2019). Changes in working capital items amounted to ($5.0 M) ($14.9 M for the six-month period ending June 30, 2020) compared to (-$1.2 M) in 2019 (-$1.6 M for the six-month period ending June 30, 2019). The variance is mainly attributable to the variance in inventories.

Financing activities

In 2020, two increased quarterly dividends of CA$0.015 per share were disbursed for a quarterly consideration of $0.4 M (CA$0.6 M). In 2019, two quarterly dividends of CA$0.01 per share were disbursed for a quarterly consideration of $0.3 M (CA$0.4 M).

In 2020 and 2019, the corporation made quarterly repayments of lease liabilities for $0.2 M.

Liquidity

As at June 30, 2020, the Corporation’s working capital amounted to $21.7 M, including $20.6 M in cash ($19.6 M, including $6.7 M in cash at December 31, 2019).

STATEMENT OF FINANCIAL POSITION

At June 30, 2020, total assets amounted to $70.2 M ($74.8 M as at December 31, 2019). Major variances since last year-end come from the significant increase in the cash balance and decrease in inventories and bank loan.

(in M $)	As at June 30,	As at December 31,
	2020	2019
Cash	20.6	6.7
Inventories	4.6	18.3
Property, plant and equipment	19.9	21.0
Exploration and evaluation assets	18.8	18.7
Other assets	6.3	10.1
Total assets	70.2	74.8
Bank loan	–	3.0
ARO	3.8	3.8
Other liabilities	5.5	8.0
Shareholders’ equity	60.9	60.0
Total liabilities and equity	70.2	74.8

OUTLOOK

A health and safety protocol has been prepared containing the measures to be taken to monitor the risk of exposure to COVID-19 at the Corporation’s workplaces including production unit, as well as establishing prevention and control standards to prevent the appearance and/or spread of the virus and  safeguard the health of  workers,  suppliers, customers and visitors.

The Corporation’s purchasing and processing operations resumed in June without any issues. In July we processed an average of more than 230 tonnes per day and aiming to reach full capacity of 300 tonnes per day by the end of the third quarter.

For complete details of the unaudited Interim Consolidated Financial Statements and associated Management’s Discussion and Analysis please refer to the Company’s filings on SEDAR (www.sedar.com) or the Company’s website (www.silverbearresources.com).

Q2 2020 QUARTER HIGHLIGHTS

During the six-month period ended 30 June 2020 the Group production statistics included:

• Mined a total of 75,415 tonnes of ore, processed 54,889 tonnes of ore at an average grade of 676.9 g/t of silver, producing a total of 1,034,282 ounces of silver;
• Sold a total of 1,065,378 ounces of silver totalling production revenue of US$17,670,112 and reported a total comprehensive loss of $26,042,816 and an accumulated deficit of $204,957,472.
• On 27 May 2020, the Group announced a further amendment to its Facilities Agreement with Inflection Management Corporation Limited (“Inflection”), a major shareholder of the Group, and Unifirm Limited (“Unifirm”), an affiliate of A.B. Aterra Resources Ltd. (“Aterra”), also a major shareholder of the Group, whereby the major shareholders agreed to a further reduction in interest payable on all funds drawn under the facilities agreement from 9% to 7% per annum (see full details below);
• In late May 2020, the CEO stated that despite the initial delay in the final commissioning of the new X-Ray transmission (“XRT”) processing equipment due to government-mandated COVID-19 restrictions, the consultants, following a prescribed quarantine period, have completed the commissioning. The XRT equipment is now fully operational;
• On 22 June 2020, the Group announced following the receipt of the draft Wardell Armstrong report (the “Draft WA Report”) based on the material change in the mineral resource estimates of both Vertikalny and Mangazeisky North deposits and scope of the project the August 2017 NI 43-101 technical report containing a resource update and accompanying Vertikalny feasibility study and Mangazeisky pre-feasibility study should no longer be relied upon and are withdrawn by the Group. In the statement, the Group stated that finalization of the Draft WA Report is dependent on Wardell Armstrong conducting a site visit to the its mining operations, owing to government mandated COVID-19 restrictions the site visit has been delayed for an indefinite period of time, (full details are described below); and
• As of the date of this report, the Group confirms there have been no major disruptions at either sites or to the Group’s planned production and operations due to the COVID-19 pandemic.

MANGAZEISKY SILVER PROJECT COMMERCIAL PRODUCTION

The Group achieved first pre-commercial silver production in 1 April 2018 through its commissioning activities at the Mangazeisky Silver Project as construction of the processing plant and associated infrastructure was completed. The Group achieved commercial production at the beginning of the third quarter of year 2019. During the Q2 2020, the Group continued to increase its productivity in mining and processing with the finalization of the XRT processing equipment commissioning in late May 2020. The table below details the production highlights for the three and six-month period ended 30 June 2020 and 2019. 

	Three-months ended 30 June 2020	Three-months ended 30 June 2019	Six-months ended 30 June 2020	Six-months ended 30 June 2019
Operating Data
Ore Mined (tonnes)	39,765	20,286	75,415	59,653
Ore processed (tonnes)	29,545	25,565	54,889	45,194
Head grade (g/t Ag)	650	492	680	575
Recovery (%)	87	76.1	86.5	70.4
Silver ounces produced	576,824	307,979	1,034,282	572,714
Financial Data
Silver ounces sold	592,938	332,129	1,065,378	626,698
Average realized price (US$/oz)	16.35	14.95	16.59	15.22
Production and pre-production revenues, US$	9,695,280	4,965,486	17,670,112	9,539,280

             
Development & Operational Activities

During the first quarter, the Group’s 2020 winter road procurement and transportation delivered approximately 14,000 tonnes of supplies, including new drill rig, excavator and the new XRT processing equipment. The winter road was closed on 30^th of April this year, and accomplished delivery of all the Group’s demand for gas condensate and diesel fuel.  Deliveries for the summer and fall months are now via cargo flights using the Group’s newly completed airstrip.

During the second quarter, in May 2020, following a prescribed quarantine period, the XRT consultants arrived at site and completed the final commissioning. The XRT equipment is now fully operational. The flotation facility construction project in its design development phase, with foundation construction to be started in the 3^rd quarter 2020. 

As of the date of this report there are no construction contractors and approximately 194 Prognoz employees at site. There are also 44 contractors, namely catering, process consultants, and construction workers. As of 30 June 2020, there was no lost time recorded accident at site. In light of the World Health Organization (“WHO”) declaring COVID-19 a global pandemic in March of this year, the Group has developed and implemented a response and mitigation plan for both its Yakutsk head office and Mangazeisky mine site. At the date of this report the Group has had no major disruptions at either sites or to our planned production and operations, however we continue to monitor the situation ensuring we keep the safety of our work force our main priority.

Corporate & Financing Activities

On 27 May 2020, the Group announced that it has further amended its existing facilities agreement (the “Facilities Agreement”) with Inflection Management Corporation Limited (“Inflection”), a major shareholder of the Company, and Unifirm Limited (“Unifirm”), an affiliate of A.B. Aterra Resources Ltd. (“Aterra”), also a major shareholder of the Company. The amendments to the Facilities Agreement (the “Facilities Agreement Amendments”): (i) reduce the interest payable on all funds drawn under the Facilities Agreement from 9% to 7% per annum; and (ii) extend the first interest period under the Facilities Agreement and revise the interest capitalization date to 1 April 2020.

The Facilities Agreement Amendments are a “related party transaction” under Multilateral Instrument 61-101 – Protection of Minority Security Holders in Special Transactions (“MI 61-101”) because Inflection and Aterra, an affiliate of Unifirm, are related parties to the Company, as its major shareholders. Pursuant to Section 5.7(f) of MI 61-101, the Company is exempt from obtaining approval of the Company’s minority shareholders as a result of the Facilities Agreement Amendments being an amendment to a loan to the Company (obtained from a related party on reasonable commercial terms that are not less advantageous to the Company than if such credit facility was obtained through an arm’s length lender) that has no equity or voting component. The Company will file a material change report in respect of the Facilities Agreement Amendments. The Group filed a material change report in respect of the Facilities Agreement Amendments on December 24, 2019.

Exploration Activities

During the second quarter 2020, the Group was working on the completion of the details of its exploration program for the upcoming exploration season.  During the season the Group is planning to target extensions of existing deposits and new areas of significance with the intent to grow the Group’s resources and establish future drilling programs.

OUTLOOK FOR Q3 2020 AND REMAINDER OF YEAR

In order to fund further development operations and maintain rights under licenses and agreements, the Group has secured funding in the form of long-term loans of which the principal totals $182 millions and the Group may be dependent on securing additional financing until such time that it generates sufficient operating cash flow to meet its liabilities. 

In consideration of the Group’s going concern and following the initiation of silver production in the second quarter of 2018 and now achieving full commercial production in the third quarter of 2019 the Group’s priorities for third quarter 2020 and remainder of the year are as follows:

• Although at the date of this report COVID-19 has not materially impacted the Group’s silver production, there is no guarantee that it will not going forward, as such the forecast for the whole of 2020 has been revised to approximately 2.2 million ounces of silver;
• In Q3 2020, the Group plans to finish the development documentation for flotation and start building the foundation;
• Complete the 2020 exploration program that target extension of existing deposits and new areas of significance with the intent to grow the Group’s resources and establish future drilling programs;
• Continue to monitor all operations to further optimize operating costs and improve operational efficiencies; and
• Continue to build up operational capabilities and staffing and introduce new systems for production monitoring and management accounting.

The company continues to advance the La Plata permitting process while in parallel advancing different aspects of required work to complete the planned feasibility study. As a major component of this study, finding a solution for clean energy is an important milestone. After several months of productive negotiations with CNEL and the Ecuadorean energy authorities, Atico Mining is pleased with the execution of this strategic agreement, as it brings the company’s La Plata project another step closer toward production.

The La Plata project has received strong support from the government of Ecuador and has been identified as part of the “second generation” of priority projects necessary for the nation’s economic development. The power agreement confirms the collaboration between Compania Minera La Plata, the local subsidiary of Atico Mining in Ecuador, and the national power company CNEL, consisting of the engineering, permitting and construction required to connect the 69-kilovolt power line required for La Plata’s planned mining infrastructures located in Palo Quemado, province of Cotopaxi.

Alain Bureau, president of Atico Mining, commented: “This is a major milestone our team has achieved for the La Plata project. The government has been quite supportive of the project and our efforts to maintain excellent co-operation and transparency with all level of authorities. This has been key to build trust while making great strides towards fast-tracking permitting of this project. We would like to commend the co-operation of CNEL’s authorities for their support on reaching this milestone.”

The power agreement confirms the availability of the required power source from CNEL’s regional substation located only 7.5 kilometres from the project. The power agreement also allows the streamlining of the electrical power supply to the project and demonstrates the Ecuadorean government’s desire to fully integrate power, oil and mining to rapidly nurture its plans within the upcoming economic growth strategy. This agreement allows for easier co-operation of all engineering and environmental teams to insure the co-ordinated development and construction of the required power line and connectivity to the main grid. The country’s authorities are also proud to provide a clean energy source, as the majority of Ecuador’s electrical power comes from modern low-cost hydroelectrical power plants.

As exploration and infill drilling continues for the rest of the year with two drill rigs at La Plata, Atico Mining is boosting its local development team with the reassignment of some of its mining professionals from El Roble to assist with the engineering for the La Plata project. Atico Mining’s internal development team and network of consultants have been very efficient in the transformation of the El Roble mine from a 350-tonne-per-day small-scale operation to a modern 1,000-tonne-per-day operation. The El Roble processing plant expansion has successfully increased its capacity, maintaining high ore recoveries while at the same time achieving a lower production cost profile.

Q2 2020 Financial and Operational Highlights

• Successful close of the plan of arrangement with Otis Gold Corp. (“Otis”) in late April 2020
• Mining and milling operations resumed from mid-June 2020 following suspension imposed by the Government of Mexico from April 1 st to June 1 st (the “Suspension”)
• Positive production and cost reductions progress following restart
• Operations continue to effectively manage COVID-19 response in Mexico
• Cash and marketable securities of US$11 million as at August 4, 2020 following repayment of Sprott Private Resource Lending II (Collector), LP (“Sprott Lending”) US$6 million bridge loan

“Our teams at Platosa and Miguel Auza did an exceptional job managing through a very difficult period,” stated Brendan Cahill, President and CEO. “We developed protocols to ensure the health of our workforce and to aid the health of our broader communities; our teams on the ground put these plans into practice and deserve great credit for their courage, perseverance and resiliency.”

Mr. Cahill continued, “Though we must continue to be diligent in our management of the ongoing pandemic, we also look ahead to brighter times. Our restart of Platosa has gone well, with efforts to reduce costs bearing immediate returns as we resumed production in mid-June. Mill recoveries improved significantly following the restart, and we continue to see these improvements in the third quarter. The key remaining piece of our cost reduction strategy is the shift to a private electricity provider, which we expect will be completed in the third quarter. Above all, we are finally seeing the resurgence in precious metal prices that our industry has been predicting for years and we look forward to taking advantage of this new bull market to our shareholders’ benefits.”

Financial Results

Financial results for the three- and six-month periods ended June 30, 2020 and 2019 were as follows:
  
('000s of USD, except amounts per share  and per ounce) Q2 2020  Q2 2019  6-Mos 2020  6-Mos 2019
Revenue (1)                                            891      8,674    7,506       13,853      
Production costs                                       (2,641)  (6,797)  (8,120)     (11,409)    
Depletion and amortization                             (666)    (1,149)  (1,935)     (2,318)     
Cost of sales                                          (3,307)  (7,946)  (10,055)    (13,727)    
Gross profit (loss)                                    (2,416)  728      (2,549)     126         
Corporate administration                               (2,345)  (1,028)  (3,508)     (2,389)     
Exploration                                            (258)    (967)    (631)       (1,972)     
Other income (expense)                                 968      34       (691)       (240)       
Net finance income (cost)                              554      (335)    (1,537)     (387)       
Income tax recovery (expense)                          97       (640)    (856)       (1,131)     
Net income (loss)                                      (3,400)  (2,208)  (9,771)     (5,993)     
Income (loss) per share - basic                        (0.02)   (0.02)   (0.08)      (0.06)      

(1)Revenues are net of treatment and refining charges ("TC/RCs").
(2)Cash flow from operations before changes in working capital.  

Revenues were negligible during the quarter due to the Suspension, comprising concentrate milled in late Q1 and early Q2 2020 that was delivered in early Q2. Concentrate deliveries resumed in early July.

Cost of sales, including depletion and amortization, primarily related to care and maintenance costs incurred during the quarter, with the predominant components being electricity expenditures on pumping for dewatering purposes at Platosa and labour costs (both at lower rates than under normal operating conditions).

The Company recorded a net loss of $3.4 million in Q2 2020 (Q2 2019 – net loss of $2.2 million). The increase in net loss of $1.2 million between Q2 2020 and Q2 2019 and the increase in net loss of $3.5 million between the six month periods ended June 30, 2020 and 2019 was primarily due to care and maintenance costs and minimal revenues from the Mexican operations due to the Suspension.

Exploration was limited during the period in Mexico due to the Suspension, but the Company expended C$261,000 at Silver City Project ramping up to the drill program that commenced in early Q3 2020 and an additional $63,000 at Kilgore Project following the acquisition of Otis. Additionally, work continued on the Oakley Project under option to Centerra (U.S.) Inc.

All financial information is prepared in accordance with IFRS, and all dollar amounts are expressed in U.S. dollars unless otherwise specified. The information in this press release should be read in conjunction with the Company’s unaudited condensed interim consolidated financial statements for the three- and six-month periods ended June 30, 2020 and associated management discussion and analysis (“MD&A”) which are available from the Company’s website at http://www.excellonresources.com and under the Company’s profile on SEDAR at http://www.sedar.com.

Operating Results & Outlook

Operating performance for the periods indicated below was as follows: 
  
                                                 Q2 2020     Q2 2019   6-Mos 2020  6-Mos 2019
                                                                                              
Tonnes of ore mined:                               3,270     18,213    23,170      37,709      
Ore processed (t):                                 1,288     19,964    20,330      36,733      
Historical stockpile processed (t):                -         -         -           1,450       
Platosa ore processed (t):                         1,288     19,964    20,330      38,183      
Blended head grade (ore and historical stockpiles):                                            
                      Silver (g/t)                 492       514       539         508         
                      Lead (%)                     5.37      4.97      5.44        4.85        
                      Zinc (%)                     6.91      7.40      6.78        7.44        
Recoveries:                                                                                    
                      Silver (%)                   92.9      90.6      89.5        90.2        
                      Lead (%)                     84.7      83.6      82.9        79.5        
                      Zinc (%)                     80.9      79.6      75.3        78.9        
Production(1)                                                                                  
                      Silver - (oz)                18,919    276,805   315,200     537,249     
                      AgEq ounces (oz)(2)          34,924    582,937   558,666     1,105,198   
                      Lead - (lb)                  129,204   1,763,316 2,019,661   3,139,740   
                      Zinc - (lb)                  158,735   2,499,403 2,289,769   4,709,028   
Payable:(3)                                                                                    
                      Silver ounces - (oz)         48,744    328,778   294,806     502,972     
                      AgEq ounces (oz)(2)          81,679    660,292   515,869     1,043,730   
                      Lead - (lb)                  340,315   2,130,372 1,854,600   3,021,084   
                      Zinc - (lb)                  260,607   2,554,290 2,066,279   4,474,024   
San Sebastian ore processed (t)                    -         -         4,785       -           

(1)Period deliveries remain subject to assay and price adjustments on final settlement with concentrate purchaser(s). Data has been adjusted to reflect final assay and price adjustments for prior period deliveries settled during the period. Tonnes Mined and Ore processed are in DMT.

(2)AgEq ounces established using average realized metal prices during the period indicated applied to the recovered metal content of the concentrates to reflect the revenue contribution of base metal sales during the period.

(3)Payable metal is based on the metals delivered and sold during the period, net of payable deductions under the Company’s offtake arrangements, and will therefore differ from produced ounces. In Q2 2020, concentrate milled in late-Q1 2020 was delivered in early Q2 2020. Milling recommenced in late-June after the Suspension, with shipping of concentrate resuming in July 2020.

(4)Average realized price is calculated on current period sale deliveries and does not include the impact of prior period provisional adjustments in the period.

Production was negligible during Q2 2020 due to the Suspension. The restart of the Company’s Mexican operations was completed successfully, with a materially-reduced workforce paying immediate dividends in the form of reduced operating costs on restart. Mill recoveries also improved significantly following the restart. The shift to a private electricity provider is expected to be completed in the third quarter, further reducing operating costs. In addition, the operations continue to pursue various business improvement initiatives designed to deliver further operational efficiencies and cost reductions. The resurgence in precious metal prices is expected to result in positive cashflows in the upcoming quarters.

COVID-19 Update

The restart of operations following the Suspension consisted of providing two days of safety and COVID-19 exposure prevention training, reorganizing the reduced workforce and implementing more efficient work schedules and various ventilation, mining method and business improvements. COVID-19 prevention, health screening, contact tracing, testing and quarantine protocols were developed and implemented early and proved effective in protecting the workforce from confirmed COVID-19 cases that originated from community spread.

The Subscription Receipts are expected to convert into units (each a “Unit”) on August 17, 2020 (the “Automatic Conversion Date”) comprised of an aggregate of 10,666,666 common shares in the capital of the Company (each a “Common Share”) and 5,333,333 Common Share purchase warrants exercisable to acquire one Common Share at an exercise price of $1.80 for 24 months following the Automatic Conversion Date, in accordance with the terms of the subscription receipt agreement entered into by the Company, TSX Trust Company and Haywood Securities Inc., on behalf of the underwriters of the Private Placement (the “Underwriters”). The gross proceeds of the Private Placement (less 50% of the Underwriters’ cash commission and all of the Underwriters’ expenses) were released from escrow to the Company on August 13, 2020.

In connection with the filing of the Prospectus the Company refiled its previously filed technical report entitled “Updated Mineral Resource Estimate for the Goliath Gold Project, Kenora Mining Division, Northwestern Ontario” (the “Goliath Technical Report”), originally filed on November 18, 2019, for the purposes of eliminating inconsistencies in the budget included as Table 26-1 of the Goliath Technical Report.

On Friday August 7, 2020 the Company also filed a technical report in respect of the Goldlund Gold Project (“Goldlund”) in relation to its acquisition from First Mining Gold Corp. (TSX: FF) (OTCQX: FFMGF) (FRANKFURT: FMG) of all of the issued and outstanding shares of Tamaka Gold Corporation (“Tamaka”), a wholly owned subsidiary of First Mining that owns Goldlund.

German Stock Exchanges

As a result of the Company’s three (3) for one (1) Common Share consolidation, completed on August 11, 2020, the Common Shares now trade on the German Exchanges under the symbol “TRC1”.