Premier Gold Mines Limited Provides Update Heading to Releasing Quarter Two Results

El Nino mine production exceeded expectations during the second quarter despite a planned shutdown of the Goldstrike roaster which resulted in minimal ore processing during the month of June. A total of 4,764 ounces of gold was produced at South Arturo prior to the shutdown. The balance of ore mined during the period was stockpiled and awaiting processing during the second half of this year.

The Mercedes mine was placed into care and maintenance due to the COVID-19 pandemic late during the first quarter and remained in that status for most of the second quarter. The mine was able to restart gradually during the latter part of the period, with activity on site initially limited due to sanitary measures required for the safety of mine personnel. Ore that was produced upon start-up remained in stockpile until processing resumed in early July.

“The El Niño mine continues to perform at the high-end of expectations”, stated Ewan Downie, Chief Executive Officer of Premier,  “Both South Arturo and Mercedes have accumulated ore stockpiles to be processed during the third quarter and a modified mine plan, designed to increase mining efficiency and expand operating margins, has been implemented at Mercedes.”

South Arturo Mine, Nevada

The El Nino underground mine is one of several development opportunities at the South Arturo Joint Venture (the “JV”) that is operated by Barrick Gold through its subsidiary Nevada Gold Mines.  El Nino is the second mine that has been developed by the JV and, similar to the Phase 2 pit, has delivered solid operating results since initial production in late 2019.

The partners are contemplating additional development opportunities such as the Phase 1 and Phase 3 open pit projects that include the potential for an on-site heap leach facility to process a large percentage of the ore produced. The Company expects to complete an updated compliant technical report for South Arturo during the third quarter with the goal of providing a long-term view of the opportunity provided by this project.

 Mercedes Mine, Mexico

In response to the COVID-19 pandemic, the Mexican federal government decreed on March 30, 2020, that most mining was not an essential business activity.  As a result, a care and maintenance plan was immediately implemented at Mercedes. The decree was lifted at the end of May and, upon certification of compliance to protocols intended to minimize the risk of COVID-19 presence and transmission on-site, limited ore and waste development as well as delineation and exploration drilling were restarted.  Ore was stockpiled in June and processing resumed in early July.

During the two-month shutdown extensive technical work was carried out to assess alternative mine plans with renewed attention to increasing production margins. A plan was developed to re-start operations with a strategy limiting mining and development activities to the Lupita (including Lupita Extension) and Diluvio zones. This realignment recognizes the need to optimize Mercedes production to its current reserve base rather than its processing capacity. Key elements of the optimized plan include:

This restructuring has resulted in a reduction of 40% of the employees required to operate the mine and 75% of mining-related contractors. The plan focuses on enhancing underground operating efficiencies and supervision in order to minimize dilution and improve ore quality. The success of future exploration and delineation drill programs will allow the production rate to increase toward nameplate capacity over time.

“A new vision for success was required to ensure the mine’s long-term viability. Our team has developed a focused and achievable plan that will lead to future growth of production at Mercedes”, stated Peter van Alphen, COO of Premier.  “We do not take lightly our decision to reduce the number of employees at the mine and must acknowledge the hard work, dedication, and support of our Mercedes employees and nearby communities impacted.”

A phased re-start of the mine will ensure the safe and successful implementation of the plan and meet sanitation requirements necessitated by our COVID-19 protocols. The initial focus prioritizes: