CEO.CA Chairman's Briefing

(all dollar amounts (other than per share amounts) are expressed in thousands of U.S. dollars unless otherwise stated)

MEDELLIN, Colombia, Aug. 3, 2023 /CNW/ - Mineros S.A. (TSX: MSA) (MINEROS:CB) ("Mineros" or the "Company") today reported its financial and operational results for the three and six months ended June 30, 2023. For further information, please see the Company's unaudited condensed interim financial statements and management's discussion and analysis ("MD&A") filed under Mineros' profile on www.sedar.com.

Andrés Restrepo, President and CEO of Mineros, commented, "We have had positive results in the second quarter of 2023, mainly due to managing our costs and administrative expenses, that offset a 6% decrease in gold production. During the second quarter of 2023 we continued our exploration campaign at the Porvenir Project in Nicaragua, where the metallurgical drilling campaign is expected to be completed by the third quarter of 2023 and we hope to share additional information in this regard soon."

FINANCIAL AND OPERATING HIGHLIGHTS FOR THE SECOND QUARTER 2023

Gold Production

• 69,254 ounces of gold produced.
• A 6% decrease in gold production compared to the same period in 2022 (Q2/22: 74,062 ounces of gold produced).

Cost of Sales, Cash Cost¹ and All-in Sustaining Cost ("AISC")¹

• Cost of sales of $99,801, similar to the same period in 2022 (Q2/22: $99,487).
• Cash Cost per ounce of gold sold² of $1,207 (Q2/22: $1,131), a 7% increase relative to the same period in 2022.
• AISC per ounce of gold sold1 of $1,388 (Q2/22: $1,388), similar to the AISC per ounce of gold sold during the same period in 2022.

Dividend Payment

• $5,213 in dividends paid.
• A decrease of 34% in dividends paid compared to the same period in 2022 (Q2/22: $7,875), explained by an extraordinary dividend of $0.01 per share paid in April of 2022.

Revenue

• Revenue of $138,826.
• Revenue increased by 1% compared to the same period in 2022 (Q2/22: $137,286).

Profitability

• Gross profit up by 3% to $39,025 compared to the same period in 2022 (Q2/22: $37,799).
• Net profit for the period up 10% to $12,552 ($0.04/share) compared to the same period in 2022 (Q2/22: $11,399 or $0.04/share).

Net Debt to Adjusted EBITDA ratio³

• Net Debt to Adjusted EBITDA ratio² of (0.02)x as at June 30, 2023.
• The Company continues to have a low Net Debt to Adjusted EBITDA ratio, with a 119% decrease compared to 0.11x as at June 30, 2022.

FINANCIAL AND OPERATING HIGHLIGHTS FOR THE SIX MONTHS ENDED JUNE 30, 2023

Gold Production

• 129,502 ounces of gold produced.
• An 8% decrease in gold production compared to the same period in 2022 (six months ended June 30, 2022: 140,071 ounces of gold produced).

Cost of Sales, Cash Cost and All-in Sustaining Cost ("AISC")¹

• Cost of sales of $185,621, a 3% decrease when compared to the same period in 2022 (six months ended June 30, 2022: $191,492)
• Cash Cost per ounce of gold sold of $1,183 (six months ended June 30, 2022: $1,152), a 3% increase relative to the same period in 2022, explained by the 8% decrease in gold production.
• AISC per ounce of gold sold¹ of $1,398 (six months ended June 30, 2022: $1,383), similar to the AISC per ounce of gold sold during the same period in 2022.

Dividend Payment

• $10,050 in dividends paid.
• A 19% decrease in dividends paid compared to the same period in 2022 (six months ended June 30, 2022: 12,473), explained by an extraordinary dividend of $0.01 per share paid in April of 2022.

Revenue

• Revenue of $256,916. Revenue decreased by 2% when compared to the same period in 2022 (six months ended June 30, 2022: $261,936).

Profitability

• Gross profit increased by 1% to $71,295 compared to the same period in 2022 (six months ended June 30, 2022: 70,444).
•  Net profit for the period up 28% to $27,956 ($0.09/share) compared to the same period in 2022 (Q2/22: $21,871 or $0.07/share).

Financial and Operating Highlights.

Operational Highlights by Material Property.

(All numbers in ounces unless otherwise noted)

For the three months ended June 30, 2023, gold production was down 6%, with 69,254 ounces of gold produced, compared to 74,062 ounces in the second quarter of 2022, summarized in the table above. The decrease in production relative to the comparative quarter in 2022 is a result of lower production achieved at the Hemco Property due to unscheduled maintenance stoppages at the milling area and lower production at the Gualcamayo Mine as it nears the end of its life of mine.

For the six months ended June 30, 2023, gold production was down 8%, with 129,502 ounces of gold were produced during the six months ended June 30, 2023, compared to 140,071 ounces in the same period of 2022. The lower production relative to the comparative period in 2022 is as a result of lower production from the underground mine at the Hemco Property due to unscheduled maintenance stoppages at the milling area during the second quarter and a decrease in production at the Gualcamayo Mine.

CORPORATE HIGHLIGHTS FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2023

New collective agreement in Colombia 

On June 8, 2023, Mineros signed a collective agreement for operations at the Nechí Alluvial Property in Colombia, covering a two year period, starting May 1, 2023.

Termination of strategic alliance with Royal Road Minerals Limited

Effective May 29, 2023, Mineros terminated and, where applicable, settled all outstanding obligations under all of its agreements with Royal Road Minerals Limited ("Royal Road").

Mineros and Royal Road have terminated their strategic alliance agreements for exploration of their respective properties in Nicaragua and Colombia, and related joint ventures in respect of the Caribe Exploration Target, located on the Hemco Property in Nicaragua, and the Guintar-Niverengo-Margaritas ("GNM") Exploration Target, located in the Anzá Province, Colombia.

Royal Road has relinquished its 50% joint venture interest in the Caribe Exploration Target to Mineros' subsidiary Hemco Nicaragua S.A. ("Hemco"), which now owns 100% of the Caribe Exploration Target. The 1.25% net smelter returns royalty applicable to the two concessions that host the Luna Roja Deposit, which was granted to Royal Road in May 2021 in connection with Mineros' acquisition of Royal Road's 50% joint venture interest in those concessions, was terminated, and provisions under the related asset purchase agreement in respect of exploration expenditures to be incurred at the Hemco Property have been released. Mineros has also relinquished its 50% joint venture interest in the GNM Exploration Target to Royal Road. Mineros and Royal Road have also annulled a cooperation agreement relating to Mineros' Gualcamayo Project in Argentina.

Subsequent events

Temporary suspension of the main processing plant at the Hemco Property in Nicaragua and Review of 2023 Guidance

On July 31, 2023, Mineros determined to temporarily suspend operations at its main processing plant, which processes 89% of the material and disposal of tailings at its Hemco Property in Nicaragua. The suspension is precautionary in nature and is designed to allow for the swift completion of the expansion of its detoxification capacity at the tailings facility prior to hurricane season in Nicaragua. This work had been planned for earlier in 2023 but had been delayed by post-pandemic equipment supply constraints. Given the shutdown, the Company has taken this opportunity to perform certain plant maintenance work which was originally scheduled for later this year. During the suspension period, which is estimated to last for approximately 20 days, industrial and artisanal mining activities will continue and the Vesmisa and La Curva plants will also continue to operate. This precautionary suspension is expected to reduce the Hemco Property's output by approximately 5,000 to 10,000 ounces of gold for the month of August. Mineros is currently reviewing its mining plan for the Hemco Property for the second half of 2023 with a view to minimizing the impact, if any, on our production guidance for 2023.

In light of the recent temporary suspension of operations at the main facility at the Hemco Property, the Company's 2023 guidance is currently under review. Mineros will keep the market informed of further developments.

GROWTH AND EXPLORATION PROJECT UPDATES

Porvenir Project, Nicaragua: A total of 4,957 metres of diamond drilling in 36 holes was completed in the second quarter of 2023, achieving 85% of the program, with the objective of providing material for metallurgical test work. The metallurgical drilling campaign is expected to be completed by the third quarter of 2023.

Luna Roja Deposit, Nicaragua: In the second quarter of 2023, the Company has been working to update the geological model for the Luna Roja Deposit and is continuing to interpret the results of its 2022 drilling campaign.

CONFERENCE CALL AND WEBCAST DETAILS

The Company will host a conference call on Friday, August 4, 2023, at 9:00 am EST (8:00 am COT) to discuss the results. The conference call will be in Spanish with simultaneous translation in English.

A live webcast of the conference all will be available at:
https://app.webinar.net/almDxXWGv8W

Live webcast requires previous registration, and interested parties are advised to access the webcast approximately ten minutes prior to the start of the call. The webcast will be archived on the Company's website at www.mineros.com.co for approximately 30 days following the call.

Participants may also dial in (charges may apply):

The list of all local and international dial in numbers can be found at the end of this document or at https://fccdl.in/i/webcastatmedios.

ABOUT MINEROS S.A.

Mineros is a gold mining company headquartered in Medellin, Colombia. The Company has a diversified asset base, with mines in Colombia, Nicaragua and Argentina and a pipeline of development and exploration projects throughout the region.

The board of directors and management of Mineros have extensive experience in mining, corporate development, finance and sustainability. Mineros has a long track record of maximizing shareholder value and delivering solid annual dividends. For almost 50 years Mineros has operated with a focus on safety and sustainability at all its operations.

Mineros' common shares are listed on the Toronto Stock Exchange under the symbol "MSA", and on the Colombia Stock Exchange under the symbol "MINEROS".

The Company has been granted an exemption from the individual voting and majority voting requirements applicable to listed issuers under Toronto Stock Exchange policies, on grounds that compliance with such requirements would constitute a breach of Colombian laws and regulations which require the directors to be elected on the basis of a slate of nominees proposed for election pursuant to an electoral quotient system. For further information, please see the Company's most recent annual information form filed on SEDAR at www.sedar.com.

QUALIFIED PERSON

The scientific and technical information contained in this news release has been reviewed and approved by Luis Fernando Ferreira de Oliveira, MAusIMM CP (Geo), Mineral Resources and Reserves Manager for Mineros S.A., who is a qualified person within the meaning of NI 43-101.

FORWARD-LOOKING STATEMENTS

This news release contains "forward looking information" within the meaning of applicable Canadian securities laws. Forward looking information includes statements that use forward looking terminology such as "may", "could", "would", "will", "should", "intend", "target", "plan", "expect", "budget", "estimate", "forecast", "schedule", "anticipate", "believe", "continue", "potential", "view" or the negative or grammatical variation thereof or other variations thereof or comparable terminology. Such forward looking information includes, without limitation, statements with respect to the Company's outlook for 2023; the suspension of operations at the main plant at the Hemco Property, and potential impacts on the Company's 2023 guidance; estimates for future mineral production and sales; the Company's expectations, strategies and plans for the Material Properties; plans in respect of the wind-down of its open pit and underground oxide gold mining operations at the Gualcamayo Property; the Company's planned exploration, development and production activities; completion of the drilling program; statements regarding the projected exploration and development of the Company's projects; adding or upgrading Mineral Resources and developing new mineral deposits; estimates of future capital and operating costs; the costs and timing of future exploration and development; the timing, receipt and maintenance of necessary approvals, licenses and permits form applicable governments, regulators or third parties; estimates for future prices of gold and other minerals; future financial or operating performance and condition of the Company and its business, operations and properties, including, without limitation, expectations regarding liquidity, capital structure, competitive position and payment of dividends; expectations regarding future currency exchange rates; and any other statement that may predict, forecast, indicate or imply future plans, intentions, levels of activity, results, performance or achievements.

Forward looking information is based upon estimates and assumptions of management in light of management's experience and perception of trends, current conditions and expected developments, as well as other factors that management believes to be relevant and reasonable in the circumstances, as of the date of this news release including, without limitation, assumptions about: favourable equity and debt capital markets; the ability to raise any necessary additional capital on reasonable terms to advance the production, development and exploration of the Company's properties and assets; future prices of gold and other metal prices; the timing and results of exploration and drilling programs, and technical and economic studies; the accuracy of any Mineral Reserve and Mineral Resource estimates; the geology of the Material Properties being as described in the applicable technical reports; production costs; the accuracy of budgeted exploration and development costs and expenditures; the timing and complexity of the work required to complete the expansion of the detoxification capacity at the Hemco Property's main processing plant; availability of skilled labour and equipment required to complete the capacity expansion; the orderly wind-down of its open pit and underground oxide gold mining operations at the Gualcamayo Property; the price of other commodities such as fuel; future currency exchange rates and interest rates; operating conditions being favourable such that the Company is able to operate in a safe, efficient and effective manner; political and regulatory stability; the receipt of governmental, regulatory and third party approvals, licenses and permits on favourable terms; obtaining required renewals for existing approvals, licenses and permits on favourable terms; requirements under applicable laws; sustained labour stability; stability in financial and capital goods markets; inflation rates; availability of labour and equipment; positive relations with local groups, including artisanal mining cooperatives in Nicaragua, and the Company's ability to meet its obligations under its agreements with such groups; and satisfying the terms and conditions of the Company's current loan arrangements. While the Company considers these assumptions to be reasonable, the assumptions are inherently subject to significant business, social, economic, political, regulatory, competitive and other risks and uncertainties, contingencies and other factors that could cause actual actions, events, conditions, results, performance or achievements to be materially different from those projected in the forward looking information. Many assumptions are based on factors and events that are not within the control of the Company and there is no assurance they will prove to be correct.

For further information of these and other risk factors, please see the ''Risk Factors" section of the Company's annual information form dated March 31, 2022 (as it may be updated or replaced from time to time), available on SEDAR at www.sedar.com.

The Company cautions that the foregoing lists of important assumptions and factors are not exhaustive. Other events or circumstances could cause actual results to differ materially from those estimated or projected and expressed in, or implied by, the forward looking information contained herein. There can be no assurance that forward looking information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such information. Accordingly, readers should not place undue reliance on forward looking information.

Forward looking information contained herein is made as of the date of this news release and the Company disclaims any obligation to update or revise any forward looking information, whether as a result of new information, future events or results or otherwise, except as and to the extent required by applicable securities laws.

NON-IFRS AND OTHER FINANCIAL MEASURES

The Company has included certain Non-IFRS financial measures and Non-IFRS ratios in this news release. Management believes that Non-IFRS financial measures and Non-IFRS ratios, when supplementing measures determined in accordance with IFRS, provide investors with an improved ability to evaluate the underlying performance of the Company. Non-IFRS financial measures and Non-IFRS ratios do not have any standardized meaning prescribed under IFRS, and therefore they may not be comparable to similar measures employed by other companies. This data is intended to provide additional information and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS. For a discussion of the use of Non-IFRS financial measures and reconciliations thereof to the most directly comparable IFRS measures, see below.

EBIT, EBITDA and Adjusted EBITDA

The Company believes that, in addition to conventional measures prepared in accordance with IFRS, certain investors use the earnings before interest and tax ("EBIT"), earnings before interest, tax, depreciation and amortization ("EBITDA"), and adjusted earnings before interest, tax, depreciation and amortization ("Adjusted EBITDA"), which excludes certain non-operating income and expenses, such as financial income or expenses, hedging operations, exploration expenses, impairment of assets, foreign currency exchange differences, and other expenses (principally, donations, corporate projects and taxes incurred). The Company believes that Adjusted EBITDA provides useful information to investors and others in understanding and evaluating our operating results because it is consistent with the indicators management uses internally to measure the Company's performance, and is an indicator of the performance of the Company's mining operations.

The following table provides a reconciliation of the Adjusted EBITDA for the three and six months ended June 30, 2023 and 2022: 

Cash Cost

The objective of Cash Cost is to provide stakeholders with a key indicator that reflects as close as possible the direct cost of producing and selling an ounce of gold.

The Company reports Cash Cost per ounce of gold sold which is calculated by deducting revenue from silver sales and depreciation and amortization from Cost of sales, and dividing the difference by the number of gold ounces sold. Production Cash Cost includes mining, milling, mine site security, royalties, and mine site administration costs, and excludes non-cash operating expenses. Cash Cost per ounce of gold sold is a Non-IFRS financial measure used to monitor the performance of our gold mining operations and their ability to generate profit, and is consistent with the guidance methodology set out by the World Gold Council.

The following table provides a reconciliation of Cash Cost per ounce of gold sold on a by-product basis to cost of sales for the three and six months ended June 30, 2023 and 2022:

All-in Sustaining Costs

The objective of AISC is to provide stakeholders with a key indicator that reflects as close as possible the full cost of producing and selling an ounce of gold. AISC per ounce of gold sold is a Non-IFRS ratio that is intended to provide investors with transparency regarding the total costs of producing one ounce of gold in the relevant period.

The Company reports AISC per ounce of gold sold on a by-product basis. The methodology for calculating AISC per ounce of gold sold is set out below and is consistent with the guidance methodology set out by the World Gold Council. The World Gold Council definition of AISC seeks to extend the definition of total Cash Cost by deducting administrative expenses, cost of sales of non-mining operations, sustaining exploration, sustaining leases and leaseback, and sustaining capital expenditures. Non-sustaining costs are primarily those related to new operations and major projects at existing operations that are expected to materially benefit the current operation. The determination of classification of sustaining versus non-sustaining requires judgment by management. AISC excludes current and deferred income tax payments, finance expenses and other expenses. Consequently, these measures are not representative of all of the Company's cash expenditures. In addition, the calculation of AISC does not include depreciation and amortization cost or expense as it does not reflect the impact of expenditures incurred in prior periods. Therefore, it is not indicative of the Company's overall profitability. Other companies may quantify these measures differently because of different underlying principles and policies applied. Differences may also occur due to different definitions of sustaining versus non-sustaining.

The following table provides a reconciliation of AISC per ounce of gold sold to cost of sales for the three and six months ended June 30, 2023 and 2022:

Net Free Cash Flow 

The Company uses the financial measure "net free cash flow", which is a Non-IFRS financial measure, to supplement information regarding cash flows generated by operating activities. The Company believes that in addition to IFRS financial measures, certain investors and analysts use this information to evaluate the Company's performance with respect to its operating cash flow capacity to meet recurring outflows of cash.

Net free cash flow is calculated as cash flows generated by operating activities less non-discretionary sustaining capital expenditures and interest and dividends paid related to the relevant period.

The following table sets out the calculation of the Company's net free cash flow to net cash flows generated by operating activities for the three months ended June 30, 2023 and 2022:

Return on Capital Employed 

The Company uses ROCE as a measure of long-term operating performance to measure how effectively management utilizes the capital it has provided. This Non-IFRS ratio is intended to provide additional information and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS. The calculation of ROCE, expressed as a percentage, is Adjusted EBIT (calculated in the manner set out in the table below) divided by the average of the opening and closing capital employed for the 12 months preceding the period end. Capital employed for a period is calculated as total assets at the beginning of that period less total current liabilities. The following table sets out the calculation of ROCE as at June 30, 2023 and 2022.

Net Debt to Adjusted EBITDA Ratio 

Net Debt to Adjusted EBITDA ratio is a non‐IFRS ratio that provides the liquidity position of the Company. The calculation of net debt shown below is calculated as nominal undiscounted debt including leases, less cash and cash equivalents. The following sets out the calculation of Net Debt to Adjusted EBITDA ratio as at June 30, 2023 and 2022.

Average Realized Price

The Company uses "average realized price per ounce of gold" and "average realized price per ounce of silver", which are Non-IFRS financial measures. Average realized metal price represents the revenue from the sale of the underlying metal as per the statement of operations, adjusted to reflect the effect of trading at holding level (parent Company) on the sales of gold purchased from subsidiaries. Average realized prices are calculated as the revenue related to gold and silver sales divided by the number of ounces of metal sold. The following table sets out the reconciliation of average realized metal prices to sales of gold and sales of silver for the three months ended June 30, 2023 and 2022: 

Participant conference call dial in
Pin for English:    6918884#
Pin for Spanish:  10178681#

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SOURCE Mineros S.A.

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