Exploration success drives increase in Mineral Reserves and Resources

drop considerably in 2026 once the expansion is complete.

Total exploration spending through 2022 was $23.5 million and was successful in driving another increase in Mineral Reserves and Resources which now total 5.3 million ounces, a 4% increase from the end of 2021. This included a 9% increase in Mineral Reserves to 1.5 million ounces (4.2 mt grading 10.78 g/t Au) with grades increasing 6%, a 2% increase in Measured and Indicated Mineral Resources to 0.3 million ounces (1.3 mt grading 7.09 g/t Au), and 2% increase in Inferred Mineral Resources to 3.5 million ounces (8.1 mt grading 13.61 g/t Au).

During the fourth quarter, six diamond drill rigs were focused on the surface directional exploration program, as well as one drill rig focused on underground exploration drilling.

Surface Exploration Drilling

A total of 9,547 metres (“m”) of surface directional drilling was completed in 12 holes during the fourth quarter. Surface directional drilling targeted areas peripheral to Inferred Mineral Resource blocks in the Island West, Main, and East areas between 1,400 m and 1,800 m below surface with drill hole spacing ranging from 75 m to 200 m. In 2022, a total of 30,163 m surface directional drilling was completed in 31 drill holes.

Underground Exploration Drilling

During the fourth quarter of 2022, a total of 2,322 m of standard underground exploration drilling was completed in 12 holes. The objective of the underground drilling is to identify new Mineral Resources close to existing Mineral Resource or Reserve blocks.

A total of 61 m of underground exploration drift development was also completed during the fourth quarter. A total of 19,976 m underground exploration drilling was completed in 85 drill holes in 2022. For the full year, $23.5 million of exploration expenditures were incurred, of which $18.8 million were capitalized.

Island Gold is expected to produce at similar levels in 2023 as in 2022 with similar grades and processing rates. As outlined in the Phase 3+ Expansion study released in June 2022, grades mined are expected to increase in 2024, driving production higher. A further increase in grades and increase in mining rates toward the latter part of 2025, is expected to drive another increase in production in 2025.

Capital spending at Island Gold (excluding exploration) is expected to be between $210 and $235 million in 2023 as spending on the Phase 3+ Expansion ramps up, and is expected to remain at similar levels in 2024 and 2025 and then drop considerably in 2026 once the expansion is complete.

As part of a balanced approach to growth and capital allocation, the current focus of growth capital is the Phase 3+ Expansion at Island Gold. With no significant capital expected to be spent on developing Lynn Lake until the Phase 3+ Expansion is well underway, the Company remains well positioned to fund this growth internally while generating strong free cash flow over the next several years.