PRESS RELEASE, OCTOBER 25, 2018 Mineros to Acquire the Gualcamayo Mine and Enter Into La Pepa Earn-in Agreement with Yamana Gold October 25, 2018 – Medellin, Colombia: Mineros S.A. (BVC:MINEROS) (“Mineros” or the “Company”) is pleased to announce that Mineros has entered into a binding agreement with Yamana Gold Inc. (“Yamana”) to acquire the Gualcamayo gold mine in Argentina (“Gualcamayo Acquisition”) and has entered into an earn-in agreement for the La Pepa gold exploration project in Chile (“La Pepa Earn-in Agreement”, collectively with the Gualcamayo Acquisition, the “Transaction”). Transaction Highlights ─ Portfolio Diversification: Adds significant gold production and growth potential from established, mining-friendly jurisdictions and expands Mineros’ portfolio with a fourth producing asset. ─ Immediate Production and Operating Cash Flow: The Gualcamayo Acquisition provides Mineros with an established producing mine with a long operating history. Gualcamayo is on track to achieve Yamana’s 2018 gold production guidance of 100,000 ounces, and will contribute meaningfully to Mineros’ consolidated production going forward. ─ Enhanced Growth Profile: o Significant Resource Growth: Based on mineral reserves as at December 31, 2017 and before current-year depletion, the Gualcamayo Acquisition adds 491,000 ounces of gold in reserves and 2.28 million ounces of gold in incremental measured and indicated mineral resources, representing a 56% and a 142% increase, respectively, to Mineros’ current reserve and resource base(1). With the La Pepa Earn-in Agreement, Mineros has the opportunity to add an additional 2.76 million ounces of gold to its measured and indicated mineral resources(1). o Near Mine Oxide Target Potential: Gualcamayo has significant near-mine oxide targets, which are expected to provide future production growth, add to the reserve base and extend mine life. o Deep Carbonates Project (“DCP”) Potential: DCP provides a potential large scale, bulk tonnage underground operation below the current Gualcamayo operations. o Large, Prospective Land Package: The Gualcamayo Acquisition provides a large, prospective land package of 20,000 hectares. The package hosts robust exploration potential as only 20% of the land package has been explored to date.
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Opportunity to Surface Additional Value: Based on initial tests at the Gualcamayo site through the due diligence process, Mineros has identified potential operational initiatives that would provide additional upside. Re-rate Potential: Mineros’ increased production profile provides potential for a valuation re-rating given the current value gap compared to its peers, based on production profile.
Transaction Consideration Details Under the terms of the Gualcamayo Acquisition, consideration payable to Yamana will include US$30 million in cash upon closing of the Transaction, along with contingent consideration upon achievement of certain milestones. The contingent consideration component of the purchase price includes: ─ A 2% Net Smelter Return royalty (“NSR”) on metal produced after the initial 396,000 ounces of gold are produced, up to a cumulative cap of US$50 million (excluding DCP); ─ Cash payment of US$30 million upon declaration of commercial production from DCP; and ─ A 1.5% NSR on metal produced from the DCP. Under the terms of the La Pepa Earn-in Agreement, Mineros will have staged options to earn up to a 100% interest in La Pepa upon achievement of certain milestones: ─ Initial commitment to spend US$5 million over 24 months towards the development of a preliminary economic assessment in exchange for a 20% interest in La Pepa; ─ Option to earn an incremental 31% interest (up to a cumulative 51% interest) after spending a further US$15 million over a subsequent 24 months towards the completion of a National Instrument No. 43-101 compliant technical report, and making a US$5 million payment to Yamana; and ─ After earning a 51% interest, Mineros will have an option to acquire the remaining 49% (cumulative 100% interest) at fair market value, which will be determined pursuant to an agreed upon formula and be calculated by independent valuators. “This Transaction marks a significant step toward achieving the Company’s growth strategy of increasing gold production to 500,000 ounces per year. Mineros currently produces approximately 200,000 ounces of gold per year so the addition of the operating Gualcamayo mine with its upside potential brings Mineros a step closer to becoming a leading Americas-focused mid-tier gold producer,” said Andres Restrepo, President of Mineros. “Not only does this Transaction put Mineros closer to doubling its annual gold production, but through the La Pepa Earn-in Agreement, it provides the Company with a pipeline to sustain its growth and development long into the future. Yamana has been one of the most successful gold producers/ developers in Latin America and this Transaction, which will help Yamana focus on its core strategy, will allow Mineros to benefit from that experience immediately and into the future,” said Eduardo Flores Zelaya, Mineros’ Chief Business Development and Strategy Officer.
Gualcamayo Mine Overview Gualcamayo is an open pit and underground gold mine located in the San Juan province of Argentina. The mine is located 270 km north of the provincial capital of San Juan and has been in commercial production since 2009. In 2017, Gualcamayo produced 154,052 ounces of gold. There is significant upside potential at Gualcamayo, including near mine oxide targets which could potentially increase future production and extend mine life. Additionally, the DCP provides a potential large scale, bulk tonnage underground operation below the current operations. As at December 31, 2017, Gualcamayo had proven and probable gold mineral reserves of 0.49 million ounces, measured and indicated gold mineral resources of 2.28 million ounces of gold (exclusive of reserves), and inferred gold mineral resources of 1.43 million ounces. La Pepa Project Overview La Pepa is an early stage project located in the Maricunga gold belt of in Northern Chile, 120km east of the city of Copiapo. The project has been classified as a non-strategic pipeline asset by Yamana and has been on hold for the past several years. Historical work focused on the Maricunga style, large scale, bulk tonnage porphyry mineralization. Adjacent to the porphyry deposit, there is known high grade high sulphidation mineralization. As at December 31, 2017, La Pepa had measured and indicated gold mineral resources of 2.76 million ounces and inferred gold mineral resources of 0.62 million ounces. Timing and Approvals Completion of the Transaction is expected in Q4 2018. The Transaction is not subject to a financing condition as Mineros will fund the upfront consideration with available funds. Both Mineros and Yamana have received approvals from their respective Board of Directors to proceed with the Transaction. The Transaction is subject to customary regulatory and third party approvals and other customary closing conditions. Advisors and Counsel Rothschild and Scotiabank are acting as co-financial advisors to Mineros. Hatch Advisory is acting as technical advisor to Mineros. Mineros’ legal counsels are White & Case LLP and CHW Abogados SpA. Endnotes: (1) Based on mineral reserves and mineral resources as at December 31, 2017; measured and indicated mineral resources reported are exclusive of mineral reserves.
For further information contact: Paul Harris Director Investor Relations +57 321 720 1537 paul.harris@mineros.com.co About Mineros Headquartered in Medellin, Mineros is a Colombia-based Latin American gold producer with operations in Colombia and Nicaragua. In Colombia, it has produced gold from the El Bagre alluvial operations in Antioquia for over forty years, and more recently, from the La Ye underground mine. In Nicaragua, it produces gold from the Bonanza mine in the North Caribbean Coast Autonomous Region that it acquired in 2013, and through innovative agreements with artisanal miners. Mineros' strategic vision is to expand its operational and project footprint in the Americas. Additional information on Mineros is available at www.mineros.com.co. Cautionary Statement on Forward-looking Information Cautionary statement: This news release may contain certain information that constitutes forward-looking statements. Forward-looking statements are frequently characterized by words such as “plan,” “expect,” “project,” “intend,” “believe,” “anticipate” and other similar words, or statements that certain events or conditions “may” or “will” occur. Forward-looking statements are based on the opinions and estimates of management at the date the statements are made, and are subject to a variety of risks and uncertainties and other factors that could cause actual events or results to differ materially from those projected in the forward-looking statements. These factors include the inherent risks involved in the hiring and retention of directors and officers, exploration and development of mineral properties, mine site planning and development, the uncertainties involved in interpreting drilling results and other geological data, fluctuating metal prices, permitting and licensing and other factors. The Company disclaims any obligation to update or revise any forward-looking statements if circumstances or management’s estimates or opinions should change. The reader is cautioned not to place undue reliance on forward-looking statements.