Bear Creek Mining Reports 2023 Year End Financial and Operating Results

Vancouver, British Columbia--(Newsfile Corp. - April 30, 2024) - Bear Creek Mining Corporation (TSXV: BCM) (OTCQX: BCEKF) (BVL: BCM) ("Bear Creek" or the "Company") reports its annual consolidated financial results for the year ended December 31, 2023.

This news release should be read in conjunction with the Company's audited consolidated financial statements and management discussion and analysis ("MD&A") for the three months and year ended December 31, 2023, which are available on SEDAR+ (www.sedarplus.ca) and the Company's website (www.bearcreekmining.com). Monetary amounts in this news release are in United States dollars unless otherwise stated.

Highlights

2023 marked Bear Creek's first full year of ownership in and operation of the Mercedes gold mine ("Mercedes"), located in Sonora, Mexico. Over the course of the year the Company identified and overcame significant challenges inhibiting the Mercedes' performance, and made substantial changes to major financial and production obligations and to its management and staff that the Company believes will result in an improved outlook for Mercedes' performance and the Company's future. Key milestones include:

• Significantly enhancing the executive management team and senior Mercedes mine staff;
• Producing 43,860 oz Au and 167,019 oz Ag over the course of the year;
• Refreshing the Board of Directors (the "Board");
• Converting a $26.6 million current liability into a long term convertible debenture;
• Fulfilling the obligation on the approximately 300 ounce per month Nomad Gold Stream;
• Restructuring the remaining Mercedes metal streams, reducing gold deliverables by 325 ounces per month and silver deliverables to nil until April 2028 and increasing the cash payments for both;
• Amending the terms of the $22.5 million Sandstorm convertible debenture entered into on December 16, 2021, and extending its maturity date;
• Completing a private placement and a bought deal financing totaling CDN$17.7 million;
• Making substantial technical changes at Mercedes to improve operating performance;
• Enacting measures to overcome historical geotechnical challenges and development deficits at Mercedes; and
• Significantly improving Mercedes production in the fourth quarter of 2023 as a result of these foundational changes, with recent production records achieved in December 2023.

Selected FY 2023 Financial and Production Results

Bear Creek's Mercedes gold mine, located in Sonora, Mexico, produced 43,860 ounces of gold and 167,019 ounces of silver during the year ended December 31, 2023. During this period 44,403 ounces of gold were sold, of which 9,900 ounces of gold were delivered under streaming arrangements. Cash cost and all-in-sustaining cost ("AISC") per ounce of gold sold were $1,376 and $1,769, respectively.

(1) Non-GAAP Measure. Please see "Non-GAAP Measures" below for further information.
(2) Inclusive of final settlement adjustments on sales for non-streamed ounces
(3) Per share amounts are based on weighted average shares during the period

Eric Caba, President & CEO, states, "As 2023 came to a close Mercedes operating performance was getting better - a trend we expect to continue into 2024. Systemic problems take time to come to the surface and be realized however, and then take significant time and resources to resolve. 2023, our first full year as operators of Mercedes, was a difficult year for Bear Creek as our financial results clearly indicate. Operating challenges, in combination with the onerous financial and stream obligations on Mercedes, led to production results and financial outcomes far below our original vision for Mercedes. That said, we have identified and begun isolating and addressing these operating hurdles, which has already led to substantial improvements in production, development, and gold grade in Q4 2023 compared to earlier 2023 quarterly periods. We also successfully restructured the streams and debt to take a significant burden off Mercedes production. These solutions, coupled with management and technical changes, set Mercedes up to fulfill the role for which it was intended; generating free cash flow for the Company. There is still a lot of work in front of us this year to cement the improvements we made in 2023 and add additional life to Mercedes. We continue to advance initiatives to reduce costs and to develop additional opportunities both at Mercedes and Corani, but I am confident the team in place is up to the challenge. We are maintaining our excellent social licence in Peru and are investigating a number of opportunities to add value at Corani while we look to reinitiate discussions on project financing during the second half of 2024."

Debt and Stream Restructurings

During the year ended December 31, 2023, it became evident that the structure of debt and stream arrangements negotiated at the time of the Company's acquisition of Mercedes was a substantial burden compromising the financial viability of the Mercedes mine and the Company. Restructuring of these debt and stream obligations was successfully completed during 2023 and early 2024.

The debt and stream restructuring transactions were an important part of Bear Creek's strategy to improve the impact of Mercedes on the Company's financial condition and, by extension, its value to shareholders. These restructurings reduce the Company's near term debt liabilities and its monthly debt repayment contributions, and increase the Company's participation in the sale of gold and silver produced at Mercedes. Together, these benefits improve the ability of Mercedes to generate positive cash flow that can be deployed on re-investing in growth initiatives at Mercedes and on advancing the Corani project in Peru.

Equinox promissory note
On June 30, 2023 the Company executed an agreement with a subsidiary of Equinox Gold Corp. ("Equinox Gold" to convert a deferred payment (the "Deferred Payment") of US$25 million owed to Equinox Gold in respect of the Company's acquisition of Mercedes, into a five year convertible interest-bearing promissory note (the "Note"), The principal amount of approximately US$26 million (the "Principal") reflects the Deferred Payment less US$1.4 million in prior payments and approximately US$2.5 million in interest accrued since October 26, 2022.

After receiving approval by shareholders of the Company and the TSX Venture Exchange ("TSXV"), the Note was issued to Equinox Gold on October 19, 2023, in the amount of approximately $26.6 million. The Note matures on the date that is five years following the date of its issuance (the "Maturity Date") with all of the outstanding Principal and accrued and unpaid interest due on the Maturity Date. Interest will accrue monthly on the unpaid Principal at a rate equal to 7% per annum starting on the last day of the month following the month of issuance of the Note and on the last day of each month thereafter, at an approximate amount of US$152,000 per month. At any time at or prior to the Maturity Date, the unpaid Principal may be converted into Common Shares of the Company at a price per share equal to C$0.73. Additional information is available in the Company's news releases dated July 5, and October 19, 2023.

Sandstorm debt and stream
On September 28, 2023, the Company entered into a restructuring framework agreement (the "Restructuring Agreement") with Sandstorm Gold Ltd. "Sandstorm") to restructure its existing stream and debt obligations (the "Stream Amendments" and "Debt Amendments", respectively) with Sandstorm and its subsidiaries (the "Restructuring Transaction"). The Restructuring Transaction closed on January 22, 2024.

The Stream Amendments include a reduction in the number of gold ounces delivered per month from 600 to 275; the suspension of silver deliveries until April 2028 (previously 25,000 ounces per month); and an increase in the cash payments to the Company for streamed ounces to 25% of the spot price on all gold and silver deliveries (from 7.5% on fixed gold deliveries and 20% on all silver deliveries). As consideration for the Stream Amendments, the Company issued the following consideration to Sandstorm: (i) 28,767,399 Common Shares at a deemed price of C$0.27 per Common Share for an aggregate value of approximately C$7,767,198 or US$5,751,350 (bringing Sandstorm's ownership interest in the Company to approximately 19.99% of the outstanding Common Shares); (ii) granted Sandstorm a 1.0% net smelter returns royalty (the "Royalty Agreement") on and over the Corani property; and (iii) increased the principal amount of the Sandstorm Promissory Note (as defined below) by US$4,248,650.

The Debt Amendments include an extension to the maturity date, interest rate and conversion price of a US$22,500,000 convertible debenture the Company entered into with Sandstorm on December 16, 2021 (the "Amended Convertible Debenture") and include the provision that Sandstorm's ownership interest in the Company will not exceed 19.99%. Pursuant to the Restructuring Transaction, the Company also refinanced a US$14,373,000 promissory note issued by the Company to an affiliate of Sandstorm, by entering into a new amended and restated secured promissory note (the "Sandstorm Promissory Note") with a principal amount equal to up to US$21,642,612. The Sandstorm Promissory Note shares substantially the same maturity date and conversion terms as the Amended Convertible Debenture.

Additional information regarding the Sandstorm debt and stream restructurings are available in the Company's news releases dated September 28, 2023 and January 22, 2024.

Mercedes Mine, Mexico

The Mercedes mine is a fully mechanized, ramp-access operation that produces gold and silver. Eleven individual deposits have been mined or are in production. Seven additional deposits have been identified and are in the early exploration or drill definition stage. Additional mineralized zones proximal to existing workings have been identified and are at the exploration or drill definition stage.

Exploration
During the year ended December 31, 2023, a total of 14,943 meters, at a total cost of approximately $2.4 million, were drilled at Mercedes. The 2023 Mercedes drilling program concentrated on testing the on-strike and downdip extensions of mineralization at the Marianas, Rey de Oro, Diluvio and Lupita deposits, and on increasing the drill density in order to improve operations and production in current workings and contribute to improvements in the Mercedes geological models.

The table below indicates the distribution of this drilling.

Drilling at the Marianas and Rey de Oro deposits in 2023 included intercepts 1.5 to 25 times higher in gold grade than the average head grade mined from this deposit in 2023. Importantly, many of these intercepts are from holes located outside of the current reserve boundaries, confirming that ore grade mineralization is open in both deposits to the north and at depth.

The 2023 drill program also helped confirm the critical role of low angle, listric/detachment faulting on mineralization at Mercedes which, coupled with the near-vertical veins that dominate the district, allow for broader structural preparation and bulkier ore bodies. Recent drilling has also provided geological evidence, including hydrothermal textures and increasing grades as drilling progressed toward the north along the main Mercedes trend, that supports the Company's belief that the source of mineralization in the district may occur in the unexplored northern extensions of this important structure. Significant results of the 2023 Mercedes drilling program are available in the Company's news releases dated November 29, 2022, January 4, 2023, February 22, 2023 and August 30, 2023, available on the Company's website and SEDAR+.

Development
Development work at the Mercedes in late 2022 and early 2023 was substantially below expectations due to a combination of factors including unsatisfactory contractor performance, equipment availability and unplanned ground control remediation work. These delays resulted in the necessity to mine and process material with gold grades lower than expected and together these factors negatively impacted Mercedes' production results during the first three quarters of the financial year ended December 31, 2023. The factors underlying the early 2023 development delays were largely resolved during Q2 2023 and development meterage improved substantially through the remainder of the year reaching a high of 2,833 meters in Q4 2023.

Sustaining capital expenditures related to Mercedes underground development work in 2023 amounted to $12.7 million. Other sustaining capital expenditures related to mine infrastructure and facilities construction amounted to $1.6 million.

Production
During the financial year ended December 31, 2023 the Mercedes Mine produced a total of 43,860 ounces of gold and 167,019 ounces of silver at an average Cash Cost of US$1,376 per ounce of gold sold and AISC of US$1,769 per ounce of gold sold. See "Non-GAAP Financial Measures", below.

(1) See Bear Creek news releases dated April 14, July 18 and October 20, 2023 and January 16, 2024.
(2) Full year 2023 numbers may not add due to rounding
(3) Non-GAAP Measure. Please see "Non-GAAP Measures" below for further information.
(4) Q2 and Q3 2023 were originally presented per gold equivalent ounce sold. Certain of the prior periods' figures have been reclassified to conform to the current periods' presentation.

Efforts made throughout 2023 to improve Mercedes' performance, including increasing working faces (which led to increased tonnes mined and helped reduce reliance on lower grade ore to supplement production), decreasing costs, eliminating operating inefficiencies and improving staffing, positively impacted production in Q4 2023. The gold grade of ore processed decreased in the second and third quarters of 2023 as the Company increased its reliance on low grade stockpiles to maintain production, but increased substantially to 3.30 grams per tonne ("gpt") in Q4 2023 as additional ore was mined from the higher-grade San Martin deposit.

Mercedes' 2023 production was comprised of contributions from four main deposit areas: Marianas, San Martin, Diluvio and Lupita. The San Martin deposit became a key contributor to consolidated gold production during Q4 2023 as mining faces progressed into the higher grade heart of the deposit. During the last quarter, Bear Creek focused on further refining the mining and blasting methods utilized at San Martin to reduce dilution and optimize production while reducing processing costs. The structural complexity of the Marianas deposit creates challenging ground conditions and difficulties in controlling dilution. As a result, the gold grade per tonne of ore mined from Marianas was lower than planned during the second half of 2023.

During 2023 Bear Creek changed mining methodologies at the San Martin and Marianas deposits to better align with the geological and structural conditions of each deposit. During the last quarter, Bear Creek commenced another transition at Marianas from sublevel caving to a mixture of sublevel stoping and cut and fill, to more effectively reduce dilution and optimize grade. Monitoring of the impact of these changes is ongoing.

The Mercedes Mine had no fatalities and 1 lost time incident during the year ended December 31, 2023. No reportable environmental incidents occurred during the reporting period.

Bear Creek has not, to date, provided 2024 production guidance for the Mercedes Mine.

Planning for the construction of a third tailings storage facility ("TSF3") at Mercedes is underway. The land use change permit, expected during Q4 2023 was received in Q1 2024, with payment and submission completed with the Environmental Authority. Additional permits applications are in process. Contingency plans for underground deposition of tailings are progressing, with the utilization of old mining areas and of excess capacity on other in-use Mercedes tailings storage facilities being considered. Additional contingency plans are being developed should further delays be encountered in the TSF3 permitting process.

Corani Project

Activities at the Corani Property during the year ended December 31, 2023 focused primarily on community support initiatives and on undertaking a geometallurgical test program.

The impeachment and subsequent arrest of former President Castillo in late 2022 sparked civilian protests and road closures that caused significant disruptions to civil and economic activity and continued in southern Peru until Q3 2023. To ensure their safety, Bear Creek demobilized the vast majority of its employees and contractors from the Corani site in late 2022. Conditions in Puno improved following the cessation of protests and re-opening of roads in mid-2023 and Bear Creek was able to remobilize its staff and resume its Corani activities.

The Company commenced a geometallurgical test program during the year ended December 31, 2023. The geometallurgical program involved drilling 9 holes totaling approximately 1,231 meters, and logging, sampling and assaying the drill core. Assay results were substantially in line with the existing Corani block model. A selection of samples for metallurgical test work were shipped to Base Metallurgical Laboratory in Canada in late 2023 and results are expected to be received in Q2 2024. The purpose of the geometallurgical program is to establish updated data as the Company prepares to resume Corani project financing efforts.

Pending receipt of the results of the geometallurgical test program, and if and as Peruvian investment conditions improve, the Company will restart its efforts to seek the funding necessary to construct the proposed Corani mine. In the meantime, the Company is investigating a number of opportunities to add value to the Corani project and is continuing to focus on maintaining the Corani permits and the project's strong social licence.

Overview of Results of Operations, Liquidity and Capital Resources

For the year ended December 31, 2023, the Company recorded revenue of $89.1 million from the sale of gold and silver. The cost of goods sold was $59.3 million and depletion, amortization and depreciation amounted to $42.1 million.

The Company recorded a gross loss from operations of $12.3 million for the year ended December 31, 2023 (compared to a gross profit of $0.1 million the year earlier). Operations were negatively impacted by poor ground conditions in some areas of the mine which caused production costs to increase, by inflationary pressures on direct consumable costs such as diesel, tires, lubricants, explosives, and steel products, increases in indirect costs (third party suppliers passing on the impact of inflationary and consumable price increases to the Company), and strengthening of the Mexican peso against the US dollar. Spending on the Corani property totalled $7.9 million during the year ended December 31, 2023, a decrease of $1.2 million from the same period a year earlier as a result of the geometallurgical test work program that commenced in 2023. The Corani expenditures comprise both direct project expenditures and corporate overhead costs.

After operating expenses, other income and expenses, tax expenses and recoveries the Company recorded a comprehensive net loss of $39.0 million ($0.23 per share) for the twelve months ended December 31, 2023.

At December 31, 2023 the Company held cash and cash equivalents and short terms investments totaling $3.9 million, an increase of $0.4 million from December 31, 2022. During the year ended December 31, 2023, operation activities resulted in a cash outflow of $1.5 million, investing activities used $6.4 million and financing activities added $18.3 million.

At December 31, 2023, the Company's net working capital deficiency was $42.3 million (compared to $51.2 million at December 31, 2022). Significant amounts contributing to the December 31, 2023 net working capital deficiency are $28.3 million in accounts payable, current portion of deferred revenue of $15.0 million and current portion of prepay and stream arrangements of $5.7 million. The improvement in working capital deficiency year over year is primarily a result of issuance on of the Note to Equinox Gold on October 19, 2023, as discussed above under "Debt and Stream Restructurings", which resulted in changing a $26.6 million current liability into a long term obligation with a maturity date in October 2028.

The Company's consolidated financial statements for the years ended December 31, 2023 and 2022 were prepared following accounting principles applicable to a going concern, which assumes the Company will be able to continue in operation for at least twelve months from December 31, 2023 and will be able to realize its assets and discharge its liabilities in the ordinary course. While the Company's working capital deficiency improved year over year as a cumulative result of equity financings conducted during 2023 and conversion of the Mercedes Deferred Payment into the Note, and closing of the Sandstorm Restructuring Transaction in 2024 is expected to further improve liquidity, material uncertainty remains as to Company's ability to achieve the operating results and necessary cash flow generation from the Mercedes Mine required in order to avoid seeking additional financing, which may give rise to significant doubt about the Company's ability to continue as a going concern. The audited consolidated financial statements of the Company for the three months and year ended December 31, 2023 do not include adjustments to the carrying values of the assets and liabilities, the reported revenues and expenses, and the balance sheet classifications used, should the Company be unable to continue as a going concern. These adjustments could be material.

Non-GAAP Measures

This news release includes disclosure of certain financial measures or ratios, as such terms are used in National Instrument 52-112 - Non-GAAP and Other Financial Measures Disclosure, including Cash Cost and All-In Sustaining Cost ("AISC"). These Non-GAAP financial measures are not standardized financial measures under IFRS® Accounting Standards ("IFRS") and might not be comparable to similar measures presented by other companies. The Company believes that these measures and ratios provide investors with an improved ability to evaluate the prospects of the Company as they provide additional information related to operating performance and are widely used in the mining industry.

The Company has adopted the practice of calculating a performance measure consisting of the net cost of producing an ounce of gold after deducting revenues gained from silver by-product production.

Cash Cost and AISC are calculated net of credits for realized silver revenues and are calculated per ounce of gold sold. The Company adds the governmental royalty of 0.5% for special mining law, third-party net smelter royalties, and adjustments for finished goods related to the increase or decrease in remaining inventory to the cost of production. Other adjustments may be made as required. For further information regarding these non-GAAP financial measures including reconciliations of these measures to the applicable costs items as reported in the consolidated financial statements for the respective periods, please see the information under the heading "Cash Cost and All-in-Sustaining Cost ("AISC") for Mercedes" in the Company's MD&A for the three months and year ended December 31, 2023 (available on the Company's website and on SEDAR).

On behalf of the Board of Directors,

Eric Caba
President and CEO

For further information contact:
Barbara Henderson - VP Corporate Communications
Direct: 604-628-1111
E-mail: barb@bearcreekmining.com
www.bearcreekmining.com

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NI 43-101 Disclosure
Unless otherwise indicated, scientific and technical information in this news release is based on work programs and initiatives conducted under the supervision of, and/or has been reviewed and approved by, Andrew Swarthout, AIPG Certified Professional Geologist, a director of the Company who is a Qualified Person ("QP") as defined in NI 43-101. Additional information related to the Mercedes Mine and the Corani Project, including the Quality Assurance and Quality Control measures applied to the Company's sampling and assaying practices, is available in its Annual Information Form for the year ended December 31, 2023, available on its website and on SEDAR+.

Cautionary Statement Regarding Forward-Looking Information
This news release contains forward-looking statements regarding: the ability of the Mercedes mine to generate free cash flow and expectations regarding the deployment of free cash flow if and when generated; plans to re-initiate Corani project financing discussions; plans regarding additional advancements at the Corani project; the expected outcomes and benefits of increasing drill density at the Mercedes mine; completion of a review of the Mercedes geological model; the potential for additional mineralization, yet undiscovered, within the Mercedes property; the Company's interpretation of geological evidence; ongoing monitoring of the effectiveness of mining methodologies at various Mercedes workings; outcomes related to permit applications; contingency plans for the future disposal of tailings at the Mercedes mine; the timing and outcome of results from geometallurgical test work at the Corani property; and expectations regarding the maintenance of Corani permits and social licence. These forward-looking statements are provided as of the date of this news release and reflect predictions, expectations or beliefs regarding future events based on the Company's beliefs at the time the statements were made, as well as various assumptions made by and information currently available to them. In making the forward-looking statements included in this news release, the Company has applied several material assumptions, including, but not limited to: that the Restructuring Transaction will receive final approval by the TSX-Venture Exchange; that the Company will be able to meet its debt and stream obligations; that unforeseen factors will not impede the anticipated performance of the Mercedes mine; that development work at Mercedes will continue as planned and result in contributions to production as anticipated; and that exploration drilling plans will transpire as and when predicted. Although management considers this assumption to be reasonable based on information available to it, it may prove to be incorrect. By their very nature, forward-looking statements involve inherent risks and uncertainties, both general and specific, and the risk exists that estimates, forecasts, projections, and other forward-looking statements will not be achieved or that assumptions on which they are based do not reflect future experience. We caution readers not to place undue reliance on these forward-looking statements as a number of important factors could cause the actual outcomes to differ materially from the expectations expressed in them. These risk factors may be generally stated as the risk that the assumptions expressed above do not occur, but may include additional risks as described in the Company's latest Annual Information Form, and other disclosure documents filed by the Company on SEDAR+. The foregoing list of factors that may affect future results is not exhaustive. Investors and others should carefully consider the foregoing factors and other uncertainties and potential events. The Company does not undertake to update any forward-looking statement, whether written or oral, that may be made from time to time by the Company or on behalf of the Company, except as required by law.

Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

To view the source version of this press release, please visit https://www.newsfilecorp.com/release/207326