Cosala Operations Moving Forward With Reopening

TORONTO - Americas Gold and Silver Corporation, President & CEO Darren Blasutti, said, “I expect the second half of 2021 will showcase the strength of the silver portfolio following a challenging start to the year. The anticipated resource update for the Galena Complex is projected to highlight the significant potential of the asset while silver production continues to ramp-up quarter over quarter. Coupled with the anticipated full re-opening of the Cosala Operations in Mexico by the start of Q4-2021, the Company’s profitability and cash flow is expected to improve significantly given higher silver, zinc and lead prices. At Relief Canyon, the Company continues to look at alternatives to improve the metallurgical recovery of the operation and I believe there remains significant value in the asset despite the initial challenges.”

In the second quarter the Company had revenue of $9.5 million and net loss of $17.8 million for Q2-2021, with the loss mostly attributable to the continued ramp-up at Relief Canyon. This July an agreement was signed with the Mexican Ministries of Economy, Interior and Labour along with union representatives committing to a reopening of the Cosala Operations. The Company anticipates that both the mine and the mill will be at full capacity by the start of Q4-2021 assuming the compliance of the agreement by members of the union.

Galena’s Recapitalization Plan is proceeding well with the Company continuing to experience higher year-over-year production in Q2-2021 compared to Q2-2020; silver production increased by 20% year-over-year while lead production increased by 10%. Phase 1 drilling of Galena’s Recapitalization Plan was completed in the quarter and results will be incorporated into the updated mineral reserve and resource estimate before the end of August 2021. Phase 2 drilling has just begun with the first hole testing the down dip extension of the high-grade Silver Vein approximately 500 feet below the current drill station.

Following an extensive review and a challenging ramp-up at Relief Canyon, the operation proceeded with run-of-mine heap leaching and continued its efforts to resolve metallurgical challenges in Q2-2021. On August 13, 2021, the Company and the Board of Directors decided to temporarily suspend mining operations at Relief Canyon in order to prioritize capital for the Cosala Operations re-start while it continues leaching operations and ongoing metallurgical test work.

The consolidated year-to-date operating metrics from YTD-2021 were generally not comparable to YTD-2020 due to the illegal blockade at the Cosala Operations, suspension of operating metrics during the Galena Recapitalization Plan implementation, and the continued ramp-up of operations at Relief Canyon to full production.

While the Company was successful in meeting several important commissioning targets, including initial construction capital, and planned mining and crushing rates, the ramp-up at Relief Canyon has been and continues to be challenging since the first poured gold in February 2020. During this period, the Company and its consultants performed extensive analyses and implemented a number of procedural changes to address the start-up challenges typical of a heap leach operation. As part of this analysis, the Company has identified naturally occurring carbonaceous material within the Relief Canyon pit. The identification of this material was not recognized in the feasibility study.

The Company began two small run-of-mine test pads in Q1-2021 to evaluate the possibility of simplifying the flowsheet by by-passing the crushing and conveying circuits and transitioned to this method of ore placement in May 2021. Despite the encouraging initial results, the operation has not seen a sustained material increase in recoveries to date. Additional improvements in the predictive ability of the resource model are progressing with incorporation of the latest geological detail from recent pit mapping as well as new data from an extensive re-assaying program of 13,000 historic exploration pulp samples for the presence of carbonaceous material. Completion of this data compilation and analysis is targeted for late Q3-2021. Management also initiated several metallurgical test work programs to investigate ore treatment options, including Carbon-In-Leach processing. Several of the options present encouraging preliminary results. Further investigation is planned in the near term.

The Company is committed to continuing efforts to resolve these metallurgical challenges and increase production levels at Relief Canyon as noted above. However, the Company is in the process of reopening the Cosala Operations and is currently prioritizing its capital resources to the re-start. As a result of these capital allocation decisions, the Company has decided to temporarily suspend mining operations at Relief Canyon pending improved consolidated capital and the initial metallurgical test results. During this time, the Company will continue leaching operations and working to improve recovery and operations through an extensive audit of drilling, sampling, ore control, and modeling, implementing internal QA/QC programs, and metallurgy testing program on carbonaceous material.