Solid Production Results At The Mercedes And South Arturo Mines

THUNDER BAY, ON - Premier Gold Mines Limited reported solid production results for the third quarter of 2020 from the Company's 100%-owned Mercedes Mine in Mexico and its 40%-owned South Arturo Mine in Nevada. Consolidated gold production for the third quarter exceeds 19,000 ounces. 12,183 ounces of gold at Mercedes exceeds the mine's new operating plan for the quarter and Mercedes performance led by strong grades and reduced mining dilution. 7,096 ounces of gold at South Arturo ensures production already exceeding the annual plan.

Improved production from the Mercedes mine was a result of implementing a modified mine plan developed during the COVID 19-related care and maintenance period in Q2. Significant progress has been made with respect to cost reduction initiatives at the Mercedes mine during the quarter and this progress will be reflected in unit operating costs reported for Q3. The El Nino mine at South Arturo continued its trend of strong quarterly production and has now exceeded the annual production plan.

Ewan Downie, Chief Executive Officer, said, “Consolidated production in the third quarter met the high-end of expectations. The modified mine plan at Mercedes, designed to increase mining efficiency and expand operating margins, has resulted in significantly enhanced cash flow."  

Following the pandemic-related suspension of operations during the second quarter, ore production and processing resumed in July with 12,183 ounces of gold and 49,985 ounces of silver produced in the quarter.  Extensive technical work was carried out during the two-month shutdown to assess alternative mine plans with renewed attention to increasing profit margins. A new simplified operating plan with a more focused mining and development strategy has enhanced productivity, reduced costs and is ensuring the mine's ability to reliably deliver free cash flow. Significant progress has been made with respect to cost reduction initiatives at the Mercedes mine during the quarter and this progress will be reflected in unit operating costs reported for Q3.

This optimized plan has consolidated production to one mine portal from five, reduced the mining rate to a target of 1,200 tonnes per day from 2,000 tonnes, and now operates the processing plant on a campaign basis in alignment with the plan and crew rotations. Furthermore, the plan has enhanced underground operating efficiencies and supervision effectiveness, resulting in ore quality improvements such as higher than forecast grades and reduced mining dilution. Contractor supplied services were dramatically decreased with most mining carried out utilizing company employees. The success of future exploration and delineation drill programs is expected to allow the production rate to eventually return to the plant's nameplate capacity over time.

The El Nino underground mine at the South Arturo Joint Venture is operated by Barrick Gold through its subsidiary Nevada Gold Mines. El Nino has delivered solid operating results since initial production in late 2019, including year-to-date in 2020 where, despite ensuring protocols to deal with potential COVID-19 related issues, gold production has exceeded its annual plan. During the third quarter, gold production from South Arturo was 7,096 ounces, from more than 650 tonnes of ore per day at the high-grade underground operation. Expansion drill results from the El Nino underground program were announced with highlight results of 39.6 m of 17.11 g/t Au, including 21.3 m of 24.75 g/t Au (SER20019) and 100.6 m of 5.73 g/t Au, including 13.7 m of 8.52 g/t Au (SER20018). The partners continue to advance additional development opportunities, including the Phase 1 and Phase 3 open-pit projects, and are assessing the potential for an on-site heap leach facility. Surface drilling in the vicinity of these pits commenced during the third quarter. The Company is in the final stages of completing a Pre-Feasibility Study for South Arturo.