Production Highlights: 2Q18

San Julián (Phase I – veins):

• Quarterly and first half silver production decreased 20.7%, 9.1% and 12.6% vs. the same periods in 2017 and the previous quarter respectively as a result of: i) the expected lower ore grade due to less availability of the higher silver ore grade areas; and ii) a lower volume of ore processed as a result of the low water availability, restricting processing capacity. With the arrival of the rainy season, full processing capacity has now been restored.
• The construction of the water reservoir, aimed at providing a consistent source of water, has been delayed as a result of a longer than expected permitting process delaying the grant of environmental permits. The company is making efforts to accelerate this process and is also looking for alternate sources of water.
• The expected silver grade for the full year 2018 is in the range of 165-175 g/t.
• Quarterly and year to date gold production decreased vs. their corresponding periods in 2017 as a result of lower volumes of ore processed and lower ore grades due to the previously mentioned factors, however these were mitigated by the higher recovery rates.
• Quarterly gold production increased 2.5% vs. 1Q18 as a result of increased access to areas with a higher gold ore grade and a higher recovery rate which resulted from the appropriate operating controls and the excellent response of the mineral at the leaching stage.
• The expected gold grade for the full year 2018 is expected to be in the range of 1.9-2.1 g/t.

San Julián (Phase II – JM disseminated ore body):

• Quarterly silver production increased 6.9% vs. 1Q18 due to the extraction from higher ore grade areas in line with the mining sequence of the ore body. However, silver ore grade of 156.7 g/t was below the guidance of 185 g/t for the full year.
• The silver ore grade for the full year 2018 is expected to be in the range of 145-155 g/t, lower than the previously guided ore grade, due to the extraction of ore from lower grade areas of the mine as well as processing ore from the development stockpile instead of mining the orebody according to the original plan. This was done as a temporary alternate production plan as stope back-filling could not have been done at the normal pace due to lower availability of water, which has now been restored with the arrival of the rainy season.
• Quarterly by-product gold production decreased 24.6% vs. 1Q18 as a result of a lower ore grade and lower recovery rate.
• Quarterly by-product lead production increased 12.4% vs. 1Q18 as a result of a higher ore grade and recovery rate. Additionally quarterly, by-product zinc production remained at similar levels vs. 1Q18.

Performance Highlights: 1H18

San Julián (Phase I):

• Nameplate capacity of 3,000 tpd – Currently operating at c. 3,600 tpd
• Expected lower ore grade due to less availability of the higher silver grade areas
• Lower volume of ore processed as a result of the low water availability
  
  

San Julián (Phase II):

• Nameplate capacity of 6,000 tpd – Currently operating at 6,400 tpd
• Extraction of ore from lower grade areas & processing ore from the development stockpile due to low water availability
• Resulted in temporarily deviating from original production plan

Performance Targets - 2H18

• Initiatives in place to collect process water now ensure the plant will run at full capacity in 2H18 and going forward
• Construction of wells for water collection while continuing the process to obtain permits for the construction of the water reservoir
• Continue preparation and development of the mine
• Identify, explore and evaluate the District's geological potentia