TMAC Resources Announces Record Low Cash Costs and AISC and Its First Positive Earnings in Q1-2019

TORONTO–(BUSINESS WIRE)–TMAC Resources Inc. (TSX: TMR) (“TMAC” or the “Company”) is
pleased to report first quarter 2019 financial results. All amounts are
in Canadian dollars unless otherwise indicated.

Jason Neal, President and Chief Executive Officer of TMAC, stated, “TMAC
continues to grow our cashflow with record revenue of $67.9 million and
record low AISC⁽¹⁾ and Cash Costs⁽¹⁾ of US$992 per
ounce and US$658 per ounce respectively. The Company is also very
pleased to report our first ever positive earnings, which for the first
quarter was $0.06 per share. With the strengthening of operations,
subsequent to quarter-end, TMAC and Sprott amended the terms of our
credit agreement to provide additional financial flexibility through
elimination of certain covenants and all principal repayments until
April 2020, which eliminates US$26 million of principal amortization in
this period, and thereafter amortization has been reduced to US$2.5
million per quarter commencing on April 1, 2020, less than half the
previous amortization amount.”

FIRST QUARTER 2019 FINANCIAL HIGHLIGHTS

• Gold production and sales 40,050 ounces produced, 39,200 ounces
  sold
• Gross revenues $67.9 million
• Average realized gold price $1,731 per ounce (US$1,302 per
  ounce)
• Cash Costs⁽¹⁾ US$658 per ounce of gold sold
• Cost of sales⁽²⁾ US$962 per ounce of gold sold
• All-in Sustaining Costs (“AISC”)⁽¹⁾
  US$992 per ounce of gold sold
• Adjusted EBITDA⁽¹⁾ $28.6 million
• Net profit $7.2 million
• Net profit per share $0.06 per share on a basic and fully
  diluted basis
• Cash flows from operations $35.4 million
• Sustaining capex⁽¹⁾ $12.3 million
• Expansion capex⁽¹⁾ $5.8 million
• Cash on hand $54.2 million at March 31, 2019, including:

$25.6 million of unrestricted cash

$28.6 million of restricted cash

• Principal repayments $11.6 million (US$8.8 million)
• Debt balance $151.7 million (US$117.0 million)

_{(1) Refer to the “Non- IFRS Measures” and associated
MD&A for a description and calculation of these measures.}

_{(2) Includes depreciation}

BALANCE SHEET AND CASH MANAGEMENT

On April 30, 2019, TMAC entered into an amendment to the credit
agreement with the Sprott lenders. The amendment eliminates all
remaining principal payments for 2019 and for the first quarter of 2020,
totalling US$26 million (approximately $35 million), and reduces and
reschedules quarterly principal payments for 2020 to US$2.5 million per
quarter, commencing April 1, 2020, with the remaining principal balance
due on December 31, 2020. TMAC has the option to extend the term by six
months to June 30, 2021. Refer to TMAC’s news release that summarizes
the amendment to the credit agreement, issued on April 30, 2019 titled “TMAC
Resources Amends Credit Agreement to Eliminate Next 12 Months of
Principal Payments”.

TMAC is in the process of renewing the diesel fuel purchase and storage
agreement with a subsidiary of Macquarie Bank Ltd (“Macquarie”)
whereby Macquarie purchases and delivers diesel fuel to Hope Bay and
stores the fuel in TMAC’s tanks at Roberts Bay. This will allow TMAC to
purchase and pay for the diesel fuel as it is consumed rather than
prepay for a full year of diesel consumption, which reduces working
capital investment. The price of the diesel fuel is fixed in Canadian
dollars at the time of delivery. TMAC is also in the process of renewing
its fuel supply and delivery agreement that was entered into during 2015
and expired at the end of 2018. The updated pricing is expected to
result in an estimated US$40 per ounce saving in Cash Costs and AISC
commencing in Q4 2019.

In 2018, TMAC established an insurance product referred to as “Demand
Bonds” to liberate cash from TMAC’s restricted cash balance. By December
31, 2018, TMAC had issued $37 million of Demand Bonds and posted $22
million as collateral with the surety underwriters that resulted in the
release of $15 million of the restricted cash balance. During the three
months ended March 31, 2019, $2 million of security for overbonding was
cancelled and the collateral was reduced. Also in the first quarter,
TMAC issued $4 million of Demand Bonds required under the Madrid permits
and posted a $2 million cash collateralized letter of credit as security
to the underwriter. The Demand Bonds for Madrid were issued by a
different insurance company and required 50% collateral, compared to the
60% collateral required under the previously issued Demand Bonds.

There is an opportunity to release an estimated $10 million of
additional funds in the near-term and, ultimately, all of it will be
released in the long-term as TMAC demonstrates improved operational
performance and an improved financial position by reducing the amount of
collateral required for Demand Bonds. There is also an opportunity to
issue Demand Bonds for the $5 million of letters of credit issued as
security for royalty and land and mineral access payments that are
currently cash-collateralized.

FIRST QUARTER 2019 PRODUCTION HIGHLIGHTS

• Production of 40,050 ounces of gold compared to 34,080 ounces
  of gold produced in the fourth quarter 2018.
• Underground mine production during the first quarter of 2019
  was 1,600 tonnes per day at an average grade of 10.2 g/t. Included is
  131,700 tonnes of ore at an average grade of 10.8 g/t, produced from
  longhole stoping and sill development during the quarter. Sill
  development contributed a further 12,300 tonnes at an average grade of
  3.0 g/t, which is below the mining cut-off grade of 4.0 g/t, which is
  classified as incremental ore.
• The plant achieved throughput of 1,610 tonnes per day at an
  average grade of 10.3 g/t and an average recovery of 84% in the first
  quarter 2019.

Refer to TMAC’s news release that summarizes the 2019 operating results,
issued on April 7, 2019 titled “TMAC
Resources Announces Record Q1 2019 Production of 40,050 Ounces and
Improved Underground Mine and Plant Performance”.

UPDATE ON PLANT COMMISSIONING

The design, procurement, and installation of the additional gravity
concentrators was completed in December 2018, with commissioning
continuing through the first quarter of 2019. Installation of the first
surge bin between the crushing and grinding circuits was completed
during the first quarter and commissioned during the month of April. The
second surge bin has been fabricated, but the Company elected to install
and commission the second surge bin sequentially rather than
concurrently with the first surge bin to minimize project execution risk
and minimize plant disruption.

Plant recoveries improved to 84% in the first quarter 2019 compared to
82% in the fourth quarter of 2018, however the full benefit of the
improvements to the circuit have not yet been achieved. Daily
performance in the first quarter remained consistently in the 80%-89%
range. It is expected that plant recoveries will consistently average at
least 90% once commissioning is fully complete on the entire suite of
newly installed equipment.

With the improved concentrator recovery and improved leaching
performance, more gold is going to the resin circuit which is exceeding
its absorption capacity. A column is being engineered to scavenge the
solution coming from the resin circuit to recover gold in solutions that
is currently being sent to the tailings impoundment area. The
installation does not require integration in the current process as it
is a passive system at the back end of the circuit.

EXPLORATION

A total of 8,278 metres of underground diamond drilling were completed
during the first quarter of 2019 and included 4,520 metres on Doris BTD
and 3,758 metres on Doris Connector. Drilling on the Doris BTD zone was
focused on upgrading and expanding the Doris BTD Inferred Resources to
facilitate mine design and production in 2019. In addition, 7,999 metres
of surface diamond drilling was completed at Madrid North, including
1,372 metres on Naartok East and 6,627 metres on Suluk. Refer to TMAC’s
news release that summarizes the 2019 drill results, issued on April 7,
2019 titled “Doris
Drilling Continues to Define Continuity of the High Grade BTD Extension;
First Quarter 2019 Exploration Update”.

FIRST QUARTER 2019 CONFERENCE CALL AND WEBCAST

Senior management will host a conference call and webcast to discuss
these results on Thursday, May 2, 2019 at 10:00 a.m. (ET).

Conference call and webcast details:

An archive of the webcast will be available on the Company’s website.

SUMMARY OF FINANCIAL RESULTS

⁽¹⁾ Includes depreciation
⁽²⁾ Refer to the
definitions of EBITDA, Adjusted EBITDA, Cash Costs AISC, Sustaining
capex and Expansion capex in associated MD&A
⁽³⁾
Translated using exchange rates at the time of incurring the expenditure
⁽⁴⁾
AISC is calculated using the updated guidance from the World Gold
Council issued in November 2018 and certain of the projects previously
classified as sustaining capex have been reclassified as expansion
capital.

SUMMARY OF OPERATING RESULTS

⁽¹⁾ Includes material from mining that is above the mining
cut-off grade of 4.0 g/t The three month period ended December 31, 2018
includes ore mined from the surface crown pillar recovery at Doris.
⁽²⁾
Includes material from development that is below the mining cut-off
grade of 4.0 g/t
⁽³⁾ Adjusted comparative period for the
Incremental Ore that was previously classified as waste
⁽⁴⁾
Includes reconciliation adjustment based on surveyed results of the
stockpile

ABOUT TMAC RESOURCES INC.

TMAC Resources operates Hope Bay located in Nunavut, Canada. The
property and operations are remote but not isolated, serviced by both a
port and airstrip. Hope Bay is an 80 km by 20 km Archean greenstone belt
that has been explored by BHP, Miramar, Newmont and TMAC over a period
spanning more than 30 years. In that time, more than $1.5 billion of
sunk expenditures have been spent in exploration and evaluation, surface
infrastructure, and mine and process plant development. TMAC began
producing gold in early 2017 from Doris, its first mine at Hope Bay, and
processed gold at the Doris Plant which originally had nameplate
capacity of 1,000 tonnes per day and expanded to 2,000 tonnes per day
midway through 2018. Hope Bay has 4.8 million ounces of measured and
indicated resources at Doris, Madrid and Boston deposits, largely within
350 metres of surface. There is potential to grow these established
deposits considerably at depth, and then grow resources further through
the prioritized exploration of the more than 90 other identified
regional targets. TMAC is now permitted to produce from both Madrid and
Boston.

FORWARD-LOOKING INFORMATION

This release contains “forward-looking information” within the meaning
of applicable securities laws that is intended to be covered by the safe
harbours created by those laws. “Forward-looking information” includes
statements that use forward-looking terminology such as “may”, “will”,
“expect”, “anticipate”, “believe”, “continue”, “potential” or the
negative thereof or other variations or comparable terminology.

“Forward-looking information” is not a guarantee of future performance
and management bases forward-looking statements on a number of estimates
and assumptions at the date the statements are made. Furthermore, such
“forward-looking information” involves a variety of known and unknown
risks, uncertainties and other factors, which may cause the actual
plans, intentions, activities, results, performance or achievements
expressed or implied. See “Risk Factors” in the Company’s Annual
Information Form dated March 11, 2019 filed on SEDAR at www.sedar.com
for a discussion of these risks.

Contacts

TMAC Resources Inc.

Jason Neal
President and Chief Executive Officer
Phone:
416-628-0216

Lisa Wilkinson
Director, Investor Relations and Strategic
Development
Phone: 416-628-0216
[email protected]
www.tmacresources.com