Thunder Bay, August 4, 2020 – Premier Gold Mines Limited (“Premier” or “The Company”) (TSX:PG) (OTCPK: PIRGF) reports its operating and financial results for the three months ended June 30, 2020. The Company previously released second quarter production results on July 21, 2020.

Premier is a growth-oriented, Canadian-based mining company involved in the exploration, development and production of gold and silver deposits in Canada, the United States and Mexico. The Company manages a high-quality pipeline of precious metal projects in safe, proven and accessible mining jurisdictions and is focused on stable production from its two producing operations and growth through the development of its advanced-stage, multi-million ounce, gold deposits.

2020 Second Quarter Highlights
•Mercedes Mine COVID-19 operations halted during the quarter, mining restarted in June;
•Gold production of 4,765 ounces, year-to-date production of 23,082 ounces;
•Gold sales of 9,382 ounces, year-to-date sales of 24,374 ounces;
•Total revenue of $14.8 million, $37.5 million year-to-date;
•Mine operating income of $2.2 million and a net loss of $14.1 million for the quarter, mine operating income of $1.7 million and a net loss of $26.0 million year-to-date;
•Period end cash and cash equivalents balance of $51.1 million.

CEO Commentary
“Gold production continued without interruption at South Arturo providing for yet another strong operating quarter”, stated Ewan Downie, President & CEO. “At Mercedes, we have implemented a reduction of plant through-put designed to reduce costs, improve grade and maximise the profitability of the operation”.

Three months ended June 30, 2020
A total of 4,765 ounces of gold and 567 ounces of silver were produced during Q2 2020 compared to 16,450 ounces of gold and 51,792 ounces of silver during Q2 2019. The significant reduction in production compared to 2020 is directly related to the impact of the COVID-19 pandemic on mining operations in Mexico offset by increased production from South Arturo which accounted for all the production in Q2 2020. The Mercedes mine was placed on care and maintenance due to the COVID-19 pandemic on March 30, 2020 until the end of May 2020. The mine restarted gradually at the beginning of June, with activity on site initially limited due to measures required for the safety of mine personnel. Limited amount of ore produced during restart was stockpiled until processing resumed in early July.

The Company reported total revenue of $14.8 million and a mine operating income of $2.2 million during the second quarter compared to revenue of $23.0 million and mine operating loss of $0.7 million during Q2 2019. The decrease in Q2 revenue when compared to the same period in 2019 is due to the impact of the care and maintenance requirement at Mercedes offset by revenue generated from the South Arturo operations and an increase in the average realized selling price. The average realized gold price was $1,557 per ounce, an increase of $274 per ounce of gold when compared to Q2 2019.

Total mine operating income of $2.2 million for Q2 2020 compared to a loss of $0.7 in Q2 2019 is due to a higher gold selling price offset by a reduction in tonnes. A total of $3.8 million in exploration and pre-development expenses were incurred during the quarter. In addition, $5.1 million of care and maintenance expenses and $1.9 million in restructuring costs associated with the restart of Mercedes mine contributed to a net loss of $14.1 million reported for the quarter.

Six months ended June 30, 2020
Table 1: Selected Consolidated Operational and Financial Information
see & read more on
https://www.premiergoldmines.com/2020-q2-results

A total of 23,082 ounces of gold and 53,399 ounces of silver were produced for the six months ended June 30, 2020 compared to 34,063 ounces of gold and 109,472 ounces of silver for the prior year period.

The Company reported total revenue of $37.5 million and mine operating income of $1.7 million for the six months ended June 30, 2020 compared to revenue of $46.1 million and mine operating income of $3.0 million for the prior year period. The reduction in production, revenue and operating income, when compared to the prior year period, is due to the COVID-19 shut down at the Mercedes mine and offset by increased production at the South Arturo mine.

A total of $7.7 million in exploration and pre-development expenses were incurred during the six months ended June 30, 2020. These expenses along with the care and maintenance costs incurred on the shut down at Mercedes mine of $5.1 million and restructuring costs of $1.9 million, contributed to a net loss of $26.0 million reported for the year to date period.

A total of $6.3 million in capital expenditures were incurred during the period, including $5.9 million for mine development at Mercedes, $0.3 million for corporate expenditures, and the balance for sustaining and expansion related activities at South Arturo. The Company closed the quarter with cash and cash equivalents of $51.1 million.


Mercedes
The Mercedes Mine is located 150 kilometres northeast of the city of Hermosillo in the state of Sonora, Mexico. Operations are exploiting low-sulfidation quartz veins and quartz-veinlet stockwork for gold and silver.

In response to the COVID-19 pandemic, the Mexican federal government decreed on March 30, 2020 that most mining was a non-essential business activity. As a result, a care and maintenance plan was immediately implemented at Mercedes. The decree was lifted at the end of May and upon certification of compliance to protocols intended to minimize the risk of COVID-19 presence and transmission on-site and to nearby communities, a phased start-up of ore and waste development as well as delineation and exploration drilling began. Ore was stockpiled in June until processing resumed in early July.

During the two-month shutdown, extensive technical work was carried out to assess alternative mine plans with renewed attention to increasing production margins. A plan was developed to re-start operations by limiting mining and development activities to the Lupita (including Lupita Extension) and Diluvio zones. This realignment recognizes the need to optimize Mercedes’ production to its current reserve base rather than its processing capacity. Key elements of the optimized plan include:
•Consolidating production to one mine portal from five
•Reduce mining rate to 1,200 from 2,000 tonnes per day
•Operating the processing plant on a campaign basis in alignment with the plan and crew rotations

This restructuring has resulted in a reduction of 40% of the employees required to operate the mine and 75% of mining-related contractor costs. The plan focuses on enhancing underground operating efficiencies and supervision to minimize dilution and improve ore quality. Ongoing exploration and delineation drill programs are expected to enable mill throughput to increase toward nameplate capacity over time.

The quarterly operating results are provided in Table 2 below.

Table 2: Mercedes Selected Financial and Operating Results
see & read more on
https://www.premiergoldmines.com/2020-q2-results