TMAC Reports Record Q3 Operating and Financial Performance; 1,900 tpd Plant Throughput and 1,975 tpd Mine Production for October

TORONTO–(BUSINESS WIRE)–$TMMFF #HopeBay–TMAC Resources Inc. (TSX: TMR) (“TMAC” or the “Company”) reports
its operating and financial results for the third quarter of 2018.

Jason Neal, President and Chief Executive Officer of TMAC, stated, “TMAC
is pleased to report record performance in the third quarter, including
tonnes mined, tonnes processed, gold production and gold sales, but we
are more excited about the progress we have made that will drive further
substantial improvement in our operating and financial results. After a
difficult July to open the quarter, the processing plant improved to
average 80% recoveries for the full quarter, and then in October
exceeded our ramp up expectations with throughput of 1,900 tonnes per
day while maintaining recovery of 82%. Our investments in the processing
plant to improve recoveries through additional gravity concentrators and
other modifications are well advanced with the Knelson XD20s online and
both the Falcon SB1350s and the Falcon C2000s are being installed in

Mr. Neal continued, “Mine production improved modestly in the third
quarter, but development activity substantially opened up mining at the
Doris Hinge, Doris BTD and Doris Crown Pillar by mid-October and drove
October mine production to 1,975 tonnes per day. Our permitting activity
at Madrid and Boston is now one quarter ahead of the schedule we had
previously communicated. With expected receipt of the Type A Water
Licences for Madrid and Boston in Q1 2019, we are now assessing Madrid
North development which may deliver ore to the Plant in 2019. We have
also concurrently released today strong drilling results at Doris and
Madrid North, including at Naartok East where recent shallow drilling
has delivered grade and strike extent materially beyond what was
predicted in our current model of the near surface expression. The
balance sheet has been substantially strengthened with a $90 million
equity financing, supported by the largest shareholders of our Company,
which closed in early October. At the end of October, we made principal
payments and prepayments against our debt to reduce the balance from
US$160.0 million to US$125.8 million and, by the end of January, our
debt will be further reduced to US$117.0 million.”

The Company achieved record gold production of 33,100 ounces during the
third quarter. Gold sales of 32,140 ounces during the third quarter
produced record revenues of $50.3 million with cost of sales of $50.0
million, resulting in a profit from mining operations of $0.3 million.
The net loss totalled $3.3 million, or $0.04 per share on a basic and
fully diluted basis and EBITDA (1) totalled $15.7 million.
Increased production resulted in the generation of positive cash flows
from operations of $6.1 million.

Processing Plant: Third Quarter and October Performance

TMAC began the process of ramping up the processing plant (the “Plant”)
in June when the second concentrator line began commissioning. The
Company has managed a steady increase in throughput, including 1,385
tonnes per day (“tpd”) on average for the third quarter, and the
Plant has now exceeded expectations for the pace of ramp up with an
average of 1,900 tpd being processed in October. The October performance
has been achieved in a month where there has been extensive construction
activity in the Plant related to the installation of additional gravity
concentrators and substantial related upgrades and reconfiguration, with
almost zero additional downtime in the month other than regularly

maintenance. In the month of October, the Plant exceeded 2,000 tpd for
17 operating days and 2,200 tpd for seven operating days with the peak
production day of 2,333 tpd. Peak performance for the first concentrator
line was 1,162 tpd and for the second concentrator line, which only
started up in mid-June, peak performance was 1,206 tpd and on average
processed 1,008 tpd.

After disappointing Plant recovery of 75% for July, the Plant returned
to the expected recovery range and for the full third quarter averaged
80%. The Plant achieved 82% recovery for the month of October and
delivered by far the most consistent daily recovery in our operating
history. Recoveries continue to benefit from the Falcon SB400 installed
in April and the Company believes that the current recoveries of 82% to
85% represents the sustainable range before the benefits of the
additional gravity concentrators and the other Plant modifications are

The processed grade in the third quarter of 10.1 g/t included purposely
lower feed grade of 9.0 g/t in July during the period of high operating
volatility in the early weeks of starting up the second concentrator
line. Third quarter gold production of 33,100 ounces and gold sales of
32,140 ounces are both record performances for TMAC. Feed grade in
October was also below average at 6.7 g/t, with Plant operating
decisions driven in part by expectations for improving gold recoveries
in November and December as well as reduced financial liquidity pressure
with the completion of a substantial equity financing. Despite lower
grades, October gold production of 10,470 ounces and gold sales of
11,240 ounces represent our third best month.

(1) EBITDA (Earnings before interest, taxes, depreciation and
amortization) refer to non-IFRS measures. Refer to the Management
Discussion and Analysis for further information on these measures.

Processing Plant: Gravity Concentrator Upgrades and Additions

TMAC is highly focused on completing the installation of the additional
gravity concentrators in the Plant, which was extensively detailed in
our second quarter results and Management Discussion and Analysis. In
the third quarter, significant progress was made and the project is
nearing completion. Two Knelson XD20s have been installed to capture
fine gravity recoverable gold in the concentrate treatment side of the
Plant (the “CTP”) regrind circuit. Their installation included
the reconfiguration of the inline pressure jigs and spinners to the CTP
in recirculation with the screening circuit, with those changes
completed by the end of October.

The successful Falcon SB400s in each of the concentrator lines are being
upgraded to Falcon SB1350s, which are being installed in November. The
Falcon SB1350s will enable the Plant to treat the entire flow within the
primary grinding circuit, rather than solely the recirculating load. Two
Falcon C2000s, which are expected to scavenge gravity recoverable gold
and sulfides from the cyclone overflow feeding the flotation cells
thereby further reducing losses to tailings, are expected to be online
by the end of November. The surge bins for each of the concentrator
lines, currently in fabrication, will be installed before the end of the
year to add further stability to Plant operations; this is the last
significant planned modification. TMAC maintains its expectation that
recoveries of at least 90% will be achieved by the end of the year with
the completion of these Plant modifications.

Doris Mine: Third Quarter and October Performance

During the third quarter and the month of October, the Company completed
underground infrastructure and development, including vent raises and
escapeways, to provide access to three production areas and one
development area: the hinge zone in Doris North (“Doris Hinge”);
Doris North below the diabase dyke zone (“Doris BTD”); the crown
pillar at Doris which can be mined from surface (“Doris Crown Pillar”);
and the development of Doris Connector. Production volumes from the
Doris mine in early 2018 were substantially limited to production from
Doris North above the diabase dyke but sequenced below the thicker,
higher-grade Doris Hinge.

The Company mined 103,300 tonnes of ore, or 1,123 tpd, in the third
quarter including 92,300 tonnes of ore at 9.0 g/t, primarily from mining
stopes in Doris North, and 11,000 tonnes of incremental ore at 3.3 g/t,
primarily from development activity in the Doris Connector. Incremental
ore is below the cut-off grade for mining and is separately stockpiled
because it is derived from development and must be brought to surface
regardless. This material has an in situ value of approximately $175 per
tonne and, therefore, generates a significant margin over processing
costs and will be processed given Plant capacity or as part of blending

Ore stockpiles at September 30, 2018 were estimated to contain 73,300
tonnes, consisting of 33,100 tonnes of ore at an average grade of 7.0
g/t, or 7,500 ounces of contained gold, and 40,200 tonnes of incremental
ore at a grade of 3.3 g/t containing 4,300 ounces of gold.

TMAC mined 61,200 tonnes of ore, or 1,975 tpd, in the month of October.
The improved mining rate includes the benefit of accessing attractive
Doris Hinge and Doris BTD stopes by the middle of October and the
start-up of the surface recovery of the Doris Crown Pillar. The initial
estimates of available ore from the Doris Crown Pillar were 16,000
tonnes at 17.0 g/t contained in a high-grade core. As surface mining
activity in October progressed, TMAC’s confidence in the additional ore
volume available increased as 21,415 tonnes were mined in October at an
estimated grade of 7.2 g/t even before reaching the targeted zone. The
Company now estimates that mining from the Doris Crown Pillar will
produce up to 75,000 tonnes in total, comprised of a probable mineral
reserve of 16,000 tonnes at 17.0 g/t and an inferred mineral resource of
59,000 tonnes at 6.2 g/t that will be upgraded with further development
and sampling.

Madrid-Boston Project Permitting Progress

TMAC announced the positive recommendation of the Nunavut Impact Review
Board (“NIRB”) in June and subsequent acceptance by the Minister
of Crown Indigenous Relations and the Minister of Intergovernmental and
Northern Affairs and Internal Trade in October. The NIRB conducted the
Project Certificate Workshop on November 1, 2018 with all parties and
expects to issue the Project Certificate by November 15, 2018. The final
Nunavut Water Board (“NWB”) hearing concluded on October 25,
2018. Within 45 days of that date, the NWB will send the draft Type A
Water Licences to the Ministers for approval that is reasonably expected
to follow 45 days thereafter. As such, TMAC has revised its expectation
on timing to receive the Type A Water Licences to be in the first
quarter of 2019 rather than in the second quarter as was originally

The scope of permitting for the development of Madrid and Boston covers
the projects as described in the Company’s prefeasibility study
published in 2015. The permitting strategy, however, also included
operational flexibility, additional infrastructure and water-use for
increased processing throughput. Also included in the permitting is
surface crown pillar recovery similar in approach to what is currently
being executed at Doris.

With the revised expected timing to receive the Project Certificate and
Type A Water Licences, TMAC is currently evaluating advanced exploration
and development strategies for Madrid North, which may include
generating ore feed for the Plant in 2019.

Exploration Results and Strategic Focus

The Company last released exploration results in June and today has
concurrently issued a news release with further results from its 2018

The most significant focus at Doris has been on extending the Doris BTD.
Results demonstrate continuing strong gold grade to the north and the
zone remains open in this direction. Highlights from the recent drilling
results include TM50172 grading 16.4 g/t Au over 6.5 metres and TM50175
grading 24.2 g/t Au over 10.9 metres. By year end, there will be a
further 60 metres of development which will set up an additional drill
platform to test a further 100 metres of strike length. Doris BTD will
remain a significant focus of our 2019 exploration program. In addition,
the advancement of development at Doris Connector will provide
exploration platforms for Doris Connector and Doris BTD Connector.

TMAC also completed 75 holes at Madrid North in 2018, of which 44 were
targeting the Naartok West zone and 31 were targeting the Naartok East
zone. The results showed strong grade and geological continuity within
the higher-grade core of the deposit. Results at Naartok East exceeded
expectations with better grade and strike extension than previously
modelled from wide-spaced drilling. Recent highlights from the Naartok
West zone include drill hole TM00381, intersecting 7.4 g/t Au over 65.7
metres, including 14.4 g/t Au over 26.1 metres and drill hole TM00396,
intersecting 6.6 g/t Au over 42.2 metres. Highlights from the Naartok
East zone include drill hole TM00422, which intersected 10.4 g/t Au over
9.6 metres and drill hole TM00441, which intersected 11.0 g/t Au over
12.5 metres, including 23.6 g/t Au over 5.4 metres. The successful
exploration program at Madrid North supports TMAC’s ongoing evaluation
of near-term development.

The priorities for the 2019 exploration program are being finalized, but
is expected to include expenditure at Doris targeted to add mine life,
investment at Madrid North to prepare TMAC for near-term development
decisions, exploration at Boston targeted at increasing reserves and
resources to make better-informed infrastructure development decisions
and regional exploration, which benefits from extensive historic work,
and will be focused on targets in proximity to established, planned or
potential infrastructure. Included in TMAC’s $90 million equity offering
that closed in October was $15 million of flow-through shares. TMAC
expects a minimum exploration budget of $20 million in 2019, when
including exploration at Doris, which is not funded by flow-through

Financial Results

Cash Costs per ounce sold (1) in the third quarter of US$825
per ounce sold were 11% lower than the previous quarter as gold sales
continued to increase quarter-over-quarter due to increased recoveries
and throughput, and costs decreased as economies of scale were achieved.
Gold sales increased by 25% in the quarter while gross Cash Costs,
excluding a net realizable value adjustment on ore stockpiles(2)
equal to US$47 per ounce, increased by 6% in the same period. With
continued improvement in recoveries expected in the fourth quarter of
2018, combined with it being the first full quarter of running both
concentrating lines, the unit costs are expected to decline even further.

AISC per ounce sold (1) in the third quarter of US$1,456 per
ounce sold were 11% lower than the previous quarter and include site
infrastructure projects, which mostly consist of one-time initiatives to
improve life-of-mine production. The largest components of site
infrastructure projects are the construction of the south dam in the
tailings impoundment area, the marine outfall pipeline and the gravity
concentrator project in the Plant, all of which relate more to original
project construction capital as opposed to sustaining capital, though
these items are included as sustaining capital in AISC due to timing,
and totalled US$240 per ounce in the third quarter. The AISC per ounce
sold is expected to decrease as production from the Plant increases and
improvement and construction capital expenditures decrease. The
sustaining capital expenditures are expected to be approximately $15
million in the fourth quarter compared with $22 million in the third

  Three months ended

September 30,


  Three months ended

June 30,


  Three months ended

March 31,


    US$/oz   US$/oz   US$/oz
Ounces sold 32,140 25,760 19,540
Cash Costs (1) 825 928 1,049
Less: Inventory NRV Adjustment (2) (47)   (12)  
Cash Costs excluding NRV adjustment 778 916 1,049
Corporate general and administration costs 103 132 169
Underground development 149 198 215
Site infrastructure projects 139   104   174
All-in sustaining costs before the following 1,169 1,350 1,607
South dam 19 256 190
Marine outfall pipeline 131 20 10
Gravity concentrator project 90 4
Add back: Inventory NRV Adjustment (2) 47   12  
All-in sustaining costs   1,456   1,642   1,807

Balance Sheet

TMAC completed several initiatives in the third quarter and in the month
of October to strengthen the balance sheet.

On October 3, 2018, TMAC completed a $90 million equity financing for
aggregate gross proceeds of $90.0 million and net proceeds of
approximately $88.0 million, or 98% of the gross proceeds. The equity
financing consisted of a concurrent public offering and a private
placement of common shares and flow-through common shares at a blended
offering price of $4.40 per share.

On October 31, 2018, in addition to the regularly scheduled $8.4 million
(US$6.5 million) principal payment, the Company made an additional
voluntary prepayment of $36.3 million (US$27.7 million) against its debt
facility. The additional voluntary prepayment had no fees associated
with it and reduces the scheduled January 31, 2019 principal payment to
$11.4 million (US$8.8 million). The interest savings on the voluntary
prepayment are expected to be approximately $0.8 million.

(1) Cash Costs, AISC (All-in Sustaining Costs) and EBITDA (Earnings
before interest, taxes, depreciation and amortization) refer to non-IFRS
measures. Refer to the Management Discussion and Analysis for further
information on these measures.

(2) The net realisable value adjustment was processed against gold
and stockpile inventory. Refer to the management discussion and analysis
for further details.


TMAC filed its third quarter 2018 Financial Statements and MD&A for the
period ended September 30, 2018. The documents may be found on the
Company’s website at
or, once filed, on SEDAR at
Please read this news release in conjunction with these documents.


Senior management will host a conference call on Friday, November 9,
2018 at 10:00 am (ET).

In order to participate in the conference call please dial (416)
(Toronto local or international) or 1 (800) 319-4610
for toll-free within Canada and the United States at least five minutes
prior to the scheduled start of the call. Alternatively, a live audio
webcast of the conference call will be available at
An archive of the webcast will be available on the Company’s website.


November 27 – 28, 2018

Jason Neal, President and Chief Executive Officer, will present on
Wednesday, November 28, 2018 at 10:50 am ET at the 2018 Scotiabank
Mining Conference, taking place in Toronto, ON, Canada.


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 thereof or comparable terminology.
Such forward-looking information includes, without limitation, bringing
the timing for bringing Madrid and Boston into production and the
throughput and recoveries ramp up at Doris throughout 2018.

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 of
the Company to be materially different from any plans, intentions,
activities, results, performance or achievements expressed or implied by
such forward-looking information. See “Risk Factors” in the Company’s
Annual Information Form dated February 22, 2018 filed on SEDAR at
for a discussion of these risks.


TMAC Resources Inc.
Jason Neal, 416-628-0216
and Chief Executive Officer
Ann Wilkinson, 416-628-0216
President, Investor Relations
Financial Communications Inc.

Daniel Gordon, (416) 644-2020 or
(514) 939-3989