Mr. Mark Backens reports

TIMMINS GOLD OUTLINES COMPLETE PRE-CONSTRUCTION PROGRAM FOR ANA PAULA

Timmins Gold Corp.'s board of directors has approved a preconstruction program, including commencement of a feasibility study, for the Ana Paula gold project in Guerrero state, Mexico. The feasibility study is advancing on the back of a positive preliminary economic assessment (PEA) that was updated earlier this year and indicates that Ana Paula represents a robust, high-margin, open-pit mining project at a gold price of $1,200 (all amounts are in U.S. dollars unless otherwise noted).

Preconstruction activities will commence immediately, and will include feasibility work, infill drilling, metallurgical testwork, and environmental baseline and permitting activities. With this $9.2-million budget, the company expects the feasibility study to be complete by the third quarter of 2017, and to have all permits required to start construction by the first quarter of 2018.

The disassembly program of the El Sauzal facilities, acquired in October, 2015, from Goldcorp, is complete, on time and on budget, with zero lost-time accidents.

"We are extremely pleased to commence work on the feasibility study," stated Mark Backens, interim chief executive officer. "With the improvements in our balance sheet and operations at the San Francisco mine, we can begin to unlock the value of Ana Paula. We continue to view this project as one of the best development-stage gold projects in North America. With its higher grade, low cash costs, high capital efficiency and industry-leading internal rate of return (IRR), Ana Paula will be a very profitable mine. Further, the El Sauzal facilities will provide us a head start to rapidly advance the project to construction-ready status."

PEA summary

On March 23, 2016, the company announced results of an updated PEA for the Ana Paula gold project, highlights of which are presented below:

• After-tax net present value at 5 per cent (NPV5) of $248-million and IRR of 43 per cent at $1,200 per gold ounce;
• After-tax net present value at 5 per cent of $295-million and IRR of 48 per cent at $1,300 per gold ounce;
• Average annual production of 116,000 gold ounces and 239,000 silver ounces over an 8.2-year mine life;
• Construction capital costs of $121.7-million, including contingency costs of $19.8-million;
• Cash costs of $470 per gold ounce, cash costs of $442 per gold ounce on a byproduct basis and all-in sustaining cash costs of $507 per gold ounce.

Preconstruction program

The estimated budget for the preconstruction program is approximately $9.2-million and includes:

• $2.2-million, drilling, including soil sampling and trenching (10,000 metres of core drilling for resource definition, 2,000 metres of core drilling for geotechnical work and 4,000 metres of reverse circulation drilling for condemnation);
• $3.4-million, feasibility work program;
• $3.6-million, environmental studies and construction permits.

The company has contracted M3 Engineering & Technology Corp. to lead its feasibility study. M3 has extensive experience in Mexico. More specifically, M3 was the lead engineering firm responsible for the feasibility study and the EPCM for Torex Gold's El-Limon Guajes mine in Guerrero, which is in close proximity to the Ana Paula gold project.

Qualified persons

Technical information contained in this news release was reviewed and approved by Taj Singh, MEng, PEng, the vice-president of engineering and project development for Timmins, who is recognized as a qualified person under NI 43-101.

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