Mr. Wojtek Wodzicki reports

NGEX REPORTS 2018 RESULTS

NGEx Resources Inc. has released its results for the year ended Dec. 31, 2018.

Highlights:

• During the fourth quarter of 2018, the company completed a preliminary feasibility study (PFS) on its 100-per-cent-owned Josemaria project in San Juan province, Argentina. The PFS evaluated a stand-alone development option for the Josemaria project in Argentina, which contemplates an open-pit mine with a shallow, high-grade starter pit. The study was completed and announced on Nov. 20, 2018, showing positive economics for the Josemaria project with a $2.0-billion (U.S.) after-tax net present value using an 8-per-cent discount rate and 19-per-cent internal rate of return.
• With the PFS complete, the company intends to advance Josemaria toward production by completing a feasibility study (FS), securing water rights and advancing its environmental permitting plans. Fieldwork in support of the feasibility study, including resource and geotechnical drilling, began during the fourth quarter.
• Copper-gold discovery at Nacimientos project: A three-hole scout drilling program was carried out at the company's new Nacimientos copper/gold project, located in San Juan province, Argentina, during the second quarter of 2018. Drill results confirmed the presence of an extensive porphyry copper-gold system and a large epithermal system under younger cover rocks. These encouraging results will be used to guide further exploration in the 2019 to 2020 field season.
• On Feb. 1, 2019, the company completed a $20-million private placement, selling an aggregate of 20 million common shares for net proceeds of $19.7-million. Net proceeds of the private placement will be used toward continuing work programs in Argentina and Chile, as well as for repayment of balance drawn on the debenture and general corporate purposes.

Outlook

The company continues to optimize and derisk its advanced-stage projects by exploring options and alternatives to advance each toward eventual development. Management is pursuing the following opportunities to add value to the company's projects:

• Completing a feasibility study of the Josemaria deposit as a stand-alone project;
• Continuing environmental baseline studies that will provide information required to prepare an environmental impact assessment report in support of project permitting;
• Exploring opportunities for potential development partnerships, as well as synergies and co-operative development plans with other regional operators to use spare capacity of processing plants and infrastructure, including port facilities. Innovative development concepts, such as those used at Teck and Goldcorp's Nueva Union project and Barrick and Goldcorp's Norte Abierto project, demonstrate an opportunity to share infrastructure on a regional scale by connecting multiple deposits.

The company is targeting completion of a feasibility study on the Josemaria project by the second quarter of 2020, with the objective of advancing the project toward permitting and eventual development. The company plans to review development options for the Los Helados project. In addition to work programs planned for the company's advanced-stage projects, the company will continue to advance its early-stage exploration projects in the coming season. In particular, the company will use the information gathered from the initial scout drilling campaign at Nacimientos to plan a more extensive drill program. The company will also continue to evaluate other exploration projects for potential acquisitions and to lay the groundwork for its next generation of projects.

To devote adequate resources toward the completion of an FS and development of the Josemaria project, the company is considering a restructure of its operations through a transaction that would separate the Josemaria project from the company's other projects through a plan of arrangement under the Canada Business Corporations Act. The completion of any spinout and any listing of the resulting entity would be subject to completion of a definitive agreement, regulatory approval, including the approval of the Toronto Stock Exchange, the approval of shareholders of the company and the Supreme Court of British Columbia. The final terms of the structure, including the spinout ratio to NGEx shareholders, retained equity level and timing of the record date are expected to be determined in due course, and remain subject to definitive documentation and approval by the board of directors. Notwithstanding the foregoing, the board of directors reserves the right to elect not to proceed with any spinout.

              SELECTED FINANCIAL INFORMATION
                      (in thousands)
  
                             Dec. 31, 2018       Dec. 31, 2017

Cash                                $5,029              $6,789
Working capital                     (3,740)               (986)
Mineral properties                  16,013              10,056
Total assets                        24,090              18,299
Long-term liabilities                  369                 580
                                 ---------           ---------

Liquidity and capital resources

The company began the process of securing additional sources of financing for its exploration program and operations during the fourth quarter of 2018 by securing a $5-million (U.S.) unsecured credit facility. The amounts drawn on the 2018 facility were repaid in full on Feb. 5, 2019, following the completion of the $20-million private placement, which closed on Feb. 1, 2019. The company plans to use the net proceeds of the private placement toward continuing work programs in Argentina and Chile, including: a feasibility study on the Josemaria project; engineering and exploration studies on the company's other projects; repayment of the balance drawn on the company's credit facility, which was completed on Feb. 5, 2019; and general corporate purposes. On a continuing basis, management evaluates and adjusts as necessary its planned level of activities, including planned exploration and administrative costs to ensure adequate levels of working capital are maintained.

The reduction in cash and working capital from the prior year was attributable to continuing exploration activities, including mineral property acquisitions and corporate working capital expenditures, during 2018. The $3.7-million working capital deficiency as at Dec. 31, 2018, was remediated upon completion of the private placement in February, 2019.

                                    FINANCIAL RESULTS
                         (in thousands, except per-share amounts) 

                                                 Three months ended Dec. 31,       Year ended Dec. 31,
                                                          2018         2017         2018         2017

Exploration expenses                                    $5,350       $1,384      $11,597       $5,053
General and administration and other items (G&A)           798          532        3,436        2,933
Net loss                                                 6,328        1,729       15,119        7,912
Basic and diluted loss per share                          0.03         0.01         0.07         0.04
                                                       -------      -------      -------      -------

The company's net loss for the year ended Dec. 31, 2018, totalled $15.1-million. Exploration expenditures are the most significant expenditures of the company and reflect the costs of conducting exploration activities and project investigations on its South American projects. The increase in exploration expenditures for the year ended Dec. 31, 2018, compared with the prior year, is due to the advancement of the Josemaria project with the completion of a PFS and carrying out fieldwork in support of a feasibility study during the fourth quarter of 2018. The company has also completed a three-hole scout drilling program to test and confirm the geological model at Nacimientos, which has resulted in higher exploration costs incurred during the year.

General and administration (G&A) costs for 2018 increased from $2.9-million to $3.4-million, as a result of higher share-based compensation, which is a non-cash cost reflecting the expenses associated with the vesting of outstanding options during the period. Excluding share-based compensation, G&A costs for the year ended Dec. 31, 2018, totalled $2.6-million, which is relatively consistent with the $2.5-million reported for the prior year. The company incurred higher promotion and public relations costs as management hosted a site visit for investors and analysts, participated in more industry conferences, and undertook additional promotional marketing trips during the year. The increase in public relations costs was offset by a reduction in incentive bonuses paid in 2018.

Qualified persons

Technical disclosure for the company's projects included in this press release has been reviewed and approved by Bob Carmichael, PEng (British Columbia). Mr. Carmichael is NGEx's vice-president of exploration and a qualified person (QP) under National Instrument 43-101 (Standards of Disclosure for Mineral Projects) and Jamie Beck, PEng. Mr. Beck is NGEx's vice-president, corporate development and projects, and a qualified person under National Instrument 43-101 (Standards of Disclosure for Mineral Projects).

About NGEx Resources Inc.

NGEx is a Canadian mineral exploration company with projects in Argentina and Chile. The company's main focus is on advancing the development of its two large copper-gold deposits, Los Helados and Josemaria, located in Chile's Region III and adjacent San Juan province, Argentina. The company owns a 100-per-cent interest in the Josemaria project and is the majority partner and operator for the Los Helados project, subject to a joint exploration agreement with its joint exploration partner in Chile, Pan Pacific Copper. The company is also actively seeking new exploration projects and carrying out earlier-stage exploration on projects with large-scale potential.

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