Mr. Robert Bell reports

RED EAGLE MINING DECLARES COMMERCIAL PRODUCTION AT THE SAN RAMON GOLD MINE AND REPORTS 2016 FINANCIAL RESULTS

Red Eagle Mining Corp. has released its financial results for the year ending Dec. 31, 2016, and is providing business highlights to date including:

• Declared commercial production at the San Ramon gold mine on March 31, 2017;
• Acquired the high-grade California gold project through Red Eagle Mining's controlled public subsidiary Red Eagle Exploration (see news releases dated Feb. 15, 2017, and March 15, 2017);
• Closed bought deal equity financing of common shares with the BMO Capital Markets for gross proceeds of $17.25-million including its entire overallotment option (see news release dated Feb. 21, 2017);
• Brian Peer was appointed general manager of the Santa Rosa gold project on Feb. 18, 2017. Mr. Peer has 31 years of mining experience including 19 years in senior management. Most recently, he was country manager, Mexico, for Alamos Gold, responsible for the safe and efficient operations of two mines and the development of an additional two mines. Previously, Mr. Peer worked for Coeur Mining and for 10 years at Barrick Gold;
• Robert Bell retired from day-to-day operations and the position of chief operating officer of Red Eagle Mining. However, he remains an active member of the board of directors and the technical and sustainability committee of both Red Eagle Mining and Red Eagle Exploration;
• Completed 2016 detailed ore production stope delineation drilling at the San Ramon gold mine. Results from the delineation drilling exceeded expectations with many intercept grades significantly higher than the reserve grade of 5.2 grams per tonne gold (see news release dated Jan. 17, 2017);
• First gold poured at the San Ramon gold mine (see news release dated Nov. 7, 2016);
• Graduated to the Toronto Stock Exchange (see news release dated Nov. 3, 2016) and began trading on the Lima Stock Exchange under symbol R (see news release dated Sept. 20, 2016);
• Completed private placements of common shares for gross proceeds of approximately $20-million (see news releases dated April 21, 2016, and July 14, 2016);
• Acquired the high-grade Santa Ana historic silver mine through Red Eagle Mining's controlled public subsidiary Red Eagle Exploration (see news release dated Aug. 10, 2016).

Development and construction of the San Ramon gold mine and mill

During the fourth quarter of 2016, construction and commissioning of the mill were completed with first gold pour in November, 2016. The processing facility has reached a steady operating throughput capability and underground mining is progressing at an increasing rate with the opening up of additional ore development headings.

Mine development

Underground development continues to advance well. Since third quarter 2016 when the decline moved through oxidized material, requiring additional support, into competent granodiorite, daily advance rates have substantially increased from three metres per day up to 27 metres per day. The main and secondary ramps have advanced 2.4 kilometres from the portal. A 57-metre vertical ventilation shaft has been completed and connected to the underground workings.

Initial poor ground conditions were encountered, particularly close to the saprolite contact and historic workings, resulting in slower mining rates and greater dilution than planned in start-up. Accordingly, the mining method has been adjusted to conventional mechanized cut and fill stoping, stope lengths have been reduced to 40 metres, and ground controls are improving to minimize dilution. The minus-100- and minus-125-metre levels are currently being mined with seven ore development headings.

Mill

The processing facility commissioning is complete and exceeding design throughput with the capability to process up to 1,200 tonnes per day. The high-voltage transmission line construction is complete and energized, connecting the project to the national electrical grid. The dry waste management facility is complete with filtered tailings being dry stacked. Gold recoveries have reached 93 per cent and are on track to the design rate of 96 per cent.

Safety

Operations have continued to adopt best practices in safety with many awareness programs in place and monitoring occurring on a continuous basis. The results have been demonstrated in the safety statistics to date.

Social and environmental

Red Eagle Mining continues to maintain positive relationships with and be involved with the local communities. Continuous information flow has been maintained with all stakeholders regarding the advances of the operations. Red Eagle Mining is committed to maximizing local employment and is proud to have already employed 56 per cent of its work force from the local municipality of Santa Rosa de Osos. Red Eagle Mining continues to strictly adhere to the terms of its environmental licence and the associated environmental management plan. The environmental agency, along with local committees, has maintained a strict monitoring program as the project has progressed with visits at least monthly. Red Eagle Mining has received positive inspection reports from all inspections.

March, 2017, operating results and outlook

Twenty-three thousand six hundred sixty-six tonnes of ore were processed during March (760 tonnes per day). Higher-grade ore was blended with lower-grade stockpiles to ensure operating efficiency throughout the month. One thousand seven hundred fifty-eight ounces of gold were produced during March.

Underground production crews continue to build on their expertise and efficiency. Production rates and grade continue to increase as the underground team adjusts to more controlled stoping methods and additional production faces open up. The blending of lower-grade stockpiles will cease as production rates increase.

Red Eagle Mining declared commercial production at the end of first quarter 2017 and expects to advance to positive cash flows from operations in the second quarter. Production guidance is 35,000 to 40,000 ounces of gold for 2017 and 60,000 to 70,000 ounces of gold for 2018.

Exploration drilling is currently under way testing the eastern extent of the San Ramon gold deposit and multiple targets approximately three kilometres to the west of the processing facility.

Ore production stope delineation drilling

In June, 2016, Red Eagle Mining commenced detailed ore production stope delineation drilling at the San Ramon gold mine. The 10,000-metre program was drilled from eight surface pads spaced over 300 metres of strike length. One hundred seven diamond drill holes (SRD-0001 to SRD-0107) were drilled on approximately 15-metre centres from surface to a vertical depth of 160 metres from surface. The program only infill drilled a portion of the reserves at the San Ramon gold mine which overall extend for two kilometres of strike length and to 250 m depth. The deposit is also open both at depth and on strike to the east where exploration drilling is currently under way.

Highlights from the program include the following intercepts:

• SRD-0027 -- 10.73 m at 8.91 grams per tonne gold from 60.66 m downhole (including 1.20 m at 21.39 g/t Au and 1.10 m at 35.37 g/t Au);
• SRD-0029 -- 6.70 m at 12.69 g/t Au from 69.80 m downhole (including 1.40 m at 45.06 g/t Au);
• SRD-0038 -- 8.25 m at 5.89 g/t Au from 37.25 m downhole (including 0.65 m at 36.17 g/t Au);
• SRD-0038 -- 5.45 m at 11.53 g/t Au from 54.55 m downhole (including 0.92 m at 30.81 g/t Au);
• SRD-0043 -- 2.70 m at 20.56 g/t Au from 81.20 m downhole (including 0.93 m at 49.26 g/t Au);
• SRD-0044 -- 4.25 m at 20.60 g/t Au from 89.75 m downhole (including 0.74 m at 78.35 g/t Au and 0.45 m at 40.21 g/t Au);
• SRD-0046 -- 12.56 m at 7.66 g/t Au from 67.64 m downhole (including 1.05 m at 48.70 g/t Au);
• SRD-0046 -- 9.68 m at 7.89 g/t Au from 94.70 m downhole (including 0.70 m at 48.88 g/t Au);
• SRD-0046 -- 2.07 m at 42.62 g/t Au from 130.70 m downhole;
• SRD-0047 -- 5.21 m at 7.47 g/t Au from 93.15 m downhole (including 1.41 m at 19.18 g/t Au);
• SRD-0049 -- 7.16 m at 29.03 g/t Au from 131.82 m downhole (including 2.31 m at 73.96 g/t Au);
• SRD-0054 -- 3.92 m at 12.83 g/t Au from 50.78 m downhole (including 1.40 m at 30.70 g/t Au);
• SRD-0068 -- 2.90 m at 27.35 g/t Au from 69.90 m downhole;
• SRD-0083 -- 4.05 m at 10.45 g/t Au from 68.30 m downhole;
• SRD-0091 -- 2.40 m at 23.34 g/t Au from 72.60 m downhole;
• SRD-0093 -- 12.60 m at 16.47 g/t Au from 89.90 m downhole (including 0.50 m at 83.60 g/t Au);
• SRD-0101 -- 5.15 m at 33.39 g/t Au from 89.55 m downhole (including 0.60 m at 75.56 g/t Au);
• SRD-0105 -- 6.15 m at 12.82 g/t Au from 90.15 m downhole (including 0.95 m at 41.40 g/t Au.

Results from the delineation drilling exceeded expectations with many intercept grades significantly higher than the reserve grade of 5.2 g/t Au. For complete drill results, please refer to press releases dated June 1, 2016, Aug. 16, 2016, Sept. 7, 2016, Sept. 14, 2016, Dec. 6, 2016, and Jan. 17, 2017.

Selected financial data

The selected financial data in the table are derived from the audited consolidated financial statements for the 12 months ended Dec. 31, 2016, as prepared in accordance with international financial reporting standards.

 
                        SELECTED FINANCIAL DATA
                   (in thousands, except per share)

                                                For the year ended   
                                    Dec. 31, 2016    Dec. 31, 2015

Net loss                                   $9,209           $6,706
Comprehensive loss                          8,842            7,437
Basic and diluted loss per share             0.04             0.05
Cash and cash equivalents                   5,642           10,348
Total assets                              163,835           62,583
Total liabilities                         113,580           33,574
Shareholders' equity                       50,255           29,009

For the year ended Dec. 31, 2016, Red Eagle Mining reported a net loss of $9.2-million (2015: $6.7-million). The net loss increased compared with the 2015 period primarily due to increased expenses associated with the ramp-up of the San Ramon gold mine and mill, which also resulted in the increased values of total assets and shareholders' equity. The increase in total liabilities primarily relates to amounts outstanding on the construction credit facility.

This press release should be read in conjunction with the consolidated financial statements and management's discussion and analysis for the year ended Dec. 31, 2016. These documents can be found on Red Eagle Mining's website or profile at SEDAR.

The technical information contained in this news release has been reviewed and approved by Red Eagle Mining's vice-president of exploration, Jeff Toohey, PEng, who is a qualified person as defined under National Instrument 43-101.

About Red Eagle Mining Corp.

Red Eagle Mining is a gold producer focused on building shareholder value through discovering, developing and operating gold projects with low costs and low technical risks in Colombia, a jurisdiction with prolific historic production but until recently limited modern exploration. Red Eagle Mining owns 100 per cent of the Santa Rosa gold project, where the San Ramon gold mine has commenced commercial production. Red Eagle Mining also operates and controls Red Eagle Exploration which owns 100 per cent of the California gold, Vetas gold and Santa Ana silver projects, and is actively consolidating additional high-grade precious metal deposits in Colombia.

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