Mr. Patrick Balit reports

RED EAGLE MINING ANNOUNCES RIGHTS OFFERING

Red Eagle Mining Corp. has provided an operational update and has arranged an equity rights offering. Gold grades in the production headings have been in line with feasibility study estimates, averaging 5.5 grams per tonne gold during May, 2017. However, challenging ground conditions have led to unacceptable dilution and gold losses using the current mining method. Consequently, to get the mine on a firm footing, management has deemed it prudent to halt stope production and move to a new mining method that will require the construction of a paste backfill plant. Once in place, there will be both better grade control and in particular gold losses will be minimized. This temporary suspension of mining high-grade stopes ensures that gold production from these areas will be maximized.

While the paste backfill plant is constructed, production crews will be diverted to underground mine development. This will ensure greater operational flexibility once the paste backfill plant is in operation. In order to finance the paste backfill plant and to provide working capital before gold production resumes, Red Eagle Mining is undertaking a rights offering.

A rights offering was chosen to give the opportunity to all existing shareholders to participate. Major shareholders have informed Red Eagle Mining that they intend to fully exercise their rights.

Rights offering

Red Eagle Mining has filed a rights offering circular with the securities regulatory authorities in each of the provinces and territories of Canada in connection with an offering of rights to acquire units of Red Eagle Mining for gross proceeds of up to approximately $46-million. Pursuant to the rights offering, each eligible registered holder of common shares of Red Eagle Mining as at the close of business on July 5, 2017, will receive one right for each common share held. For each two rights the holder will be entitled to subscribe for one unit at a subscription price of 35 cents per unit. Each unit will consist of:

• One common share of Red Eagle Mining;
• One transferable common share purchase warrant exercisable into one common share of Red Eagle Mining at a purchase price of 50 cents per common share for a period of five years from the issue date. The warrants will be listed for trading on the Toronto Stock Exchange subject to fulfilling the TSX minimum listing conditions.

The rights issued under the rights offering will be evidenced by transferable rights certificates or equivalent thereof which will expire at 4 p.m. Toronto time on Aug. 4, 2017, after which time unexercised rights will be void and of no value. The rights offering includes an additional subscription privilege under which eligible holders of rights, who fully exercise their rights, will be entitled to subscribe, on a pro rata basis with other shareholders who participated in the oversubscription, for units that have not been purchased under the rights offering.

The common shares trade on the TSX and will commence trading on an ex rights basis on June 30, 2017. The rights will be listed for trading on the TSX under the symbol R.RT commencing on June 30, 2017, and will be delisted from the TSX at 12 p.m. Toronto time on the expiry date.

The notice of rights offering and related rights certificates will be mailed to all registered holders of common shares as of the close of business on the record date. Eligible registered shareholders, as described in the rights offering circular, who wish to exercise their rights must forward a completed rights certificate together with the applicable funds to Computershare, the rights agent, on or before the expiry date. Shareholders who own their common shares through an intermediary, such as a bank or broker, will receive materials and instructions from their intermediary.

Use of proceeds from the rights offering is for underground development ($10-million (U.S.)), paste backfill plant ($3-million (U.S.)), underground delineation drilling ($2-million (U.S.)) and working capital.

Any questions may be directed to the company's information agent, Laurel Hill Advisory Group, at 1-877-452-7184 (North American toll-free) or 1-416-304-0211 (collect calls), or by e-mail at assistance@laurelhill.com.

Operations update

Mine development

Underground development continues to advance well in competent granodiorite without support. The main and secondary ramps have advanced 3.5 kilometres from the portal providing access to the minus-100-, minus-125- and minus-150-metre levels, measured from surface. Development of an average of 20 metres per day is planned for the remainder of 2017. Upon completion of the program an additional four kilometres of development will have been completed giving access to 54 ore development headings, allowing much more production flexibility.

Challenging ground conditions have been encountered in the stopes, particularly close to the saprolite contact and historic workings, resulting in slower mining rates and greater dilution than planned. Accordingly, the mining method will be adjusted from shrinkage to conventional and mechanized cut and fill, optimizing mining the narrower high-grade veins and reducing dilution and ore loss.

In order to change the mining method to underhand cut and fill stoping it is necessary to implement a pasteback fill program, utilizing waste tailings material. Paste backfill has been successfully tested and an add-on plant is being designed. Capital expenditures are estimated at $3-million (U.S.) and the projected timeline to completion is up to five months. In addition, to facilitating the change in mining method, paste backfill has provided much improved ground stability. Until the paste backfill plant is completed, mining ore in stopes will be temporarily suspended as it is not being efficiently extracted under the current method resulting in unnecessary dilution and ore loss. Development ore will continue to be mined and stockpiled. Upon completion, the additional development and paste backfill system will allow consistent production of 750 tonnes per day initially ramping up to 1,000 tonnes per day.

Delineation drilling

The 2017 mining stope delineation underground drill program has commenced as planned, utilizing increased access to the orebody from the mine development program. The program commenced in June with two rigs, ramping up to four rigs by September. Results will be released as received throughout 2017. The 2016 delineation drill program positively reconciled grade against the resource model.

Mill

The mill processing facility commissioning is complete and exceeds by 20 per cent the nameplate design throughput, with the capability to process up to 1,200 tonnes per day. Stockpiled ore from the continuing mine development program will be blended with ore stoping production upon completion of the paste backfill system. Gold recoveries have been consistently higher than 90 per cent. Production guidance for 2018 is for more than 50,000 ounces of gold.

About Red Eagle Mining Corp.

Red Eagle Mining is a gold producer focused on building shareholder value through acquiring, developing and operating gold projects 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 production. Red Eagle Mining also controls Red Eagle Exploration Ltd. which owns 100 per cent of the Vetas gold, California gold and Santa Ana silver projects, and is actively consolidating additional high-grade precious metal deposits in Colombia.

We seek Safe Harbor.