Mr. Alberto Morales reports

ANDEAN PRECIOUS METALS REPORTS Q4/FY 2023 RESULTS; MEETS 2023 REVISED PRODUCTION GUIDANCE

Andean Precious Metals Corp. has released its operating highlights and financial results for the three and 12 months ended Dec. 31, 2023. All amounts are expressed in United States dollars, unless otherwise noted.

This news release should be read together with Andean's management discussion and analysis (MD&A) and audited consolidated financial statements for the three and 12 months ended Dec. 31, 2023, which are available under the company's profile on SEDAR+ and on Andean's website.

"In just 12 months, we have significantly advanced our growth strategy and taken meaningful steps to reposition the company," said Alberto Morales, executive chairman and chief executive officer. "In 2023, San Bartolome successfully transitioned to an oxide processor focused on increasing cash flow generation. Last year we acquired Golden Queen, providing geographical diversification and adding a producing gold and silver mine with expected upside opportunities. With the addition of a second producing asset, we are poised to substantially increase our gold and silver production, while increasing our operating cash flow."

Mr. Morales continued: "While our team achieved significant milestones in 2023, we are just beginning to reap the rewards of our efforts. At Golden Queen, our focus is on optimizing mine operations, implementing a new mine plan, driving cost efficiencies and delivering positive exploration results. Meanwhile, at San Bartolome, our goal is to improve operating cash flow following the completion and commissioning of our FDF processing facility. As we think about 2024, our focus will be on streamlining and enhancing our operations in Bolivia and the United States while actively seeking additional acquisitions to sustain and accelerate our growth."

Q4 2023 and full-year 2023 highlights:

• Met revised full-year 2023 production guidance of between 4.6 million ounces and 4.8 Moz silver equivalent:
  • The company produced 4.7 Moz of silver equivalent in 2023, excluding Golden Queen's production of 500,000 oz AgEq, or 6,528 oz gold equivalent, from Nov. 24, 2023, to Dec. 31, 2023. Production for the full year 2022 was five Moz AgEq;
  • Q4 2023 production was 1.2 Moz AgEq from San Bartolome, excluding Golden Queen's production of 500,000 oz AgEq, or 6,528 oz AuEq, from the acquisition date to Dec. 31, 2023.
• Increased revenue; achieved record quarterly revenue in Q4 2023:
  • In Q4 2023, the company achieved record quarterly revenue of $48.8-million from the sale of two Moz AgEq at an average realized silver price of $24.42 per ounce, compared with Q4 2022 revenue of $25.7-million from the sale of 1.2 Moz AgEq at an average realized silver price of $21.19 per ounce;
  • For the year ended Dec. 31, 2023, revenue was $125.3-million, $17.3-million higher than full year 2022. The increase of $17.3-million was primarily attributable to $13.3-million of incremental revenue from Golden Queen and $4-million from higher average realized silver prices offset by lower sales at San Bartolome.
• Higher gross operating income: The company recorded gross operating income of $5.1-million and $14.2-million for Q4 2023 and full year 2023, respectively, compared with $1.1-million and $9.7-million for Q4 2022 and full year 2022, respectively. Gross operating income for both Q4 2023 and full year 2023 included $300,000 for Golden Queen from the acquisition date to Dec. 31, 2023.
• Higher net income primarily due to $36.5-million gain recognized on bargain purchase of Golden Queen:
  • For Q4 2023, the company reported net income of $38.1-million, or 24 cents per basic share and 21 cents per diluted share for Q4 2023, compared with a net loss of $3.3-million, or two cents per basic and diluted share for Q4 2022;
  • For 2023, net income was $38.5-million, or 24 cents per basic and 22 cents per diluted share, compared with a net loss of $10.1-million, or six cents per basic and diluted share in 2022.
• Increased net cash flow provided from operating activities: Net cash flow provided from operating activities was $5.1-million for Q4 2023 and $4.2-million for full year 2023, compared with net cash flow used in operating activities of $3-million and $2.7-million for Q4 2022 and full year 2022, respectively.
• Earnings before interest, taxes, depreciation and amortization (EBITDA): EBITDA was $40.7-million and $50.2-million for Q4 2023 and full year 2023, respectively, compared with negative EBITDA of $1.3-million and $1.6-million for Q4 2022 and full year 2022, respectively. The increase was mainly due to the $36.5-million purchase gain recognized on the acquisition of Golden Queen, an increase in sales volumes and a higher average realized silver price per ounce sold.
• Adjusted EBITDA: Adjusted EBITDA recognized for Q4 2023 and full year 2023 were $7.9-million and $20.1-million, respectively, compared with negative $1-million and $3.5-million for Q4 2022 and full year 2022, respectively. The increase was primarily due to growth in sales volumes and a higher average realized silver price per ounce sold and partially offset by an increase in non-recurring corporate development costs.
• Executing on growth initiatives:
  • Acquired a 100-per-cent interest in Golden Queen and its Soledad Mountain mine and heap leach operation from Auvergne Umbrella LLC:
    • The company's consolidated financial statements include $13.3-million in revenue and $400,000 in net income before income tax from Golden Queen from the acquisition date to Dec. 31, 2023. Had the transaction been completed on Jan. 1, 2023, Golden Queen would have contributed revenue of $91.3-million for the period of Jan. 1, 2023, to Dec. 31, 2023, and the company's full-year 2023 consolidated revenue would have been $216.7-million. Commenced postacquisition plans to optimize operations of Golden Queen that are expected to increase production, improve costs and extend the mine life.
  • San Bartolome has fully transitioned to a material processing operation with a focus on sourcing high-grade, high-margin material. Additionally, the company expects to commence processing tailings material from its fines disposal facility (FDF) in the first half of 2024. During 2023, San Bartolome signed several long-term contracts for oxidized material, including:
    • In June, 2023, signed a 24-month agreement to purchase 170,000 tonnes of high-grade (average silver grade of 354 grams per tonne) from the Alta Vista project owned by Empresa Minera Bedrock SRL;
    • In September, 2023, signed an agreement with Silver Elephant Mining Corp. granting Manquiri an exclusive right to purchase up to 800,000 tonnes (average silver grade of 223 g/t) of oxide material from Silver Elephant's Paca silver project until Jan. 31, 2029, or upon receiving the specified quantity.
  • A preliminary feasibility study technical report for San Bartolome mine, Bolivia, which was filed on SEDAR+ on Feb. 16, 2024, included an updated mineral resource and mineral reserve estimate; San Bartolome's life of operation is 4.6 years based on a recoverable proven and probable reserve of 11.95 Moz with an average grade of 93 g/t Ag.
  • A feasibility study update technical report on the Soledad Mountain heap leach project was filed on SEDAR+ on Jan. 31, 2024. Golden Queen's new life of mine average annual production is expected to include up to 65,000 oz of gold and 466,000 oz of silver for five years.
• Balance sheet maintained for continuing strategic growth:
  • The company had total liquid assets of $72.8-million as at Dec. 31, 2023, including cash of $64.9-million, accounts receivable of $900,000, VAT (value-added tax) certificates of $1.8-million and $5.2-million of marketable securities. This compares with $90.4-million of total liquid assets as at Dec. 31, 2022, which included cash of $80.7-million, accounts receivable of $200,000, VAT certificates of $4.1-million and $5.3-million in marketable securities, translating into negative net debt. The reason for the decrease in liquid assets is primarily due to the acquisition of Golden Queen, including an upfront cash payment, debt repayment and capital expenditures.
  • There were zero-cost collar contracts in place at Dec. 31, 2023, for 300,000 ounces of silver associated with San Bartolome's production. The zero-cost collar contracts were written at an average put strike price of $23 per ounce of silver and an average call strike price of $30 per ounce of silver, for 100,000 ounces per month for the period January to March, 2024.
  • As at Dec. 31, there were zero-cost collar contracts in place for 12,000 ounces of gold relating to Golden Queen's production. The zero-cost collar contracts were written at an average put strike price of $2,000 per ounce of gold and an average call strike price of $2,212 per ounce of gold, for 2,000 ounces per month for the period January to June, 2024.
• Responsible operations: The company reported no lost-time incidents and no negative environmental issues during 2023.
• Normal course issuer bid (NCIB):
  • Pursuant to an NCIB commencing Oct. 4, 2022, and expiring on Oct. 3, 2023, the company repurchased and cancelled a total of 3,160,100 shares at an average purchase price of 79 Canadian cents per share for a total of $1.9-million ($2.5-million (Canadian)).
  • On Dec. 21, 2023, the company renewed its NCIB. As of March 25, 2024, the company has repurchased 5,333,291 common shares at an average purchase price of 70 Canadian cents per share for a total of $2.8-million ($3.7-million (Canadian)).
  • Since the inception of its NCIB in the fall of 2022, the company has repurchased 8,493,391 common shares at an average purchase price of 73 Canadian cents per share for a total of $4.6-million ($6.2-million (Canadian)).

The company's guidance for its annual production, operating costs and capital expenditures is discussed in detail herein.

Golden Queen

At Golden Queen, 2024 production is expected to be 60,000 AuEq (plus/minus 5 per cent) based on current mining plans and in line with the technical report issued in January, 2024. As announced, the fire incident at Golden Queen in December, 2023, will impact its Q1 2024 production. However, production will ramp up to between 15,000 oz AuEq and 18,000 oz AuEq on average per quarter from Q2 2024 to Q4 2024. Total mine tonnage production is estimated at 26.8 million tonnes (plus/minus 5 per cent) including 3.9 million tonnes (plus/minus 5 per cent) of ore estimated to be stacked to the leach pad resulting in a strip ratio of 5.9:1. Mine ore grades are estimated to average 0.805 g/t AuEq in 2024, a decrease from 0.869 g/t AuEq in 2023. Heap leach crushing and stacking activities will add 3.9 million tonnes in 2024 to the pad resulting in production of 60,000 oz AuEq (plus/minus 5 per cent). Apparent recovery for 2024 is estimated at 63.2 per cent.

San Bartolome

Mining activities at San Bartolome were suspended in Q3 2023. Production of five Moz AgEq is expected to be derived mostly from third party purchased material sourced primarily from Cachi Laguna, Cerro Rico, Paca and other rural co-operatives. Material purchases are negotiated for larger volumes and longer-term contracts at prices and payment terms conditional on the nature and geology of each deposit. When silver prices change significantly, new negotiations may occur in some instances, which could impact the grade/price curve. Following the completion of the FDF project in the first half of 2024, management is anticipating production of 800,000 oz AgEq (plus/minus 5 per cent) from the FDF in 2024. Total tonnes milled in 2024 are expected to be 1.4 million tonnes (plus/minus 5 per cent), recovering five Moz AgEq (plus/minus 5 per cent) at a 144 g/t head grade and a calculated recovery of 78 per cent compared with the same recovery rate in 2023. The increase in average grade is due to high-grade material from Cerro Rico, Paca and Cachi Laguna.

Consolidated

In 2024, on a consolidated basis, silver equivalent ounces production is expected to increase by 121 per cent to 10.4 Moz AgEq (plus/minus 5 per cent) (115,000 gold equivalent ounces plus/minus 5 per cent). The increase is largely due to full-year production of 60,000 oz AuEq (plus/minus 5 per cent), or 5.4 Moz AgEq (plus/minus 5 per cent), expected from Golden Queen.

Cost guidance

With the acquisition of Golden Queen, the revenue split in 2024 is estimated to be 54 per cent gold and 46 per cent silver. In addition, San Bartolome's operations no longer include mining activities, as it transitioned exclusively to ore purchasing and processing during Q3 2023. Therefore, providing consolidated cost guidance may not provide meaningful information for measuring key indicators of performance.

Herein is the cost guidance for each of the company's operations, based on their respective primary metal contribution.

Golden Queen

Operating cash cost per gold equivalent ounce produced at Golden Queen is expected to be $1,500 (plus/minus 5 per cent) in 2024. The company expects its all-in sustaining cost at Golden Queen to be $1,750 per gold equivalent ounce sold (plus/minus 5 per cent) for 2024.

San Bartolome

As a result of the transition to exclusively processing activities during Q4 2023, silver equivalent ounces produced from third party material sources represent more than 98 per cent and 78 per cent for Q4 2023 and full year 2023, respectively, compared with 68 per cent and 67 per cent for Q4 2022 and full year 2022. The purchase price paid to third party material suppliers is impacted by several factors, including precious metal spot prices, head grade per tonne and material volume.

In evaluating the performance and profitability of San Bartolome, management is adopting two new metrics: cash gross operating margin (CGOM) per equivalent ounces and gross margin ratio (GMR). These new indicators provide information on the gross amount of cash that could be generated from the production or sale of one unit (oz) of silver equivalent. The company believes CGOM and GMR metrics are useful to investors because they provide insight into operational profitability relative to performance on a period-by-period basis derived from purchase ore that is subject to unpredictable variable inputs. These metrics are conceptually understood and reported in the tolling or processing industry.

In 2024, CGOM per silver equivalent ounce is expected to be $3.88 compared with $2.71 in 2023. GMR is anticipated to be 19.5 per cent in 2024 compared with 12.4 per cent in 2023. The increase in CGOM and GMR is largely attributable to the suspension of mining activities at the high-cost, low-margin Pallacos deposits. During 2024, 76 per cent of the silver equivalent ounces expected to be sold are from high-grade and high-margin material ore sources, including Paca and Alta Vista.

Capital expenditure guidance

Total capital expenditures are expected to be in the range of $24-million (plus/minus 5 per cent), largely due to the $9.5-million included in the growth capital for the procurement of six new 785-8 haul trucks, as part of the company's strategic mobile fleet replacement and mine optimization. Included in the sustaining capital at Golden Queen is the capitalization of the major overhaul maintenance/rebuild of equipment costs of $8.3-million.

Capitalized exploration at Golden Queen is expected to be $1-million and included as part of sustaining capital.

Approximately $2.7-million included in San Bartolome's 2024 sustaining capital relates to the continued expansion of the tailing storage facilities. The project, which started in 2022, will expand the dam at the south and north sides to accommodate future storage.

Capital expenditures are expected to be financed from cash on hand, cash flow from operations and third party financing.

Conference call/webcast

Management will host a webcast tomorrow morning to discuss the company's fourth quarter and full-year 2023 financial and operating results. A question-and-answer session will follow management's prepared remarks. Details of the webcast are as follows:

Date and time: Wednesday, March 27, 2024, at 9 a.m. ET

Conference call

Canada/United States toll-free: 1-800-319-4610

Toronto toll: 1-416-915-3239

International toll: 1-604-638-5340

Webcast: A live audio webcast of the earnings call will be available on-line.

Notes: To access the live webcast, please connect at least five to 10 minutes prior to the start time to ensure adequate time for any software download that may be required to join the webcast.

Replay: An archived replay of the webcast will be available for 90 days on Andean's website.

Qualified person statement

The scientific and technical content disclosed in this press release was reviewed and approved by Donald J. Birak, independent consulting geologist to the company, a qualified person as defined by National Instrument 43-101 -- Standards of Disclosure for Mineral Projects, registered member, Society for Mining, Metallurgy and Exploration (SME), fellow, Australasian Institute of Mining and Metallurgy (AusIMM). Mr. Birak has visited Manquiri's various sites frequently, most recently in September, 2023.

About Andean Precious Metals Corp.

Andean is a growing precious metals producer focused on top-tier jurisdictions in the Americas. The company owns and operates the San Bartolome project in Potosi, Bolivia, and the Soledad Mountain mine in Kern county, California, and is well financed to act on future growth opportunities. Andean's leadership team is committed to creating value; fostering safe, sustainable and responsible operations; and achieving its ambition to be a mid-tier precious metals producer.

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