Mr. Eric Caba reports

BEAR CREEK MINING REPORTS Q2 2023 FINANCIAL AND OPERATING RESULTS

Bear Creek Mining Corp. has released its interim consolidated financial results for the three and six months ended June 30, 2023 (Q2 2023). Monetary amounts in this news release are in United States dollars unless otherwise stated.

This news release should be read in conjunction with the company's interim consolidated financial statements and management discussion and analysis (MD&A) for the three and six months ended June 30, 2023, which are available on SEDAR+ and the company's website.

Overview

Bear Creek's 2023 business priorities are to improve the performance of the Mercedes gold mine in Sonora, Mexico, and to improve the company's financial condition. These priorities continued to be the focus of Bear Creek's activities during Q2 2023, with positive progress made on both fronts.

During Q2 2023, the company undertook sweeping changes to the Mercedes operations by adding significant technical talent and subsequently implementing more productive mining methods tailored to the geological and structural characteristics of each of the current workings. These new mining methods and other cost efficiencies have significantly impacted mining costs per tonne of ore mined, which have declined by 23 per cent from $80.84 in the first four months of 2023 to $61.96 for May and June, 2023. Development meters also improved substantially, increasing 30 per cent during Q2 2023 compared to the first quarter.

The Mercedes mine has been inconsistent in achieving the anticipated gold grades projected in the mine plans and geological models the company inherited upon its acquisition of Mercedes in April, 2022. Although the 23-per-cent reduction in mining costs per tonne is substantial, the lower-than-planned grades being mined has negatively affected the cash cost and AISC (all-in sustaining costs) on a per-ounce basis. Bear Creek has undertaken a complete review and rework of the geological interpretation of the Mercedes mine to understand the controls on mineralization better, improve the predictability of ore grades and ultimately increase the grade of ore sent to the mill. Revisions to the reserve block modelling and mine sequencing are also in process. This work is expected to provide operating plans and forecasts with much higher confidence going forward. Accordingly, the company advises that its 2023 annual production guidance, issued on Feb. 24, 2023, is being revised to 45,000 to 55,000 ounces gold production. The company expects to be able to incorporate this work and recent high-grade drill intercepts into further updates and production estimates for 2023.

Eric Caba, president and chief executive officer, states: "During Q2 2023 the company felt the brunt of development work delays, operating performance challenges, inflationary pressures and foreign exchange factors that transpired during the first quarter. I want to stress that we are actively working to address and mitigate these factors to improve the Mercedes operation and the company's financial strength. While our timeline to achieve the production levels and cost structure that we originally envisioned for Mercedes has taken longer than anticipated, we continue to be very excited by the potential we see at Mercedes to increase annual production, discover new orebodies and expand existing ones, and to contribute significant free cash flow to the company. Further supporting our strong optimism, development drilling is intersecting gold grades two to 10 times the current mining grades, often in parts of the ore bodies where access is being completed for near-term mining. We will update our 2023 production guidance again, once we are able to revise projections with greater confidence."

Recent improvements to the company's financial liquidity were made by restructuring certain of its debt and streaming obligations. Most notably:

• On May 11, 2023, the company announced it had amended the terms of the gold purchase agreement with Sandstorm Gold Ltd. in return for a payment to the company of $5-million. Additional details are provided herein.
• On July 5, 2023, Bear Creek announced it had executed a restructuring agreement with Equinox Gold Corp. to convert a $26-million (U.S.) current liability into a non-current obligation by issuing a five-year convertible promissory note at a competitive interest rate. Payment of the note will satisfy the final purchase price installment (the deferred payment) for Mercedes. Additional details of the Equinox debt restructuring agreement are provided herein.

These balance sheet improvements give the company the financial flexibility to focus Mercedes's cash flow on increasing gold production and growth initiatives at both Mercedes and the Corani silver project in Puno, Peru.

Mercedes gold mine, Mexico

Safety

The Mercedes mine had no lost time incidents (LTI), restricted work or medical treatment accidents during Q2 2023. The Mercedes mine reached one year without an LTI during the third quarter of 2022 and has maintained that status to date. No reportable environmental incidents occurred during Q2 2023.

Mine plan and development

During Q2 2023, the company revised the mining methods employed at the Marianas and San Martin deposits, from cut and fill mining at both deposits to room and pillar mining at San Martin and sublevel caving and sublevel stoping at Marianas. The use of long-hole open stoping was also increased in the remaining operating areas. These methodologies better align with the structural and geologic characteristics of these deposits, are less costly and, in the case of room and pillar mining, less dilutive. Mining costs per tonne of ore mined have declined by 23 per cent in recent months and the company expects them to fall by another $3 to $5 per tonne of ore mined by the end of 2023.

The factors impeding development in the first quarter and into early Q2 2023 were substantially improved in the second half of Q2 2023, leading to a 30-per-cent increase in development advances quarter over quarter. Use of the bulk mining methodologies the company shifted to in Q2 2023, as described herein, increases the efficiency of the development work as more tons of ore become available per meter of development. This effectively leverages the same development to greater effect and contributes to lower operating and all-in sustaining costs.

The San Martin deposit is expected to be a significant contributor to Mercedes's gold production through the remainder of 2023, with tonnes mined doubling from 400 to 800 tonnes per day during Q3 2023 as the available working faces increase and the mining advances into the higher-grade core of the deposit. Development work and production are also expected to commence from the high grade Rey de Oro deposit in the coming weeks, which will provide additional working faces and mill feed.

During Q2 2023, 9,211 ounces of gold and 39,827 ounces of silver were produced at Mercedes. While the development improvements and new mining methods improve the outlook for Mercedes during the remainder of the year, production from Mercedes during Q2 2023 was directly impacted by the operating and development work challenges experienced in the first quarter and, consequently, was below the guidance forecasted for Q2 2023.

Exploration

Exploration drilling was delayed during Q2 2023 as the company focused on operating efficiencies and recovering development advances within the mines. Delineation drilling in the Marianas workings has continued to show very encouraging results. The discovery of a number of new veins and the intersection of zones of intense structural complexity, including hydrothermal breccias that contain gold mineralization at significantly higher grades than the current reserve grade, suggest that the higher temperature sources of mineralization are being approached. This indicates strong potential for additional ore along strike and at depth. Geological interpretation of Marianas is continuing to better understand the deposit's nature and significant upside potential.

Exploration drilling in the Marianas Deep, Marianas Extension and the San Martin Displacement zones is scheduled to restart in Q3 2023.

Overview of results of operations, liquidity and capital resources

Results of operations

For the three months ended June 30, 2023, the company recorded revenue of $19.9-million from the sale of gold and silver. The company sold a total of 10,132 GEOs (gold equivalent ounces) at an average price of $1,963/GEO. The cost of goods sold was $14.6-million, and depletion, amortization and depreciation amounted to $8.6-million.

The gross loss from Mercedes operations was $3.3-million during Q2 2023. Operations were negatively impacted by inflationary pressures on direct consumable costs (primarily diesel, tires, lubricants, explosives and cement), indirect costs (supplies and services), and the Mexican peso's strengthening against the United States dollar. Spending on the Corani property totalled $1.9-million during Q2 2022, comprising direct project expenditures and corporate overhead costs. After all operating expenses, other income and expenses, tax expenses, and recoveries, the company recorded a comprehensive net loss of $7.6-million (five cents per share) for the three months ended June 30, 2023.

Liquidity

On June 30, 2023, the company held cash and cash equivalents and short terms investments in the amount of $5.0-million (not including $1.7-million in restricted cash), an increase of $1.5-million from Dec. 31, 2022. For the six months ending June 30, 2023, operating activities resulted in a cash inflow of $7.5-million, investing activities used $3.4-million and financing activities used $2.6-million in cash.

On June 30, 2023, the company's net working capital deficiency was $57.5-million (compared with $60.0-million on March 31, 2023, and $51.2-million on Dec. 31, 2022). Significant amounts contributing to the June 30, 2023, net working capital deficiency are current amounts owing in relation to the final Mercedes mine acquisition payment, accounts payable and deferred revenue plus streams.

After the end of Q2 2023, the company closed a non-brokered private placement financing pursuant to which 16,725,000 common shares of the company were sold at a price of 49 Canadian cents per share for gross proceeds of approximately $8.2-million (Canadian). Additional information is provided in the company's news release dated July 21, 2023.

Amended gold purchase agreement

During Q2 2023 Sandstorm advanced the company an additional $5-million pursuant to an amendment to the gold purchase agreement between the two parties dated Dec. 17, 2022 (see Bear Creek Mining news releases dated Dec. 17, 2022, and May 11, 2023). In exchange for the additional cash payment, the amended gold purchase agreement extends the company's delivery to Sandstorm of 600 ounces of gold per month by an additional seven months (a new total of 29,400 ounces over 49 months) at a price equal to 7.5 per cent of the spot gold price at the time of delivery. All other delivery and payment terms of the gold purchase agreement remain the same. A total of 8,400 ounces of gold have been sold to Sandstorm pursuant to the gold purchase agreement as of June 30, 2023. No delivery or payment amendments have been made to Bear Creek's additional gold and silver stream agreement with Nomad Royalty Co. Ltd. See herein for additional information about the Nomad gold stream.

Restructuring of deferred payment

As described herein and in the company's news releases dated May 30, 2023, and July 5, 2023, Bear Creek entered into an agreement dated June 30, 2023, with Premier Gold Mines Ltd., a subsidiary of Equinox Gold, to convert approximately $26-million (U.S.) in near-term payment obligations into a five-year convertible promissory note with an interest rate of 7 per cent per year. Payment of the note will satisfy the final purchase price instalment for the Mercedes mine. Issuing the note is subject to compliance with applicable Canadian securities laws, the receipt of shareholder approval (as defined herein), and TSX Venture Exchange acceptance. The company intends to hold a meeting of its shareholders (the special meeting) on Sept. 21, 2023, to obtain disinterested shareholder approval for the note. If shareholder approval is not received at the special meeting, the note will not be issued, and the company's obligations to pay the deferred payment will remain in full force and effect. Additional details are provided in the Bear Creek Mining news release dated July 5, 2023.

Upcoming conclusion of stream

As part of its acquisition of Mercedes on April 21, 2022, the company assumed a gold prepay agreement with Nomad, requiring the company to deliver between 900 and 1,100 ounces of gold per quarter, depending on the price of gold. At the time of the company's assumption of this gold stream, 5,400 ounces remained to be delivered to Nomad under the stream. On June 30, 2023, 900 ounces of gold remain to be delivered, and the company expects this stream to be concluded in the third quarter of 2023. Conclusion of the Nomad gold stream will reduce Mercedes's gold stream burden by 33 per cent, from 2,700 ounces to 1,800 per quarter.

Going concern

The company's Q2 2023 interim consolidated financial statements were prepared following accounting principles applicable to a going concern, which assumes the company will be able to continue in operation for at least 12 months from June 30, 2023, and will be able to realize its assets and discharge its liabilities in the ordinary course of operations. While the addition of cash from the gold purchase agreement amendment and the July, 2023, private placement financing and the renegotiation of the terms of the $26-million Equinox payment improves the company's liquidity, material uncertainty remains about the ability of the company to achieve the operating results and necessary cash flow generation from the Mercedes mine to avoid seeking additional financing, which may give rise to significant doubt about the company's ability to continue as a going concern.

We seek Safe Harbor.