Mr. Guy Goulet reports

CDPR SIGNS TERM SHEETS FOR AN AGGREGATE OF US$ 20.5M TO DEVELOP ITS SANTANDER MINE

Cerro de Pasco Resources Inc. has signed a term sheet with Ocean Partners U.K. Ltd. (OPUK), a metals trading firm, and Arena Investors LP, a global asset manager, to provide an aggregate of $12-million (U.S.) to $15.5-million (U.S.), consisting of an $8-million (U.S.) loan facility from Arena and a $4-million (U.S.) to $7.5-million (U.S.) revolving concentrate prepayment facility from OPUK (the financing). In addition, the company has secured a $5-million (U.S.) term sheet with a private Peruvian fund in exchange for a 10-per-cent ownership position in Cerro de Pasco's Santander subsidiary (the equity interest). The purpose of the financing and equity interest will be to strengthen the company's balance sheet during the physical development stage of the Santander Pipe project at its Santander mine in Peru.

Guy Goulet, Cerro de Pasco's chief executive officer, stated: "We are very pleased to enter into a transaction with OPUK and Arena, in addition to the equity interest in the Santander subsidiary. Our Santander mine in Peru is at a turning point in its evolution as we focus on the significantly higher-grade Santander Pipe. Capital support for completion of development works at Santander will bring our cash cost down to 90 U.S. cents per pound of zinc, positioning us close to the bottom quartile of the cost curve for zinc producers."

OPUK prepayment details

OPUK and Cerro de Pasco Resources will enter commercial contracts for the supply of zinc, copper and lead concentrates that are both committed and not committed to existing offtakers. OPUK will advance to Cerro de Pasco Resources $4-million (U.S.) and up to a maximum of $7.5-million (U.S.), against monthly deliveries of concentrate for the life of the commercial contract. Once sufficient material has been delivered to OPUK to repay amounts outstanding plus costs, the facility may be redrawn immediately.

Cerro de Pasco Resources, upon the funding of the first draw down, will issue warrants to the OPUK for a face value of $2.5-million with an exercise price of 25 cents, subject to exchange approval.

Arena loan facility details

Arena will provide a 36-month loan facility up to $8-million (U.S.), secured primarily against Cerro de Pasco's Santander assets, and first-ranking fixed and floating security over the company's interest in the Quiulacocha TSF (ailing storage facility), which may be removed once the facility amount is below $4-million (U.S.). The repayment period will contemplate the first six months of interest only, followed by 30 months of equal principal plus interest payments.

Cerro de Pasco Resources, upon obtainment of funds from the loan facility, will issue to Arena $5-million in face value of warrants at an exercise price of 25 cents, subject to exchange approval.

Conditions precedent

The financing is subject to various conditions of both OPUK and Arena, including execution of binding prepayment documentation and the completion of additional equity or subordinated debt of $12-million (U.S.).

With respect to the additional equity required, Cerro de Pasco Resources has already signed a $5-million (U.S.) term sheet with a private Peruvian fund in exchange for a 10-per-cent ownership position in Cerro de Pasco's Santander subsidiary. The closing of the equity interest in Santander will be simultaneous to the closing of the financing.

In parallel, the company is in advanced discussions with suppliers offering subordinated financing, specifically relating to the development of the Santander mine. The company will report advancements in due course.

Technical information

Jorge Lozano, MMSAQP, chief operating officer for Cerro de Pasco Resources, has reviewed and approved the scientific and technical information contained in this news release. Mr. Lozano is a qualified person for the purposes of reporting in compliance with National Instrument 43-101.

About Cerro de Pasco Resources Inc.

Cerro de Pasco Resources is a mining and resource management company, with the goal to become the next mid-tier producer of base metals in Peru. Cerro is currently engaged in mining, developing and exploring its wholly owned 6,000-hectare Santander mine in the highly prospective Antamina-Yauricocha skarn corridor, located 215 km from Lima. Cerro is also focused on the development of its principal 100-per-cent-owned asset, the El Metallurgista mining concession, comprising mineral tailings and stockpiles extracted from the Cerro de Pasco open-pit mine in central Peru. The company's approach at El Metalurgista entails the reprocessing and environmental remediation of mining waste and the creation of numerous opportunities in a circular economy. Cerro was founded on clear objectives, to engender long-term economic sustainability and benefit for the local population, from an economic, social and health point of view.

We seek Safe Harbor.