Mr. Steve Parsons reports

GOLDSOURCE ANNOUNCES POSITIVE PRELIMINARY ECONOMIC ASSESSMENT FOR THE EAGLE MOUNTAIN GOLD PROJECT; AFTER-TAX IRR OF 5% AND NPV5% OF US$292 MILLION

Goldsource Mines Inc. has released results for a preliminary economic assessment (PEA) for the company's 100-per-cent-owned Eagle Mountain gold project in Guyana, South America. The PEA demonstrates potential for robust project economics as expressed by both strong after-tax returns on capital and free cash flow.

The PEA was prepared by ERM Consultants Canada Ltd. with contributions from Soutex Inc. for aspects related to metallurgy and the process plant in accordance with National Instrument 43-101 Standards of Disclosure for Mineral Projects. The PEA contemplates a fit-for-purpose, low-capital-cost-intensity phased development plan for the project. The initial phase (phase 1) comprises shallow (starting at surface), low-strip-ratio open pits targeting soft-rock saprolite resources and a processing plant design that accounts for the beneficial characteristics of saprolite. This is followed by the second phase (phase 2), the development of open-pit fresh rock resources, in which gold production is derived from a blend of fresh rock, transition rock and saprolite material.

PEA highlights:

• Robust project economics with strong after-tax internal rate of return and after-tax net present value:
  • After-tax internal rate of return of 57 per cent and after-tax net present value discounted at 5 per cent of $292-million (U.S.) at the base case gold price of $1,850 (U.S.) per ounce;
  • After-tax IRR of 69 per cent and after-tax NPV (5 per cent) of $388-million (U.S.) at spot gold prices of $2,055 (U.S.) per oz (Jan. 15, 2024).
• Shallow open pit with 15-year mine life; quick payback period driven by a phased development plan:
  • Phase 1 -- 4.5 years of production from low-strip soft-rock saprolite resources offers low capex intensity, with development capex estimated at $95.6-million (U.S.), and a short payback period of 18 months;
  • Phase 2 -- the subsequent development of shallow and higher-grade fresh rock resources brings the mine life to 15 years. Phase 2 development capex estimated at $46.6-million (U.S.) consists primarily of additional processing equipment, building off the substantial infrastructure provided in phase 1;
  • Average all-in sustaining costs (AISC) of $1,077 (U.S.) per oz of gold produced. Phase 1 AISC estimated at $829 (U.S.) per oz of gold;
  • Projected average annual gold production of 66,500 oz per year for 15 years;
  • Average mill head grade of 1.26 grams per tonne gold with associated strip ratio of 2.1, and average mill gold recovery of 90.7 per cent. Phase 1 mill head grade of 1.20 gpt gold with associated strip ratio of 1.2, and mill recovery of 95.1 per cent.

Goldsource chief executive officer Steve Parsons, PEng, stated: "The PEA results for Eagle Mountain represent a significant milestone in demonstrating the potential for robust project economics as expressed by the strong after-tax IRR of 57 per cent and quick payback period. Also, a key objective with the PEA was to demonstrate the merits of the phased development plan, specifically the potential to scale into production with a low-capex-intensity, multiyear runway of low all-in sustaining costs, and potential strong free cash flow generation. As expected, the Eagle Mountain gold project is well suited to this approach owing to the distinctly shallow nature of the mineral resources. Notably, the soft-rock saprolite, which does not require drilling and blasting, translates to low estimated initial capital and operating cost intensities.

"The PEA incorporates a fit-for-purpose approach; mine design and equipment selection are tailored for the distinct requirements of phase 1 and phase 2. The PEA contemplates a technically simple, open-pit mine and 5,000-tonne-per-day gold processing plant. The plant is initially configured for saprolite, which brings to bear lower power requirements and elevated gold recoveries. In year 5, the plant is upgraded with conventional crushing and grinding equipment to treat a blend of fresh rock, transition rock and saprolite. While throughput rates greater than 5,000 tpd and lower cut-off grades for the fresh rock component could have allowed for production and NPV benefits, this would have come at the expense of IRR and with larger financing needs, concessions we were not willing to make as we look to bring forward a project with a low capital intensity and more favourable development logistics."

Key PEA assumptions:

• The PEA is based on the April, 2022, mineral resource estimate (MRE) comprising an estimated 31.1 million tonnes (Mt) grading 1.18 gpt gold for 1,183,000 oz of gold in indicated mineral resources, and 18.4 Mt grading 0.98 gpt gold for 582,000 oz of gold in inferred mineral resources. The 2022 MRE is contained in a technical report titled "Eagle Mountain Gold Project, Potaro -- Siparuni Region Guyana, NI 43-101 Technical Report" dated May 24, 2022, with an effective date of April 5, 2022.
• The production scale for phase 2 was established to maximize the utility of the 5,000 tpd phase 1 processing infrastructure (that is, minimize the requirements for additional capex). The timing of the transition to phase 2 was set based on projections for free cash flow, specifically to recover the phase 1 development capex and generate significant surplus cash to finance phase 2.
• PEA mine plan and cost assumptions contemplate contract mining and power generation.
• Phase 1 and phase 2 development capex estimates for the processing plant are based on budget quotes from manufacturers for large mechanical equipment and quotes from recently constructed and under-construction projects for other plant/auxiliary equipment. Non-plant and other development capex are derived from both benchmarking analyses using comparable projects and calculation-derived estimates for certain earthmoving activities. Development capex includes a contingency of 15 per cent.

A technical report prepared in accordance with NI 43-101 on the project which includes the PEA will be filed with the applicable Canadian securities regulators within 45 days of this news release. The technical report will be available under the company's profile on SEDAR+ and on the company's website. The results of the PEA are preliminary in nature and include inferred mineral resources that are considered too speculative geologically to have economic considerations applied to them to be classified as mineral reserves. There is no certainty that the results of the PEA will be realized. Mineral resources that are not mineral reserves do not have demonstrated economic viability.

Life-of-mine (LOM) estimated cash flow profile

The economic analysis of the project is based on the production and cost models developed for the phase 1, phase 2 and LOM construction, operating and reclamation plans. The models include detail for the major components of the phases, including the open pits, carbon-in-leach (CIL) processing plant and supporting infrastructure, such as haul roads, waste rock dumps and tailings storage facilities. The economic analysis uses a cash flow model at a base case gold price of $1,850 (U.S.) per oz. The model applies all phase 1 preproduction capital costs (development capex) in year 0 and phase 2 development capex in years 4 and 5. At the base case gold price of $1,850 (U.S.) per oz gold, cumulative undiscounted after-tax free cash flow is estimated at $443-million (U.S.) and average annual after-tax free cash flow at $37-million (U.S.) for years 1 to 15. At spot gold prices of $2,055 (U.S.) per oz (Jan. 15, 2024), cumulative undiscounted after-tax free cash flow is estimated at $585 (U.S.) and average annual after-tax free cash flow at $47-million (U.S.).

Overview of production plan

The conceptual LOM plan estimates total gold production of 997,000 oz, of which 306,000 oz at AISC of $829 (U.S.) per oz of gold are for phase 1. Total recoverable gold is a subset of the 2022 MRE, largely due to the company's express focus on delivering a smaller, higher-grade fit-for-purpose project to enhance the overall development logistics in the context of the project particulars and market backdrop. The alternative, a larger bulk-tonnage operation with a lower cut-off grade, notably for the fresh rock, could have resulted in higher conversion rates, but would have come with higher development capex and lower internal rates of return.

The PEA contemplates an open-pit operation using contract mining. Mill feed for the processing plant is sourced from the primary Eagle Mountain deposit as well as satellite pits at the Salbora deposit and Toucan and Powis prospects, which are proximal (within approximately 1.5 kilometres) to the Eagle Mountain pit outline. Mining will use traditional load and haul methods using hydraulic excavators, and/or wheel loaders as appropriate to the terrain. Based on the conceptual locations of the processing plant and waste dumps, haulage is predominantly downhill from the Eagle Mountain deposit, which provides scope for fuel savings. Phase 1, estimated at 4.5 years, considers initial gold production from saprolite mineralization during which time most of the mining will be free dig (that is, not requiring blasting). This is followed by phase 2 in which gold production will be derived from a blend of fresh rock, transition and saprolite mineralization for an estimated 10.5 years, bringing the estimated LOM plan to 15 years. Phase 2 will require drilling and blasting of the fresh and transition rock to facilitate mining, material handling and processing. The PEA mine plan is designed to maintain mill feed rates at 1,825,000 tonnes per year (approximately 5,000 tpd) through phases 1 and 2.

For phase 1, the process flowsheet involves a low-capital-intensity saprolite CIL plant. Main components include five leach tanks, scrubber, ball mill, cyclones, gravity concentrators, carbon stripping circuit and effluent treatment. While the back end of the plant, downstream of the grinding circuit, is similar for both phases, additional screening, crushing and grinding, and additional power generation equipment are required for phase 2 to treat the harder fresh rock material. The mill configuration for phase 2 is also capable of processing 5,000 tpd, including up to 4,250 tpd of fresh and/or transition rock with the balance of the mill feed being made up with saprolite. Coarse and bulk fresh rock encountered in phase 1 will be stockpiled and processed in phase 2. Detailed metallurgical test work from 2018 (saprolite) and 2022 (fresh rock and saprolite) for areas represented in the 2022 MRE provide the basis for the PEA mill design criteria developed by Soutex.

Capital and operating cost estimates

Phase 1 development capex (preproduction capex) is estimated at $95.6-million (U.S.) (including contingency), of which $56.5 (U.S.) is related to the processing plant (direct and indirects). Phase 2 development capex, primarily comprising processing equipment to accommodate harder fresh rock, is estimated at $46.6-million (U.S.) with expenditures to commence in the second half of year 4. A further $133.4-million (U.S.) of sustaining capex is estimated over the LOM (averaging $8.9-million (U.S.) per year), of which $51.9-million (U.S.) relates to tailings storage facilities, $23.8-million (U.S.) to the processing plant and $20-million (U.S.) to open pit auxiliary equipment. Total LOM capital expenditures are estimated to be $295.6-million (U.S.). This includes $20-million (U.S.) for mine reclamation at the end of the LOM.

Total LOM operating costs are estimated at $786-million (U.S.). The operating cost estimate is based on the total amount of labour, materials and consumables that will be required to fully execute the mining and processing plans for phase 1 and 2. The PEA contemplates open-pit mining and power generation by contractors. Average unit mining cost of $2.10 (U.S.) and $2.75 (U.S.) per tonne mined were used for saprolite and fresh rock/transition, respectively, in the economic analysis. Operating costs have been determined based on benchmarking analyses using similar-sized saprolite and fresh rock operations with adjustments for local conditions. For unit processing cost determinations, the average ore blend (ratio of fresh rock to saprolite) for the LOM was used to estimate power draw and reagent consumptions.

As contemplated in the PEA study, over 300 mining, processing, maintenance and general administrative workers are expected to be employed directly. In addition, the project will benefit Guyana through both taxation and royalty payments.

Eagle Mountain project opportunities

Based on project work, including engineering studies, exploration and results of a 2017 pilot plant operation at Eagle Mountain, opportunities have been identified which may offer scope to enhance project economics. The following opportunities will be evaluated:

• The PEA economic model accounts for $59-million (U.S.) of construction costs over the LOM for a tailings storage facility. It is recommended that the company evaluate alternative and potentially lower-cost locations for tailings deposition with consideration given to valley and topographic lows within the Eagle Mountain prospecting licence. Also, the opportunity to backfill the open pits during phase 2 activities will be evaluated.
• Evaluation of the potential efficacy of locating a portion of the saprolite processing equipment, such as the scrubber, and pump boxes, at higher elevations along the northeast flanks of the Eagle Mountain deposit. This could allow for the use of slurry transport of saprolite material to the main processing facility, reducing truck haulage of saprolite from these areas of the Eagle Mountain deposit. This technique was tested during the 2017 gravity pilot plant. Trade-off studies are recommended.
• The PEA contemplates a power-by-the-hour contract using diesel generators. The company will complete trade-off studies to evaluate the merits of owner-operated gensets. Also, the company will evaluate opportunities for lower costs via hydrokinetic power sourced from nearby rivers.
• The PEA does not include drill results after December, 2021, the cut-off date for the 2022 MRE. The company will evaluate opportunities to incorporate exploration targets that have been identified, upgrade inferred mineral resources to indicated mineral resources and, via expansion drilling, test for opportunities to capture additional shallow gold mineralization currently below the $1,600 (U.S.) per oz PEA pit shells. Also, several area and regional targets need to be evaluated for potential additional mineral resources.

Qualified persons

The independent qualified persons, as defined in NI 43-101, for the PEA and who have verified and approved the contents of this news release are Nigel Fung, PEng, of ERM (mining and economic model), Leon McGarry, PGeo, an ERM associate (mineral resource), and Dr. Antoine Berton, PEng, PhD, of Soutex (processing).

All scientific and technical data contained in this presentation have been reviewed and approved by N. Eric Fier, CPG, PEng, executive chairman of Goldsource, a qualified person for the purposes of NI 43-101.

The qualified persons referenced in this news release are not aware of any environmental, permitting, legal, title, taxation, socio-economic, marketing, political or other relevant factors that could materially affect the PEA.

About Goldsource Mines Inc.

Goldsource Mines is a Canadian exploration company focused on its 100-per-cent-owned Eagle Mountain gold project in Guyana, South America. The company is led by an experienced management team, proven in making precious metals exploration discoveries and executing on phased project development in the Americas.

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