Mr. Frederick Davidson reports

IMPACT SILVER ANNOUNCES Q2 2023 RESULTS WITH REVENUE UP 57% AND STRONG OPERATING INCOME

Impact Silver Corp. has released its financial and operating results for the second quarter ended June 30, 2023. The company reports revenue of $5.5-million in Q2 2023, representing a 57-per-cent increase over revenue of $3.5-million in Q2 2022. Mine operating income (before amortization and depletion) in Q2 2023 was $900,000 compared with $30,000 Q2 2022. The overall improvement in revenue is due in part to increased gold and silver sales. The net loss in Q2 2023 was $900,000 compared with a net loss of $800,000 in Q2 2022. The net loss in the period includes $500,000 for G&A (general and administrative) costs related to the new Plomosas acquisition, as well as one-time costs related to the marketing of the company's recent non-brokered private placement.

The company maintains a strong balance sheet with $13.7-million in cash and no long-term debt. During the period, the company completed a $9-million non-brokered private placement and ended the quarter with working capital of $13.3-million.

On April 3, 2023, the company closed the acquisition of the Plomosas zinc-lead-silver mine for a total purchase price of $6-million (U.S.), consisting of $3-million (U.S.) in cash and the balance in the form of Impact shares (a total of 11,441,647 shares were issued and are subject to certain restrictions). Postclosing adjustments are being made based on changes in working capital.

Zacualpan silver district

The company's average mill head grade of 163 grams per tonne (g/t) during the period was up 2 per cent on a year-over-year basis, with increased gold production and sales in Q2 2023 from the new Alacran mine. Higher over all production levels across the company, including silver, lead and gold, helped contribute to a 63-per-cent increase in revenue per tonne of $155.67 in Q2 2023, compared with $95.44 in Q2 2022.

The company continued to focus on exploration and development of the Royal mines of Zacualpan and the Plomosas mining districts in Q2 2023, and spent $2.8-million on these programs.

Uncertainty revolving around the state of global economies have contributed to continued demand for precious and base metals during the period, as investors continued their flight to safety to combat inflation. Moreover, there are strong signs that softer monetary policy is on the horizon as the rate of interest rate increases have started to slow, adding further support to silver and gold prices during the period. While cost inflation pressures continue to persist throughout the supply chain and labour network, much of the year-over-year cost increases are owed to negative foreign exchange pressures from the strengthening Mexican peso. This contributed to an increase in direct costs per production tonne in Q2 2023 of $130.67, compared with $94.86 in Q2 2022. Costs may continue to increase in 2023, albeit there is evidence of a slowing trend in this regard.

Plomosas high-grade zinc mine

During the second quarter, the company closed on its transformative acquisition of the Plomosas high-grade zinc mine in northern Mexico. The acquisition provides the company with a meaningful new chapter as it expands Impact's production profile from one to two producing operations. Plomosas adds significant and high-grade metal diversification through its high-grade zinc deposit, as well as exciting exploration potential across the property's largely unexplored property area.

During the quarter, the company began a major rehabilitation program at the mine, to bring the asset back into production following a near-one-year hiatus. As of June 30, 2023, the company was approaching the later stages of its planned rehabilitation at Plomosas, both on time and on budget, including improvements and upgrades at the mine, mill, plant and surrounding infrastructure.

Fred Davidson, president and chief executive officer of Impact, stated: "During the second quarter, our team at Zacualpan continued to execute on a grade-improvement and cost-reduction plan which began in 2022. These efforts have started to bear fruit, as seen with the increase in average grade milled and, specifically, the impressive increase in gold production on a year-over-year basis. While cost pressures continue to persist, improvements and efficiencies across the system have started to offset these trends. Meanwhile, our transformative new Plomosas mine is on the doorstep to restarting production. This top-quartile-in-zinc-grade mine is in an established mining region and will soon start to generate significant revenue diversification for the company as we consider further potential expansion of this new producer in 2024."

Q2 2023 financial overview:

• On April 3, 2023, the company paid a total of $6-million (U.S.) to acquire the Plomosas zinc-lead-silver mine, consisting of $3-million (U.S.) in cash and the balance in the form of Impact shares (a total of 11,441,647 shares were issued and are subject to certain restrictions). Postclosing adjustments are being made based on changes in working capital, as agreed to between the two parties.
• Revenue in Q2 2023 was $5.5-million, up from $3.5-million in Q2 2022. No revenue in Q2 2023 is attributed to the new Plomosas mine acquisition.
• Mine operating earnings before amortization and depletion in Q2 2023 was $900,000, compared with $30,000 in Q2 2022.
• The net loss in Q2 2023 was $900,000 compared with net loss of $800,000 in Q2 2022. The net loss in the period includes $500,000 for G&A costs related to the new Plomosas acquisition, as well as one-time costs related to the marketing of the company's recent non-brokered private placement.
• After investing $2.8-million in exploration expenditures and mining assets during the quarter, the cash position remained strong at quarter-end with $13.7-million, with working capital of $13.3-million.
• During the quarter, the company closed an oversubscribed, non-brokered private placement for an additional $9-million.
• The company has no long-term debt.

Q2 2023 production overview:

• Mill throughput in Q2 2023 was 35,753 tonnes compared with 37,183 tonnes in Q2 2022.
• Silver production during the period increased by 1 per cent, to 155,744 ounces (oz), compared with 154,001 oz in Q2 2022, while contributions from lead and gold saw production increases on a year-over-year basis of 49 per cent and 383 per cent, respectively.
• Revenue per tonne sold was $155.67 in Q2 2023, representing an increase of 63 per cent over the same period in 2022 of $95.44.
• Direct costs per production tonne were $130.67 in Q2 2023, representing an increase of 38 per cent over Q2 2022 costs of $94.86 per tonne. Much of this increase is due to foreign exchange, with the balance coming from inflation-related pressures in Mexico.

Exploration review

At the Royal mines of Zacualpan, management continues to focus its drill program in areas where it has seen continuing success, such as the San Ramon and the Guadalupe mine. Meanwhile, management is especially encouraged with developments at the Alacran mine, as its elevated gold values could continue to improve the overall grade for the Zacualpan district operations and, as a result, revenue per tonne.

Outlook

With a strong balance sheet, exploration potential at both of the mining districts, encouraging gold potential, as well as the coming start-up of the Plomosas high-grade zinc acquisition, management believes the next 18 months will be transformative for the company and its investors. These factors should lead to continuing improvement in revenues, while management expects cost pressures to continue to slow heading into 2024.

The company's growth is expected to reflect its strong position as one of just a handful of intermediate miners offering investors exposure to three distinct verticals across the mining sector, including exploration, production and growth.

A recorded conference call reviewing the financial and production results of the quarter ended June 30, 2023, will be available on the company website on Aug. 28, 2023.

The information in this news release should be read in conjunction with the company's Q2 2023 unaudited condensed consolidated interim financial statements, and management's discussion and analysis, available on the company website and on SEDAR+.

About Impact Silver Corp.

Impact Silver is a successful intermediate mineral producer and explorer with three mining projects in Mexico.

Royal mines of Zacualpan silver-gold district: Impact owns 100 per cent of the 211-square-kilometre Zacualpan project where four underground silver mines and one open-pit mine feed the central 500 tpd (tonnes per day) Guadalupe processing plant. To the south, the Capire project includes a 200 tpd processing pilot plant adjacent to an open-pit silver mine with a National Instrument 43-101 inferred mineral resource of over 4.5 million ounces (Moz) silver, 48 million pounds (Mlb) zinc and 21 Mlb lead (see Impact news release dated Jan. 18, 2016, for details and qualified person statement). Company engineers are reviewing Capire for a potential restart of operations to leverage improving commodity prices. Over the past 17 years, Impact has developed multiple exploration zones into commercial production and has produced over 12 million ounces of silver, generating revenues of more than $241-million.

Plomosas zinc-lead-silver district: Plomosas is a high-grade zinc-lead-silver producer with exceptional exploration upside potential. The company aims to recommence operations in the near term, followed by plans for expanding operations in 2024. Exploration potential at Plomosas is exceptional, with only 600 m of the six km long structure having been explored to date. This is in addition to other exploration targets on the 3,019-hectare property, including untested copper-gold targets with high-grade surface prospecting sampling. Regionally, Plomosas lies in the same mineral belt as some of the largest carbonate replacement deposits in the world.

Qualified person and NI 43-101 disclosure

George Gorzynski, PEng, is a qualified person within the meaning of National Instrument 43-101, and has approved the technical information contained in this news release.

We seek Safe Harbor.