Mr. Adam Lundin reports

JOSEMARIA REPORTS 2019 RESULTS

Josemaria Resources Inc. has released its results for the year ended Dec. 31, 2019.

Highlights

The company's primary focus is the advancement of its 100-per-cent-owned Josemaria copper/gold project in San Juan province, Argentina, by completing a feasibility study by the third quarter of 2020. The company assembled an integrated engineering team led by Fluor Canada Ltd., which is responsible for overall project management, infrastructure and mineral process design, and project cost estimation. Other internationally recognized consultants are also engaged to support the program with a focus on environmental studies and permitting, social and community engagement, mineral resource and reserve estimates, mine design, and tailings and water management.

Changes were made to the executive team during the second half of 2019, with the goal of assembling a dedicated team with the capability to complete the technical and commercial feasibility work required to advance the Josemaria copper/gold project toward development:

• Adam Lundin was appointed president and chief executive officer effective Sept. 16, 2019, replacing Dr. Wojtek Wodzicki, who continues to serve as a director of the company.
• Ian Gibbs was appointed chief financial officer effective as of Sept. 1, 2019, replacing Joyce Ngo, who has taken on the role of corporate controller.
• Arndt Brettschneider was appointed vice-president, projects, effective as of Aug. 6, 2019, replacing James Beck, who resigned as vice-president, corporate development and projects. Mr. Brettschneider has overall responsibility for the delivery of the Josemaria project feasibility study.

During the second half of 2019, work on the feasibility study focused on advancing project design concepts and engineering designs for on- and off-site facilities. Analysis of samples for metallurgical and comminution testwork continued with a focus on increasing confidence in the expected metallurgical response and grinding characteristics of the mineral reserve. Pilot plant testing of a bulk sample was completed, and an analysis of the test results commenced. Work also commenced on the environmental and social impact assessment (ESIA) with the engagement of Ausenco (Vector Argentina SA) based in Mendoza, Argentina, to compile the baseline data and lead the development of the ESIA in support of future project permitting.

The company commenced the Argentine summer field season test programs during the third quarter of 2019 to collect additional geological, geotechnical, metallurgical and hydrological information. Collection of baseline, archeological, community, social and environmental data to inform the ESIA was also commenced through 2019.

Commenting on the year, Adam Lundin, president and chief executive officer, remarked: "In 2019 we transformed Josemaria Resources into a pure play development vehicle focused solely on the Josemaria deposit in San Juan, Argentina. We are pleased with progress to date on the Josemaria feasibility study, ongoing work related to the environmental and social impact assessment (ESIA), and field season activities focused on collecting additional information for both the feasibility study and ESIA. We remain committed to efforts aimed at permitting, and ultimately developing this major copper and gold asset. Josemaria, once constructed, should play a measurable role in providing long-term quality copper supply as electrification technology advances worldwide."

Completion of the spinout of NGEx Minerals

On July 17, 2019, Josemaria Resources completed a previously announced spinout of the Los Helados property and certain other exploration properties into NGEx Minerals Ltd. by a plan of arrangement under the Canada Business Corporations Act and changed its name to Josemaria Resources Inc.

Under the terms of the arrangement, the company transferred its wholly owned subsidiaries that directly or indirectly held the Los Helados project, and other exploration projects located in Argentina and Chile, along with $7.3-million in cash, to NGEx Minerals in exchange for common shares of NGEx Minerals. NGEx Minerals was incorporated on Feb. 21, 2019, under the laws of CBCA as a wholly owned subsidiary of the company in connection with the arrangement. Pursuant to the arrangement, the company distributed 100 per cent of the common shares of NGEx Minerals it received under the arrangement to its Josemaria Resources shareholders on a pro rata basis, such that its shareholders received one common share of NGEx Minerals for every two common shares of Josemaria Resources held as of the record date. NGEx Minerals began trading on Aug. 20, 2019, on the TSX Venture Exchange under the trading symbol NGEX.

Pursuant to the arrangement and changes made to the board of directors during the year, the company's board of directors currently comprises the following eight directors:

• Lukas Lundin;
• Jack Lundin;
• Dr. Wodzicki;
• Ashley Heppenstall;
• Paul Conibear;
• Christine Batruch;
• Adam Lundin;
• Ron Hochstein.

Outlook

The company is targeting completion of the feasibility study on the Josemaria project by the third quarter of 2020, with the objective of advancing the project toward permitting and eventual development. Management also plans to continue environmental and social baseline studies that will provide information required to prepare an ESIA report in support of project permitting.

Additional opportunities and next steps include:

• Project optimization and value engineering;
• Compilation and integration of field season results;
• Off-site infrastructure assessments;
• Concentrate transportation option analysis;
• Environmental and social impact assessment;
• Community engagement;
• Continued open dialogue with all levels of government.

          SELECTED FINANCIAL INFORMATION
                 (in thousands)

                   Dec. 31, 2019  Dec. 31, 2018

Cash                      $4,043         $5,029            
Working capital          (20,872)        (3,843)          
Mineral properties        10,608         16,012           
Total assets              18,732         24,090           
Total liabilities         35,087          9,887            

Liquidity and capital resources

To support the advancement of the Josemaria project, the company arranged two new debenture credit facilities totalling $30-million (U.S.) with Zebra Holdings and Investments Sarl, and Lorito Holdings Sarl during 2019, and began drawing on the available debenture facilities to provide additional sources of financing to further advance its project and operations. No interest is payable in cash during the term. The company issued 855,105 shares as consideration for the funds drawn on the facilities, with an additional 254,000 common shares issuable, resulting in $700,000 in finance costs recognized for the fiscal year ended Dec. 31, 2019. Lorito reports its securityholdings in the company as a joint actor with Zebra, and they collectively held more than 35 per cent of the company's issued and outstanding common shares as at Dec. 31, 2019. On those facilities $9.5-million (U.S.) remains undrawn as of the date of this press release.

The company does not currently generate income from operations. The company anticipates that it will need further financing in order to advance the Josemaria project, and for general corporate and working capital purposes. The company is continuing to evaluate potential additional sources of financing. Historically, capital requirements have been primarily financed through equity financing, joint ventures, disposition of mineral properties and investments, and the use of credit facilities. On a continuing basis, the company's planned initiatives and other work programs may be postponed, or otherwise revised, as necessary.

                                       FINANCIAL RESULTS
                            (in thousands, except per-share amounts)

                                           Three months ended Dec. 31,            Year ended Dec. 31,
                                               2019              2018             2019          2018  
      
Exploration and project evaluation
expenses                                    $10,510            $5,350          $35,541       $11,597      
General and administration (G&A)              1,293               798            5,364         3,436       
Gain on spinout transaction                       -                 -          (30,847)            -           
Net (loss)                                   11,097             6,328           10,950        15,119      
Basic and diluted (loss) per share             0.04              0.03             0.04          0.07        

Exploration and project evaluation expenditures are the most significant expenditures of the company and relate mainly to conducting these activities on its Josemaria project. Exploration and project evaluation expense totalled $35.5-million for the year ended Dec. 31, 2019, compared with $11.6-million for the prior year. The increase in exploration and project evaluation expenditures for the 2019 year reflects the company's key focus on advancing the Josemaria project through the feasibility study, including continuing environmental baseline studies in support of future project permitting and the continuing associated field programs. With the completion of the reserve definition drilling in the first half of the year, the company commenced foundation and in-pit geotechnical drilling, condemnation drilling, as well as water well drilling with production scale testing in order to collect geotechnical data for the open-pit mine design and to determine site geotechnical conditions at planned locations for mine infrastructure, as well as to locate and characterize source locations for water to support the planned operation.

General and administration (G&A) costs for 2019 increased from $3.4-million to $5.4-million. The company incurred additional professional and regulatory fees of $500,000 to execute the spinout of NGEx Minerals, and deployed additional board and senior management personnel including the appointment of the vice-president, projects, to manage and support the Josemaria project. Share-based compensation charges also increased during the year, compared with 2018, as the replacement options associated with the arrangement fully vested as of the effective date of the arrangement.

The company recorded a $31-million gain for the year as a result of accounting for the spinout of NGEx Minerals as a distribution in kind to its shareholders. The distribution to shareholders was accounted for based on the fair value of net assets transferred to NGEx Minerals in accordance with IFRS, with the difference between that value and the carrying amount of the net assets recognized in the statement of comprehensive loss. The fair value was estimated based on the trading value of NGEx Minerals shares for the 10-day period subsequent to commencement of trading. In addition to the $31-million gain on spinoff transaction, the company reclassified $1.3-million of cumulative other comprehensive loss to the P&L during the third quarter of 2019 to reflect the recycling of cumulative exchange differences attributable to the subsidiaries spun out to NGEx Minerals in connection with the arrangement on July 17, 2019.

For the year ended Dec. 31, 2019, the company's net loss totalled $10.9-million compared with $15.2-million for the fiscal 2018 year, with the difference largely attributable to the gain on the spinout transaction, which partially offset the increase in exploration expenses and G&A costs for the year.

Qualified persons

Technical disclosure for the Josemaria project included in this press release has been reviewed and approved by Bob Carmichael, PEng (B.C.). Mr. Carmichael is the company's vice-president of exploration and a qualified person (QP) under National Instrument 43-101 -- Standards of Disclosure for Mineral Projects.

About Josemaria Resources Inc.

Josemaria Resources is a Canadian natural resources company focused on advancing the development of its wholly owned Josemaria copper-gold project in San Juan province, Argentina. The company is a reporting issuer in the provinces of British Columbia, Alberta, Ontario and Quebec, and its corporate head office is in Vancouver, B.C. The company's shares are listed on the Toronto Stock Exchange and on Nasdaq Stockholm under the name symbol JOSE.

Josemaria technical report

The technical report dated Dec. 19, 2018, and titled "NI 43-101 Technical Report, Pre-feasibility Study for the Josemaria Copper-Gold Project, San Juan Province, Argentina," with an effective date of Nov. 20, 2018, is available for review under the company's profile on SEDAR and on the company's website.

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