Cerro de Pasco Resources Inc. (CSE: CDPR) (OTCPK: GPPRF) (FRA: N8HP) is pleased to announce selected second quarter 2023 financial and operating results. All currency is in U.S. dollars, unless otherwise stated. The Company’s Financial Statements and Management’s Discussion & Analysis are available at www.pascoresources.com and www.sedar.com.

Selected Q2 2023 financial and operating results

• Metal Production in Q2 2023 was 10 million pounds of Zinc, 820 thousand pounds of Lead, and 66 thousand ounces of Silver. These production figures represent an 83% increase in Zn, 112% increase in Pb and 238% in Ag respectively over Q2 2022 production.
• Revenue for Q2 2023 was $4.5 million. Revenue in Q2 2023 was impacted by $3.9 million of negative final settlements from Q1 2023 sales and further exacerbated by a 35% decrease in quarter over quarter zinc prices.
• Q2 2023 C1 cash Cost ⁽⁴⁾ of $1.34, and AISC ⁽⁵⁾ $1.60 per pound of zinc produced remain in-line with the Company’s projections; C1 Cash cost decreased by 41% and AISC decreased by 35% as compared to Q2 2022 due to the resumption of normal production rates and improved cost plans. AISC included development and new infrastructure supporting the Santander Pipe connection.
• Q2 2023 average mill production was 2,050 tonnes per day. This was a 97% improvement over throughput achieved in Q2 2022.
• Average mine development of 532 meters per month for Q2 2023. A 4% increase over Q1 2022. This included a total of 208 meters completed for the Magistral-Pipe tunnel project.
• The Company met production guidance for 1H 2023.
• Positive mine operating cash flow ⁽³⁾ of over $3.8 million.
• Over 21% of the net loss for Q1 2023 comprises either non-cash or one-time items ⁽⁶⁾; net loss for Q2 2023 totaled $10.4M or ($0.03) per share.
• As of June 30, 2023, the Company had cash, cash equivalents, and restricted cash of $6.1 million.

Guy Goulet, CDPR’s CEO commented, “CDPR delivered a solid quarter despite inflationary pressures that impacted the global mining industry. Production has nearly doubled since Q2 2022 and average mill production was just under nameplate capacity. Aggressive cost reduction plans saved nearly 35% on unit costs. Revenues for Q2 2023 were severely impacted due to a negative revision in final settlements of Q1 2023 sales further exacerbated by the significant drop in zinc prices. As a result, we have announced and implemented a new curtailed operating plan to sustain the Santander operation while we continue advancing the Pipe project.”

Guy Goulet, CDPR’s CEO further commented “The large imbalance in working capital is expected to be temporary due to an increase in accounts payable, primarily caused by the decision to pursue the development of the Santander Pipe in advance of support funding. According to the projections supported by a third-party NI 43-101 preliminary economic assessment, the Santander Pipe’s Consolidated Plan will produce a positive cashflow for a period of 10+ years. Once the previously announced financing packages are closed, the Santander mine will be on track to quickly begin the period of positive cashflow and naturally address the imbalance in working capital.”

Summary of Operating Results at Santander

Q2 2023 business development highlights

• On April 11, 2023, the Company announced that it has filed on SEDAR an independent Preliminary Economic Assessment for its brownfield Pipe Project.
• On June 19th, 2023, the Company announced the discovery of La Cuñada Zone at the Santander Pipe, an additional potential resource that benefits the Pipe project. The La Cunada zone starts at the surface of the historic open pit (4580 masl), continues to the bottom of the pit (4380 masl), and ends at the historic underground operation (level 4220 – where the Upper-Zone starts).
  • The La Cuñada Zone in the Santander Pipe involves vertical mineralization of approximately 200 meters and has the potential to add 2-3M tonnes with grades between 3-4% Zn, 0.3-0.4% Pb, 0.6-0.7 oz/tn Ag and 0.10-0.12% Cu. The La Cuñada Zone, for practical purposes, is divided into two zones: (1) Superficial Zone “La Isla”, consisting of a remnant volume from old open pit mining, and (2) “La Cuñada-underground”, which corresponds to historic underground mining.
  • The 2023 Puajanca drilling was completed in early June. Puajanca, which is within proximity to the existing operation combined with the addition of La Cuñada potential zone are exciting complements to the Santander Pipe package. The campaign comprised 8 boreholes totaling 2,208 meters of drilling. Highlights include:
  • The drill holes SAN-0295 and SAN-0297 intersected 39.6 meters grading 2.92% Zinc 0.81% Lead, 0.02% Copper and 1.60 opt Silver.
  • Overall, the Puajanca drilling campaign intercepted 61.8 meters of mineralization with average grades of 2.96% Zinc 0.98% Lead, 0.03% Copper and 1.8 opt Silver.
• On June 28, 2023, the Company announced that it has signed a term sheet with Ocean Partners UK Limited, a metals trading firm and Arena Investors, LP, a global asset manager, to provide an aggregate of $12.0M to $15.5M, consisting of a $8.0M loan facility from ARENA and a $4.0M to $7.5M revolving concentrate pre-payment facility from OPUK. In addition, the Company has secured a $5.0M term sheet with a private Peruvian fund in exchange for a 10% ownership position in CDPR’s Santander subsidiary. 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.

Private Placement Financings Completed in Q2 2023

• On June 5, 2023, the Company concluded a private placement by issuing 10,400,000 units at a price of CA$0.10 per unit for proceeds of CA$1,004,000. Each unit consists of one common share and one warrant for a total of 10,400,000 common shares and 10,400,000 warrants. Each warrant will entitle the holder to acquire one additional common share of the Company at an exercise price of CA$0.25 with an expiry date of two years.
• On June 23, 2023, the Company concluded a private placement by issuing 1,027,500 units at a price of CA$0.10 per unit for proceeds of CA$102,750. Each unit consists of one common share and one warrant for a total of 1,027,500 common shares and 1,027,500 warrants. Each warrant will entitle the holder to acquire one additional common share of the Company at an exercise price of CA$0.25 with an expiry date of two years.

Quiulacocha Easement Update

In order to fulfill the requirements to obtain the authorization to start exploration activities from the General Mining Bureau of Mining of the Ministry of Energy and Mines (DGM, for its acronym in Spanish), on August 25th, 2022, CDPR requested the DGM to impose an easement for 2 years over a part of the plot called Parcel “K”, owned by Activos Mineros S.A.C.

The following phases of the process have been completed:

• Mining expert opinion obtained.
• Conciliation stage lead by the Centre of Conflict Resolution of the Catholic University of Peru (PUCP) completed.
• Valuation of the easement request by an agronomic expert appointed by the Ministry of Housing, Construction and Sanitation (MVCS, for its acronym in Spanish) conducted.
• CDPR has formally confirmed to the DGM its request for the granting of the easement.

The following milestones are expected to be obtained in September 2023:

• The DGM forwards the complete file to the Ministry of Agricultural Development and Irrigation (MIDAGRI, for its acronym in Spanish) for the issuance of a favorable technical opinion.
• Once MIDAGRI’s opinion is received, the DGM prepares the draft Supreme Resolution that sets the amount of compensation to be paid for the easement, along with the minutes of the easement establishment. This Supreme Resolution requires the signature of the Minister of Energy and Mines, the Ministry of Agriculture, and the President of the Republic.

Technical Information

Mr. Jorge Lozano, MMSAQP and Chief Operating Officer for CDPR, 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 NI 43-101.

About Cerro de Pasco Resources

Cerro de Pasco Resources Inc. is a mining and resource management company, with the goal to become the next mid-tier producer of base metals in Peru. CDPR is currently engaged in mining, developing and exploring our wholly owned 6,000 hectare Santander Mine in the highly prospective Antamina-Yauricocha Skarn Corridor, located 215 km from Lima. CDPR is also focused on the development of its principal 100% owned assest, 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. CDPR founded on clear the objectives, to engender long-term economic sustainability and benefit for the local population, from an economic, social and health point of view.