23:01 | 14.06.2018
TMAC Resources Sees Record May Processing Plant Results, Substantially Improved Balance Sheet and High-Grade Exploration Success

As promised with the release on May 10, 2018 of TMAC Resources Inc.’s
(TSX: TMR) (“TMAC” or the “Company”) Financial Statements
and Management’s Discussion and Analysis for the periods ended March 31,
2018 and 2017, we are today releasing results for May to provide
transparency on the first month of the processing plant’s (the “Plant”)
performance after the installation of a Falcon SB400 in the primary
grinding circuit of the North Concentrator Line (“CL1”). In
addition, we are reporting on the start-up in June of the South
Concentrator Line (“CL2”), recent exploration results at Doris
and Madrid and the strengthening of the TMAC balance sheet.

Jason Neal, President and Chief Executive Officer of TMAC, stated, “Our
management team has taken several significant steps forward in the month
of May, operationally and financially. We have achieved a new level of
Plant recovery and performance and are planning the next steps for
further improvement. As well, a key objective for 2018 has been to use
more efficiently the equity that TMAC has raised historically. The first
success was a diesel fuel consignment transaction to lower peak
inventories by more than $20 million, and the second success we are
announcing today is a new payment and bonding collateral structure with
an expectation to efficiently release by July at least $25 million of
our current restricted cash balance. We also have an opportunity today
to remind our stakeholders of TMAC’s great potential to grow value with
the drill-bit with the release of significant exploration results in a
concurrent release that includes a hole with 2,710 grams per tonne over
0.66 metres, the second-best drill intercept in the history of the Hope
Bay project.”

Gil Lawson, Chief Operating Officer of TMAC, said, “In our first month
operating a Falcon SB400 in the Plant we achieved a recovery for the
month of 83%, which is very encouraging for the very first month of its
operation. We tested the unit with our lowest grade stockpile for about
half the month before feeding the Plant with higher grade blends. The
performance improvement of the concentrator line met our expectations
given the various grade regimes that were tested to achieve this average
recovery. We have ordered additional gravity concentrator units that
will be installed beginning later this summer that will drive further
improvements and take us to the point where we will begin optimization
and seek our ultimate recovery target of greater than 90%. We commenced
feeding low-grade ore to CL2 in early June and it is ramping up to
deliver overall Plant capacity of 2,000 tonnes per day. The mine
continues to ramp up production to feed the growing Plant capacity. With
increased throughput, grade and recoveries we expect to drive our all in
sustaining costs significantly lower as fixed costs are spread over
increasing gold production.”
May Plant Performance
For the month of May, gold recovery increased to 83%, an improvement
from 76% in April and 71% in the first quarter, on processing 28,900
tonnes at an average ore grade of 12.7 grams per tonne (“g/t”)
resulting in record gold production of 9,850 ounces and record gold
pours of 10,108 ounces. Gold production in May was 28% better than the
previous best month of November 2017, despite that comparable month
benefiting from 22% higher grade. The amount of gold poured in May was
49% higher than the previous best month of December 2017.
South Concentrator Line (CL2) Start-Up
TMAC successfully installed and wet commissioned CL2 by the end of May
with rock commissioning commencing June 3rd. CL2 incorporates
modifications implemented on CL1 during its commissioning and ramp up,
including, as original equipment, its own Falcon SB400. The
commissioning of CL2 has been significantly better than CL1 based on our
learning through a challenging start up, supporting our strategy of a
staggered start up of the Plant. The next critical step is the
integration of the two concentrator lines into the concentrate treatment
process to achieve overall plant capacity of 2,000 tonnes per day. While
early in the process of ramp up, we have thus far met commissioning
targets. TMAC reduced the ore feed grade at the beginning of June during
the start up of CL2 and will begin increasing grade as confidence in
sustained performance improves.
Balance Sheet and Liquidity
While TMAC maintains the objective of replacing the current Letters of
Credit (“LCs”) with surety bonds, the Company has collaborated
with CIBC, Purves Redmond Limited and certain insurance companies to
design, as an interim step, a payment and bonding collateral structure
to achieve a similar benefit. TMAC is therefore expecting that there is
potential to release at least $25 million of its current restricted cash
balance by July.

Crown Indigenous Relations and Northern Affairs and the Kitikmeot Inuit
Association will continue to hold LCs exactly as they do today, but in
place of cash collateral CIBC will hold the new product, referred to as
“demand bonds”, that will be provided by the same insurance companies
which provide surety bonds. The demand bond wording and structure has
been agreed with and vetted by CIBC as well as a representative group of
insurance companies. TMAC and CIBC have executed an amendment to the
terms of the current LC agreement to allow for the use of demand bonds
and the insurance companies have initiated the underwriting process of
the demand bonds. The demand bonds require a process similar to that
used for issuing surety bonds to be followed and success is now in the
control of TMAC and the insurance companies who have indicated an
interest in issuing demand bonds. It is TMAC’s expectation that the
insurance companies may require that a portion of the demand bond face
value be held as cash collateral. TMAC currently has $42 million of
restricted cash which would be released by CIBC upon receipt of the
demand bonds. The underwriting process is expected to close in July.

On May 10, 2018, TMAC announced a diesel fuel consignment transaction
which replaced an up-front acquisition cost of $21 million at the time
of our annual sealift with an ongoing payment based on consumption. The
main conditions precedents have been fully satisfied with the only
remaining condition being the inspection of the Hope Bay storage tank
and the installation of additional measurement equipment that is
expected to be completed in mid-July. As a result, the cash outflow for
the annual sealift from May to September was reduced from approximately
$60 million to approximately $40 million, reducing peak working capital.

The importance of the diesel fuel consignment agreement and the payment
and bonding collateral structure, and potentially conventional surety
bonding in the future, include both near-term liquidity and,
importantly, a template to reduce further working capital investment as
TMAC grows.

At the end of May TMAC had an unrestricted cash balance of $27.1
million, which if combined with the potential net release of restricted
cash would exceed at least $52 million pro forma. With completion of the
diesel consignment transaction, and considering deposits already funded,
the remaining committed 2018 sealift investment is approximately $35
million in total, to be expended June through September. Continued ramp
up of the Plant and mine are required to generate material net free cash
flow from operations.
Exploration at Doris and Madrid
TMAC also issued today a concurrent news release with detailed drilling
results at Doris and Madrid. Despite only $8 million dollars of drilling
expenses budgeted for 2018, including infill production drilling, TMAC
has had significant success thus far. Highlights include two drill holes
within the Doris North BTD zone, intersecting (i) 261.4 g/t Au over 7.1
metres including 2,710 g/t over 0.66 metres and 71.8 g/t Au over 1.4
metres; and (ii) 1,255 g/t over 1.5 metres. Results at Madrid North
include two near surface intercepts of (iii) 11.5 g/t Au over 25.1
metres, including 18.1 g/t Au over 14.0 metres; and (iv) 12.9 g/t Au
over 50.0 metres, including 60.1 g/t Au over 8.5 metres. Please see our
parallel news release titled “TMAC Provides Exploration Update,
Highlights Include 261.4 g/t Au over 7.1 metres at Doris North BTD
Extension” posted concurrent to this news release for a complete and
detailed description of these results.

In the intersections highlighted above true width varies depending on
the dip of the drill hole and we encourage readers to refer to the
complete text of the news release.
For the Doris and Madrid North drilling campaigns, samples were prepared
at ALS Laboratories in Yellowknife, Northwest Territories, and assayed
at their Vancouver, British Columbia laboratory (an ISO/IEC 17025
accredited lab for gold analysis). Analysis for gold is completed on
sawn half core samples (NQ) using 50 gram fire assay with atomic
absorption (AAS) finish. Samples with higher grade gold (>100 g/t) are
re-assayed using the pulp and fire assay with gravimetric finish
procedures. Samples with visible gold, and surrounding samples are
analyzed using screen metallics (1000 g of material is screened to 100
microns, with all +100 micron material analyzed and two samples of -100
micron analyzed by 50 g fire assay with AAS finish, results are averaged
based on weight). The Company control checks include the insertion of
standard reference materials and blank samples to monitor the precision
and accuracy of the assay data. For a complete description of TMAC’s
sample preparation, analytical methods and QA/QC procedures refer to the
2017 Annual Information Form dated February 23, 2017 and filed on TMAC’s
profile at
Scientific and technical information was prepared by, and all other
scientific and technical information contained in this document was
reviewed and approved by, Gil Lawson, P.Eng., Chief Operating Officer of
TMAC, and David King, P.Geo., Vice President, Exploration and Geoscience
of TMAC, each of whom is a “qualified person” as defined by NI 43-101.
This release contains “forward-looking information” within the meaning
of applicable securities laws that is intended to be covered by the safe
harbours created by those laws. “Forward-looking information” includes
statements that use forward-looking terminology such as “may”, “will”,
“expect”, “anticipate”, “believe”, “continue”, “potential” or the
negative thereof or other variations thereof or comparable terminology.
Such forward-looking information includes, without limitation, freeing
up restricted cash from completing demand bonds and the ramp up at Doris
to design capacity.

Forward-looking information is not a guarantee of future performance and
management bases forward-looking statements on a number of estimates and
assumptions at the date the statements are made. Furthermore, such
forward-looking information involves a variety of known and unknown
risks, uncertainties and other factors, which may cause the actual
plans, intentions, activities, results, performance or achievements of
the Company to be materially different from any plans, intentions,
activities, results, performance or achievements expressed or implied by
such forward-looking information. See “Risk Factors” in the Company’s
Annual Information Form dated February 22, 2018 filed on SEDAR at
for a discussion of these risks.
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