Mining Operations Well Underway At Topia and San Ignacio

VANCOUVER - Guanajuato Silver Company Ltd., Chairman and CEO, James Anderson, said, "With mining operations well underway at both Topia and San Ignacio, the integration of our newly acquired mines from Great Panther is considerably ahead of schedule. Our ability to transition the San Ignacio Mine rapidly and professionally from care & maintenance back to production is demonstrative of the technical acumen of our Mexican operations teams."

In August, Guanajuato Silver acquired the Topia Mine, San Ignacio Mine, and VMC from Great Panther. The San Ignacio Mine and the Valenciana Mines Complex had been placed on care & maintenance in November 2021, due to a lack of tailings capacity.

El Cubo comprises two main mine areas - the Villalpando Mine area in the south and the Santa Cecilia Mine area in the north; at Santa Cecilia the main NW Villalpando vein structure is often crosscut with additional perpendicular (transverse) vein structures which frequently carry proportionally higher gold content. Because of the increasing importance of the Santa Cecilia Mine area, the Company decided to link the Villalpando and Santa Cecilia areas by way of a 150-meter tunnel and ramp (the 705 ramp) - (See Guanajuato Silver news release dated May 5, 2022 - GSilver Drills 2,988 GPT AgEq Over 0.35m Estimated True Width at El Cubo). This work has now been completed, thereby reducing the total haulage distance to only 2.5km from 7.2km. The reduction of the haulage distance has made an immediate positive impact on project economics in terms of reduced fuel costs, reduced road maintenance, and reduced tire wear. Furthermore, the construction of the access tunnel has opened-up new higher-grade stope areas that were largely inaccessible to previous operators.

The Company is pleased to report that these and other operational improvements increased production at El Cubo in July to 144,000 silver equivalent ounces, an increase of 23% over June's production. The Company expects that the August 4, 2022 acquisition of Great Panther's Mexican assets will further boost production materially on a go-forward basis.

The San Ignacio Mine had operated continuously for 10 years prior to being placed on care and maintenance in November 2021 as discussed above; high-grade epithermal mineralization exists within a quartz vein system named ‘La Luz', located parallel to and approximated 5km west of the Veta Madre system. The Company confirms that within just four days of the close of the Great Panther acquisition, previously mined material from San Ignacio was delivered to El Cubo for processing. Furthermore, the mining of new material at San Ignacio began just seven days after closing the acquisition. Mineralized material from San Ignacio is being transported directly to El Cubo for processing and is expected to add approximately 5,000 to 6,000 tonnes of material per month to the El Cubo processing circuit for the remainder of 2022. It should be noted that San Ignacio vein material has previously been processed successfully at the El Cubo mill (See Guanajuato Silver news release dated January 6, 2022 - GSilver Begins Processing Third-Party Silver and Gold Mineralized Material).

Under the previous operator, mineralized material from San Ignacio was transported approximately 20km to the Cata mill at VMC. Because the route from San Ignacio to El Cubo incorporates the local highway system, the current haulage time is only about 15 minutes longer than using the previous arrangement.

Mined since the 1500s and comprising an immense strike length of over 4.2km along the world-class Veta Madre or ‘Mother Vein', the Valenciana Mines Complex ("VMC") includes five mines (Guanajuatito, Valenciana, Cata, Rayas-Los Pozos, and Promontorio) that over the centuries have merged to form one large continuously interconnected mine. Historically, Valenciana was one of the most significant silver mines in the world; at times near the end of the 18th century the mine accounted for nearly 40% of world silver production. Under the previous operator, mineralized material from VMC was processed at the Cata mill, which remains in good working order and has a nameplate capacity of 36,000 tonnes per month.

The Company's engineering and geological teams are currently reviewing opportunities to restart mining at VMC as well as processing at Cata. GSilver anticipates that mining will recommence at VMC before the end of 2022 with mineralized material being sent to El Cubo for processing. The Company expects to restart the Cata mill in early 2023.

Located in north-eastern Durango, the Topia Mine was operated continuously since 2004 by Great Panther. Topia is a polymetallic mine that produces silver, lead, zinc and gold through a 7,500 tonnes per month flotation processing facility. Since the completion of the MMR acquisition, the Company reports it has sold 99.2 dry tonnes of lead-silver-gold concentrate to a division of Samsung Electronics Co Ltd., and 97.7 dry tonnes of zinc-silver concentrate to a division of Ocean Partners Ltd. (U.K.).

Commenting on Topia, President Ramon Davila said, "I am very excited; as the former Economic Minister for the State of Durango, based on my previous operating experience in the state, and after reviewing our current mining operations, I believe we have an opportunity to incorporate a hub & spoke mining strategy at Topia similar to the one we are now employing successfully with our Guanajuato assets."