Ayawilca is one of the biggest undeveloped zinc deposits worldwide – certainly held by a junior company. We believe that, with further successful exploration, Ayawilca still has the potential to contain 80 to 100 million mt of mineable zinc mineralization.”

Graham Carman

PRESIDENT AND CEO, TINKA RESOURCES

June 28, 2019

What are the most notable features of your updated resource estimate?

Tinka had a significant 34% increase in tonnage of our zinc resource based on 20,000 m of drilling during 2018, and the zinc grade did not change. This was a great result. The updated resource was based on 157 holes and more than 60,000 m of drilling on the property. The tin resource also increased by about 35%. We are very pleased with the resources increase, to the point that we are advancing our preliminary economic assessment (PEA), which will be completed by the end of Q2 2019. Around 25% of our zinc resources are now in the indicated category, which is an improved confidence level over inferred resources, and we will convert more of our resources into the measured and indicated category prior to a pre-feasibility study.

Are there any new permits in process related to the upcoming drilling campaign?

We have another drilling campaign budgeted for 2019 for around 10,000 m, which recently commenced in April 2019 . We have an environmental impact assessment (EIA) and drill permit that is current for the next two years, but we did recently file for a modification that will allow us to complete a lot more holes. Also, the government has abandoned the 50-meter restriction whereby you could not move beyond 50-meters from the planned drilling location. So, the permits are much more flexible now. As far as the community agreements go, we have access agreements for the life of the EIA.

What will be the focus of the 2019 drilling campaign?

Our intention is to test new zones and find more ore, as well as to do some in-fill drilling in anticipation of the future pre-feasibility study, which can only incorporate measured and indicated resources. Right now, our zinc resources contain 11.7 million tonnes (indicated) plus 45 million tonnes (inferred) at high zinc grades. There are still open areas at depth and on the edges of the deposit for additional potential; in particular, we like the deeper targets because last year we found repetitions of our favorable limestone horizon beneath the resource, and we also found that zinc grade increased significantly with depth. We had one hole that intersected 10 m at 44% zinc underneath the previous resource, which is basically direct shipping ore in terms of its grade. Ayawilca is going to be an underground mine; the shallowest part is 150 m from surface, and mineralization goes down to 400 m so far.

How are you moving along with the metallurgical tests at Ayawilca?

We have already done a lot of metallurgical test work in Peru, and we are now running some additional tests with a Canadian laboratory. We are focusing on variability test work, testing samples from different areas of the deposit to define the recovery rates from different parts of the deposit while also determining how many ore types we have. There will likely be two or three ore types based on sulfide content. The good thing is that the ore is generally coarse-grained and easy to separate, and it is all sulfide – there is no oxide at all.

The other component is the tin resource, which is separate from the zinc resource. We may include the tin in the PEA as well, so we are doing more metallurgical work on tin recoveries. The tin is hosted by cassiterite, which is tin oxide (SnO2), in a matrix of sulfide that we need to remove to concentrate the cassiterite.

How does Ayawilca fit in the portfolio of undeveloped zinc deposits worldwide?

Ayawilca is one of the biggest undeveloped zinc deposits worldwide – certainly held by a junior company. We believe that, with further successful exploration, Ayawilca still has the potential to contain 80 to 100 million mt of mineable zinc mineralization. We will continue to seek new zones of mineralization to push the deposit up to that level.

How do you feel about the future behavior of the zinc price?

After the excitement at the end of 2017, 2018 has seen zinc prices relax somewhat, but the price has still remained robust.  Right now there are a couple of zinc mines starting in Australia so we are seeing more concentrate coming to the market; however, despite the new production, zinc prices have remained strong into 2019.  We believe zinc prices will continue to be robust for the short to medium term. Experts predict there will be a significant shortage in zinc from 2021, which is when Ayawilca may be close to coming on stream. 

When do you think you should find a partner to come on board at Ayawilca?

This year we will continue to de-risk the project through the completion of our PEA and detailed metallurgical test work. Following the PEA, we believe this project will advance rapidly towards mine development. We will consider a strategic partner post-PEA, if it makes sense to do so, and if we believe it is in the best interests of our shareholders. 

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