Resource World Magazine

D E C E M B E R / J A N U A R Y 2 0 1 8 www.resourceworld.com 9 countries have well developed mining industries, well established mining laws, and established mining cultures. In addi- tion, the majority of our management team has experience in Latin America, and our Board of Directors is well connected in the region. Based on this, we defined our objective to build a mid-tier gold producer focused on Latin America. We created a strategy we call 'buy and build' – meaning, buy assets that have potential to build on the existing operations, improve or extend them, and combine them into a better value portfolio of assets. We have assembled an experienced management team with a history of creat- ing shareholder value, while maintaining a conservative financial management approach. We will maintain a strong bal- ance sheet with conservative leverage ratios, and ensure tight controls for operat- ing budgets and capital expenditures. RW: How do you plan to grow the company? Are you looking to acquire existing mines or advanced projects? NW: We are targeting gold mining projects in Latin America, and our focus is on producing mines with existing or near-term cash flow to provide an operat- ing base from which to grow. These might include medium-sized dislocated mines, or non-core assets within a senior produc- er's portfolio, or assets with upside from optimization and de-risking of current operations. We will look at projects with relatively low technical risk or those trad- ing at a discount. Our intent is to build a portfolio of quality assets that will generate supe- rior shareholder returns. We've done this before, and we have the team, the skills, the relationships, and financial support to deliver on this strategy. RW: How does Los Filos fit that strategy? NW: Los Filos fits our 'buy and build' strategy perfectly. It is our flagship asset, and provides the foundation from which we will grow. Having completed a six- month transition phase at Los Filos, we are now turning our attention to the next acquisition. Los Filos is the third largest gold mine in Mexico, currently producing 200,000 ounces of gold per year at an AISC of about $900 per ounce, with an expansion under way that will take it to 350,000 ounces per year at an AISC closer to $800 per ounce. Los Filos is just the first step in our growth strategy, and provides an ideal platform for growth. RW: When you acquired Los Filos Mine from Goldcorp, was it already a successful mine? NW: Yes. It is a sizeable, low-cost mine with long-established operations, having produced 2.5 million ounces of gold since it started up in 2008. We have best-in-class infrastructure and a solid workforce. While Goldcorp had declared it non-core, we saw a valuable mine development opportunity in the Bermejal Underground which repre- sents significant upside potential. We have focused on reducing costs and transition- ing the mine into an independent business unit and profit centre. RW: What were the Los Filos terms of acquisition? NW: We paid US $350 million to acquire the Los Filos Mine. Of that, US $279 mil- lion was in cash and the remaining US $71 million was paid in Leagold shares. This established Goldcorp as our largest share- holder, at 23%. RW: How was the financing arranged to acquire Los Filos? NW: We financed the acquisition through a combination of debt and equity, including a CDN $179 million subscription receipt offering, a US $150 million loan facility with Orion Resource Partners, a US $50 million equity private placement by Orion Resource Partners, and the US $71 million worth of Leagold shares as mentioned. RW: When Los Filos was acquired, did you already have plans to change the operations in some ways? What were your plans for Los Filos? NW: Yes. By the time the acquisition closed in April 2017 our team was familiar with many of the opportunities and chal- lenges at Los Filos. The opportunities we initially pursued were to increase mining rates at both the open pit and underground operations; re-install the agglomerator, and extend the overland conveyor network; Open pit mining operations at the Los Filos gold mine in the Guererro Gold Belt south of Mexico City. Photos courtesy Leagold Mining Corp.

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