GRC.TO · 2020-06-19 12:00:00

Gold Springs Resource Adds Over 100,000 AuEq Ounces to the Resource at Gold Springs and Updates PEA

Economic Studies

Gold Springs Resource Adds Over 100,000 AuEq Ounces to the

Resource at Gold Springs and Updates PEA

June 19, 2020, Vancouver, British Columbia— Gold Springs Resource Corp. (TSX:

GRC, OTCQB: GRCAF) (the “Company” or “GRC”), is pleased to announce that it has completed

a NI-43-101 resource estimate update and a preliminary economic assessment update (the

“2020 PEA”) for the Gold Springs project located along the Nevada-Utah border in the United

States of America. All dollar amounts in this press release are stated in U.S. currency.

Updated Resource Estimate

The updated resource estimate, with an effective date of May 1, 2020, is summarized in the table

below:

Category

2017 Resource

Au Ag

Tonnes Grade Troy oz Grade Troy oz

(1000s) (g/t) (1000s) (g/t) (1000s)

Measured 13,591 0.58 252 11.1 4,855

Indicated 16,245 0.53 276 9.1 4,741

Measured & Indicated 29,836 0.55 528 10.0 9,596

Inferred 4,660 0.46 69 6.5 973

Both the 2020 and 2017 Resources are pit-constrained and use a 0.25 g/t gold cutoff grade and reflect

gross metal content that is not adjusted for metallurgical recoveries. The inferred resource is in addition

to the measured and indicated resource. Numbers have been rounded, which may lead to some numbers

not adding up exactly. Mineral resources that are not mineral reserves do not have demonstrated

economic viability.

No drilling was conducted in 2018. In 2019, a small drill-program was conducted to explore, for

a first time, the high-grade veins of the Homestake target at Gold Springs. Two holes, HS-19-

007 and HS-19-012, intercepted significant high-grade gold mineralization however follow-up

drilling is required at Homestake to trace the continuity of the intercepted gold mineralization

along strike and to depth. For more information visit:

www.goldspringsresource.com/projects/homestake/

2020 Preliminary Economic Assessment Update

Matias Herrero, President and CEO stated “The 2020 PEA confirms once again Gold Springs’

robust economics and its strong leverage to higher precious-metal prices. The 2020 PEA shows

a low-CapEx, technically-simple, heap-leach operation, that is scalable within the context of an

expanded resource which we believe is very likely with further drilling”.

Highlighted Changes from the Previous PEA

2020 PEA 2015 PEA

Economic Assumptions

Gold Price $1,450 $1,300

Silver Price $16 $21

Gold/Silver Price Ratio 90.6 61.9

Mineral Economics

NPV5% after tax $153.6 million $92.1 million

IRR after tax 38.9% 35.8%

Initial CapEx $83.5 million $55.0 million

Sustaining CapEx $16.0 million $24.9 million

Total CapEx $99.5 million $79.9 million

After-tax Payback 2.9 years 3.1 years

Cash Cost per oz (net of silver by-product) $715 $669

AISC per oz (net of silver by-product) $837 $863

LOM cumulative after-tax free cashflow $212.7 million $133.3 million

Mining

Strip Ratio (Waste to Mineralization) 1.6 2

Mining Method Contract Mining Contract Mining

Life of Mine (LOM) 8 years 9 years

Contained Gold ounces 708,899 589,136

Contained Silver ounces 13,410,951 13,337,511

Processing

Processing Throughput: Crushed 15,000 tpd 15,000 tpd

Processing Throughput: Run-of-mine 3,200 tpd n/a

Gold Recovery System Merrill Crowe Merrill Crowe

Gold Recovery - Heap-leach crushed 73% 73%/72%

Gold Recovery - Heap-leach Run-of-mine 40% n/a

Silver Recovery - Heap-leach crushed 40% 40%/30%

Silver Recovery - Heap-leach Run-of-mine 20% n/a

LOM payable (recovered) Gold oz 490,152 428,408

LOM payable (recovered) Silver oz 4,842,140 4,915,349

LOM annual average gold production 61,269 47,601

LOM annual average silver production 605,268 546,150

* Cash cost per gold ounce is net of silver credit and includes mining, processing, general and

administrative, and operating cost contingency; All-In Sustaining Cost (AISC) per gold ounce includes

Cash cost per gold ounce plus sustaining capital, federal, state and local taxes and does not include

initial capital. The portion of the project subject to the updated PEA does not have overriding royalties.

The PEA is preliminary in nature, it includes inferred mineral resources that are considered too

speculative geologically to have economic considerations applied to them that would enable them to be

categorized as mineral reserves, and there is no certainty that the PEA will be realized.

The project has strong leverage to a rising gold price and resiliency to a lower gold

price:

Gold Price $1,300 $1,400 $1,600 $1,800 $2,000

After Tax NPV (5%) (1000s) $106,615 $137,965 $200,099 $261,787 $323,887

The Technical Report containing the 2020 Resource and 2020 PEA is near completion and will

be available under the Company’s profile on SEDAR and on the Company’s website

at www.goldspringsresource.com in the next few days.

Gold Equivalence: AuEq* was calculated using Gold/Silver price ratio of 90.63 (Gold price

$1,450 and Silver price of $16) and has not been adjusted for metallurgical recoveries.

Preparation of the Resource Estimate and PEA

GRE and Kurt Katsura were contracted by the Company to prepare the new mineral resource

estimate, with the resources having been classified in accordance with standards as defined by

the Canadian Institute of Mining, Metallurgy and Petroleum (CIM) “CIM Definition Standards –

For Mineral Resources and Mineral Reserves,” prepared by the CIM Standing Committee on

Reserve Definitions and adopted by CIM Council on December 17, 2010, as amended May 10,

2014 and the generally accepted Canadian Institute of Mining’s (CIM) “Estimation of Mineral

Resources and Mineral Reserves Best Practice Guidelines (November 29, 2019)”

The 2020 Resource builds on the 2017 Resource for the South Jumbo, North Jumbo, Thor and

Grey Eagle deposits. The main objective of the 2020 Resource was to publish a revised resource

estimate for the South Jumbo (Etna) deposit of the Gold Springs project by integrating 2,596

meters of new drilling completed in the South Jumbo resource area. The 2020 Resource also

restates the 2017 Resource for the North Jumbo and Thor deposits, and the 2015 Mineral

Resource Estimate for the Grey Eagle deposit, for higher gold price and operating costs. These

three deposits have not been drilled since the last published resources. The 2017 and 2015

Mineral Resource Estimates were also performed by GRE.

GRE created a geologic model for Etna which contained new drill hole data as part of the 2017

exploration drilling. The model was completed using LeapFrog® software (Leapfrog). Drill hole

information for the entire Gold Springs Project was uploaded into Leapfrog, including collar,

assay, survey, and lithology. The Etna block model was constructed with block dimensions of 5

metres by 5 metres by 5 metres. Blocks were located relative to the LIDAR elevation model.

Each of the blocks was assigned fields to contain gold and silver grade for each estimation

method, resource classification, rock density, block tonnage, contained ounces, lithology, and

lithology groups. GRE coded the block model into Mineralized Zones and Non-Mineralized

Zones based on the wireframes created in the geologic model.

Etna data provided by GRC, and verified by Kurt Katsura, included drill hole data for 36 drill

holes and 6 trenches, collar coordinates, drill hole direction (azimuth and dip), lithology, and

sampling and assay data. Topography was derived from 1-metre LIDAR data. The assay data

included hole ID, gold in ppb, and silver in ppm.

The drill holes in the Etna area total 5,948.22 metres, and the channels total 329.19 metres. The

database includes three RC drill holes completed in 2012 totaling 417.6 metres, six holes in 2014

totaling 810.8 metres, eight RC drill holes completed in 2016 totaling 1,385.22 metres and 19

drill holes completed in 2017 totaling 3,334.6 meters. All drill hole collar locations were

surveyed by Platt & Platt Inc., professional surveyors, using Trimble surveying instrumentation.

Historic (pre-GRC) drill hole collar locations were surveyed in a similar manner. Downhole

surveys were conducted on all of the 2016 Etna drill holes, and downhole survey were conducted

on 14 of 19 Etna drill holes completed in 2017.

There are 3,620 gold and 3,273 silver assay data values in the Etna database. The Etna data was

composited into 4.57-metre (15-foot) lengths.

The Gold Springs assaying was performed almost exclusively using 1.52-metre-long sample

intervals and assayed using a 30-gram fire assay.

Using Leapfrog, GRE modeled gold and silver grades into the Etna block model using ID2.5, OK,

and NN interpolators. For each estimate, GRE first estimated the blocks only within the

Mineralized Zone. Grams of gold and silver contained were calculated from the modeled grades

using the block specific gravity. GRE chose the ID2.5 method with 2 holes required as the

preferred method because it had better local variability that more closely fit the data.

As part of the ID2.5 estimation, the average distance to composites was stored in the model.

These distances were then used to establish the resource category. The Measured category has

an average distance less than 25 metres from the drill holes, the Indicated category an average

distance between 25 and 50 metres from the drill holes and the Inferred category and average

distance between 50 and 100 metres from the drill holes.

To create the economic model for the updated PEA, GRE first developed a series of 19 sets of pit

shells for each deposit (Grey Eagle, North Jumbo, South Jumbo and Thor), within the mineral

resource block model using a range of Au prices. GRE selected the $1,200 pit shells for each

deposit as the ultimate pit for the economic model and also selected the $1,400 pit shells for the

Grey Eagle and Jumbo deposits as phase 1 resource areas. Mine schedules were developed for

each of the selected pit shells, using a production rate of 15,000 tpd. A total of seven cases were

evaluated. The variables comprising the cases were crushing cutoff grades ranging from 150 ppb

to 300 ppb with some cases also including ROM at a cutoff grade of 150 ppb. Capital and

operating costs were developed for each case, along with sizing of mining and process

equipment. The case with a crushing cutoff of 200 ppb and inclusion of ROM at a cutoff grade of

150 ppb was selected for the base case.

GRE is not aware of any legal, political, environmental, or other risks that could materially affect

the potential development of the mineral resources at Gold Springs.

Qualified Persons

The Mineral Resource has been prepared in accordance with the Canadian Institute of Mining,

Metallurgy and Petroleum (CIM), CIM Standards on Mineral Resources and Reserves,

Definitions and Guidelines prepared by the CIM Standing Committee on Reserve Definitions

and adopted by the CIM by Ms. Terre Lane, Principal Mining Engineer for Global Resource

Engineering, Mr. Todd Harvey, Principal Process and Mining Engineer for Global Resource

Engineering and Mr. Kurt Katsura, Consulting Geologist, all Qualified Persons as defined in

National Instrument 43-101 Standards of Disclosure for Mineral Projects (NI 43-101), and are

“independent” of the Company as defined in NI 43-101, and all have reviewed and approved the

scientific and technical information contained in this press release.

Cautionary Statement on Mineral Resources

This news release uses the term ‘measured resources’, ‘indicated resources’ and ‘inferred

resources’ which are terms recognized and required by Canadian regulations (under National

Instrument 43-101 Standards of Disclosure for Mineral Projects), however, such terms are not

defined terms under SEC Industry Guide 7 and are not permitted to be used in reports and

registration statements filed with the United States Securities and Exchange Commission.

Investors are cautioned not to assume that any part or all of the mineral deposits in these

categories will be upgraded or converted into ‘reserves’ as defined under NI 43-101. Mineral

resources that are not mineral reserves, do not have demonstrated economic viability. In

addition, ‘inferred resources’ have a great amount of uncertainty as to their existence, and

economic and legal feasibility. It cannot be assumed that an inferred resource will be upgraded

to a higher category. Under Canadian rules, estimates of inferred resources may not form the

basis of feasibility or pre-feasibility studies, or economic studies except for preliminary

economic assessment as defined under NI 43-101. Investors are cautioned not to assume that

part or all of an inferred resource exists or is economically or legally mineable.

Readers are also cautioned that the PEA is preliminary in nature and includes inferred mineral

resources that are considered too speculative geologically to have the economic considerations

applied to them that would enable them to be categorized as mineral reserves and there is no

certainty that the results indicated in the PEA will be realized. Mineral resources that are not

mineral reserves do not have economic viability.

Forward Looking Statements

The PEA was prepared to broadly quantify the Gold Springs project’s capital and operating

cost parameters and to provide guidance on the type and scale of future project engineering

and development work that will be needed to ultimately define the project’s likelihood of a

positive feasibility determination and optimal production rate. It was not prepared to be used

as a valuation of the project nor should it be considered to be a final feasibility study on which

a commercial production decision could be made. The capital and operating cost estimates

which were used have been developed only to an approximate order of magnitude based on

generally understood capital cost to production level relationships, and although they are

based on engineering studies, these are preliminary so the ultimate costs may vary widely

from the amounts set out in the PEA. This could materially adversely impact the projected

economics of the project. As is normal at this stage of a project, data in some areas was

incomplete and estimates were developed based solely on the expertise of the Company’s

employees and consultants. At this stage of development for Gold Springs the criteria, methods

and estimates are preliminary and result in a high level of subjective judgment being

employed. There can be no assurance that the potential results contained in the PEA will be

realized. Certain statements contained herein constitute “forward-looking information” under

applicable Canadian securities laws (“forward-looking statements”). Forward-looking

statements look into the future and provide an opinion as to the effect of certain events and

trends on the business. Forward-looking statements may include words such as “creating”,

“view of”, “intended”, “plan”, “believe”, “vision”, “would”, “continue”, “will”, “estimate”,

“promising”, and similar expressions, and include statements regarding estimated mineral

resources and the potential for delineation of additional resources through further exploration

at the Gold Springs, as well as statements regarding estimated net present values, internal

rates of return, daily and annual production, costs, recovery rates, metal prices, and

statements regarding the Company’s development plan for Gold Springs. These forward-

looking statements are based on current expectations and entail various risks and

uncertainties. Actual results may materially differ from expectations if known and unknown

risks or uncertainties affect our business or if our estimates or assumptions prove inaccurate.

Factors that could cause results or events to differ materially from current expectations

expressed or implied by the forward-looking statements, include, but are not limited to, risks

of the mineral exploration industry which may affect the advancement of the Gold Springs

project, including possible variations in mineral resources, grade, recovery rates, metal prices,

capital and operating costs, and the application of taxes; availability of sufficient financing to

fund planned or further required work in a timely manner and on acceptable terms;

availability of equipment and qualified personnel, failure of equipment or processes to operate

as anticipated, changes in project parameters, including water requirements for operations,

as plans continue to be refined; regulatory, environmental and other risks of the mining

industry more fully described in the Company’s Annual Information Form and continuous

disclosure documents, which are available on SEDAR at www.sedar.com. The assumptions

made in developing the forward-looking statements include: the accuracy of current resource

estimates and the interpretation of drill, metallurgical testing and other exploration results;

the timely receipt of required permits for the Gold Springs project; the continuing support for

mining by local governments in Nevada and Utah; the availability of equipment and qualified

personnel to advance the Gold Springs project; execution of the Company’s existing plans and

further exploration and development programs for Gold Springs, which may change due to

changes in the views of the Company or if new information arises which makes it prudent to

change such plans or programs; and the assumptions and estimates to be disclosed in the

Preliminary Economic Assessment on the Gold Springs Property, Utah/Nevada, USA ,

authored by GRE and Kurt Katsura.

Readers are cautioned not to place undue reliance on the forward-looking statements

contained in this press release. Except as required by law, the Company assumes no obligation

to update or revise any forward-looking statement, whether as a result of new information,

future events or any other reason. Unless otherwise indicated, forward-looking statements in

this press release describe the Company’s expectations as of the date hereof.

Gold Springs Resource Corp. Contact:

Matias Herrero

Chief Executive Officer

[email protected]

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