Ascendant Resources Reports First Quarter 2020 Results

● Results include the El Mochito Mine which was sold subsequent to quarter end and is shown as a discontinued operation

Q1 2020 Highlights:

• Contained metal production of 28.8 million ZnEq¹ lbs, up 23% vs Q1/19
  
  
• ZnEq grade of 7.8%, a 16% improvement over Q1/19
  
  
• Net Revenue from discontinued operations of $13.78 million, down 23% from Q1/19 and down 31% from Q4/19, due to a negative provisional price adjustment of $12.35 million
  
  
• Significant improvement in AISC of $1.03/lb ZnEq versus $1.30/lb ZnEq in Q1/19
  
  
• Adjusted EBITDA loss of $9.30 million versus $1.45 million gain in Q1/19
  
  
• Net Loss of $11.14 million and loss per share of $0.14
  
  
• Sale of El Mochito mine subsequent to the end of Q1/20 announced April 17, 2020

(All dollar amounts are in U.S. dollars (“$”) unless otherwise specified)

TORONTO, May 13, 2020 -- Ascendant Resources Inc. (TSX: ASND) ("Ascendant" or the "Company”) reports financial and operational results for the first quarter 2020 (“Q1/20”) which includes the last full quarter of operations at the El Mochito Mine for the Company. On April 27, 2020, the Company announced the completion of the divestiture of American Pacific Honduras SA de CV (“AMPAC”), which holds 100% of the El Mochito mine.

The sale of El Mochito was the result of a strategic decision by the Company to address severe liquidity pressures which continued to be exacerbated by low commodity prices in Q1/20, and improve its financial position by eliminating the financial burden of the El Mochito mine. The sale provided immediate balance sheet relief and enables the Company to focus its resources on the high-grade Lagoa Salgada VMS project (the "Lagoa Salgada project" or “Lagoa Salgada”) located on the prolific Iberian Pyrite Belt in Portugal. For further details of the sale transaction, please refer to the Company’s press release dated April 17, 2020.

President and CEO Chris Buncic stated: “The sale of El Mochito and our AMPAC subsidiary has allowed us to strengthen our financial position in preparation for the next phase of the Company’s growth as we focus on value creation through aggressive development plans for the Lagoa Salgada project in Portugal. We have great confidence in the potential of Lagoa Salgada based on the continued resource growth and economic potential the project has demonstrated to date. We look forward to commencing our 2020 exploration program that is focused on expanding and upgrading the Lagoa Salgada resource base, advancing the project to feasibility stage, and ultimately unlocking the true value potential of the project.”

____________
¹ ZnEq lbs and grades in % represents zinc metal considered together with the lead and silver expressed in zinc equivalent terms of zinc using spot metal prices and production during the period.

The comparative analysis and review for Q1/20 have been reclassified to account for and present AMPAC’s El Mochito mine as discontinued operations. The financial position information is neither restated nor remeasured for discontinued operations. As of April 27, 2020, the Company will no longer consolidate the results of AMPAC’s El Mochito mine in its consolidated financial statements.

A summary of key operational and financial performance for the first quarter 2020 is provided in the tables below:

First Quarter 2020 Operational Performance

Continuing Operations

As a result of the sale of the El Mochito mine, Q1/20 is the last full operating quarter for El Mochito to be included in the results of the Company. As of April 27, 2020, the Company is solely engaged in the exploration and development of the Lagoa Salgada VMS project in Portugal.

Discontinued Operations

Contained metal production for Q1/20 was 28.8 million pounds of zinc equivalent (“ZnEq”) metal, comprised of 16.7 million pounds of zinc, 7.4 million pounds of lead and 325 k ounces of silver. Total contained metal production for the quarter increased by 23% over the first quarter 2019 (“Q1/19”) production of 23.4 million pounds of ZnEq metal due to higher zinc and lead grades and decreased slightly (2%) over fourth quarter 2019 (“Q4/19”) production of 29.4 million pounds of ZnEq metal, due to slightly lower zinc and lead grades and significantly lower silver grades.

Milled production in Q1/20 of 203 kt demonstrated a 5% improvement over 193 kt in Q1/19 and a 9% improvement over 187 kt milled in Q4/19, predominantly a result of seasonal holidays.

The average head grade in Q1/20 of 7.8% ZnEq represents an increase of 16% over Q1/19 average head grades of 6.7% ZnEq resulting from slightly higher zinc (4.4%) and lead (2.1%) grades and higher silver prices, yet represents a decrease of 8% over 8.5% ZnEq in Q4/19 as a result of overall lower grades, especially for silver. The improvement in zinc and lead grades vs Q1/19 is a result of implemented dilution controls and focus on conventional mining from various, small high-grade pillars in the upper historical part of the mine.

Zinc processing recoveries of 83.9% in Q1/20 were marginally lower than 84.2% in Q1/19 and 2% lower than 86.0% in Q4/19 results. Lead recoveries of 79.6% were inline with Q1/19 (79.5%) and Q4/19 (79.9%). Silver recoveries were 80%, 1% higher than 79.0% in Q1/19 but 1% lower than 81.1% in Q4/19.

First Quarter 2020 Financial Performance

Continuing Operations

Continuing operations do not generate revenues for the Company.

Net loss and basic and diluted loss per share from continuing operations for the period was $1.31 million and $0.02 compared to $1.70 million and $0.02 in Q1/19.

Consolidated Operations

Net loss and basic and diluted loss per share for the period was $11.14 million and $0.14 compared to a net loss and basic and diluted loss per share of $2.41 million and $0.03 in Q1/19.

The All-In Sustaining Cost (”AISC”) per ZnEq payable pound sold in Q1/20 on a consolidated basis including corporate G&A was $1.03 representing a 21% decrease from $1.30 in Q1/19 and a 2% decrease from $1.05 in Q4/19 due to lower corporate G&A. Corporate G&A accounts for $0.03 AISC per ZnEq payable pound sold in Q1/20, $0.08 per ZnEq payable pound sold in Q1/19 and $0.05 per ZnEq payable pound sold in Q4/19. The Company expects a material decrease in corporate G&A following the divestiture of El Mochito.

Discontinued Operations

In Q1/20, revenues from discontinued operations was of $13.78 million, as a result of the sale of 29.8 million pounds of ZnEq metal, comprised of 16.5 million pounds of payable zinc in concentrates, 8.8 million pounds of payable lead in concentrates and 325,432 ounces of payable silver in concentrates. Average realized metal prices were $0.97 per pound zinc, $0.84 per pound lead and $16.72 per ounce silver. Revenues for the quarter were down from $17.78 million in Q1/19 and $19.97 million in Q4/19 as a result of lower average zinc and lead prices with lower silver grades offsetting the higher silver price in the quarter. Provisional pricing adjustments for the quarter amounted to a negative $12.35 million against the backdrop of a weak market for base metals.

Net loss and basic and diluted loss per share from discontinued operations in Q1/20 were $9.83 million and $0.12 respectively compared to $0.71 million and $0.01 in Q1/19. Loss from mining operations in Q1/20 was $8.11 million versus income from mining operations in Q1/19 of $1.26 million.

Adjusted EBITDA including discontinued operations in Q1/20 was a $9.30 million loss compared to adjusted EBITDA of $1.45 million in Q1/19.

Cash operating cost per ZnEq payable pound sold for Q1/20 was $0.64, representing a decrease of 16% from $0.76 in Q1/19 and an increase of 5% from $0.61 in Q4/19. This decrease over Q1/19 was a result of 16% higher ZnEq grades and the increase over Q4/19 was primarily a result of 8% lower ZnEq grades.

The AISC per ZnEq payable pound sold in Q1/20 on a mine site basis was $1.00 representing a decrease of 18% from $1.22 in Q1/19 and was consistent with $1.00 in Q4/19. The decrease in mine site AISC over Q1/19 is mainly attributable to the higher ZnEq grades and significantly lower sustaining capital expenditures.

Direct operating costs per tonne milled for Q1/20 at El Mochito were $79.88, in line with Q1/19 direct operating costs per tonne milled of $80.53, and a 7% decrease compared to Q4/19 direct operating costs per tonne milled of $85.63 due to the 5% improvement in milled tonnes. Capital expenditures decreased overall, which totaled $2.7 million in Q1/20 compared to $4.0 million in Q1/19 and $3.46 million in Q4/19.

Lagoa Salgada Project

On January 14, 2020, the Company announced results from its maiden Preliminary Economic Assessment (“PEA”) for the Lagoa Salgada project based on the North Zone only. The Technical Report entitled, “Technical Report and PEA for the Lagoa Salgada Property, Set?bal District, Portugal”, supporting the robust results from the maiden PEA for the North Zone at the Lagoa Salgada VMS project was prepared in accordance with Canadian National Instrument 43-101 (“NI 43-101”) with an effective date of December 19, 2019.

The report outlines a robust and compelling economic assessment for Lagoa Salgada as it assumes a two-stage underground mining development scenario, with single trackless ramp access, transverse sub-level open stoping method with pastefill. Ventilation and secondary escape ways are planned through raise-bored holes to surface. Milling rates of 2,700 tonnes per day in a standard process circuit is anticipated, with primary crushing, grinding, flotation and leaching of tailings to produce concentrates including lead, zinc, copper and tin, as well as gold and silver dor?. There is ample opportunity for extensive expansion from future exploration work to define additional resources to extend the mine life or increase the scale of the outlined operation.

Highlights from the PEA for the North Zone include:

• After-tax IRR of 31% and NPV_8% of $106M (C$139M @$1.31CAD/USD)
  
  
• Nine-year mine life with production scenario of 2,700 tpd
  
  
• Average annual EBITDA of $54.2 million
  
  
• Four-year payback period of initial Capex of $162.7 million
  
  
• Average operating costs of $49.43/t milled represents low cost production scenario
  
  
• Low average annual cash costs of $0.44/lb ZnEq and average annual All-In Sustaining Cost (AISC) of $0.66/lb ZnEq
  
• Significant upside opportunities remain with near-resource exploration targets identified with multiple deposits open laterally and at depth, and broader targets untested

Highlights of the key project metrics are provided in the following table on a 100% basis:

Notes to Table:
¹ The project economics have been calculated using consensus prices at the time of the Resource Estimate report in September 2019.

The PEA was prepared by AMC Mining Consultants (Canada) Ltd (AMC) with contributions from Resource Development Inc (RDI) for Mineral Processing and Micon International Limited (Micon), who estimated the Mineral Resources.

The PEA is preliminary in nature, as it 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 preliminary economic assessment will be realized.

The Technical Report is available for review under the Company’s profile on SEDAR and on the Company’s website.

The PEA was based on the updated Mineral Resource Estimate announced on February 13, 2019, following the Company’s second successful exploration program at Lagoa Salgada, since acquisition of an interest in the project mid-2018.

The updated Mineral Resource Estimate was prepared in accordance with Canadian National Instrument 43-101 with an effective date of September 5, 2019 and was successful in significantly upgrading the resources at Lagoa Salgada. Results demonstrated material growth in the North Zone (the main massive sulphide) with the conversion of significant resources into the Measured & Indicated category. To date the North Zone has been delineated by less than a total of 76 holes.

Highlights from the Mineral Resource Estimate are as follows:

• North Zone: Measured Mineral Resources increased by 57% to 2.8 Mt at 10.7% ZnEq¹.
  
  
• North Zone: Measured & Indicated Mineral Resources increased by 71% to 10.3 Mt at 9.1% ZnEq:
  
  
  • 170% increase in the precious metal rich gossan zone to 1.7 Mt at 4.6g/t AuEq².
    
    
• Global NI 43-101Measured and Indicated Resources of 12.8 million tonnes and Inferred Resources of
  10.3 million tonnes.
  
  
• Drilling in the Central and South Zones identified Copper rich sulphide mineralization. The new resources in these zones are reported in Copper equivalent grades. Future drill programs will focus on expanding and upgrading the strong potential anticipated in these zones.

¹ ZnEq% = ((Zn Grade*25.35)+(Pb Grade*23.15)+(Cu Grade*67.24)+(Au Grade*40.19)+(Ag Grade*0.62) )+(Sn
Grade*191.75))/25.35
² AuEq(g/t) = ((Zn Grade*25.35)+(Pb Grade*23.15)+(Cu Grade*67.24)+(Au Grade*40.19)+(Ag Grade*0.62) )+(Sn
Grade*191.75))/40.19

A summary of the updated Mineral Resource Estimate is set out in the table below:

Lagoa Salgada Mineral Resource Estimate - Effective September 5, 2019

North Zone Mineral Resource Estimate

Notes to tables:
(1) Min(eralized) Zones: GO=Gossan, MS=Massive Sulphide, Str=Stringer, Str/Fr=Stockwork
(2) ZnEq% = ((Zn Grade*25.35)+(Pb Grade*23.15)+(Cu Grade*67.24)+(Au Grade*40.19)+(Ag Grade*0.62)+(Sn Grade*191.75))/25.35
(3) CuEq% = ((Zn Grade*25.35)+(Pb Grade*23.15)+(Cu Grade * 67.24)+(Au Grade*40.19)+(Ag Grade*0.62))/67.24
(4) AuEq(g/t) = ((Zn Grade*25.35)+(Pb Grade*23.15)+(Cu Grade * 67.24)+(Au Grade*40.19)+(Ag Grade*0.62) )+(Sn Grade * 191.75))/40.19
(5) Metal Prices: Cu $6,724/t, Zn $2,535/t, Pb $2,315/t, Au $1,250/oz, Ag $19.40/oz, Sn $19,175/t
(6) Densities: GO=3.12, MS=4.76, Str=2.88, Str/Fr=2.88

Outlook

Q1 2020 represents the last full operating quarter, as the Company completed the sale of the El Mochito mine on April 27, 2020. For further details of the sale transaction, please refer to the Company’s press release dated April 17, 2020.

Despite the operational successes achieved at El Mochito since the acquisition of mine in December 2016, the Company’s financial performance continued to be affected by the turbulent metals market putting downward pressure on zinc and lead prices, high-treatment and refining charges, continued costs pressures and additional required capital investment at the mine site. Furthermore, the global pandemic surrounding COVID-19 has had a significant impact on the global economy including zinc and lead prices which declined significantly in March 2020. With the mine not meeting the Company’s profitability objectives and the recognition of the significant funding required to continue operations in addition to the investment needed for long-term optimization, the Company made the prudent and strategic decision to sell the mine.

The sale of the mine provided immediate strengthening of the Company’s financial position with the receipt of a cash consideration of $1.0 million plus an additional $0.1 million in working capital adjustments. More importantly, the sale eliminated the Company’s direct AMPAC expenses, liabilities and obligations, including a working capital deficiency from discontinued operations of $26.56 million (see Note 4 to the consolidated financial statements). The Company also maintains upside exposure to zinc through a royalty on zinc sales from the El Mochito mine subject to the future price of zinc, wherein Ascendant will receive US$0.0125 per lb of zinc for all sales through December 31, 2029 when the price of zinc is in excess of US$1.15 per lb.

The divestiture of El Mochito now enables Ascendant to focus on its highly attractive, high-grade Lagoa Salgada VMS project located on the prolific Iberian Pyrite Belt in Portugal and devote the desired resources to a project that the Company believes will be a significant driver of growth and value.

The planned exploration program this year at Lagoa Salgada will include downhole IP and drilling aimed at expanding and upgrading the copper-rich resource in the Central and South Zones with additional drilling of the southern extension of the high-grade massive sulphide mineralization of the North Zone expected to expand the Indicated Mineral Resources. The program also includes four metallurgical drill holes for further metallurgical testing. All zones remain open along strike and at depth and from the extensive ongoing gravimetric work conducted on the LS West region, there is strong indication mineralization extends in all directions providing confidence in the potential growth potential. Please refer to the Company’s April 23, 2020 press release for further details on the 2020 planned exploration program.

Based on results from the 2020 drill program at Lagoa Salgada, the Company plans to complete an updated Mineral Resource Estimate in the latter half of the year which will be used as a basis for a Feasibility Study to begin thereafter.

The results of the PEA for Lagoa Salgada, announced on January 14, 2020, highlight the robust potential of the project, and outlines a compelling case for the future growth potential of the project. Management expects Lagoa Salgada to be an important value driver for the Company going forward as we seek to rapidly develop the Project towards its mineable potential. The Company is actively engaged with potential strategic and financial partners for funding the advancement and development of the Lagoa Salgada property.

Following the quarter, on April 6, 2020, the Company appointed Mr. Joao Barros to the position of President, Ascendant Portugal. Mr. Barros is currently President of Redcorp – Empreendimentos Mineiros, Lda., the joint venture company in which Ascendant has its investment and is earning an 80% interest in Lagoa Salgada. Mr. Barros has been instrumental in the advancement of the Lagoa Salgada project over the past twelve years, and most recently under Ascendant’s direction. Mr. Barros has a strong technical background having significant senior mining management experience with the exploration and development of numerous polymetallic VMS, gold and tungsten operations in Portugal. His depth of experience and history with the project provide a great deal of confidence in our continued success under his direction in country.

Also strengthening our position in Portugal, on May 6, 2020, the Company announced Mr. Rui Botica Santos has joined the Company’s Board of Directors. He has also joined as a member of the Audit Committee. Mr. Santos is a lawyer based in Portugal who is widely regarded as a leading authority in the mining sector in Portugal. Mr. Santos has spent over 20 years representing/assisting domestic and international corporations in negotiations and disputes with the State regarding land acquisitions, exploration, extraction and environmental licenses, for both the mining and oil and gas industries in Portugal, Angola, Brazil and East Timor. Most notably, he was the legal advisor for major privatization transaction regarding the acquisition of Somincor by EuroZinc, which is now Lundin Mining’s Portuguese subsidiary operating the large-scale Neves-Corvo mine in Portugal. Mr. Santos is a Partner of CRA - Coelho Ribeiro e Associados – Portuguese Law Firm, where he leads the firm’s Arbitration and Mining practices.

The information provided within this release should be read in conjunction with Ascendant’s unaudited condensed consolidated interim financial statements and management's discussion and analysis for the three months ended March 31, 2020 and 2019, which are available on Ascendant’s website and on SEDAR.

Technical Disclosure/Qualified Person

All technical information contained herein has been reviewed and approved by Robert A. Campbell, M.Sc, P.Geo, an officer and director of the Company. Mr. Campbell is a "qualified person" within the meaning of NI 43-101 – Standards of Disclosure for Mineral Projects (“NI 43-101”).

About Ascendant Resources Inc.

Ascendant Resources Inc. is a Toronto-based mining company focused on the exploration and development of the highly prospective Lagoa Salgada VMS project located on the prolific Iberian Pyrite Belt in Portugal. Through focused exploration and aggressive development plans, the Company aims to unlock the inherent potential of the project, maximizing value creation for shareholders.

Lagoa Salgada contains over 12.8 million tonnes of M&I Resources and over 10.3 million tonnes in Inferred Resources and demonstrates typical mineralization characteristics of Iberian Pyrite Belt VMS deposits containing zinc, copper, lead, tin, silver and gold, and demonstrates. Extensive exploration upside potential lies both near deposit and at prospective step-out targets across the large 10,700ha property concession. The project also demonstrates compelling economics with scalability for future resource growth in the results of the Preliminary Economic Assessment completed in 2020. Located just 80km from Lisbon, Lagoa Salgada is easily accessible by road and surrounded by exceptional Infrastructure. Ascendant holds a 21.25% interest in the Lagoa Salgada project through its 25% position in Redcorp - Empreendimentos Mineiros, Lda, (“Redcorp”) and has an earn-in opportunity to increase its interest in the project to 80%. Mineral & Financial Investments Limited owns the additional 75% of Redcorp. The remaining 15% of the project is held by Empresa de Desenvolvimento Mineiro, S.A. (EDM), a Portuguese Government owned company supporting the strategic development of the country’s mining sector. The Company’s interest in the Lagoa Salgada project offers a low-cost entry to a potentially significant exploration and development opportunity, already demonstrating its mineable scale.

Ascendant Resources is also engaged in the ongoing evaluation of producing and development stage mineral resource opportunities. The Corporation's common shares are principally listed on the Toronto Stock Exchange under the symbol "ASND". For more information on Ascendant Resources, please visit our website at www.ascendantresources.com.

Neither the Toronto Stock Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX) accepts responsibility for the adequacy or accuracy of this release.

For further information please contact:

Katherine Pryde
Communications & Investor Relations
Tel: 888-723-7413
info@ascendantresources.com

Forward Looking Information

This news release contains "forward-looking statements" and "forward-looking information" (collectively, "forward-looking information") within the meaning of applicable Canadian securities legislation. All information contained in this news release, other than statements of current and historical fact, is forward-looking information. Often, but not always, forward-looking information can be identified by the use of words such as "plans", "expects", "budget", "guidance", "scheduled", "estimates", "forecasts", "strategy", "target", "intends", "objective", "goal", "understands", "anticipates" and "believes" (and variations of these or similar words) and statements that certain actions, events or results "may", "could", "would", "should", "might" "occur" or "be achieved" or "will be taken" (and variations of these or similar expressions). Forward-looking information is also identifiable in statements of currently occurring matters which may continue in the future, such as "providing the Company with", "is currently", "allows/allowing for", "will advance" or "continues to" or other statements that may be stated in the present tense with future implications. All of the forward-looking information in this news release is qualified by this cautionary note.

Forward-looking information in this news release includes, but is not limited to, statements regarding exploration and capital expenditures at the Lagoa Salgada project, expanding and upgrading the resource base at Lagoa Salgada and the ability to bring the Lagoa Salgada project to a feasibility stage. Forward-looking information is not, and cannot be, a guarantee of future results or events. Forward-looking information is based on, among other things, opinions, assumptions, estimates and analyses that, while considered reasonable by Ascendant at the date the forward-looking information is provided, inherently are subject to significant risks, uncertainties, contingencies and other factors that may cause actual results and events to be materially different from those expressed or implied by the forward-looking information. The material factors or assumptions that Ascendant identified and were applied by Ascendant in drawing conclusions or making forecasts or projections set out in the forward-looking information include, but are not limited to, the ability of the Company to reduce costs, exploration and capital expenditures, maintain robust adjusted EBITDA and free cash flow and other events that may affect Ascendant's ability to develop its project; and no significant and continuing adverse changes in general economic conditions or conditions in the financial markets.

The risks, uncertainties, contingencies and other factors that may cause actual results to differ materially from those expressed or implied by the forward-looking information may include, but are not limited to, risks generally associated with the mining industry, such as economic factors (including future commodity prices, currency fluctuations, energy prices and general cost escalation), uncertainties related to the development and operation of Ascendant's projects, dependence on key personnel and employee and union relations, risks related to political or social unrest or change, rights and title claims, operational risks and hazards, including unanticipated environmental, industrial and geological events and developments and the inability to insure against all risks, failure of plant, equipment, processes, transportation and other infrastructure to operate as anticipated, compliance with government and environmental regulations, including permitting requirements and anti-bribery legislation, volatile financial markets that may affect Ascendant's ability to obtain financing on acceptable terms, the failure to obtain required approvals or clearances from government authorities on a timely basis, uncertainties related to the geology, continuity, grade and estimates of mineral reserves and resources, and the potential for variations in grade and recovery rates, uncertain costs of reclamation activities, tax refunds, hedging transactions, as well as the risks discussed in Ascendant's most recent Annual Information Form on file with the Canadian provincial securities regulatory authorities and available at www.sedar.com.

Should one or more risk, uncertainty, contingency, or other factor materialize, or should any factor or assumption prove incorrect, actual results could vary materially from those expressed or implied in the forward-looking information. Accordingly, the reader should not place undue reliance on forward-looking information. Ascendant does not assume any obligation to update or revise any forward-looking information after the date of this news release or to explain any material difference between subsequent actual events and any forward-looking information, except as required by applicable law.

NON-IFRS PERFORMANCE MEASURES

The non-IFRS performance measures presented do not have any standardized meaning prescribed by IFRS and are therefore unlikely to be directly comparable to similar measures presented by other issuers.

Non-IFRS reconciliation of Adjusted EBITDA

EBITDA is a non-IFRS measure that represents an indication of the Company’s continuing capacity to generate earnings from operations before taking into account management’s financing decisions and costs of consuming capital assets, and management’s estimate of their useful life. EBITDA comprises revenue less operating expenses before interest expense (income), property, plant and equipment amortization and depletion, and income taxes. Adjusted EBITDA has been included in this document. Under IFRS, entities must reflect in compensation expense the cost of share-based payments. In the Company’s circumstances, share-based payments involve a significant accrual of amounts that will not be settled in cash but are settled by the issuance of shares in exchange for cash. EBITDA and Adjusted EBITDA do not have any standardized meaning prescribed by IFRS and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS. EBITDA and Adjusted EBITDA exclude the impact of cash costs of financing activities and taxes, and the effects of changes in operating working capital balances, and therefore are not necessarily indicative of operating profit or cash flow from operations as determined under IFRS. Other companies may calculate EBITDA and Adjusted EBITDA differently. As such, the Company has made an entity specific adjustment to EBITDA for these expenses. The Company has also made an entity-specific adjustment to the foreign currency exchange (gain)/loss.

The following table provides a reconciliation of net income (loss) to Adjusted EBITDA:

Direct operating cost per tonne milled

The Company uses the non-IFRS measure of direct operating cost per tonne milled to manage and evaluate operating performance. The Company believes that, in addition to conventional measures prepared in accordance with IFRS, certain investors use this information to evaluate the Company’s performance and ability to generate cash flows. Accordingly, it is intended to provide additional information and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS. The Company considers cost of sales per tonne milled to be the most comparable IFRS measure to direct operating cost per tonne milled and has included calculations of this metric in the reconciliations within the applicable tables to follow.

Direct operating cost per tonne milled includes mine direct operating production costs such as mining, processing, administration, indirect charges as surface maintenance and camp expenses, and inventory sales adjustments but does not include, smelting, refining and freight costs, royalties, depreciation, depletion, amortization, reclamation, and capital costs.

The following table provides a reconciliation of direct operating costs to cost of sales, as reported in the Company’s financial statements for the 3 months ended March 31, 2020:

Additional non-IFRS measures

The Company uses other financial measures, the presentation of which is not meant to be a substitute for other subtotals or totals presented in accordance with IFRS, but rather should be evaluated in conjunction with such IFRS measures. The following other financial measures are used:

• Operating cash flows before movements in working capital - excludes the movement from period-to-period in working capital items including trade and other receivables, prepaid expenses, deposits, inventories, trade and other payables and the effects of foreign exchange rates on these items.

The terms described above do not have a standardized meaning prescribed by IFRS, and therefore the Company’s definitions are unlikely to be comparable to similar measures presented by other companies. The Company’s management believes that their presentation provides useful information to investors because cash flows generated from operations before changes in working capital excludes the movement in working capital items. This, in management’s view, provides useful information of the Company’s cash flows from operations and are considered to be meaningful in evaluating the Company’s past financial performance or its future prospects. The most comparable IFRS measure is cash flows from operating activities.