Darren Klinck, President, CEO & Director Corporate ...€¦ · Corporate Presentation Q2 2018 A leading natural resource company driving stakeholder value through responsible, sustainable,

Darren Klinck, President, CEO & Director

Corporate Presentation Q2 2018

A leading natural resource company driving stakeholder value through responsible, sustainable, and innovative development

This presentation contains “forward-looking information” within the meaning of Canadian securities legislation and “forward-looking statements” within the meaning of the United States Private Securities LitigationReform Act of 1995 (collectively, “forward-looking statements”). All statements, other than statements of historical fact, that address activities, events or developments that Bluestone Resources Inc. (“Bluestone” or the“Company”) believes, expects or anticipates will or may occur in the future including, without limitation: statements about the Company’s plans for its mineral properties; Bluestone’s business strategy, plans and outlook;the future financial or operating performance of Bluestone; capital expenditures, corporate general and administration expenses and exploration and development expenses; expected working capital requirements; thefuture financial estimates of the Cerro Blanco Project economics, including estimates of capital costs of constructing mine facilities and bringing a mine into production and of sustaining capital costs, estimates ofoperating costs and total costs, net present value and economic returns; proposed mine life, production timelines and rates; funding availability; resource estimates; metal or mineral recoveries; metal price assumptions;and future exploration and operating plans are forward-looking statements. These forward-looking statements reflect the current expectations or beliefs of the Company based on information currently available toBluestone and often use words such as “expects”, “plans”, “anticipates”, “estimates”, “intends”, “may” or variations thereof or the negative of any of these terms.

All forward-looking statements are made based on the Company’s current beliefs as well as various assumptions made by the Company and information currently available to the Company. Generally, theseassumptions include, among others: the ability of Bluestone to carry on exploration and development activities; the price of gold, silver and other metals; there being no material variations in the current tax andregulatory environment; the exchange rates among the Canadian dollar, Guatemalan quetzal and the United States dollar remaining consistent with current levels; the presence of and continuity of metals at the CerroBlanco Project at estimated grades; the availability of personnel, machinery and equipment at estimated prices and within estimated delivery times; metals sales prices and exchange rates assumed; appropriatediscount rates applied to the cash flows in economic analyses; tax rates and royalty rates applicable to the proposed mining operation; the availability of acceptable financing; anticipated mining losses and dilution;success in realizing proposed operations; anticipated timelines for community consultations and the impact of those consultations on the regulatory approval process.

Forward-looking statements are subject to a number of risks and uncertainties that may cause the actual results of the Company to differ materially from those discussed in the forward-looking statements and, even ifsuch actual results are realized or substantially realized, there can be no assurance that they will have the expected consequences to, or effects on, Bluestone. Factors that could cause actual results or events to differmaterially from current expectations include, among other things: risks and uncertainties related to expected production rates, timing and amount of production and total costs of production; risks and uncertaintiesrelated to ability to obtain or maintain necessary licenses, permits, or surface rights; risks associated with technical difficulties in connection with mining development activities; risks and uncertainties related to theaccuracy of mineral resource estimates and estimates of future production, future cash flow, total costs of production and diminishing quantities or grades of mineral resources; risks associated with geopoliticaluncertainty and political and economic instability in Guatemala; risks and uncertainties related to interruptions in production; the possibility that future exploration, development or mining results will not be consistentwith the Company’s expectations; uncertain political and economic environments and relationships with local communities; risks relating to variations in the mineral content within the mineral identified as mineralresources from that predicted; variations in rates of recovery and extraction; developments in world metals markets; risks related to fluctuations in currency exchange rates; as well as those factors discussed under “RiskFactors” in the Company’s Amended and Restated Annual Information Form.

Any forward-looking statement speaks only as of the date on which it was made, and except as may be required by applicable securities laws, Bluestone disclaims any intent or obligation to update any forward-lookingstatement, whether as a result of new information, future events or results or otherwise. Although Bluestone believes that the assumptions inherent in the forward-looking statements are reasonable, forward-lookingstatements are not guarantees of future performance and accordingly undue reliance should not be put on such statements due to their inherent uncertainty. There can be no assurance that forward-looking statementswill prove to be accurate, and actual results and future events could differ materially from those anticipated in such statements.

All mineral resource information has been estimated and disclosed in accordance with the definition standards on mineral resources and mineral reserves of the Canadian Institute of Mining, Metallurgy and Petroleumreferred to in Canadian Securities Administrators National Instrument 43-101 (“NI 43-101”), which requires disclosure of mineral resource information. U.S. reporting requirements for disclosure of mineral propertiesare governed by the United States Securities and Exchange Commission Industry Guide 7, which sets forth substantially different guidelines than NI 43-101.

This presentation does not constitute an offer to sell or a solicitation of an offer to buy any of the securities in the United States. The securities have not been and will not be registered under the United States SecuritiesAct of 1933, as amended (the “U.S. Securities Act”) or any state securities laws and may not be offered or sold within the United States or to U.S. Persons unless registered under the U.S. Securities Act and applicablestate securities laws or an exemption from such registration is available.

Compliance with NI 43-101Certain information in this presentation is derived from the results of a preliminary economic analysis of the Cerro Blanco Project effective February 7, 2017, with a report date of March 20, 2017 and a revised reportdate of June 2, 2017 (the “PEA”) prepared in accordance with NI 43-101. A copy of the PEA is available on the SEDAR website under the Company’s profile at www.sedar.com.

The PEA is preliminary in nature, 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 asmineral reserves, and there is no certainty that the PEA will be realized. Mineral resources that are not mineral reserves do not have demonstrated economic viability. The mineral resources may be affected bysubsequent assessment of mining, environmental, processing, permitting, taxation, socio-economic and other factors.

The scientific and technical information in this presentation has been reviewed and approved by John Robins, Executive Chairman of Bluestone, a qualified person as defined in NI 43-101.

Risk FactorsAs a mineral resource development company, Bluestone is engaged in a highly speculative business that involves a high degree of risk and is frequently unsuccessful. In addition to the information disclosed elsewherein this presentation, readers should carefully consider the risks and uncertainties described in the Company’s Amended and Restated Annual Information Form dated June 2, 2017 and its Final Short Form Prospectusdated June 15, 2017, both of which are available at www.sedar.com. These risk factors do not necessarily comprise all of the risks to which Bluestone is or will be subject.

Forward Looking Statements & Risk Factors TSXV:BSR OTCQB:BBSRF | 2

Cerro Blanco Highlights

High Grade

Resource of 1.2 Moz at 10.2

g/t gold (Indicated Category)

Permitted

Exploitation mining license with

underground mining activities occurring

1st Quartile AISC1

AISC US$490/oz | Initial Capex

US$171 M | Avg. Production of

138 koz/yr avg. in the first 4 years

Infrastructure

US$230 M spent to date on the

project (includes US$60 M on the

geothermal project), 3 km of

underground development

Geothermal Power

50 year license for 50 MW of annual

production, 19 geothermal wells in

place

Proven Leadership Team

1. Preliminary Economic Assessment on the Cerro Blanco Gold project as disclosed in the

Feb 7, 2017 press release.

TSXV:BSR OTCQB:BBSRF | 3

Corporate Structure

Capital Structure – April 2, 2018

Listing TSXV:BSR | OTCQB:BBSRF

Share Price C$1.15

Shares Outstanding 63,815,560

Options 5,935,000

Warrants1 5,212,309

Cash2 ~C$38 M

Cash Per Share2 ~C$0.60/share

Enterprise Value ~C$35 M

Major Shareholders


1. Warrants: 3,679,162 @ $0.35 and 1,535,147 @ $2.00, Options @ $1.50

2. As of year end December 31, 2017

Analyst Coverage

Lundin Family

Trust, 36%

CD Capital, 17%Mgmt. , 9%

Goldcorp, 5%

Retail, 12%

Institutional, 21%

Tyron BreytenbachC$4.00

David MedilekC$2.25

Proven Leadership

Executive Team

Darren Klinck, President, CEO & Director

Previously EVP at OceanaGold

Peter Hemstead, CFO

Capstone Mining, Sherwood Copper, PwC Canada

David Cass, VP Exploration

+25 years of experience, previous Exploration

Manager of North America for Anglo American

David Gunning, VP Operations

+35 years of underground operational experience,

previous COO at Starcore International Mines

Jeff Reinson, VP Project Development

+25 years of project management, Goldcorp, AngloGold

Ashanti, Newmont, Rio Tinto

Stephen Williams, VP Corporate Development &

Investor Relations

Canaccord Genuity, Freeport MacMoran

Board of Directors

John Robins, Executive Chairman

Kaminak, Stornoway, Grayd, Hunter Exploration

Zara Boldt, Director

Lucara, Kaminak, Stornoway

Leo Hathaway, Director

Lumina Copper, Anfield Gold, Lumina Capital

William Lamb, Director

Lucara Diamonds, De Beers

Paul McRae, Director

Lundin Mining, Lundin Gold, INCO, De Beers

James Paterson, Director

Kivalliq, Corsa Capital, Kaminak

Keith Peck, Director

Orezone, Centenario Copper, RBC, Haywood


Cerro Blanco Project Location

Mining Projects in Guatemala

Cunico | Guaxilan

Open pit nickel mine

~1.2 mtpa throughput

Status - Operating

Solway | Fenix

Open pit nickel mine

Purchased for US$140 M in 2011

Invested US$600 M


Employees ~ 1,750 people

Status - Operating

Goldcorp | Marlin

Open pit & underground gold mine


Operated 12 years

Employed ~1,500 people

Status - Reclamation

Tahoe | Escobal

Underground gold mine


Employees ~ 850 people

Status - Operating

Source: Corporate disclosure.

Cemex | Arizona

Cement plant

~545,000 tpa throughput

Cerro Blanco Project

~160 km by road east-southeast of

Guatemala City (2.5 hour drive)

Connected by the Pan American Highway

(mine site is 7 km from the highway)

Nearest town is Asuncion Mita with a population

of 15,000

No relocation or land resettlement required for

the project

The population is ethnically "mestizo" (European

and non-indigenous)

Natural resources account for 15% of

Guatemala’s exports

On a local basis, the economy is primarily

derived from agriculture and ranching

50% of the religious population practices

Evangelicalism, a contrast to the rest of Latin

America


Guatemala Overview

January 2016, the country elected a new President – Jimmy Morales (4 yr term)

New US appointed Ambassador Luis E. Arreaga took office in October 2017, pro business

approach, influential

Bilateral investment treaty in place, the US is Guatemala’s largest trading partner

~34% of Guatemala’s exports by value are delivered to the US

Largest economy in Central America ($US72B 2017E) and one of the strongest performing

Growing GDP per capita with stable growth rates in the range of 2% to 4% per year

Predominately agriculture based – vegetables, fruit and sugar make up the main exports

Stable currency, exchanges rates have fluctuated between 7 and 8 Quetzals per USD over the

last 10 years


Guatemala City – Modern Infrastructure

Cerro Blanco PEA Highlights

Robust economics with first quartile cash costs

Highlights

Peak Production 144 koz/yr

Avg. Production 138 koz/yr1

Initial Capex US$171 M

Avg. AISC US$490/oz

NPV5% US$317 M

IRR 44%

1. Average production in the first four years of operations.

Source: Bluestone Resources’ press release dated February 7, 2017 disclosing results of a

Preliminary Economic Assessment on the Cerro Blanco Gold project.


Operating Summary

Mine Life 9 years

Tonnes Milled 4.0 Mt

LOM Avg. Grade 8.14 g/t Au | 27.95 g/t Ag

Recovery 91% Au | 88% Ag

Avg. Throughput 1,250 tpd

LOM Avg. Production 105 koz/yr Au

Peak Production (Yr. 2) 144 koz Au

Cost Summary

LOM Avg. Cash Costs US$372/oz

LOM Avg. AISC US$490/oz

Initial Capex US$171 M

Sustaining Capex US$105 M

Economics

After-Tax NPV5% US$317 M

After-Tax IRR 43.8%

Ater-Tax Pay-Back 1.8 years

138144

127

141

102

85 8977

43

145151

133 143

105

8894

79

46

$0

$150

$300

$450

$600

$750

$900

$1,050

0

20

40

60

80

100

120

140

160

Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9

AIS

C (

US

$/

oz

)

Pro

du

cti

on

(k

oz

Au

Eq

)

Gold Production Silver Production AISC

Cerro Blanco PEA Production Profile

Expected average annual production in the first four years of 138 koz/yr at US$414/oz

Industry Cash Cost CurveProduction (%)

50% 75%25%0%

Cerro Blanco Cash Cost

Lowest Quartile Cash Costs

Source: SNL Metals and Bluestone Resources’ press release dated Feb 7, 2017 disclosing results of a

Preliminary Economic Assessment on the Cerro Blanco Gold project. All-in sustaining cash costs as defined per

World Gold Council guidelines, less corporate general and administration costs.

Note: Royalties include a 1% NSR to Goldcorp and a 1% royalty to Guatemala.

Production Goal – 140 koz/yr AuEq


Existing Infrastructure

Infrastructure

2 portals, 2 declines, multiple Alimak vent raises

Operating water treatment facility

Secure explosives compound

Shop, warehouse, office and dry facilities

US$2.4 M of mine equipment purchased from

Marlin, including: 12 MW generator sets, scoop

trams, jumbos, bolters and underground drills

~8 km to an under-utilized electrical substation

US$230 M invested to date, 2 portals & 3 km of underground development


Water Treatment Plant

3 km of Underground Development

Cerro Blanco Deposit Characteristics

The Cerro Blanco Gold project is a classic

hot springs-related, low sulphidation gold-

silver deposit, deposit sits within a low

laying hill

High grade veins are best developed

between the elevations of 200 m to 500 m,

dipping up to 60°

The deposit is currently dewatered to 417

masl with approx. 35% of the gold resource

above that level; dropping one level (30 m)

would represent approx. 52% of the gold

resource dewatered

Previous drilling focused on the main

deposit area, regional sampling and

trenching returned highly-anomalous gold

results – significant exploration potential in

the larger land package


Cerro Blanco Project Site

Exposed Veins in Underground Development

Cerro Blanco Deposit Characteristics TSXV:BSR OTCQB:BBSRF | 12

Underground sampling continues to successfully

identify high-grade veins both within and outside

of the current PEA resource estimate validating

the geological model

Cerro Blanco Exploration Potential

Significant exploration potential in

the larger district, the current

resource is confined to a 400 m

by 800 m area

Highly prospective targets ~1 km

north of the main deposit –

underexplored to date

Gold bearing structures extend at

least 2 km northwest and 1 km

south of the deposit; resources

are wide open at depth

Geothermal well No.7 ~0.5 km

southeast of the deposit

encountered a 27 m zone

averaging 6.3 g/t Au and 22 g/t

Ag

Exploration Potential


Cerro Blanco Geothermal Potential

Economic geothermal resource located east of the Cerro Blanco Gold project with

potential to reduce costs or be monetized

US$60 M spent on exploring and advancing the Mita Geothermal project

50-year license to build and operate a 50 MW geothermal plant granted

Flow testing program underway to upgrade the confidence level in the geothermal

resource

US$60 M spent to date, 19 geothermal wells drilled and a feasibility study completed


Geothermal Flow Testing (April 2018)

Geothermal Flow Testing (April 2018)

Sustainability

Social Responsibility

Guiding principles: respect, transparency,

accountability & sustainability

Excellent relationship with local stakeholders

Continual involvement of local communities in

the decision-making process, to design, plan

and carry out local sustainable development

Active initiatives for the past 10 years in the

areas of education, health, sociocultural sports

and community infrastructure

Updated social and health baseline studies are

being developed to identify community needs

and to help prioritize them

Strong support from local authorities (local

municipality)

Bolstering efforts with a focus on building

sustainable capacity, local employment and

local procurement

Environmental Protection

The project has 26 monitoring points for water

quality

13 surface, 5 ground, 4 fresh water springs, 2

hot springs, and the entrance and discharge

of the water treatment plant

Continuous regional water testing has been

conducted since 2004

Water monitoring results are reported to the

MARN and MEM in compliance with local and

international standards and the environmental

impact study approval

Independent community team – AMAR monitor

water quality around the project’s area of

influence in conjunction with Bluestone

Environmental technicians monitor air quality,

noise levels and terrestrial biology as well

Active engagement with the community for the last decade


11.610.8

10.29.6

8.9 8.7 8.47.5

5.9

2.7

Dalradian Continental Bluestone Lundin Pure Gold Harte Osisko Auryn Sabina Atac

Peers

M&I Resource Grade

Cerro Blanco is one of the highest grade deposits amongst its peers, and it is permitted for construction

Sources: Capital IQ, Analyst research, Corporate disclosure as of April 2, 2018.

1. Osisko Mining and Sabina grades represent Windfall Project and Back River

Project, respectively.

Mkt. Cap.(US$)

1 1

P/NAV


0.71x

0.58x

0.51x 0.48x 0.48x 0.44x 0.43x 0.41x

0.31x

0.21x

Lundin Continental Sabina Pure Gold Harte Auryn Osisko Dalradian Bluestone Atac

$521 $541 $328 $110 $208 $103 $651 $267 $61 $59

Harte

Orla

Continental

Midas

Sabina

Lundin Gold

Victoria Gold

Dalradian

IDM

Orezone

Pure Gold

West African

Equinox

Belo Sun

AlmadenAtacama

$500

$1,000

$1,500

$2,000

$2,500

$3,000

10% 15% 20% 25% 30% 35% 40% 45%

Ca

pit

al

Inte

nsit

y ($

US

/o

z A

nn

ua

l P

rod

uc

tio

n)

After-tax IRR (%)

Peers

Capital Intensity Vs. IRR

Cerro Blanco generates a robust after-tax IRR with low capital intensity1

Sources: Corporate disclosure, technical reports and company websites.

1. Bluestone initial capex and IRR as disclosed in the Preliminary Economic.

Assessment press release dated February 7, 2017. Bubble size represents market

cap in US$M, as of April 2, 2018.

Higher IRR

Lo

we

r Ca

pita

l Inte

nsity

Bubble size Represents Mkt. Cap.


Peers

Cerro Blanco would potentially generate, approximately the same pre-tax cashflow as

a project producing 200 koz/yr at US$700/oz AISC1

Cerro Blanco has one of the lowest LOM avg. AISC profiles amongst its peers at US$490/oz

Sources: Corporate disclosure, margin based on a gold price of US$1,250/oz

Note: Bluestone average production based on the first four years of operations as disclosed

in the Preliminary Economic Assessment press release dated February 7, 2017. AISC as

defined per World Gold Council guidelines, less corporate G&A costs.

1. Cash flow is calculated as the difference between the AISC and US$1,250/oz gold price,

multiplied by the avg. annual production profile.

Mkt Cap. (US$M)

AISC vs. MarginAvg. LOM AISC (net credits)

Margin based on US$1,250/oz

LOM Avg.Prod. (Au koz/yr)


64% 63%61% 61%

51% 50% 50% 49% 47% 46%

46%

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ma

$445 $459 $489 $490

$616 $620 $623 $638 $658 $673

$674 $714 $725

$754 $779

$862

$941

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Belo

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46%43% 42%

40%38%

31%

25%

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Ata

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ma

66 79 259 138 340 198 345 190 81 117 130 66 149 136 205 148 228

$208 $180 $541 $61 $136 $328 $869 $136 $22 $106 $267 $110 $167 $385 $119 $85 $42

Key Deliverables

Fully financed to a construction decision

Structural Geology

Work

Hydrology Work

+5,000 m Infill

Drill Program

Geothermal Well-

Flow Testing Results

Infill Drill Results

Resource

Estimate Update

Start Exploration

Drill Program

Exploration Drill

Results

Exploration Drill

Results

FEASIBILITY

STUDY

Financing/

Construction

Production

Q1 2018 Q2 2018 Q3 2018 Q4 2018

2019 Late 2020


Haul Truck at the South Portal

Appendix

Additional Information

Cerro Blanco Gold Project from the East

Resource Summary

Cerro Blanco Gold Project mineral resource statement, effective February 7, 2017:

Notes on Resource Estimate:

(1) Mineral resources are not mineral reserves and have not demonstrated economic viability. The estimate of mineral resources may be materially affected by environmental, permitting, legal, title,

taxation, socio-political, marketing, or other relevant issues.

(2) The mineral resources in this presentation were estimated using 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 Council.

(3) Mineral resources are reported at a cut-off grade of 3.75 gpt gold assuming: metal price of US$1,250 per ounce of gold and US$16 per ounce of silver, mining cost of US$49 per tonne, G&A cost of

US$17 per tonne, processing cost of US$26 per tonne, process recovery of 91% Au.

(4) All figures have been rounded to reflect the relative accuracy of the estimates.

Grade Resource

Tonnes

(000s t)

Gold

(g/t)

Silver

(g/t)

Gold Eq

(g/t)

Gold

(Moz)

Silver

(Moz)

Gold Eq

Moz)

Indicated Resource 3,731 10.2 36.5 10.7 1.24 4.47 1.3

Inferred Resource 243 6.0 4.2 6.1 0.05 0.03 0.05


Legal and Regulatory Framework

Mining Laws Provide a Clear Framework Guatemalan mining law provides for three types of

licenses for reconnaissance, exploration and exploitation

Reconnaissance license (rarely used, can be skipped) for a 6 month term, renewable for an additional six month period

Exploration license covering an area up to 100 km2; three-year term, extendable for two additional two-year terms

Exploitation license; 25 year term, extendable for a second 25 year term

Covers a maximum of 20 km2

Guatemala does not have a specific law on water rights

Mining projects have the right to responsible use of water as long as this resource is not contaminated

Easements and road access are obtained through civil agreements with the legal owners and local authorities

Attractive Tax & Royalty Regime

Current Guatemalan royalty 1% on precious

metals mining revenues (Marlin and Escobal both

pay an additional voluntary 4% royalty)

Mining companies may choose how to pay income

tax, either;

(i) 7% gross revenue tax or

(ii) 25% tax on operating profits

VAT of 12% payable on purchase of in-country

goods; recoverable by mining companies

Stamp tax of 5% is payable on dividends to

shareholders paid out of retained earnings

Government support for the Cerro Blanco Gold project


Additional Information

Acquisition Terms of Cerro Blanco

Deal closed May 31, 2017

Cash payment of US$18 M upon close

of transaction

US$2 M for the purchase of Marlin

equipment

1% net smelter royalty to Goldcorp

Cash payment of US$15 M within six

months of commercial production –

Offset by country VAT receivable of

US$15 M

Goldcorp retains a 4.9% equity interest

in Bluestone


Technical Advisory Committee

Alf Hills (Chair)

Mining, Placer Dome, CIM

Scott Donald

Hydrogeologist, Golder

Allan Moss

Mining & Geo-technical, SRK, Golder, Rio

Tinto

Roger Nendick

Operations, Sherritt, Fluor, Glamis

Robert Sim

Resource Estimation, SIM Geological,

Inmet

Ward Wilson

Mine Waste Management, University of

Alberta

Darren Klinck

President, CEO & Director

Contact:

Stephen Williams, P.Eng., MBA

Vice President Corporate Development & Investor Relations

Email: [email protected]

Phone: +1 (604) 646-4534

Documents

Darren Klinck, President, CEO & Director Corporate ...€¦ · Corporate Presentation Q2 2018 A leading natural resource company driving stakeholder value through responsible, sustainable,