PLATFORM FOR GROWTH. Business Combination Rye Patch Gold & Alio Gold. March 19, 2018

Transcription

1 PLATFORM FOR GROWTH Business Combination Rye Patch Gold & Alio Gold March 19, 2018

2 FORWARD-LOOKING STATEMENT This presentation includes certain "Forward-Looking Statements" within the meaning of the United States Private Securities Litigation Reform Act of 1995 and forward-looking information under applicable Canadian securities laws. These forward-looking statements or information relate to, among other things: anticipated benefits of the Arrangement to Alio Gold, Rye Patch and their respective shareholders; the timing and receipt of required shareholder, court, stock exchange, creditor and regulatory approvals for the Arrangement; the ability of Alio Gold and Rye Patch to satisfy the other conditions to, and to complete, the Arrangement; the anticipated timing of the mailing of the information circulars regarding the Arrangement, the closing of the Arrangement; future growth potential for Alio Gold, Rye Patch and their respective businesses; future mine development plans at the Ana Paula Project; estimates regarding production at the San Francisco and Florida Canyon Mines; and estimates of production costs and the possible revaluation potential. In respect of the forward-looking statements and information concerning the anticipated completion of the proposed Arrangement and the anticipated timing for completion of the Arrangement, the parties have provided them in reliance on certain assumptions that they believe are reasonable at this time, including assumptions as to the time required to prepare and mail shareholder meeting materials, including the required joint management information circular; the ability of the parties to receive, in a timely manner, the necessary shareholder, court, stock exchange, creditor and regulatory approvals; and the ability of the parties to satisfy, in a timely manner, the other conditions to the closing of the Arrangement. These dates may change for a number of reasons, including unforeseen delays in preparing meeting material; inability to secure necessary shareholder, court, stock exchange, creditor and regulatory approvals in the time assumed or the need for additional time to satisfy the other conditions to the completion of the Arrangement. Accordingly, readers should not place undue reliance on the forward-looking statements and information contained in this presentation concerning these times. Forward-looking information relating to future production, analyst coverage, liquidity, cash flow and potential revaluation of Alio Gold shares, future growth potential for Alio Gold, Rye Patch and their respective businesses, future mine development plans, estimates regarding the recovery of minerals, and estimates of production costs is based on management of the applicable parties reasonable assumptions, estimates, expectations, analyses and opinions, which are based on such management s experience and perception of trends, current conditions and expected developments, and other factors that management believes are relevant and reasonable in the circumstances, but which may prove to be incorrect. Assumptions have been made regarding, among other things, the price of silver, gold, and other metals; costs of development and production; estimated production rates for gold and other metals produced by the parties; the estimated costs of development of development projects; Alio Gold and/or Rye Patch s ability to operate in a safe and effective manner and their ability to obtain financing on reasonable terms. These statements reflect the parties respective current views with respect to future events and are necessarily based upon a number of assumptions and estimates that, while considered reasonable by the respective parties, are inherently subject to significant business, economic, competitive, political and social uncertainties and contingencies. Many factors, both known and unknown, could cause actual results, performance or achievements to be materially different from the results, performance or achievements that are or may be expressed or implied by such forward-looking statements or information and the parties have made assumptions and estimates based on or related to many of these factors. Such factors include, without limitation: satisfaction or waiver of all applicable conditions to closing of the Arrangement including, without limitation, receipt of all necessary shareholder, court, stock exchange, creditor and regulatory approvals or consents and lack of material changes with respect to Alio Gold and Rye Patch and their respective businesses, all as more particularly set forth in the Arrangement Agreement; the synergies expected from the Arrangement not being realized; business integration risks; fluctuations in general macro-economic conditions; fluctuations in securities markets and the market price of Alio Gold s shares; fluctuations in the spot and forward price of gold and other metals or certain other commodities (such as natural gas, fuel oil and electricity); fluctuations in the currency markets (such as the Canadian dollar, Mexican peso and the U.S. dollar); changes in national and local government, legislation, taxation, controls, regulations and political or economic developments in Canada, the United States or Mexico; operating or technical difficulties in connection with mining or development activities; risks and hazards associated with the business of mineral exploration, development and mining (including environmental hazards, industrial accidents, unusual or unexpected formations, pressures, cave-ins and flooding); risks relating to the credit worthiness or financial condition of suppliers, refiners and other parties with whom the parties do business; inability to obtain adequate insurance to cover risks and hazards; and the presence of laws and regulations that may impose restrictions on mining, including those currently enacted in the United States and Mexico; employee relations; relationships with and claims by local communities and indigenous populations; availability and increasing costs associated with mining inputs and labour; the speculative nature of mineral exploration and development, including the risks of obtaining necessary licenses, permits and approvals from government authorities; diminishing quantities or grades of mineral reserves as properties are mined; title to properties; and the factors identified under the caption "Risk Factors" in Alio Gold s Annual Information Form, and under the caption "Risk Factors" in Rye Patch s Annual Information Form. In addition, the failure of a party to comply with the terms of the Arrangement Agreement may result in that party being required to pay a termination fee to the other party, the result of which could have a material adverse effect on the paying party s financial position and results of operations and its ability to fund growth prospects and current operations. Readers are cautioned against attributing undue certainty to forward-looking statements or information. Although the parties have attempted to identify important factors that could cause actual results to differ materially, there may be other factors that cause results not to be anticipated, estimated or intended. The parties do not intend, and do not assume any obligation, to update these forward-looking statements or information to reflect changes in assumptions or changes in circumstances or any other events affecting such statements or information, other than as required by applicable law. All figures presented throughout this document are in US$ unless otherwise specified. 2

3 A FUTURE MID-TIER GOLD PRODUCER Florida Canyon Mine Nevada, USA Status: Operating Lincoln Hill, Wilco, Gold Ridge, Garden Pass Projects Nevada, USA Status: Exploration San Francisco Mine Sonora, Mexico Status: Operating Ejutla Project Oaxaca, Mexico Status: Exploration Ana Paula Project Guerrero, Mexico Status: Feasibility 3

4 STRATEGIC RATIONALE Diversification of Assets and Risk Pro forma 165,000 ounces of gold production 1 in 2018 Potential for low-capital expansion at existing operations in 2019 Two open-pit heap leach operations: Sonora, Mexico and Nevada, USA Future growth with development of Ana Paula project Enhanced Capital Markets Presence Enhanced scale and stronger market positioning increases access to capital Enhanced trading liquidity and appeal to a larger shareholder base Increased equity capital markets and analyst research coverage Exploration Potential to Drive Growth Large, district scale property positions and exploration pipeline 56,000 hectare land package along the highly prospective Guerrero Gold Belt 18,000 hectare land package along the Oreana Trend in Nevada 1. Research analyst consensus figures 4

5 TRANSACTION SUMMARY Proposed Transaction Consideration Conditions Anticipated Timing Other Terms Alio Gold to acquire Rye Patch via a Plan of Arrangement Total transaction value of approximately C$128 million on an undiluted basis Pro forma ownership: 53% Alio Gold / 47% Rye Patch of an Alio Gold share per Rye Patch common share Implies C$1.57 per common share or a 35% premium over the 20-day volume weighted average price 2 for the period ending March 16, 2018 Rye Patch shareholder vote /3 % of shareholder votes cast Alio Gold shareholder vote - majority of shareholder votes cast Customary regulatory and court approvals Mailing of meeting materials on or about April 17, 2018 Shareholder meetings and closing expected on or about May 25, 2018 Customary non-solicitation covenants, subject to normal fiduciary outs Alio right to match Superior Proposal Break fee of C$4.0 million payable to either Alio Gold or Rye Patch Note: Market data as at March 16, Pro forma ownership based on existing Alio Gold and Rye Patch shareholders is calculated using the treasury stock method day volume weighted average price based on trading on the TSX and TSX.V for Alio Gold and Rye Patch, respectively 5

6 LEADERSHIP TEAM & BOARD OF DIRECTORS Executive Team Board of Directors Greg McCunn CEO & Director - Over 25 years in finance, operations, project engineering, project construction and corp. dev. - Former CFO of Asanko Gold; Former CFO Farallon Mining Colette Rustad EVP & CFO - Over 20 years as an int l finance professional in the mining, resource and finance industries - Former SVP, Controller and Treasurer of Goldcorp Douglas Jones 1 EVP & COO (Rye Patch) - Over 30 years of experience in precious and base metal mining projects, operations and engineering - Former SVP of Eldorado Gold and general manager for Kinross Gold in Washington and Stillwater Mining in Montana Jason Gregg EVP Human Resources - Over 20 years of experience in human resources - Former VP of HR & Environment of Newmarket Gold Paul Hosford VP Project Development - Over 30 years of experience in metallurgy, operations, commissioning and project development - Former Project Director for New Gold s Rainy River project; Former Project Mgr of Mt. Milligan Miguel Bonilla Country Manager Mexico - Over 21 years of experience in finance - Former VP Finance and Controller of Alio Gold Lynette Gould VP Investor Relations - Over 15 years of experience in investor relations and finance - Former Director, Investor Relations of Goldcorp 1. Alio Gold will seek to retain Doug Jones as COO Bryan Coates Chairman - Over 30 years of industry experience - President of Osisko Gold Royalties; Former VP Finance & COO of Osisko Mining Mark Backens - Over 30 years of industry experience - Former Interim CEO of Alio Gold; Former Director of Investment Banking-Mining for Scotia Capital George Brack - Over 30 years of industry experience - Former Managing Director and Industry Head, Mining at Scotia Capital; Former President of Macquarie North America Stephen Lang - Over 43 years of industry experience - Chairman & Director of Centerra Gold; Former President & CEO of Centerra Gold Paula Rogers - Over 20 years of industry experience - Former CFO of Castle Peak Mining; Former Vice-President, Treasurer of Goldcorp Jose Vizquerra-Benavides - Over 15 years of industry experience - Executive Vice-President of Strategic Development & Director of Osisko Mining - Former President & CEO of Oban Mining Corp Timothy Baker - Over 35 years of experience with mining companies in management and operations at globally focused mid-tier and senior mining companies - Chairman of Golden Star Resources and Director of Antofagasta and Sherritt International John Mansanti - 40 years of experience in the management of mining operations and projects 6 - Former President of the Nevada Mining Association

7 PRO FORMA CAPITALIZATION Metrics Alio Gold Rye Patch Pro Forma TSX Share Price (C$) C$3.17 C$1.26 C$3.17 Shares Outstanding (M) Shares Outstanding (TSM) (M) Market Capitalization (US$M) $108 $79 $204 Cash and Cash Equivalents (US$M) $53 $21 $74 Total Debt (US$M) $0 $29 $29 Enterprise Value (US$M) $55 $87 $ E Consensus Production (koz Au) M&I Resource 1 (Moz AuEq) Inferred Resource 1 (Moz AuEq) Source: Bloomberg, S&P Capital IQ, broker reports and company disclosure Note: Market data and 2018E consensus production estimates as at March 16, 2018; net debt as at December 31, 2017 and adjusted for subsequent events 1. Further mineral resource information can be found in Appendix C; gold equivalency calculated using US$1,300/oz Au and US$17.50/oz Ag 7

8 BENEFITS TO ALIO GOLD SHAREHOLDERS A STRONGER, MORE DIVERSIFIED PLATFORM FOR GROWTH Strengthens and de-risks portfolio with the addition of a second producing asset Establishes an operating presence in Nevada, providing further geopolitical diversification Provides near-term production growth while lowering combined cost profile Strengthens Alio Gold s ability to generate free cash flow on a per share basis Incremental free cash flow to finance the construction of Ana Paula Adds significant exploration potential with a large, district scale land package and strong pipeline of development and exploration opportunities 8

9 BENEFITS TO RYE PATCH SHAREHOLDERS DIVERSIFYING SINGLE-ASSET RISK Immediate up-front premium of approximately 35% based on the 20-day volume weighted average prices of both companies while maintaining meaningful equity participation 1 Improved balance sheet with US$45 million of pro forma net cash as at Dec. 31, and the flexibility to support advancement of Rye Patch projects Asset diversification with exposure to a second producing asset and meaningful ownership in Alio Gold s high-grade, high-margin Ana Paula project Expands operation capabilities, adding proven expertise in open pit mining and heap leaching Combined company provides significant revaluation potential as a diversified company with growth potential 1. As at March 16, 2018; VWAP based on trading on the TSX and TSXV for Alio Gold and Rye Patch, respectively 2. Adjusted for subsequent events 9

10 INCREASED DIVERSIFICATION Asset Diversification Geographic Diversification Stage Diversification Current 1 San Francisco 35% Ana Paula 65% Sonora 36% Guerrero 64% Producing 35% Development 65% Pro Forma 1 Lincoln Hill 6% Florida Canyon 38% Wilco 2% Other 3% Ana Paula 32% San Francisco 19% Nevada 48% Guerrero 33% Sonora 19% Development 44% Producing 56% 1. Based on consensus analyst NAV estimates as at March 16,

11 Torex Leagold Guyana Goldfields Klondex Argonaut Pro Forma Beadell TMAC Alio Gold Premier Gold Atlantic Gold Rye Patch Wesdome Jaguar Equinox Guyana Goldfields Torex TMAC Premier Gold Equinox Argonaut Atlantic Gold Leagold Klondex Pro Forma Wesdome Alio Gold Jaguar Beadell Rye Patch ENHANCED CAPITAL MARKETS PRESENCE MARKET CAPITALIZATION (US$M) 1 $690 $613 $609 $469 $391 $343 $339 $321 88% increase $240 $204 $178 $108 $94 $85 $ E CONSENSUS GOLD PRODUCTION (koz) % increase Source: Bloomberg, S&P Capital IQ, broker reports and company disclosure as at March 16, Market capitalization calculated using the treasury stock method 11

12 Atlantic Gold Torex Klondex TMAC Guyana Goldfields Jaguar Wesdome Premier Gold Beadell Leagold Argonaut Rye Patch Equinox Alio Gold Atlantic Gold TMAC Guyana Goldfields Premier Gold Argonaut Equinox Klondex Wesdome Leagold Jaguar Torex Alio Gold Beadell Rye Patch SIGNIFICANT RE-RATING POTENTIAL PRICE / CONSENSUS NAVPS 0.8x 0.8x 0.7x 0.7x 0.6x 0.5x 0.5x 0.5x 0.4x 0.4x 0.4x 0.4x 0.3x 0.3x ENTERPRISE VALUE / MEASURED AND INDICATED GOLD EQUIVALENT RESOURCE (US$/oz) 1 $234 $221 $154 $148 $100 $90 $64 $58 $54 $31 $30 $28 $27 $19 Source: Bloomberg, S&P Capital IQ, broker reports and company disclosure as at March 16, Gold equivalency calculated using US$1,300/oz Au and US$17.50/oz Ag 12

13 PLATFORM FOR GROWTH TO DELIVER VALUE FOR ALL STAKEHOLDERS Experienced Team of Mine Builders and Operators Robust Financial Position Diversified Portfolio with Multi-Asset Production Developing and Exploring at Growth Projects 13

14 APPENDIX A: PRO FORMA ALIO GOLD ASSETS 14

15 ALIO GOLD SAN FRANCISCO MINE FOCUSING IN 2018 ON COST REDUCTION AND IMPROVED EFFICIENCY Increasing recoveries through blasting improvements for better fragmentation Emulsion/Powder Blasting patterns geometry and size Drilling diameter to 7 ½ from 6 Dual cut-off strategy underway Lower grade material trucked to heap leach pad 2018E 1 Production: 90,000oz 100,000oz AISC 1 : $1,000 $1,100/oz Capital 2 & exploration expenditure: $2.5 $3.0 million 1. See Appendix B for further information on guidance outlook and non-gaap measures 2. Includes sustaining and expansionary capital 15

16 SAN FRANCISCO MINE HIGHLIGHTS Three months ended Years ended Key Operating Statistics Dec 31 Sept 30 Jun 30 Mar Ore processed (Mt) Ore grade (g/t Au) Waste mined (Mt) Strip ratio (W:O) Gold produced (oz) 16,070 19,429 22,011 26,048 83, ,322 Key Financial Statistics (US$ millions unless otherwise noted) Revenue $20.6 $25.2 $27.1 $32.3 $105.2 $123.9 By-product cash costs 1 /oz $1,041 $886 $740 $735 $831 $734 AISC 1 /oz $1,357 $1,104 $954 $848 $1,034 $853 Earnings (loss) $(2.9) $5.2 $3.5 $6.0 $11.9 $31.7 Cash flow from operations $(2.2) $2.7 $2.8 $9.7 $13.0 $ See Appendix B for further information on non-gaap measures 16

17 RYE PATCH GOLD ALONG THE OREANA TREND Oreana Mines and Deposits Rye Patch Mine Rye Patch Deposit Active Mine Florida Canyon Mine Standard Mine Deposit Land Status Rye Patch Gold Coeur Mining Waterton Pershing Gold US Interstate: I-80 Nevada Town Wilco Lovelock Gold Ridge Lincoln Hill Unionville Spring Valley Rochester Mine Relief Canyon 17

18 RYE PATCH GOLD FLORIDA CANYON MINE FLAGSHIP ASSET Past producing, open pit, heap leach gold operation located along the Oreana trend in northcentral Nevada First gold poured in Q Mine and crusher out-performing plan Leach kinetics as stated Tremendous exploration potential Florida Canyon PEA Summary (Jan. 27, 2017) Mine life 8.5 years Resource (M&I) 1,126.6 koz Ore grade 0.45 g/t Au Strip Ratio (w:o) 1.47:1 Au recovery rate 71.1% LOM gold production koz Projected annual production 76.5 koz Cash costs AISC Initial capital Payback (after tax) NPV 5% (after tax) US$759/oz Au US$885/oz Au US$28.9M 3.0 years US$56.4M IRR 34.4% 18

19 RYE PATCH GOLD FLORIDA CANYON MINE New leach pad built Crusher upsized Fleet rehabilitation completed Staffing fully ramped-up 19

20 ALIO GOLD ANA PAULA PROJECT LOCATED IN A HIGHLY PROLIFIC GOLD BELT Torex Leagold Los Filos San Luis Rey David El Limon Guajes Guajes Media Luna ALO Ana Paula Project Area 20

21 ADVANCING ANA PAULA PROJECT DEFINITIVE FEASIBILITY STUDY Initiated in July 2017 Additional metallurgical test work ongoing Advancing geotechnical and design engineering Evaluating potential for scope changes to include underground mine component FINALIZING PERMITTING Received Change of Land Use (ETJ) approval in September 2017 Received Environmental Impact Assessment (MIA) approval in April 2017 Completed major permitting hurdles SECURING DEBT FINANCING OF BETWEEN $90 MILLION AND $100 MILLION Received indicative proposals and under review 21

22 EXTENSIVE EXPLORATION PROGRAM IN 2018 Q Surface exploration drilling of six holes to target high-grade breccia extension underway Q North Area drilling targeting open pit resource expansion to commence H Underground decline under construction to explore breccia extension & skarn target advancing Portal site cleared; explosives magazine site completed; surface infrastructure installed H Underground drilling program to commence in Q Regional exploration on 56,000 hectare land package 22

23 ANA PAULA PFS HIGHLIGHTS 1,2 ROBUST ECONOMICS ON A HIGH-GRADE, HIGH-MARGIN PROJECT After-tax NPV 5% $223M After-tax IRR 34% After-tax Payback 2.6 years Annual Average Production 116,000 oz Gold 166,000 oz Silver First Quartile Operating Costs 3 By-product: $489/oz AISC: $524/oz Life of Mine 7.5 years Strip Ratio 4 2.8:1 Capital Cost $137.2M High-Grade 2.36 g/t Gold 5.22 g/t Silver 1. NI Preliminary Feasibility Study, Guerrero, Mexico, dated May 16, 2017, which is available on Alio Gold s SEDAR profile at 2. Gold price assumption of US$1,250/oz. 3. Source: WoodMac 2016 total cash costs (including royalties). 4. Excludes 7.7 Mt of pre-stripping. 23

24 IMPROVING THE ECONOMICS AT ANA PAULA BENEFITS OF UNDERGROUND COMPONENT IN DEFINITIVE FEASIBILITY STUDY Increase production to fill the mill Mill previously operated at 6,000tpd; geometry of the proposed pit limits ore production to 5,000tpd Additional ore from underground could enhance production profile and unit costs Reduce strip ratio Mining of proposed open pit is done in three distinct phases with phase 3 requiring significant pushback of the pit walls to allow deeper mining from surface Potential to mine phase 3 more efficiently from underground Eliminate additional surface tailings facilities for the tailings from the ambient oxidation process ( AOX ) Tailings from AOX process could be stored underground as back-fill Inert flotation tailings could be stored on surface in an unlined tailings storage facility 24

25 ALIO GOLD GREENFIELD EXPLORATION EJUTLA ORGANIC GROWTH OPPORTUNITY Greenfield exploration site in highly prospective district Evidence of epithermal gold-silver target Exploration team on-site Initial 5,000-metre drill program developed Three extensive northwest-trending mineralized structural corridors on the property will be the key focus of exploration activities Drill program targeted to commence in 2019 Ejutla Project Oaxaca, Mexico Status: Exploration Adjacent to Fortuna Silver Mines San Jose Project 25

26 RYE PATCH EXPLORATION PROJECTS LINCOLN HILL Lincoln Hill Technical Report (Oct. 2, 2014) Mine life 5 years PEA-stage gold development project located ~35 miles southwest of Florida Canyon Project will be an open pit operation with a heap leach processing plant handling both oxide and sulphide materials and producing a gold-silver doré Exploration upside Robust economics Opportunity to reduce capital costs and improve project economics with the utilization of Florida Canyon infrastructure and equipment Ore mined 12.3 Mt Strip Ratio (w:o) 0.5:1 Production rate 4.4 ktpd Average gold grade / recovery 0.65 g/t / 64% Average silver grade / recovery g/t / 59% Average annual gold production 33koz Average annual silver production 753koz Pre-production capital US$26M LOM sustaining capital US$4M Cash cost (US$/oz AuEq) US$575/oz AISC ($/oz AuEq) US$759/oz NPV 5% (after tax) US$41M IRR 34.4% 26

27 RYE PATCH EXPLORATION PROJECTS (CONT D) WILCO Large bulk-tonnage open pit gold deposit located along the Oreana trend Geologically similar to Florida Canyon Total resource 1 of 1.9 Moz Au at 0.34 g/t and 16.4 Moz Ag at 3.14 g/t Excellent infrastructure and reduced capital cost with Florida Canyon Expected to be developed after Lincoln Hill GOLD RIDGE Gold-silver exploration target covering 2,200 ha on the Oreana trend GARDEN GATE PASS Gold-silver exploration target covering 1,030 hectares on the Cortez trend Between Barrick and McEwen along trend 1. For further information on mineral resources see Appendix C 27

28 APPENDIX B: FOOTNOTES 28

29 APPENDIX B FOOTNOTES 1. Non-GAAP Measure: All-in sustaining cost per gold ounce The Company has adopted an all-in sustaining cost per ounce on a by-product basis performance measure which is calculated based on the guidance note issued by the World Gold Council. Management uses this information as an additional measure to evaluate the Company s performance and ability to generate cash. All-in sustaining costs on a by-product basis include total production cash costs, corporate and administrative expenses, sustaining capital expenditures and accretion for site reclamation and closure costs. These reclamation and closure costs represent the gradual unwinding of the discounted liability to rehabilitate the area around the Mine at the end of the mine life. The Company believes this measure to be representative of the total costs associated with producing gold; however, this performance measure has no standardized meaning. As such, there are likely to be differences in the method of computation when compared to similar measures presented by other issuers. 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 GAAP. Refer to Alio Gold s Management s Discussion and Analysis ( MD&A ) for the year ended December 31, 2017, the quarter ended September 30, 2017, June 30, 2017 and March 31, 2017 for a reconciliation of the all-in sustaining cost per gold ounce on a by-product basis to the consolidated financial statements. 2. Non-GAAP Measure: Cash cost per gold ounce and cash cost per gold ounce on a by-product basis Cash cost per gold ounce and cash cost per gold ounce on a by-product basis are non-gaap performance measures that management uses to assess the Company s performance and its expected future performance. The Company has included the non-gaap performance measures of cash cost per gold ounce and cash cost per gold ounce on a by-product basis throughout this document. In the gold mining industry, these are common performance measures but they do not have any standardized meaning. As such, they are unlikely to be comparable to similar measures presented by other issuers. Management believes that, in addition to conventional measures prepared in accordance with GAAP, certain investors use this information to evaluate the Company s performance and ability to generate cash flow. Accordingly, presentation of these measures is to provide additional information and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with GAAP. 29

30 APPENDIX B FOOTNOTES (cont d) The cash cost per gold ounce is calculated by dividing the operating production costs by the total number of gold ounces sold. The cash cost per gold ounce on a byproduct basis is calculated by deducting the by-product silver credits per gold ounce sold from the cash cost per gold ounce. For a reconciliation of the cash cost per gold ounce and cash cost per gold ounce on a by-product basis to the consolidated financial statements please refer to Alio Gold s Management s Discussion and Analysis ( MD&A ) for the year ended December 31, 2017, the quarter ended September 30, 2017, June 30, 2017 and March 31, Guidance projections used in this document ( Guidance ) are considered forward-looking statements and represent management s good faith estimates or expectations of future production results as of the date hereof. Guidance is based upon certain assumptions, including, but not limited to, metal prices, oil prices, certain exchange rates and other assumptions guidance assumes Au=$1,250/oz, Ag=$18.00oz, $1.30 CAD/USD, MXN/USD. Such assumptions may prove to be incorrect and actual results may differ materially from those anticipated. Consequently, Guidance cannot be guaranteed. As such, investors are cautioned not to place undue reliance upon Guidance and forward-looking statements as there can be no assurance that the plans, assumptions or expectations upon which they are placed will occur. 30

31 APPENDIX C: RESERVES AND RESOURCES 31

32 APPENDIX C RESERVES AND RESOURCES ANA PAULA PROJECT Mineral Resource Estimate for Ana Paula Project (inclusive of Mineral Reserves) Area Category Cut-off (Au g/t) Tonnes Au (g/t) Gold (ounces) Ag (g/t) Silver (ounces) Resources amenable to open pit extraction Measured 0.6 7,541, , ,236,000 Indicated 10,491, , ,629,000 Measured and Indicated 18,032, ,195, ,865,000 Inferred 249, , ,000 Resources amenable to underground extraction Measured , , ,000 Indicated 2,925, , ,000 Measured and Indicated 2,967, , ,000 Inferred 621, , ,000 Total resources Measured OP 0.6 and 7,582, , ,242,000 Indicated UG ,416, , ,027,000 Measured and Indicated 20,998, ,461, ,269,000 Inferred 870, , ,000 32

33 APPENDIX C RESERVES AND RESOURCES ANA PAULA PROJECT Mineral Reserve Estimate for Ana Paula Project Category Tonnes (kt) Gold Grade (g/t) Gold (ounces) Silver Grade (g/t) Silver (ounces) Proven 6, , ,115,000 Probable 6, , ,139,000 Total 13, ,021, ,254,000 33

34 APPENDIX C RESERVES AND RESOURCES SAN FRANCISCO MINE (AS OF APRIL 1, 2017) Mineral Resource Estimate for the San Francisco Project (inclusive of Mineral Reserves) 1 For OP Using a Gold Price of US$1,350/oz Area Cut-off (Au g/t) Category Tonnes Au (g/t) Gold (ounces) San Francisco Mine OP Measured 39,713, ,000 Indicated 20,604, ,000 Measured and Indicated 60,317, ,053,000 Inferred 483, ,000 La Chicharra Mine OP Measured 6,918, ,000 Indicated 6,068, ,000 Measured and Indicated 12,986, ,000 Inferred 231, ,000 La Chicharra Pit NW OP Measured 673, ,000 Indicated 558, ,000 Measured and Indicated 1,231, , Inferred resource in the tables is within the pit shell of US$1,350/oz. Inferred 2,

35 APPENDIX C RESERVES AND RESOURCES SAN FRANCISCO MINE (AS OF APRIL 1, 2017) Mineral Resource Estimate for the San Francisco Project (inclusive of Mineral Reserves) 1 For OP Using a Gold Price of US$1,350/oz Area Cut-off (Au g/t) Category Tonnes Au (g/t) Gold (ounces) La Chicharra Pit North OP Measured 186, ,000 Indicated 92, ,000 Measured and Indicated 278, ,000 Inferred 5, Total Resources Measured 47,490, ,000 Indicated 27,322, ,000 Measured and Indicated 74,813, ,302,000 Inferred 721, , Inferred resource in the tables is within the pit shell of US$1,350/oz. 35

36 APPENDIX C RESERVES AND RESOURCES SAN FRANCISCO MINE Mineral Reserves within the San Francisco and La Chicharra Pits After Mining Recovery and Dilution Pit Classification Metric Tonnes Gold (g/t) Contained Gold Ounces San Francisco Pit Proven 27,048, ,500 Probable 12,083, ,700 Total 39,131, ,200 La Chicharra Pit Proven 2,329, ,200 Probable 5,328, ,300 Total 7,657, ,600 La Chicharra Pit NW OP Proven 170, ,400 Probable 363, ,000 Total 533, ,400 36

37 APPENDIX C RESERVES AND RESOURCES SAN FRANCISCO MINE Mineral Reserves within the San Francisco and La Chicharra Pits After Mining Recovery and Dilution Pit Classification Metric Tonnes Gold (g/t) Contained Gold Ounces La Chicharra Pit North OP Proven 72, ,500 Probable 200, ,800 Total 272, ,300 Total Proven 29,619, ,600 Probable 17,974, ,900 Total 47,593, ,500 San Francisco Mine Low-Grade Stockpile 7,199, ,200 San Francisco Mine Total Pits and Stockpile 54,792, ,700 37

38 APPENDIX C RESERVES AND RESOURCES Rye Patch s NI Oreana Trend Resource Inventory 1 Property Resource Category Tonnes (x 1000) Gold Grade (g/t) Silver Grade (g/t) Contained Gold Ounces Contained Silver Ounces Measured 72, ,035,000 - Florida Canyon 2 Indicated 4, ,300 - Inferred ,300 - Measured 25, ,000 3,076,000 Wilco 3 Indicated 89, ,000 8,911,000 Inferred 52, ,000 6,100,000 Measured 4, ,000 1,592,000 Lincoln Hill 4 Indicated 25, ,000 8,655,000 Inferred 20, ,000 8,163,000 Total M & I Resource 219, ,768,600 22,234,000 Total Inferred Resource 73, ,300 14,263, All resources on 100% basis; metallurgical recoveries and net smelter returns are assumed to be 100% unless indicated; conforms to NI resource definitions 2. Based on Rye Patch s March 16, 2016, NI Preliminary Economic Assessment Technical Report 3. Based on Rye Patch s June 27, 2012, NI Wilco Project Technical Report 4. Based on Rye Patch s July 2, 2014, NI Preliminary Economic Assessment Technical Report 38

39 IMPORTANT INFORMATION REGARDING TECHNICAL DISCLOSURE For more information on the San Francisco Mine mineral reserves and mineral resources, see the San Francisco technical report entitled NI F1 Technical Report Updated Resources and Reserves and Mine Plan for the San Francisco Gold Project, Sonora, Mexico, dated May 25, 2017, which is available on Alio Gold s SEDAR profile at Mineral resources that are not mineral reserves do not have demonstrated economic viability. For more information on the Ana Paula mineral reserves and mineral resources, see the Ana Paula technical report entitled NI Preliminary Feasibility Study, Guerrero, Mexico, dated May 16, 2017, which is available on Alio Gold s SEDAR profile at Mineral resources that are not mineral reserves do not have demonstrated economic viability. Cautionary Note to United States Investors Alio Gold is subject to the reporting requirements of the applicable Canadian securities laws, and as a result reports its mineral reserves and resources according to Canadian standards. Canadian reporting requirements for disclosure of mineral properties are governed by National Instrument ( NI ). The definitions of NI are adopted from those given by the Canadian Institute of Mining, Metallurgy and Petroleum. U.S. reporting requirements are governed by Industry Guide 7 ( Guide 7 ) of the Securities and Exchange Commission (the SEC ). These reporting standards have similar goals in terms of conveying an appropriate level of confidence in the disclosures being reported, but embody different approaches and definitions. For example, under Guide 7, mineralization may not be classified as a reserve unless the determination has been made that the mineralization could be economically and legally produced or extracted at the time the reserve determination is made. In particular, Alio Gold reports resources in accordance with NI While the terms Mineral Resource, Measured Mineral Resource, Indicated Mineral Resource and Inferred Mineral Resource are recognized and required by Canadian securities laws, they are not defined terms under Guide 7 and, generally, U.S. companies are not permitted to report resources in documents filed with the SEC. As such, certain information contained in this presentation concerning descriptions of mineralization and resources under Canadian standards is not comparable to similar information made public by U.S. companies subject to the reporting and disclosure requirements of the SEC. In addition, an Inferred Mineral Resource has a great amount of uncertainty as to its existence and as to its economic and legal feasibility, and it cannot be assumed that all or any part of an Inferred Mineral Resource will ever be upgraded to a higher category. Under Canadian rules, estimates of Inferred Mineral Resources may not form the basis of feasibility or other economic studies beyond Preliminary Economic Assessment. It cannot be assumed that all or any part of Measured or Indicated Resources will ever be converted into Mineral Reserves, and it cannot be assumed that all or any part of an Inferred Mineral Resource exists, or is economically or legally mineable. In addition, the definitions of Proven Mineral Reserves and Probable Mineral Reserves under NI differ in certain respects from the standards of Guide 7. 39

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