TSX-V : IPT   $
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Impact Silver Corp.


President's Message

IMPACT Silver wrapped up 2019 with a renewed determination that precious metal bull market is coming. Our dedicated focus is to grow into a mid-tier, low cost, pure and profitable silver producer, and we have reached milestones such as producing cumulative over a milestone 10 million ounces cumulative from 2006.
With our track record of operating a small scale plant successfully despite historically low silver prices the last 6 years, we were able to attract and sign a concentrate agreement with a potential strategic partner in Samsung C&T.

Over the last 18 months has made a number of strategic moves with the intention of not only surviving weaker global prices for silver but preparing for the future. In the capital markets it was able to raise $6.7M in private placements within 2019. Operationally it took a decision to actually reduce silver production by focusing only on those mines with the highest operating margins, putting others on care and maintenance. This resulted in positive cashflows from operations during the second half of 2018 and combined with the capital raises allowed the company to continue its exploration and development projects deferred during the 2016 to 2018 seasons, including the Guadalupe and Veta Negra mines along with the earlier stage Chapinial gold target. A number of earlier stage project were initiated in the Valle de Oro region of the property.
Combined with a rising price of silver in the latter half of 2018, and strict cost controls the last few months of 2019 and the first two months of 2020 anticipated a strong performance for the first half of 2020.

The COVID-19 pandemic has interrupted that performance as the price of silver temporarily fell below $14.00 an ounce and as the company responds to the one-month shutdown required by the Mexican government. At this point, with the dramatic drop in the price of silver, as well as the Mexican Peso it is difficult to anticipate the immediate future. The former appears to be gradually recovering, however the strength of the Mexican Peso compared to the US$ is a trend more difficult to determine. As a result the company has accepted a $2.0 million private placement for 0.30 price of 6,666,667 units composed of one share and one share purchase warrant for $.385. This was designed with two objectives; the first to provide the Company adequate liquidity to help ensure against what could be future shocks to the industry and the economy in general and as well to be in a position to look for opportunities to expand it's production in the future.

2019 was a year of exploration successes after years of deferral and focusing on just brownfield work. San Ramon Deeps continue to surprise with high grade zones beyond a barren zone and may unlock tonnage similar to when mining started there over ten years ago.
Realizing the gold targets at IMPACT was a goal in 2019 - with results at both Manto America and Santa Teresa resulting in high grade gold. (2.69 meters of 5.27 g/t gold at El Canelo). More work is needed but a confirmation gold exists deeper than the typical epithermal silver geology is a tremendous first pass.

On brownfield front - two operation success were achieved this year.
First, the re-discovery, refurbishment, and restart production of the Guadalupe mine, right beside the current mill. This project was re-explored and additional tonnage was discovered which combined with lower trucking and haul costs meant IPT's cost dropped significantly.
Second, our Capire VMS plant had a successful preliminary review for Dense Media Separation. DMS is a pre-sorting technology frequently used in other mining and could reduce costs by up to 30%. More tests are needed but it could foreseeably make Capire logical sooner.

Exceeding Our Targets

IMPACT has grown substantially in the last 14 years and has developed into a cash generating silver producer. We achieved record revenues for 2011 of $24.3 million, up 46% from $16.7 million in 2010, and record net earnings in 2011 of $7.6 million, a 121% jump from $3.4 million in 2010.

We increased our annual silver production in 2019 was revised down below full capacity of Guadalupe, instead focusing on profitable and lower cost ounces to combat lower prices earlier in 2019. At 400TPD, the mill has full ability to ramp up to 535TPD as silver prices rebound.

Throughout the year, two financing rounds were done for the 5th round of capital raising since IPO in 2006. Management took the opportunity to raise $6.7 million through two non-brokered private placement financing. This additional capital bolsters our treasury and allows for additional production expansion options, high potential exploration, corporate development for JV, and a foundation for potential M&A given our operational excellence.

Looking forward, we have the path firmly in place to look beyond organic growth and consider acquiring and developing new streams of earnings and accretive ways to increase shareholder value. We are anticipating 2020 to be a long awaited bull market for the mining sector and positioning IMPACT to capitalize on it once again.

Sincerely, I Thank You

At this point I would like to take this opportunity to thank our shareholders, directors, employees, contractors and suppliers for their support during these trying times. Impact remains what is most likely the highest pure silver producer in Mexico where over 90% of our revenue is generated from silver production. That leverage to silver provides substantial volatility as well as opportunity to our shareholders. At the same time after 13 years of continuous production and 10 million ounces of silver sold with revenues in excess of $175 million to date, it also remains a unique precious metals exploration project.

Frederick W. Davidson
President and CEO