Cementing our first mover status in an under-explored world-class gold-silver district

Carangas Project is located about 180 km to the west of the city Oruro, Bolivia, within the South American Epithermal Belt which hosts large precious metal deposits and operations in neighboring countries but remains under-explored in Bolivia. The project is comprised of three Exploration Licenses (Granville I, Granville II and Colapso) for a total area of 41.25 square kilometers, and is accessible via the paved Highway 12 and a municipally maintained 30 km gravel road.

In April 2021, the Company announced it entered a Mining Associate Contract with a private Bolivian corporation. By the Contract, the Company will cover 100% of the future expenditures of exploration, mining, development and production activities and will take 98% operation profits of the project moves to mining production stage. The agreement has a term of 30 years and is renewable for another 15 years.

Geologically, the Project is located in the West Cordillera full of Tertiary-Quaternary volcanic and intrusive rocks. Mineralization at Carangas is hosted in volcaniclastics and rhyolitic intrusive bodies, featured by shallow silver dominated polymetallic mineralization underlain by gold dominated mineralization at depth in an area of approximately 1000m by 800m. Exploration drilling commenced in mid-2021 and approximately 73,000 m drilling has been completed in more than 170 holes to date. Inaugural mineral resource estimate is scheduled in mid-2023 and PEA at the end of 2023.

Historical Exploration and Mining

Mining in the district is thought to have commenced in the sixteenth century and continued intermittently until the early twentieth century. The Project, particularly West Dome, contains extensive surface workings, underground mine adits, shafts and associated processing and smelting infrastructure. There is no active mining at present.

Modern mineral exploration, led by local mining interests, began in the early 1980s. The first drill program, comprising nine reverse circulation holes for a total of 1,000 m, was carried out in 1995. Written records for the program report a drill intercept of 116 m at an average grade of 95 g/t silver (from 18 m to 134 m downhole), including 16 m at 325 g/t silver (from 66 m to 82 m downhole), including a 4-m mined-out interval in hole RC-05.

A second drill program was conducted in 2000, also led by a local Bolivian group, with six diamond drill holes for a total of 914 m completed. The results are in line with prior exploration and include a drill intercept of 76 m at an average grade of 90 g/t silver, 0.96% lead, and 0.12% zinc (from 0 m to 76 m downhole), including 8 m at 266 g/t silver, 1.02% lead, and 0.06% zinc (from 26m to 34 m downhole) in hole DDH-01. No recorded exploration activities occurred over the next 20 years until the Company’s involvement.

Geological Setting

Carangas is located within the Cordillera Occidental physiographic province close to its eastern limit with the Altiplano (Guerra et al, 1965). The Cordillera Occidental is defined by a chain of late Miocene to Recent volcanic peaks stretching more than 750 km in length and some 40 km wide (Arce, 2009) straddles the Bolivia‐Chile border. This volcanic arc and associated granitic plutonic rocks of the Coastal Batholith in northern Chile and southern Peru (USGS and GEOBOL, 1975) were emplaced in and cut a Jurassic‐Cretaceous aged eugeoclinal‐miogenclinal mélange of volcanic flows and ash flows with associated sedimentary rocks (sandstone, siltstone, conglomerates, tuffaceous sediments and tuffs (Arce, 2009) all developed over Paleozoic‐aged basement rocks.

The Carangas mineral deposits are hosted with the Carangas Volcanic field (USGS and GEOBOL, 1975) deposited from eruption and collapse of the Carangas Caldera (Lopez‐Montaño, 2019). All of the mineralization at Carangas is hosted in the Carangas Formation and has been dated at approximately 15 Ma (USGS and GEOBOL, 1975).

The Carangas area is dominated by two, prominent, but relatively low relief, hills called West Dome and East Dome. They are situated in the central to south‐central part of the Carangas caldera; the limits of which extend well beyond the limits of the Prospecting and Exploration Licenses. A smaller, low elevation hill, called South Dome, is about 500 m south of West Dome. Historically, West and East domes were known as Espiritu Santo Hill and San Antonio, respectively. A series of west‐northwest to north‐northwest and east‐west trending veinlets and veinlet swarms are exposed on both West Dome and East Dome and host Ag and Au mineralization. Another example of the veinlets was examined in the San José adit at the north side of West Dome.

Megaw (2022) describes the West Dome area as being “dominated by a multi‐stage rhyolite‐rhyodacite complex marked by highly heterolithic breccia”.

The two domes are separately by a northeast‐southwest trending valley, the Central Valley, and the Carangas River. The Central Valley is postulated to be fault‐controlled by the Company’s geologists and Megaw (2022) mentions that the inferred fault “runs through the breccia pipe” and that there are features on surface and in core that suggest one can see “at least a 900 m vertical section through a highly active, multi‐stage rhyolitic flow dome complex ranging from the uppermost subaqueous/subaerial zones down into the hypabyssal ‘throat’ of the system”.

Mineralization

At the present time there are at least two main mineralized zones on the Property and a third inferred from limited deep drilling as of the Effective Date.

The zones have been described by Zhang (2022) as follows:

• Upper Zone (Zone 1): Formed in a low T/P environment, with silver and lead but low to no zinc. The zone is exposed on the top of West Dome hosted in what is interpreted to be maar sediments of unlithified sandy layers intercalated with heterolithic breccia and hydrothermal breccia. The heterolithic breccia is comprised of clasts of various lithology and matrix of fine debris of similar lithology as the clasts. Hydrothermal breccia typically consists of altered rhyolitic clasts which are cemented by chalcedony. When the chalcedony looks grey or dark color, it hosts silver up locally over 1,000 ppm, but when the chalcedony is white, silver grades are generally low. The grey or dark color of chalcedony may be caused by very fine‐grained disseminated silver sulfides. The heterolilthic breccia generally does not carry high grade silver. Due to erosion, the current thickness of the maar sediments horizon is from few meters to 50 m thick.
• Middle Zone (Zone 2): Below the maar is volcanic lithic tuff of dacitic composition, which is cut by roughly east‐west, northwest‐west and some east‐northeast striking fractures filled with sulfides of silver, lead and zinc. Local tectonic breccia may be developed when dense fractures of different orientations crosscut each other, with sulfides filled between breccia clasts. The sulfides include pyrite, galena and sphalerite and silver minerals. There are two types of sphalerite: dark sphalerite disseminated in lithic tuff and yellow sphalerite in veins. This Middle Zone of mineralization is normally 200 to 250 m thick below the Upper Zone and formed in a higher T/P environment compared to the Upper Zone.
• Lower Zone (Zone 3): below the Middle Zone, with higher T/P, grades of silver drop quickly, but gold mineralization occurs and increases in grade with depth. Common mineralization in this zone is disseminated pyrite in strongly argillic‐ to sericite‐ altered tuff or ignimbrite which is cut by veins of pyrite/chalcopyrite/sphalerite/drusy quartz/siderite.

The Upper Zone was exploited via historic adits at West Dome. The presence of a deeper, Au‐base metal zone was tested in 2022.

While the dominant mineral trends are west‐northwest and northwest, there are some occurrences of east‐northeast‐striking mineralized features.

The scientific and technical information contained herein has been reviewed and approved by Alex Zhang, P. Geo., Vice President of Exploration, who is a Qualified Person for the purposes of National Instrument 43-101 — Standards of Disclosure for Mineral Projects (“NI 43-101”). The Qualified Person has verified the information disclosed herein using standard verification processes, including the sampling, preparation, security and analytical procedures underlying such information, and is not aware of any significant risks and uncertainties or any limitations on the verification process that could be expected to affect the reliability or confidence in the information discussed herein.

Please see the full text of the NI 43-101 Technical Report titled “Carangas Project Technical Report Department of Oruro, Bolivia“ with a June 16, 2022 effective date.

Exploration Highlights

From July 2021 to the end of 2022, the Company completed ~63,580 m of drilling in 150 drill holes. Every drill hole intercepted the silver horizon near surface, and drill holes collared in the Central Valley area continuously hit gold mineralization underneath the silver zone. Drilling has discovered an extensive, shallow horizontal silver-rich zone of 1,000 m long by 800 m wide and up to 200 m thick, stacked above a gold zone in a rhyolite intrusive system. Carangas is one of the first projects showcasing Bolivia’s gold potential, historically overlooked, and overshadowed by the country’s significant silver and tin endowment.

The Company plans to complete an additional 15,000 m of drilling in Q1 2023 to extend the deep gold mineralization to the northeast and the shallow silver mineralization to the southwest of the well-delineated area. Drilling to date stands to support Carangas’ inaugural resource estimate in Q1 2023, followed by a preliminary economic assessment by the end of 2023.

Regional exploration potential

In September 2022, a 3D Bipole-Dipole IP-MT survey was completed in the West Dome-Central Valley-East Dome drilling area. This program tests how the geophysical signature of known mineralization responds to the survey, which successfully identified multiple chargeability anomalies. Results from the IP survey revealed that holes drilled to date overlap with one of many IP chargeability anomalies. Furthermore, there are several anomalies north of the current drilling area, warranting follow up drill testing.

The IP survey also showed that higher chargeability at 3600 m elevation, approximately 350 m below the surface, appears to perfectly coincide with the higher-grade gold intercepts at that depth. Previous gold intercepts seem to have hit the east half of the chargeability anomaly at 3600 m elevation.

Recent geophysical results also indicate that gold mineralization is potentially related to some kind of “plume” system, which differs from our previous view that the gold may be related to regional north-west structures.

Metallurgical Testing

Preliminary metallurgical testwork consists of scoping-level cyanide leach and flotation testing and is carried out by Bureau Veritas’s Metallurgical Division in Richmond, British Columbia, Canada. Mineralized materials sampled from rejects of selected Carangas drill cores with assays were composited to five samples based on the type of mineralization and degree of oxidization. Host rock sample is altered volcanoclastic rocks of dacitic-rhyolitic composition.

These preliminary test results clearly demonstrate that high recovery rates can be expected for gold using cyanide leaching and for silver, lead, and zinc through conventional cyanide leaching and flotation for silver-lead-zinc mineralized materials. Based on the preliminary metallurgical test results, the following recommendations can be made with respect to the selection of flowsheet for the future process plan:

• For gold, cyanide leach and carbon-in-pulp (CIP) may potentially achieve an average of 98.6% gold recovery. Gold doré will be the final product.

• For silver-lead-zinc, silver/lead concentrate and zinc concentrate may be produced by sequential selective flotation or gravity concentration. The resultant silver/lead concentrate may be treated by cyanide leach to enable silver doré production.