Operating Highlights

Positive Initial Assays Results in Extension to 2020/2021 Drill Program

The Company’s 2020/2021 drill campaign at Filo del Sol was the main operational focus during the first quarter of 2021. Encouraged by the efficacy of its internally developed COVID-19 operating protocol through the earlier phases of the program, the Company added an additional fifth rig and related support to the campaign in February 2021. As a result, the Company successfully completed 7,288 metres of drilling during the quarter, and reached this season’s target of approximately 8,300 metres by March 31, 2021.

As of the date of this MD&A, complete assay results have been reported on four completed holes, and partial results on another two. The initial assay results are summarized in the following table:

These initial assay results have been early indications of success for 2020/2021 drill program, and key achievements thus far include:

• Step-out holes FSDH043 and FSDH44 extending the known mineralization 1 kilometre to the north and 200 metres to the east, respectively. Both holes hosted grades which increased with depth and ended in mineralization;

• FSDH040 providing infill of the large gaps between the long, high-grade intersections from last season’s program. Although FSDH040 was lost prior to reaching its target depth, it nonetheless returned 117.5 metres of 0.69% copper equivalent starting from 94.0 metres, including a high-grade, supergene enriched zone of 26.0 metres of 1.37% copper equivalent;

• Holes FSDH037 and FSDH041 intersecting the deposit’s high-grade silver zone further north than the previous northernmost intersection, increasing the total length of the silver zone to over 2 kilometres. Full assay results for these holes are pending; and

• Hole FSDH042 discovering a new oxide gold zone 1.5 kilometres north of the main deposit, which confirms the vast exploration potential that still exists at Filo del Sol and that the larger system extends beyond the boundaries of the known deposit. This hole is highlighted by 48 metres at 1.01 g/t gold.

Building on these accomplishments, the Company has elected to extend its drill campaign to the end of May 2021, adding approximately two months of additional drilling. The extended program could result in approximately 12,000 metres of total drilling completed during the current program, and would make a marked, positive impact on the Company’s primary operating objectives for the season, being expansion of the deposit to the north, and infilling the gaps between the high-grade intersections from the prior season.

OUTLOOK AND CONTINUED RESPONSE TO COVID-19

The Company’s 2020/2021 drill campaign is ongoing and currently scheduled to continue to the end of May 2021. The extended program is anticipated to complete approximately 12,000 metres of total diamond drilling, which exceeds the Company’s initial goal of 8,000 metres for the 2020/2021 season. The program’s operating objectives for the season include extending the known mineralization north towards a previously completed reverse circulation drill hole (VRC093, drilled in 2015), identifying and confirming the geological controls of high-grade copper, gold and silver zones within the overall mineralization envelope, and providing adequate infill drilling to potentially add portions of the sulphide mineralization to Filo del Sol’s Mineral Resource estimate.

As of the date of this MD&A, the Company has completed a total of nine holes and continues to advance the program with five diamond rigs operating at Filo del Sol. Core sample assays are underway, and additional results are expected to be received, analyzed, and announced throughout the second quarter.

The Company’s plans and timelines are subject to the Company being able to operate safely in accordance with its approved COVID-19 protocol.  As a result of its current strategies, the Company is confident that it can safely and effectively complete the 2020/2021 field program as planned, however, this expectation will be continuously evaluated as the situation with respect to the COVID-19 pandemic in Argentina develops.

As the Company continues to monitor developments with respect to COVID-19, both globally and within its operating jurisdictions, it may implement changes to its COVID-19 protocol, or its business in general, as may be deemed appropriate to mitigate any potential impacts to its business and its Stakeholders. Such changes may include, but are not limited to, temporary closures of the Company’s project site or offices, and deviations from the timing and nature of previous operating plans. Moreover, sustained COVID-19 outbreaks globally have resulted in operational and supply chain delays and disruption as a result of governmental regulation and preventative measures being implemented worldwide, including in Argentina. The Company could also be required to close, curtail or otherwise limit its operating activities as a result of the implementation of any such governmental regulation or preventative measures in the jurisdictions in which the Company operates, or as a result of sustained COVID-19 outbreaks at its project site or facilities. Any such closures or curtailments could have an adverse impact on the business of the Company. All non-critical business travel continues to be curtailed. 

QUALIFIED PERSON

The scientific and technical disclosure for the Filo del Sol Project included in this MD&A have been reviewed and approved by Bob Carmichael, P. Eng. (BC) and/or Jamie Beck, B.A.Sc., P.Eng. Mr. Carmichael is Filo Mining's Vice-President of Exploration and a Qualified Person under National Instrument 43-101 Standards of Disclosure for Mineral Projects. (“NI 43-101”).  Mr. Beck is Filo Mining’s President and CEO and is also a Qualified Person under NI 43-101.

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

Certain statements made and information contained herein in the MD&A constitutes “forward-looking information” and forward-looking statements” within the meaning of applicable securities legislation (collectively, “forward-looking information” or “forward-looking statements”) concerning the business, operations, financial performance and condition of Filo Mining.  The forward-looking information contained in this MD&A is based on information available to the Company as of the date of this MD&A. Except as required under applicable securities legislation, the Company does not intend, and does not assume any obligation, to update this forward-looking information.  Generally, any statements that express or involve discussions with respect to predictions, expectations, beliefs, plans, projections, objectives, assumptions or future events or performance, (often, but not always, identified by words or phrases such as "plans", "expects" or "does not expect", "is expected", "budget", "scheduled", "estimates", "forecasts", "intends", “projects” , “estimates”, “budgets”, “scheduled”, “forecasts”, “assumes”, “intends”, “strategy”, “goals”, “objectives”, “potential”, “possible”, "anticipates" or "does not anticipate", or "believes", or variations of such words and phrases or statements that certain actions, events, conditions or results “will”, "may", "could", "would", “should”, "might" or "will be taken", "will occur" or "will be achieved" or the negative connotations thereof and similar expressions) are not statements of historical fact and may be forward-looking statements. 

All statements other than statements of historical fact may be forward-looking statements. Forward-looking information is necessarily based on estimates and assumptions that are inherently subject to known and unknown risks, uncertainties and other factors that may cause the actual results, level of activity, performance or achievements of the Company to be materially different from those expressed or implied by such forward-looking information, including but not limited to: risks and uncertainties relating to, among other things, the inherent uncertainties regarding Mineral Resource estimates, cost estimates, changes in commodity prices, currency fluctuation, financings, unanticipated resource grades, infrastructure, results of exploration activities, cost overruns, availability of materials and equipment, timeliness of government approvals, taxation, political risk and related economic risk and unanticipated environmental impact on operations as well as other risks, and uncertainties and other factors, including, without limitation, those referred to in the “Risks and Uncertainties” section of the MD&A and in the Company’s most recent Annual Information Form, under the heading “Risks Factors”, and elsewhere, which may cause the actual results, level of activity, performance or achievements of the Company to be materially different from those expressed or implied by such forward-looking information.

The Company believes that the expectations reflected in the forward-looking statements and information included in this MD&A are reasonable but no assurance can be given that these expectations will prove to be correct and such forward-looking statements and information should not be unduly relied upon.  This statement and information is as of the date of the MD&A. In particular, this MD&A contains forward-looking statements or information pertaining to the assumptions used in the PFS for the Filo del Sol Project, the assumptions used in the Mineral Reserves and Resources estimates for the Filo del Sol Project, including, but not limited to, geological interpretation, grades, metal price assumptions, metallurgical and mining recovery rates, geotechnical and hydrogeological conditions, as applicable; ability to develop infrastructure; assumptions made in the interpretation of drill results, geology, grade and continuity of mineral deposits; expectations regarding access and demand for equipment, skilled labour and services needed for exploration and development of mineral properties; and that activities will not be adversely disrupted or impeded by exploration, development, operating, regulatory, political, community, economic and/or environmental risks. In addition, this MD&A may contain forward-looking statements or information pertaining to: potential exploration upside at the Filo del Sol Project, including the extent and significance of the sulphide mineralization underlying the current Mineral Resource and the prospectivity of exploration targets; exploration and development plans and expenditures; the ability of the Company’s COVID-19 operating protocol to continue to meet government mandated health and safety guidelines enabling it to conduct its field programs as planned; opportunities to improve project economics; the success of future exploration activities; potential for resource expansion; potential for the discovery of new mineral deposits; ability to build shareholder value; expectations with regard to adding to Mineral Reserves or Resources through exploration; expectations with respect to the conversion of inferred resources to an indicated resources classification; ability to execute the planned work programs; estimation of commodity prices, Mineral Reserves and Resources, estimations of costs, and permitting time lines; ability to obtain surface rights and property interests; currency exchange rate fluctuations; requirements for additional capital; government regulation of mining activities; environmental risks; unanticipated reclamation expenses; title disputes or claims; limitations on insurance coverage; and other risks and uncertainties.

Forward-looking information is based on certain assumptions that the Company believes are reasonable, including that the current price of and demand for commodities will be sustained or will improve, the supply of commodities will remain stable, that the general business and economic conditions will not change in a material adverse manner, that financing will be available if and when needed on reasonable terms and that the Company will not experience any material labour dispute, accident, or failure of plant or equipment.  These factors are not, and should not be construed as being, exhaustive.  Although the Company has attempted to identify important factors that would cause actual results to differ materially from those contained in forward-looking information, there may be other factors that cause results not to be as anticipated, estimated, or intended.  There can be no assurance that such statements will prove to be accurate, as the Company’s actual results and future events could differ materially from those anticipated in such statements, as a result of the factors discussed in the “Risk and Uncertainties” section of this MD&A, and elsewhere, and in the “Risk Factors” section of the Company’s most recent Annual Information Form, which is available under the Company’s profile on SEDAR at www.sedar.com.  All of the forward-looking information contained in this document is qualified by these cautionary statements.  Readers are cautioned not to place undue reliance on forward-looking information due to the inherent uncertainty thereof.

Statements relating to "Mineral Resources" are deemed to be forward looking information, as they involve the implied assessment, based on certain estimates and assumptions, that the Mineral Resources described can be profitably produced in the future.