Operating Highlights

2021/2022 Drill Program Extends High-grade Aurora Zone at Filo del Sol

The Company opened the first quarter of 2022 with five diamond rigs turning at the Filo del Sol Project, and as of the date of this MD&A the campaign has ramped up to seven diamond rigs, with an additional reverse circulation (“RC”) rig.  The RC rig is being used to pre-collar holes in the challenging area overlying Breccia 41 in order to improve drill productivity and hole completion rates. The 2021/2022 drill campaign is the most ambitious program undertaken in the project’s history, and it has continued to deliver strong results which validate Filo del Sol’s potential as a generational discovery in an emerging copper-gold-silver district. Highlights from the 2021/2022 campaign to date include:

• FSDH054, which successfully extended Breccia 41, intersected 172m at 3.22% CuEq (1.51% Cu; 1.42g/t Au; 75.9g/t Ag) from a depth of 830m within a broader interval of 1,224m at 1.26% CuEq (0.71% Cu; 0.54g/t Au; 18.0g/t Ag) from a depth of 146m. This hole was collared 60m east of, and drilled parallel to, FSDH041 and the mineralization intersected is completely outside of the current Mineral Resource;
• FSDH055A, which returned the best precious metal intersections on the project to date, with 64m at 1,213.8g/t Ag and 0.49g/t Au from a depth of 362m;
• FSDH056, which intersected 502m at 0.89% CuEq (0.50% Cu; 0.40g/t Au; 11.4g/t Ag) from a depth of 168m, ending in over 1% CuEq mineralization at a depth of 670m, where it was abandoned due to poor ground conditions; and
• FSDH058, drilled almost 500m south of FSDH041, returned 1,252m at 0.91% CuEq (0.56% Cu; 0.41g/t Au; 6.6g/t Ag) from a depth of 100m, including 310m at 1.40% CuEq (0.87% Cu; 0.62g/t Au; 8.2g/t Ag) from a depth of 600m. This hole was drilled to a final depth of 1,352m and is outside of the resource shell below a depth of 380m.

The assay results received so far from the 2021/2022 drill program have extended the high-grade mineralization of Breccia 41, confirmed the continuity of strong mineralization within the broader Aurora Zone, and served as a reminder of the remarkable precious metal content of the deposit, which provides optionality for future development and project financing scenarios.

Assay results to date from the 2021/2022 drill program are summarized in the table below:

1 CuEq for drill intersections is calculated based on US$3.00/lb Cu, US$1,500/oz Au and US$18/oz Ag, with 80% metallurgical recoveries assumed for all metals. The formula is: CuEq % = Cu % + (0.7292 * Au g/t) + (0.0088 * Ag g/t).

As of the date of this MD&A, four additional holes have been completed with assays pending. Holes FSDH055C and FSDH057 are respectively 50m and 200m step-outs of FSDH041 and have the potential to extend the high-grade mineralization of Breccia 41 to the north. FSDH059, approximately 100m north of FSDH041, was abandoned at 312m prior to reaching target depth.  The fourth hole, FSDH060, was completed to a final depth of 1,070m, approximately 2km north of FSDH041, and tests the north-south expanse of the Filo del Sol deposit. Assay results for these holes will be released as they are received, analyzed and confirmed by the Company.

$100 Million Strategic Investment by BHP

On March 11, 2022, by way of a non-brokered private placement, the Company closed the sale of 6,270,000 common shares to BHP Western Mining Resources International Pty Ltd, a wholly owned subsidiary of BHP Group Limited (collectively, "BHP"), at a price of $15.95 per common share for total gross proceeds of $100 million (the “Private Placement”). The subscription price represented a 12% premium to the 20-day volume weighted average trading price of the Company’s common shares ending the last trading day prior to announcement of the Private Placement. Share issuance costs related to the Private Placement totaled $0.3 million, and comprised of professional fees and regulatory fees. No finder's fee or commissions were payable in connection with the Private Placement.

Upon closing of the Private Placement, BHP owned approximately 5% of the Company’s issued and outstanding common shares on an undiluted basis. The common shares acquired by BHP pursuant to the Private Placement are subject to a statutory four-month hold period in accordance with applicable securities regulations. 
In connection with the Private Placement, BHP has been granted certain participation and top-up rights, allowing BHP to maintain its ownership interest from time to time, provided that such participation rights will not apply to any portion of BHP's ownership interest in excess of a 9.9% undiluted ownership level in the Company.  In addition, the Company and BHP have agreed to form a joint advisory committee to share expertise, exploration concepts, and discuss future project development.

The Company intends to use the net proceeds of the Private Placement to advance exploration and development of the Company's Filo del Sol Project and for working capital and general corporate purposes.