Operating Highlights

Strong Exploration Results Continue in Aurora Zone and Breccia 41; Discovery of New Porphyry Centre

During the second quarter of 2022, the Company focused on drilling at Filo del Sol and drill results received during the period continued to showcase the size and grade of the mineralization identified at the project to date as well as its remarkable exploration potential.

Holes testing continuity and expansion of the bonanza-grade Breccia 41 structure, and the broader high-grade Aurora Zone, have returned strong results, highlighted by the following:

• FSDH055C is the best hole ever drilled at Filo del Sol from a grade-thickness perspective, and confirmed continuity of high-grade mineralization within the Aurora Zone as well as the bonanza-grade mineralization of Breccia 41. The hole was stopped at a depth of 1,488m due to the capacity of the drill, and returned 1,338m at 1.33% CuEq from 150m, including 126m at 5.02% CuEq from 728m in Breccia 41, within which was a 24m interval at 13.30% CuEq from 728m;
• FSDH057 also tested Breccia 41, successfully extending it 175m to the north.  The hole intersected 651m at 1.12% CuEq from 136m, including 289m at 2.00% CuEq from 498m in the encompassing Aurora Zone and 11.1m at 17.6% CuEq from 776m in Breccia 41. The hole was lost within Breccia 41, ending in the highest grade copper values ever discovered at Filo del Sol, and the total length of the zones remains unknown at this location.  Both zones remain open in multiple directions around this hole.
• FSDH058, drilled into the Aurora Zone, returned 1,252m at 0.91% CuEq from a depth of 100m to the end of the hole, including 310m at 1.40% CuEq and 6m at 398.3 g/t Ag in the silver zone, demonstrating the continuity of strong mineralization within this high-grade feature of the Filo del Sol deposit.

In addition, FSDH060 discovered what is currently interpreted as a new porphyry centre, named the Bonita Zone, along the overall Filo trend, supporting the interpretation that the Filo del Sol Project hosts a multikilometer, northeast-trending alignment of overlapping porphyry-centered hydrothermal systems which is open to expansion. FSDH060 was drilled to a final depth of 1,070m and intersected 738m at 0.51% CuEq from a depth of 332m, including 322m at 0.63% CuEq from 620m. This new discovery will be a high-priority drill target with further testing planned for the upcoming South American spring season.

Assay results received by the Company during the second quarter of 2022 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, additional holes have been completed with assays pending, which include:

• FSDH061, located 228m northeast of FSDH057, completed to a depth of 1,093m;
• FSDH063, located 150m west of FSDH025, to investigate the southwestern extension of the Aurora Zone, completed to a depth of 1,141m; and
• FSDH066, located 1.3km northeast of FSDH060, to investigate the area under the Maranceles veins, a series of quartz-enargite veins which outcrop in this area, completed to a depth of 458m.

Assay results for these holes will be released as they are received, analyzed and confirmed by the Company.

Election of William A. Lundin to the Board of Directors

At the Company’s 2022 Annual General and Special Meeting held on June 23, 2022, Mr. William A. Lundin was elected to the Company’s Board of Directors, in replacement of Mr. Lukas H. Lundin, who did not stand for re-election.

Mr. W. Lundin currently serves as the Chief Operating Officer for International Petroleum Corp. ("IPC"), an international oil and gas exploration and production company with a portfolio of assets located in Canada, Europe and Southeast Asia. Prior to his tenure with IPC, Mr. W. Lundin worked in various field positions within the Lundin Group and brings with him a wealth of technical expertise. He is a registered Professional Engineer in the province of Alberta and holds a Bachelor of Mineral Resource Engineering from Dalhousie University. Mr. W. Lundin also currently serves as a director for ShaMaran Petroleum Corp. and the Lundin Foundation, and as Chairman for Africa Energy Corp.

Exercise of Top-up Right by BHP

On July 29, 2022, subsequent to the end of the second quarter, the Company closed a non-brokered private placement to BHP Western Mining Resources International Pty Ltd, a wholly owned subsidiary of BHP Group Limited (collectively, "BHP"), whereby the Company issued 44,047 common shares to BHP for gross proceeds of $675,681 (the “Anti-dilution Top-Up”).

The Anti-dilution Top-Up was undertaken pursuant to the terms of the March 11, 2022 private placement of 6,270,000 common shares to BHP at a price of $15.95 per common share for total gross proceeds of $100 million (the “Private Placement”), whereby BHP was granted certain anti-dilutive rights, allowing BHP to top-up and maintain its pro rata 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.