TSXV:FIL $1.89 $0.02 OMX:FIL $12.95 $0.05

Operating Highlights

Q1 2020 Operating Highlights

CORE BUSINESS

Filo Mining is a mineral exploration company, focused on its 100% controlled, flagship Filo del Sol Project, which is comprised of two adjacent land holdings: the Filo del Sol Property located in San Juan Province, Argentina, and the Tamberias Property, located in Region III, Chile. The Filo del Sol Project is located between the prolific Maricunga and El Indio gold belts, two major mineralized trends that contain such deposits as Caspiche, La Coipa, Veladero, and El Indio. The region is a stable mining jurisdiction and hosts a number of large-scale mining operations. The project area is covered under the Mining Integration and Complementation Treaty between Chile and Argentina, which provides the framework for the development of cross border mining projects.

The Company has completed a pre-feasibility study (“PFS”) on the Filo del Sol Project, with an effective date of January 13, 2019, which demonstrated the project’s robust economic potential. The PFS, which was based only on the oxide portion of the current Mineral Resource and used prices of US$3.00/lb copper, US$1,300/oz gold, and US$20/oz silver, yielded an after-tax net present value (“NPV”) of US$1.28 billion at a discount rate of 8%, and generated an internal rate of return (“IRR”) of 23%. Positive valuations were also maintained across a wide range of sensitivities on key assumptions.

The Company’s most recent Mineral Resource and Mineral Reserve statement is shown below.


The Filo del Sol Project continues to hold significant exploration potential, with less than 20% of the project area explored to date. The Company’s Mineral Resource estimates are inclusive of the Mineral Reserve estimates as set forth above.

The technical information relating to the PFS is based on a technical report titled “NI 43-101 Technical Report, Pre-feasibility Study for the Filo del Sol Project” dated February 22, 2019, with an effective date of January 13, 2019 (the “Technical Report”). The Technical Report was prepared for Filo Mining by Ausenco Engineering Canada Inc. (“Ausenco”). The Qualified Persons, as defined under NI 43-101, responsible for the Technical Report are Scott Elfen, P.E., Ausenco; Robin Kalanchey, P.Eng., Ausenco; Bruno Borntraeger, P.Eng., Knight Piesold Ltd.; Fionnuala Devine, P.Geo., Merlin Geosciences Inc.; Ian Stillwell, BGC Engineering Inc.; Neil Winkelmann, FAusIMM, SRK Consulting (Canada) Inc.; James N. Gray, P.Geo., Advantage Geoservices Limited; and Jay Melnyk, P.Eng., AGP Mining Consultants, all of whom are independent of Filo Mining. The Technical Report is available for review under the Company's profile on SEDAR at www.sedar.com and on the Company's website at www.filo-mining.com.

The Company’s strategy is to create value for its shareholders by expanding and increasing the quality of the resources and reserves at the Filo del Sol Project and by advancing engineering and other studies that are required to prepare the Filo del Sol Project for eventual development by the Company or by third parties.

The Company has a strong management team and board with extensive experience in the resource sector, particularly in Chile and Argentina. The board and management team have an appropriate mix of geological, engineering, financial, and business skills to advance the Company’s projects and to generate value for its shareholders.

FIRST QUARTER 2020 OPERATING HIGHLIGHTS

Successful Completion of 2019/2020 Season Despite Curtailment in Response to COVID-19

The Company planned its 2019/2020 field program to follow-up on the exploration successes of the previous season, which confirmed the existence of a significant porphyry copper-gold system underlying the current Mineral Resource at Filo del Sol. The 2019/2020 season, which began in November 2019, was curtailed in late March 2020 in response to the intensification of the COVID-19 pandemic, and its arrival in Chile and Argentina.

Despite the shortened program, the Company completed its main objective for the season which was to expand the mineralization below the known deposit, particularly below the area of highest copper and gold grades. The Company drilled eight diamond holes, two of which were completed to their planned depths, while the rest were stopped short of their targeted depths as a result of the curtailment. The completed holes expanded the deep mineralization well below the bottom of the PFS pit shell, and both ended in mineralization.

The campaign was highlighted by hole FSDH032, which was drilled to a final depth of 1,141.0 metres and intersected mineralization over a length of 1,009.0 metres at 0.95% Copper Equivalent (“CuEq”), and hole FSDH034, which was drilled to a final depth of 1,106.0 metres and intersected mineralization over a length of 1,034.0 metres at 0.68% CuEq, including 439.0 metres at 0.84% CuEq. Most notably, drilling exited the current Mineral Resource pit shell at depths of 378 metres and 320 metres respectively, and the remaining intercepts below these depths are completely outside of the current Mineral Resource, demonstrating the considerable extent and grade of the underlying mineralization.

Complete assay results for the first five diamond holes of the 2019/2020 campaign are provided in the table below, and the pending results for the remaining holes will be made available when received and verified by the Company.


1 Copper Equivalent is calculated based on US$ 2.80/lb Cu, US$ 1,400/oz Au and US$ 16/oz Ag. The formula is: CuEq % = Cu % + (0.7292 * Au g/t) + (0.0083 * Ag g/t).See the Company’s News Release dated April 20, 2020 for full details.

Together with holes completed during the previous season, these findings represent a step change in the Company’s understanding of the geology of the Filo del Sol deposit and continue to affirm that the current Mineral Resource is only a small portion of a much larger mineralized system. The Company now has three diamond holes drilled to depths in excess of 1 kilometre, spanning a north-south distance of 1 kilometre, with all holes ending in mineralization.

In addition to the diamond drilling, 13 reverse circulation (“RC”) holes were drilled to the southwest of the resource area to test for an extension of the oxide part of the Filo del Sol deposit suggested by surface mapping and re-interpretation of geophysical data. Assay results for the first 11 RC holes have been received and verified by the Company, as communicated by the Company’s news release dated April 20, 2020. While no significant mineralization was encountered by most of the RC holes during the 2019/2020 campaign, the Company did encounter silicification and locally anomalous pathfinder elements consistent with the extension of the upper part of the system into this area. Accordingly, potential remains for mineralization at depth which will be followed up by future exploration.

In addition to the drilling, full 3D induced polarization and drone-supported magnetic geophysical surveys were completed over the project area, providing a high-quality geophysical dataset.The results of these surveys will be integrated with the geological model to provide a comprehensive 3D model of the geology and physical properties of the deposit area which will guide future drilling campaigns.

OUTLOOK AND CONTINUED RESPONSE TO COVID-19

The exploration findings from the last two field seasons have demonstrated that the extent of the mineralization extends well beyond the depths of the current Mineral Resource. Complete assay results are still pending from the recent drill campaign and will be made available once received and verified by the Company.

As the Company continues to assess its options for unlocking value at the Filo del Sol Project for its shareholders, it will take into consideration this recent exploration success, as well as the compelling investment thesis presented by the PFS.

The Company continues to respond to the COVID-19 pandemic within the framework of internal protocols, and local and national health authority requirements and recommendations. The health and safety of the Company’s employees, contractors, visitors, and stakeholders remain Filo Mining’s top priority. The Company’s camp facilities and offices have implemented travel restrictions, surveillance, monitoring and response plans to reduce the risk of COVID-19 exposure and outbreak, including health screening of personnel when appropriate. All non-critical business travel has also been curtailed. We will continue to monitor the situation and are prepared to implement additional changes to minimize any potential impacts of the global outbreak that might emerge at the Company’s project site or offices as necessary. In addition, as part of its response to COVID-19 and the resulting global economic turmoil, the Company has implemented immediate cost saving measures, including cuts to discretionary expenditures and voluntary reductions to senior management salaries for the duration of the crisis.

OUTSTANDING SHARE DATA

As at May 6, 2020, the Company had 88,218,451 common shares outstanding and 8,234,167 share options outstanding under its share-based incentive plan.

FINANCIAL INFORMATION

The Company’s next scheduled financial report will be for the three and six months ending June 30, 2020, which is expected to be published on or around August 13, 2020.

RISKS AND UNCERTAINTIES

The operations of the Company are speculative due to the high-risk nature of its business, which includes the acquisition, financing, exploration, development and operation of mineral and mining properties.There are a number of factors that could negatively affect the Company’s business and the value of its common shares, and these risk factors could materially affect the Company’s future operations and financial position and could cause actual events to differ materially from those described in forward-looking statements relating to the Company. There have been no material changes in the risks and uncertainties affecting the Company that were discussed in the Company’s annual 2019 MD&A, as filed on SEDAR at www.sedar.com on March 19, 2020.

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 James 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 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: the Company's expected timing of results related to the 2019/2020 field program at its 100% owned Filo del Sol Project; potential upside at the Filo del Sol Project, including the extent and significance of the porphyry copper-gold system underlying the current Mineral Resource; assumptions and interpretations around prospectivity of the Tamberias West area; the Company’s ability to define and understand the structural controls applicable to the high-grade gold zones within the Filo del Sol deposit; the ability of the Company to secure additional financing and/or the quantum and terms thereof; support of the Lundin Family Trusts; exploration and development plans and expenditures; the timing and nature of studies and any potential development scenarios; 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.