Geological Resources – Palito

Important Information about Mineral Reserve and Resource Estimates

Whilst the Company takes all reasonable care in the preparation and verification of the mineral reserve and resource figures. the figures are estimates based in part on forward-looking information.

Estimates are based on management’s knowledge, mining experience, analysis of drilling results, the quality of available data and management’s best judgment. They are, however, imprecise by nature, may change over time, and include many variables and assumptions including geological interpretation, commodity prices and currency exchange rates, recovery rates, and operating and capital costs.

There is no assurance that the indicated levels of metal will be produced, and the Company may have to re-estimate the mineral reserves based on actual production experience. Changes in the metal price, production costs or recovery rates could make it unprofitable to operate or develop a particular deposit for a period of time.

The Company estimates and discloses mineral reserves and resources using the definitions adopted by the Canadian Institute of Mining, Metallurgy and Petroleum, and in accordance with NI 43-101.  Further details are available at www.cim.org.  See the “Glossary of Geological and Mining Terms” for complete definitions of mineral reserves and mineral resources.

On 25 January 2018, Serabi filed a report prepared as a Canadian National Instrument 43-101 (NI 43-101) Technical Report (“the Technical Report”) prepared by SRK Consulting (US) Inc. (“SRK”) on the Palito Mining Complex which consists of the Palito and Sao Chico gold deposits.

The  Technical Report established an independent Mineral Resource and Mineral Reserve for the Palito deposit as follows:

1)     Mineral Resources are not Mineral Reserves and have not demonstrated economic viability

2)     Mineral Resources are reported inclusive of Mineral Reserves.

3)     Figures are rounded to reflect the relative accuracy of the estimates.

4)     Mineral resources are reported within classification domains inclusive of in situ dilution at a cut off grade of 3.10 g/t gold assuming an underground extraction scenario, a gold price of US$1,500/oz, and metallurgical recovery of 91% and a 5.0:1 Brazilian Real to U.S. Dollar exchange rate.

3)     Polygonal techniques were used for Mineral Resource estimates.

The Technical Report established an independent Mineral Reserve for the Palito deposit as follows:

1)     Mineral Reserves have been rounded to reflect the relative accuracy of the estimates. Proven underground Mineral Reserves are reported within the Measured classification domain, and Probable underground Mineral Reserves are reported within the Indicated classification domain. Proven and Probable underground Mineral Reserves are inclusive of external mining dilution and mining loss and are reported at a CoG of 3.70 g/t gold assuming an underground extraction scenario, a gold price of US$1,500/oz, a 5.0:1 Brazilian Real to U.S. Dollar exchange rate, and metallurgical recovery of 91%.

Serabi is the operator and owns 100% of the Palito Mine such that gross and net attributable mineral reserves are the same. The mineral reserve and mineral resources estimates were prepared by the Company in accordance with the standard of CIM and NI 43-101, with an effective date of 31 December 2020, and reviewed and approved by Michael Hodgson BSc, MSc FIMMM, who is a qualified person under National Instrument 43-101 – Standards of Disclosure for Mineral Projects (“NI 43-101”) and who has acted as the qualified person under the AIM Rules.