EXHIBIT 23.1

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We consent to the use of our reports dated March 18, 2024 relating to the financial statements of MAG Silver Corp. (the “Company”) and the effectiveness of the Company’s internal control over financial reporting appearing in this Annual Report on Form 40-F for the year ended December 31, 2023.

/s/ Deloitte LLP                                                               

EXHIBIT 23.2

CONSENT OF PAUL SALMENMAKI, P.ENG.
 

I refer to the technical report entitled “Juanicipio Mineral Resources and Mineral Reserves NI 43-101 Technical Report”, with an effective date of March 4, 2024 and filed on SEDAR+ on March 27, 2024 (the “Technical Report”) that is referenced in MAG Silver Corp.’s Annual Information Form (“AIF”) for the fiscal year ended December 31, 2023, filed as Exhibit 99.1 to this Annual Report on Form 40-F with the United States Securities and Exchange Commission pursuant to the Securities Exchange Act of 1934, as amended.

I hereby consent to any extracts from or a summary of the Technical Report in the AIF filed as Exhibit 99.1 to this Annual Report on Form 40-F.

Sincerely,

/s/ Paul Salmenmaki                                                                                                                     

Paul Salmenmaki, P. Eng.  

March 27, 2024

EXHIBIT 23.3

CONSENT OF ROBERT CHESHER, FAusIMM (CPMET)
 

I refer to the technical report entitled “Juanicipio Mineral Resources and Mineral Reserves NI 43-101 Technical Report”, with an effective date of March 4, 2024 and filed on SEDAR+ on March 27, 2024 (the “Technical Report”) that is referenced in MAG Silver Corp.’s Annual Information Form (“AIF”) for the fiscal year ended December 31, 2023, filed as Exhibit 99.1 to this Annual Report on Form 40-F with the United States Securities and Exchange Commission pursuant to the Securities Exchange Act of 1934, as amended.

I hereby consent to any extracts from or a summary of the Technical Report in the AIF filed as Exhibit 99.1 to this Annual Report on Form 40-F.

Sincerely,

Robert Chesher, FAusIMM (CPMET)        

March 27, 2024

EXHIBIT 23.4

CONSENT OF MO MOLAVI, P.ENG.
 

I refer to the technical report entitled “Juanicipio Mineral Resources and Mineral Reserves NI 43-101 Technical Report”, with an effective date of March 4, 2024 and filed on SEDAR+ on March 27, 2024 (the “Technical Report”) that is referenced in MAG Silver Corp.’s Annual Information Form (“AIF”) for the fiscal year ended December 31, 2023, filed as Exhibit 99.1 to this Annual Report on Form 40-F with the United States Securities and Exchange Commission pursuant to the Securities Exchange Act of 1934, as amended.

I hereby consent to any extracts from or a summary of the Technical Report in the AIF filed as Exhibit 99.1 to this Annual Report on Form 40-F.

Sincerely,

Mo Molavi, P. Eng.   

March 27, 2024

EXHIBIT 23.5

CONSENT OF JOHN MORTON SHANNON, P.GEO.

I refer to the technical report entitled “Juanicipio Mineral Resources and Mineral Reserves NI 43-101 Technical Report”, with an effective date of March 4, 2024 and filed on SEDAR+ on March 27, 2024 (the “Technical Report”) that is referenced in MAG Silver Corp.’s Annual Information Form (“AIF”) for the fiscal year ended December 31, 2023, filed as Exhibit 99.1 to this Annual Report on Form 40-F with the United States Securities and Exchange Commission pursuant to the Securities Exchange Act of 1934, as amended.

I hereby consent to any extracts from or a summary of the Technical Report in the AIF filed as Exhibit 99.1 to this Annual Report on Form 40-F.

Sincerely,

John Morton Shannon, P.Geo.

March 27, 2024

EXHIBIT 23.6

CONSENT OF ROBERT CRAIG STEWART, P.GEO.
 

I refer to the technical report entitled “Juanicipio Mineral Resources and Mineral Reserves NI 43-101 Technical Report”, with an effective date of March 4, 2024 and filed on SEDAR+ on March 27, 2024 (the “Technical Report”) that is referenced in MAG Silver Corp.’s Annual Information Form (“AIF”) for the fiscal year ended December 31, 2023, filed as Exhibit 99.1 to this Annual Report on Form 40-F with the United States Securities and Exchange Commission pursuant to the Securities Exchange Act of 1934, as amended.

I hereby consent to any extracts from or a summary of the Technical Report in the AIF filed as Exhibit 99.1 to this Annual Report on Form 40-F.

Sincerely,

Robert Craig Stewart, P. Geo.        

March 27, 2024

EXHIBIT 23.7

CONSENT OF GILBERTO DOMINGUEZ, P.E.
 

I refer to the technical report entitled “Juanicipio Mineral Resources and Mineral Reserves NI 43-101 Technical Report”, with an effective date of March 4, 2024 and filed on SEDAR+ on March 27, 2024 (the “Technical Report”) that is referenced in MAG Silver Corp.’s Annual Information Form (“AIF”) for the fiscal year ended December 31, 2023, filed as Exhibit 99.1 to this Annual Report on Form 40-F with the United States Securities and Exchange Commission pursuant to the Securities Exchange Act of 1934, as amended.

I hereby consent to any extracts from or a summary of the Technical Report in the AIF filed as Exhibit 99.1 to this Annual Report on Form 40-F.

Sincerely,

Gilberto Dominguez

March 27, 2024

EXHIBIT 31.1

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

CERTIFICATION

I, George Paspalas, certify that:

1. I have reviewed this Annual Report on Form 40-F of MAG Silver Corp.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the issuer as of, and for, the periods presented in this report;

4. The issuer’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the issuer and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the issuer, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the issuer’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the issuer’s internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the issuer’s internal control over financial reporting; and

5. The issuer’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the issuer’s auditors and the audit committee of the issuer’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the issuer’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the issuer’s internal control over financial reporting.

Date: March 27, 2024

EXHIBIT 31.2

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

CERTIFICATION

I, Fausto Di Trapani, certify that:

1. I have reviewed this Annual Report on Form 40-F of MAG Silver Corp.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the issuer as of, and for, the periods presented in this report;

4. The issuer’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the issuer and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the issuer, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the issuer’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the issuer’s internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the issuer’s internal control over financial reporting; and

5. The issuer’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the issuer’s auditors and the audit committee of the issuer’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the issuer’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the issuer’s internal control over financial reporting.

Date: March 27, 2024

EXHIBIT 32.1

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

CERTIFICATION

In connection with the Annual Report of MAG Silver Corp. (the “Registrant”) on Form 40-F for the year ending December 31, 2023 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, George Paspalas, Chief Executive Officer of the Registrant, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge:

1.  The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

2.  The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Registrant.

Date: March 27, 2024

EXHIBIT 32.2

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

CERTIFICATION

In connection with the Annual Report of MAG Silver Corp. (the “Registrant”) on Form 40-F for the year ending December 31, 2023 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Fausto Di Trapani, Chief Financial Officer of the Registrant, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge:

1.  The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

2.  The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Registrant.

/s/ Fausto Di Trapani    

Fausto Di Trapani

Chief Financial Officer

Date: March 27, 2024

MAG Silver Corp. (the “Company”) has adopted this Policy in accordance with New York Stock Exchange (“NYSE”) listing requirements.

This Policy applies in the event of any accounting restatement (“Restatement”) due to the Company’s material non-compliance with financial reporting requirements under applicable federal securities laws, in accordance with Rule 10D-1 of the Securities Exchange Act of 1934 (“Rule 10D”). This Policy shall apply to Incentive-Based Compensation (as defined below) received on or after October 2, 2023 (the “Effective Date”).

The executives of the Company who serve or served as an “executive officer” (as defined under Rule 10D) of the Company (the “Executive Officers”) are covered by this Policy. This includes the Company’s current or former Chief Executive Officer; President; Chief Financial Officer; any other C-Suite executives of the Company; any Vice-President of the Company in charge of a principal business unit, division or function; and any other current or former officer or person who performs or performed a significant policy-making function for the Company, including executive officers of Company’s subsidiaries, if they perform such policy-making functions, as determined by the Company’s Compensation & Human Resources Committee (the “CHR Committee”) and Board of Directors (the “Board”). All of these Executive Officers are subject to this Policy, even if an Executive Officer had no responsibility for the financial statement errors which required restatement. The CHR Committee and Board will confirm on an annual basis who is considered an Executive Officer for purposes of this Policy.

This Policy covers all incentive-based compensation (including any cash or equity compensation) that is granted, earned or vested based wholly or in part upon the attainment of any “financial reporting measure” (“Incentive-Based Compensation”). This Policy applies to any Incentive-Based Compensation “received” by an Executive Officer during the period (the “Clawback Period”) consisting of any of the three completed fiscal years immediately preceding:

Financial reporting measures are those that are determined and presented in accordance with the accounting principles used in preparing the Company’s financial statements and any measures derived wholly or in part from such financial information (including non-GAAP measures, stock price and total shareholder return). For purposes of this Policy, Incentive-Based Compensation is deemed “received” in the fiscal period during which the applicable financial reporting measure (as specified in the terms of the award) is attained (the “Performance Period”), even if the payment or grant occurs after the end of that fiscal period. For the avoidance of doubt, the Clawback Period with respect to an Executive Officer applies to Incentive-Based Compensation received by the Executive Officer (a) after beginning services as an Executive Officer (including compensation derived from an award authorized before the individual is newly hired as an Executive Officer, e.g. inducement grants) and (b) if that person served as an Executive Officer at any time during the Performance Period for such Incentive-Based Compensation.

For the avoidance of doubt, Incentive-Based Compensation does not include (i) base annual salary, (ii) compensation which is awarded based solely on service to the Company (e.g. a time-vested award, including time-vesting stock options or restricted share units), or (iii) compensation which is awarded based solely on subjective standards, strategic measures (e.g. completion of a merger) or operational measures (e.g. attainment of a certain market share).

The amount of Incentive-Based Compensation that must be repaid by the Executive Officer (subject to the few limitations discussed below) is the amount of Incentive-Based Compensation received by the Executive Officer that exceeds the amount of Incentive-Based Compensation that otherwise would have been received had it been determined based on the Restatement (the “Recoverable Amount”). Applying this definition, after a Restatement, the Company will recalculate the applicable financial reporting measure and the Recoverable Amount in accordance with SEC and NYSE rules. The Company will determine whether, based on that financial reporting measure as calculated relying on the original financial statements, the Executive Officer received a greater amount of Incentive-Based Compensation than would have been received applying the recalculated financial measure. Where Incentive-Based Compensation is based only in part on the achievement of a financial reporting measure performance goal, the Company will determine the portion of the original Incentive-Based Compensation based on or derived from the financial reporting measure which was restated and will recalculate the affected portion based on the financial reporting measure as restated to determine the difference between the greater amount based on the original financial statements and the lesser amount that would have been received based on the Restatement. The Recoverable Amounts will be calculated on a pre-tax basis to ensure that the Company recovers the full amount of Incentive-Based Compensation that was erroneously awarded. Documentation of the Company’s calculation of the Recoverable Amount shall be maintained, and may be provided to NYSE as required by the NYSE rules.

If equity compensation is recoverable due to being granted to the Executive Officer (when the accounting results were the reason the equity compensation was granted) or vested by the Executive Officer (when the accounting results were the reason the equity compensation was vested), in each case in the Clawback Period, the Company will recover the excess portion of the equity award that would not have been granted or vested based on the Restatement, as follows:

The Board (or its applicable committee) will take such action as it deems appropriate, in its sole and absolute discretion, reasonably promptly to recover the Recoverable Amount, unless a majority of the independent members of the Board (or, if composed of independent directors, the CHR Committee) determines that it would be impracticable to recover such amount because (1) the Company has made a reasonable and documented attempt to recover the Recoverable Amount and has determined that the direct costs of enforcing recovery would exceed the Recoverable Amount, or (2) recovery would likely cause an otherwise tax-qualified retirement plan, under which benefits are broadly available to employees of the Company, to fail to meet the requirements of 26 U.S.C. 401(a)(13) or 26 U.S.C. 411(a) and regulations thereunder, or (3) if the recovery of the incentive-based compensation would, based on an opinion of counsel, violate the home-country laws of the Company. To the extent the Recoverable Amount represents an award which has previously been deferred, such deferred compensation award shall be forfeited. Without otherwise limiting the Company’s authority to recover the Recoverable Amount hereunder, the Company shall have the authority to unilaterally forfeit an Executive Officer’s deferred compensation, subject to compliance with Section 409A of the Internal Revenue Code.

In addition to the provisions described above, if the Company is required to prepare an accounting restatement due to the material noncompliance of the Company, as a result of misconduct, with any financial reporting requirement under the securities laws, then, in accordance with Section 304 of the Sarbanes-Oxley Act of 2002, the Chief Executive Officer and Chief Financial Officer (at the time the financial document embodying such financial reporting requirement was originally issued) shall reimburse the Company for:

To the extent that subsections A, B, C and D of this Policy (the “Rule 10D-1 Clawback Requirements”) would provide for recovery of Incentive-Based Compensation recoverable by the Company pursuant to Section 304 of the Sarbanes-Oxley Act, in accordance with subsection E of this Policy (the “Sarbanes-Oxley Clawback Requirements”), and/or any other recovery obligations (including pursuant to employment agreements, or plan awards), the amount such Executive Officer has already reimbursed the Company shall be credited to the required recovery under the Rule 10D-1 Clawback Requirements. Recovery pursuant to the Rule 10D-1 Clawback Requirements does not preclude recovery under the Sarbanes-Oxley Clawback Requirements, to the extent any applicable amounts have not been reimbursed to the Company.

The Company will not indemnify or provide insurance to cover any repayment of Incentive-Based Compensation in accordance with this Policy.

The provisions of this Policy apply to the fullest extent of the law; provided however, to the extent that any provisions of this Policy are found to be unenforceable or invalid under any applicable law, such provision will be applied to the maximum extent permitted, and shall automatically be deemed amended in a manner consistent with its objectives to the extent necessary to conform to any limitations required under applicable law.

This Policy is in addition to (and not in lieu of) any right of repayment, forfeiture or right of offset against any Executive Officer that is required pursuant to any other statutory repayment requirement (regardless of whether implemented at any time prior to or following the adoption of this Policy).

All determinations and decisions made by the Board (or any committee thereof) pursuant to the provisions of this Policy shall be final, conclusive and binding on the Company, its subsidiaries and the persons to whom this Policy applies.

The CHR Committee shall review this Policy at least annually, or otherwise as it deems appropriate, and propose recommended changes to the Governance and Nomination Committee, who shall then recommend approval of the changes to the Board. Changes to this Policy will be communicated to all persons to whom this Policy applies.

Questions about the interpretation of this Policy, please contact the Chief Financial Officer of the Company.

Adopted by the Board on November 9, 2023.

Last reviewed and approved by the Board on March 8, 2024.

4

Exhibit 99.1

2023 Annual Information Form

TABLE OF CONTENTS

2023 Annual Information Form

2023 Annual Information Form

INTRODUCTORY NOTES

In this Annual Information Form (“AIF”), unless the context otherwise dictates, “MAG”, “MAG Silver” or the “Company” refers to MAG Silver Corp. and its subsidiaries.

Date of Information

All information in this AIF is as of December 31, 2023 unless otherwise indicated.

Documents Incorporated by Reference

The information provided in this AIF is supplemented by disclosure contained in the document listed below which is incorporated by reference into this AIF. This document must be read together with this AIF. The document listed below is not contained within, nor attached to this document. The document may be accessed by the reader on SEDAR+ at www.sedarplus.ca.

Cautionary Statement on Forward-Looking Information

This AIF and the documents incorporated by reference herein contain “forward-looking information” and “forward-looking statements” within the meaning of applicable Canadian and United States securities legislation (collectively herein referred to as “forward-looking statements”), including the “safe harbour” provisions of provincial securities legislation, the U.S. Private Securities Litigation Reform Act of 1995, Section 21E of the U.S. Securities Exchange Act of 1934, as amended and Section 27A of the U.S. Securities Act of 1933, as amended. Such forward-looking statements include, but are not limited to:

2023 Annual Information Form

When used in this AIF, any statements that express or involve discussions with respect to predictions, beliefs, plans, projections, objectives, assumptions or future events of performance (often but not always using words or phrases such as “anticipate”, “believe”, “estimate”, “expect”, “intend”, “plan”, “strategy”, “goals”, “objectives”, “project”, “potential” or variations thereof or stating that certain actions, events, or results “may”, “could”, “would”, “might” or “will” be taken, occur or be achieved, or the negative of any of these terms and similar expressions), as they relate to the Company or management, are intended to identify forward-looking statements. Such statements reflect the Company’s current views with respect to future events and are subject to certain known and unknown risks, uncertainties and assumptions.

Forward-looking statements are necessarily based upon estimates and assumptions, which are inherently subject to significant business, economic and competitive uncertainties and contingencies, many of which are beyond the Company’s control and many of which, regarding future business decisions, are subject to change. Assumptions underlying the Company’s expectations regarding forward-looking statements contained in this AIF include, among others:

2023 Annual Information Form

Many factors could cause actual results, performance or achievements to be materially different from any future results, performance or achievements that may be expressed or implied by such forward-looking statements, including, among others:

2023 Annual Information Form

2023 Annual Information Form

Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those described herein. This list is not exhaustive of the factors that may affect any of the Company’s forward-looking statements. Forward-looking statements are statements about the future and are inherently uncertain, and actual achievements of the Company or other future events or conditions may differ materially from those reflected in the forward-looking statements due to a variety of risks, uncertainties and other factors, including without limitation, those referred to in this AIF under the heading “Risk Factors” and documents incorporated by reference herein.

2023 Annual Information Form

The Company’s forward-looking statements are based on the reasonable beliefs, expectations and opinions of management on the date the statements are made and, other than as required by applicable securities laws, the Company does not assume any obligation to update forward-looking statements if circumstances or management’s beliefs, expectations or opinions should change. For the reasons set forth above, investors should not attribute undue certainty to or place undue reliance on forward-looking statements.

Cautionary Note to United States Investors

Unless otherwise indicated, technical disclosure regarding the Company’s properties included or incorporated by reference herein, including the use of the terms “Mineral Resources” and “Mineral Reserves”, and all Mineral Resource and Mineral Reserve estimates contained in such technical disclosure, has been prepared in accordance with the requirements of National Instrument 43-101 – Standards of Disclosure for Mineral Projects (“NI 43-101”) and the Canadian Institute of Mining, Metallurgy and Petroleum (the “CIM”) – CIM Definition Standards on Mineral Resources and Mineral Reserves, adopted by the CIM Council, as amended (the “CIM Definition Standards”). NI 43-101 is an instrument developed by the Canadian Securities Administrators that establishes standards for all public disclosure an issuer makes of scientific and technical information concerning mineral projects.

Canadian standards, including NI 43-101, differ significantly from the disclosure requirements of the U.S. Securities and Exchange Commission (“SEC”) under subpart 1300 of Regulation S-K (the “SEC Modernization Rules”). The Company is not required to provide disclosure on its mineral properties under the SEC Modernization Rules and provides disclosure under NI 43-101 and the CIM Definition Standards. Accordingly, information contained in this AIF, or the documents incorporated by reference herein, may differ significantly from the information that would be disclosed had the Company prepared the Mineral Resource and Mineral Reserve estimates under the standards adopted under the SEC Modernization Rules.

Cautionary Note to Investors Concerning Estimates of Mineral Resources

“Inferred Mineral Resources” are Mineral Resources for which quantity and grade or quality are estimated based on limited geological evidence and sampling. Geological evidence is sufficient to imply but not verify geological and grade or quality continuity. “Inferred Mineral Resources” are based on limited information and have a great amount of uncertainty as to their existence and great uncertainty as to their economic and legal feasibility, although it is reasonably expected that the majority of “Inferred Mineral Resources” could be upgraded to “Indicated Mineral Resources” with continued exploration.

Under Canadian rules, estimates of Inferred Mineral Resources are considered too speculative geologically to have the economic considerations applied to them to enable them to be categorized as Mineral Resources and, accordingly, may not form the basis of feasibility or pre-feasibility studies, or economic studies except for a Preliminary Economic Assessment as defined under NI 43-101. Indicated and Inferred Mineral Resources that are not Mineral Resources do not have demonstrated economic viability.

Technical Information

Unless otherwise indicated, scientific or technical information in this AIF is based on information prepared by employees of MAG or by Fresnillo, as operator of Juanicipio, as applicable, under the supervision of, or that has been reviewed and approved by , Dr. Peter Megaw, Ph.D., CPG, the Company’s Chief Exploration Officer, and Gary Methven, P.Eng., Vice President, Technical Services, each of whom is a “Qualified Person” as defined in NI 43-101. A “Qualified Person” means an individual who: (i) is an engineer or geoscientist with a university degree, or equivalent accreditation, in an area of geoscience, or engineering, relating to mineral exploration or mining; (ii) has at least five years of experience in mineral exploration, mine development or operation or mineral project assessment, or any combination of these, that is relevant to his or her professional degree or area of practice; (iii) has experience relevant to the subject matter of the mineral project and the technical report, and (iv) is a member in good standing of a professional association. Dr. Megaw is not independent as he is an officer and a paid consultant of the Company. Mr. Methven is not independent as he is an employee of the Company (see “Interests of Management and Others in Material Transactions” below).

2023 Annual Information Form

Currency and Exchange Rates

All dollar amounts referred to in this AIF are expressed in United States dollars (“US$”) except where indicated otherwise. The Company’s accounts are based on a U.S.$ functional currency and are reported in a US$ presentation currency. All references to “dollars” are to US$ except where indicated otherwise. All references to “pesos” are to Mexican pesos. The Company incurs expenditures primarily in US$, and to a lesser extent in Canadian dollars (“C$”) and pesos.

The following table sets forth the rate of exchange for the C$ expressed in US$ in effect at the end of the periods indicated, the average of exchange rates in effect on the last day of each month during such periods, and the high and low exchange rates during such periods as reported by the Bank of Canada for conversion of Canadian dollars into United States dollars:

The rate of exchange on March 26, 2024 as reported by the Bank of Canada for the conversion of Canadian dollars into United States dollars was C$1.00 equals US$0.7368. 

The following table sets forth the rate of exchange for the Mexican peso expressed in US$ in effect at the end of the periods indicated, the average of exchange rates in effect on the last day of each month during such periods, and the high and low exchange rates during such periods based on the exchange rate published by Banco de Mexico in the Official Journal of the Federation to settle liabilities denominated in foreign currency payable in Mexico, for conversion of Mexican pesos into United States dollars (“Official Closing Rate”):

The Official Closing Rate of exchange on March 26, 2024 as reported by the Banco de Mexico for the conversion of Mexican pesos into United States dollars was $1.00 pesos equals US$0.0599.

Financial Data in this AIF

Financial information reported in this AIF is in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board.

CORPORATE STRUCTURE

Name, Address and Incorporation

MAG Silver Corp. was originally incorporated under the Company Act (British Columbia) on April 21, 1999, under the name “583882 B.C. Ltd.” On June 28, 1999, in anticipation of becoming a capital pool company, the Company changed its name to “Mega Capital Investments Inc.” On April 22, 2003, the Company changed its name to “MAG Silver Corp.” to reflect its new business upon the completion of its qualifying transaction on the TSX Venture Exchange. On July 27, 2005, the Company transitioned from the Company Act (British Columbia) to the Business Corporations Act (British Columbia) and concurrently adopted new articles and amended its authorized capital to an unlimited number of Common Shares without par value and an unlimited number of preferred shares without par value (the “Preferred Shares”). The Company’s head office is located at Suite 770, 800 West Pender Street, Vancouver, British Columbia, Canada, V6C 2V6. The Company’s registered office is located at 3500 – 1133 Melville Street, Vancouver, British Columbia, Canada, V6E 4E5.

2023 Annual Information Form

Intercorporate Relationships

The following chart illustrates the Company’s material subsidiaries, including the jurisdiction of incorporation of each subsidiary, and its associated property.

Notes:

GENERAL DEVELOPMENT OF THE BUSINESS

Overview

MAG Silver Corp. is a growth-oriented Canadian exploration company focused on advancing high-grade, district scale precious metals projects in the Americas. MAG Silver is emerging as a top-tier primary silver mining company through its (44%) interest in the 4,000 tonnes per day (“tpd”) Juanicipio mine, operated by Fresnillo plc (56%) (the “Juanicipio Mine” or “Juanicipio”). The Juanicipio Mine is located in the Fresnillo Silver Trend in Mexico, the world’s premier silver mining camp, where in addition to underground mine production and processing of high-grade mineralized material, an expanded exploration program is in place targeting multiple highly prospective targets. MAG Silver is also executing multi-phase exploration programs at the Deer Trail 100% earn-in project in Utah (the “Deer Trail Project”) and the 100% owned Larder Project, located in the historically prolific Abitibi region of Canada (the “Larder Project”).

MAG’s Common Shares trade on the Toronto Stock Exchange (“TSX”) and the NYSE American, LLC (the “NYSE American”) both under the symbol “MAG”.

2023 Annual Information Form

Principal Project

Juanicipio

MAG owns 44% of the Juanicipio Entities, which own the high-grade silver Juanicipio Mine located in the Fresnillo District, Zacatecas State, Mexico. Fresnillo is the operator and holds the remaining 56%.

Minera Juanicipio commissioned AMC Mining Consultants (Canada) Ltd. (“AMC”) to prepare the 2024 Technical Report on behalf of MAG.

Fresnillo and MAG jointly approved the Juanicipio Mine development on April 11, 2019, following which project construction commenced immediately and the underground mine development continued. Production and exploration at Juanicipio are all being carried out by the project operator, Fresnillo, with MAG being represented in all board of directors, technical committee, joint health and safety committee and ad-hoc meetings for the Juanicipio Entities. Commissioning of the processing facility commenced in Q1 2023 and was performed under the guidance of an Engineering, Procurement and Construction Management contract entered into with an affiliate of Fresnillo and various third-party start-up specialist consultants. MAG’s share of project costs was funded by operating cash flow from underground mine production, by cash calls through its 44% interest in Minera Juanicipio and, to a lesser extent, incurred directly by MAG to cover expenses related to its own commissioned technical studies and analyses, as well as direct project oversight. Minera Juanicipio is governed by a shareholders’ agreement and corporate by-laws, pursuant to which each shareholder is to provide funding pro-rata to its ownership interest (the “Shareholders’ Agreement”). An operator services agreement became effective upon initiation of commercial production whereby Fresnillo and its affiliates continue to operate the mine (the “Operator Services Agreement”) for a fee of $13 million per annum. Both silver-rich lead and zinc concentrate offtake agreements have been executed by Minera Juanicipio with Met-Mex Peñoles, S.A. de C.V. (“Met-Mex”) (an affiliate of Fresnillo), under which both concentrates are being sold and treated at international benchmark market terms in Torreón, Mexico. The pyrite concentrate is generally sold to trading firms who blend the material with other concentrates to realize payable metal for Juanicipio.

Commercial production was declared at the Juanicipio Mine on June 1, 2023, and the facility achieved nameplate production of 4,000 tonnes per day in Q3 2023. During the year ended December 31, 2023, the mine processed 1.3 million tonnes (“Mt”) at a silver head grade of 472g/t, yielding 16.8 million ounces of silver representing at a metallurgical recovery of 87%, with an additional 37,000 oz of gold, 28 million pounds of lead and 45 million pounds of zinc recovered. Of the total minerals mined and milled in 2023, 85% was precious metals, with 75% being silver. Silver recovery continues to improve and is currently consistently at or above 88%, with ongoing initiatives to optimize.

In addition to underground mine production and processing of high-grade mineralized material, an exploration program is in place at Juanicipio targeting multiple highly prospective targets. A structural intersection marked by funnel-shaped skarn alteration with high copper and boron has been identified, indicative of an ore fluid upwelling zone. This is reflected by distinctive surface alteration, which makes a thumbprint that can be used to focus Juanicipio’s exploration program throughout the district. Only 5% of the Juanicipio property has been explored to date with many untested targets still to be pursued within the property. Drilling in recent years has primarily focused on converting the Inferred Mineral Resources included in the Deep Zone and parallel mineralized structures into Indicated Mineral Resources and to further trace mineralization to depth, as well as additional parallel mineralized structures.

At Juanicipio, the Valdecañas vein system underpins value. This Valdecañas vein system is not a single vein, but a system of related veins. The Mineral Resource and Mineral Reserve estimates outlined below comprise the data on which MAG’s 2024 Technical Report is built.

Other Exploration Properties

The Company has an interest in concession rights in other non-material properties on which the exploration is managed directly by MAG. Exploration on these interests is undertaken by contracted service providers. In the case of projects located in Mexico, MAG’s work is contracted with third parties, including Cascabel and IMDEX (Cascabel and IMDEX are related companies to MAG - see “Interest of Management and Others in Material Transactions” below).

2023 Annual Information Form

The Deer Trail Project

The silver-rich Deer Trail carbonate replacement deposit (“CRD”) project in Piute County, Utah offers MAG a 100% earn-in opportunity and encompasses the historic Deer Trail Mine and the adjoining Alunite Ridge area (6,500 Ha). MAG consolidated these properties in 2018 for the first time since the early 1980s. The Deer Trail Project lies along the same regional structure that hosts several mega-districts of similar age and style, so this consolidation allows us to consider the entire system, apply an integrated district-scale exploration approach and leverage new technologies to aid in the search for new, large-scale mineralization along the path between the historic mines and a potential Porphyry Copper-Molybdenum centre.

MAG’s exploration focus at the Deer Trail Project is to seek the source of the historically mined high-grade silver, gold, lead, zinc and copper CRD sulphides of the Deer Trail manto towards that potential porphyry centre. The Company expects to find larger-scale high-grade mineralization in the thick, high-potential Redwall Limestone that the Company has proven lies just below the less favourable interlayered sedimentary and limestone section that hosts the historic Deer Trail Mine mineralization.

Exploration at the Deer Trail Project offers several strategic advantages, one of which is the fact that it shares the same regional fault as the renowned Bingham Canyon and Tintic mining districts, paving the way for potential discoveries of substantial porphyry and CRD deposits. MAG’s exploration thesis at the Deer Trail Project is to pursue the known CRD deposits that may possibly be sourced from a Bingham-like porphyry. These porphyry “hub” targets are defined through extensive surface work showing strong coincident geochemical, geophysical and alteration anomalies.

These “hubs” are thought to be the source of the fluids that created the Deer Trail Project area’s manto, skarn and epithermal vein mineralization and pervasive alteration seen throughout the Deer Trail Project area including the Deer Trail and Carissa zones. MAG is taking a disciplined, district-scale approach to exploration within this mining-friendly community and jurisdiction that also offers excellent infrastructure. MAG launched its sustainability programs at the Deer Trail Project in 2019, demonstrating the Company’s dedication to responsible mining practices. In 2020, drilling programs commenced, marking a significant step forward in unlocking the asset’s potential.

During 2023 the Carissa Zone was discovered. Carissa represents the most widespread mineralization and strongest alteration drilled on the Deer Trail property. Two drill holes cut several hundred meters of progressively increasing Argentiferous (Silver-bearing) Manganese-Oxide Mineralization, marble and skarn before entering distinctive zones of Silver-Copper-Zinc bearing sulfide “lacing”, in turn cut by zones of pervasive mineralized skarn. The sulfide lacing and skarn zones in both Carissa holes become progressively stronger with depth and showed significant increases in pathfinder elements (W, Sn, Bi, Mo), suggesting increasing proximity to the suspected porphyry-related mineralization source.

Bingham Canyon is one of the world’s largest copper systems, featuring a porphyry copper surrounded by large-scale high-grade replacement (CRD) mineralization. MAG is currently undertaking Phase 3 and 4 drilling programs designed to test the mineralization in the porphyry “hubs” inferred to underlie Mount Brigham and Deer Trail Mountain. The first hole was drilled to test the Alunite Ridge target on the south slope of Mount Brigham. Deer Trail Mountain was subsequently drilled. Initial drilling of the Alunite Ridge and Deer Trail Mountain hubs encountered porphyry-style alteration justifying further drilling. Future “spoke” drilling is also planned to offset the Carissa Zone discovery holes identified in 2023, follow up other well-mineralized intercepts and test entirely new targets identified by recent geophysical surveys and soil surveys.

The Larder Project

The Larder Project is situated in the Abitibi Greenstone Belt and hosts three gold zones along 8.5 km of the Cadillac-Larder Break (the “Break” or the “CLB”) in one of the world’s best gold regions where over 200 million ounces of gold have been produced. The Larder Project lies in a mining-friendly jurisdiction with a very long history of mining, and agreements with First Nations are in place with positive ongoing dialogue. No significant environmental legacies are known and infrastructure (including electrical, gas, highway, water) and access are excellent. Exploration costs in this region are relatively low and experienced labour is readily available. Permitting is streamlined, predictable and many newly identified targets can be drilled from existing permitted pads.

2023 Annual Information Form

The Larder Project property includes several known shear-hosted (“orogenic”) gold mineralization centres located along approximately 8.5 km of strike length of the greater than 250 km long Break, a highly productive regional first-order shear structure. Unlike in many other shear-hosted gold deposits, mineralization occurs along the Break as concentrated ore shoots along the major first-order structure as well as on related second or third-order structures. A historic shallow exploration focus at the Larder Project means that mineralization is largely untested at depths greater than 500 m where most deposits in the region blossom.

MAG took ownership of Larder Project in 2022 through its acquisition of a 100% interest in Gatling Exploration Inc. (“Gatling”) and conducted a comprehensive data review and drilling campaign that focused below and lateral to mineralization shoots indicated by historical shallow drilling. MAG drilled 10 holes, cumulatively 10,484 m, along the Break at depth and to the Bear East Zone of the project. Results proved geological ingredients at depth, showing strong structures in favorable rock types verified at depths never recorded in the project’s history, and yielding positive assay results extending from the Bear East Zone.

In early 2023, MAG raised C$23 million by way of flow-through financing, with proceeds to fund further testing of known zones and generate new high-priority targets. The Swansea Zone drill program tested geophysical anomalies coincident with the CLB intercepting up to 50 m of alteration. This identified new targets as gold mineralization was encountered in six of seven drillholes with a 730 m strike length in green/brown carbonate altered komatiites, syenites and strongly altered mafic volcanics. The altered komatiites in this area at Swansea were never encountered in historical drill programs and are now the focal point of future targeting.

Later in 2023, a comprehensive review of all past drilling plus new geotechnical work, geophysical survey deployment, field sampling and mapping drove the creation of new 3D models for more precise drilling. This work will continue to improve property wide geological understanding and improve target generation. Following the completion of geophysical surveys and interpretation of stripped outcrops, a large pipeline of targets for 2024 has been generated. Exploration drilling tested the Cheminis mine trend at depth and the Bear East Zone and initial results from both zones are promising, with several assays pending.

In early 2024, MAG undertook further geophysical surveys and exploration programs designed to generate additional drill targets. Drilling is ongoing with two rigs testing targets based on new models derived from the comprehensive review: depth extensions at the Cheminis mine trend, Bear Central and East zones below high-grade intersections, Fernland Zone down plunge towards Cheminis, and regional high-priority targets, with a focus on the Break, as well as 2nd and 3rd order structures. With the generation of a number of high-priority targets having been identified on the Larder property, an opportunity arose in 2023 to expand MAG’s footprint in this historically prolific area. On March 22, 2024, an Asset Purchase Agreement for the Goldstake property, which is contiguous to the Larder property, was completed for C$5 million. The Goldstake property has had minimal exploration activity to date, yet is endowed with many positive geological features including known prospective 2nd & 3rd order structures which continue onto the Larder property.

Cinco de Mayo

In late 2012, certain members of the local Ejido challenged the Company’s surface right access to the Cinco de Mayo property located in the State of Chihuahua, Mexico and prevented the Company from obtaining the surface access permission required in the exploration permit process. As the Company has been unable to negotiate a renewed surface access agreement with the Ejido, a full impairment was recognized on the property in 2016; however, the concessions are still maintained in good standing.

Three Year History

Over the three most recently completed financial years, the significant events described below contributed to the development of MAG’s business.

2023 Annual Information Form

Year Ended December 31, 2021

Financing and Corporate Activities

On January 13, 2021, the Company announced the appointment of Ms. Susan Mathieu to the Company’s board of directors (the “Board”).

On March 31, 2021, the Company announced the appointment of Mr. Tim Baker to the Board. Mr. Baker replaced Mr. Richard (Rick) Clark, who resigned from the Board effective March 31, 2021.

On August 3, 2021, MAG announced that Mr. Dale Peniuk had joined the Company as a member of its Board and as Chair of the Audit Committee. Mr. Peniuk filled the vacancy on the Board that was a result of Mr. Derek White not standing for re-election at the Company’s 2021 Annual General Meeting of Shareholders.

On October 26, 2021, the Company announced the appointment of Mr. W.J. (Jim) Mallory as Chief Sustainability Officer.

On November 15, 2021, the Company announced that it had signed a binding commitment letter with the Bank of Montreal for the Facility (as defined below). The Company’s intention is for the Facility to be available for working capital and general corporate purposes, and to provide MAG with additional liquidity and financial flexibility for its 44% share of the Juanicipio development and exploration costs should it be needed.

On November 22, 2021, MAG announced that it had entered into an agreement with a syndicate of underwriters led by BMO Capital Markets and Raymond James Ltd. under which the underwriters had agreed to purchase on a bought deal basis 2,340,000 Common Shares of the Company, at a price of $17.15 per Common Share (the “2021 Offering”). In addition, the Company had granted the underwriters an option, exercisable at the offering price for a period of 30 days following the closing of the 2021 Offering, to purchase up to an additional 15% of the 2021 Offering to cover over-allotments.

On November 29, 2021, the Company announced that it had completed the 2021 Offering and had issued a total of 2,691,000 Common Shares, which included 15,700 Common Shares issued to MAG insiders and 351,000 Common Shares issued upon the full exercise of the over-allotment option. Gross proceeds of the 2021 Offering amounted to $46,150,650. MAG reported that the intended use of proceeds from the 2021 Offering were to fund exploration at Juanicipio and the Company’s other projects including the Deer Trail Project, to fund certain sustaining capital requirements at Juanicipio not included in the initial project capital estimates and for working capital and general corporate purposes.

Juanicipio

Development and Commissioning Updates

On January 27, 2021, the Company announced that, according to Fresnillo, the project operator, commissioning of the Juanicipio processing plant was expected to commence in Q4 2021, a few months later than previously reported as some infrastructure contracts had been delayed due to COVID-19 and related to COVID-19 preventative measures implemented at site. Until such time, the Company reported that Fresnillo continued to expect to process mineralized material from Juanicipio through its Fresnillo operation at a nominal rate of approximately 16,000 tonnes per month.

On October 27, 2021, MAG announced that construction of the Juanicipio processing plant was continuing to make good progress, with the focus on transitioning from construction to commissioning activities. The Company reported that pre-commissioning testing had already begun for key process plant systems, and that the plant was expected to be commissioned by year end according to the operator Fresnillo, subject to timely connection to Mexico’s national power grid.

On December 27, 2021, Fresnillo and MAG issued a joint commissioning update on Juanicipio. They announced that although the Juanicipio team had delivered the project for plant commissioning on schedule, the Comision Federal de Electricidad, a state-owned electrical company (the “CFE”) had notified Fresnillo that approval to complete the tie-in to the national power grid could not yet be granted and the mill commissioning timeline would therefore be extended by approximately six months. This tie-in delay was directly related to knock-on effects of the COVID-19 pandemic on the CFE’s operations, predominantly related to a lack of CFE staff, which had limited its ability to oversee three key tasks to: review the existing installation; supervise physical connection to the active power grid; and approve required blackout prevention devices.

2023 Annual Information Form

In the December 27, 2021 press release, MAG and Fresnillo reported that stoping and mineralized mine development at Juanicipio would continue, and that in order to minimize any potential adverse effect of the connection delay, Fresnillo would make available any unused plant capacity at its Saucito and Fresnillo operations to process mineralized material produced at the Juanicipio Mine, and, if possible, would match the commissioning and ramp up tonnages previously expected. The effect on cash flow generation from Juanicipio would therefore also be mitigated while CFE approvals were pending.

For the year ended December 31, 2021, a total of 251,907 tonnes of mineralized material primarily from underground development at the Juanicipio Mine were processed through the nearby Fresnillo processing facility. Production before off-take agreement adjustments amounted to 3.2 million silver ounces and 6,576 gold ounces (1.4 million silver ounces and 2,894 gold ounces were attributable to MAG).

Drilling Program

On August 5, 2021, the Company reported results from 2020 drilling at Juanicipio (110 holes, 39,700 m). Results of the 2020 drilling program:

The 2021 exploration program at Juanicipio, which focused on continued step-out and infill drilling of the Valdecañas Vein System (including independent targeting of the Venadas Vein family and the Anticipada Vein), was ongoing with all assays pending at year end.

The Deer Trail Project

On September 7, 2021, MAG reported the results of the Deer Trail Project’s Phase 1 drill program (three holes, 3,927 m, spaced along a 1.5 km long corridor). The Company announced that the program had successfully fulfilled all three of its planned objectives by:

Year Ended December 31, 2022

Financing and Corporate Activities

On March 28, 2022, the Company announced the appointment of Mr. Fausto Di Trapani as Chief Financial Officer, effective May 20, 2022. Mr. Di Trapani replaced Mr. Larry Taddei, who, after 12 years of service with the Company, stepped down to pursue other opportunities.

2023 Annual Information Form

On May 20, 2022, the Company completed the acquisition of all of the outstanding shares of Gatling (the “Gatling Acquisition”) by way of a court-approved plan of arrangement under the Business Corporations Act (British Columbia) in accordance with the terms of an arrangement agreement between the Company and Gatling dated March 11, 2022, pursuant to which MAG acquired all of the issued and outstanding common shares of Gatling and, in consideration therefore, shareholders of Gatling received 0.01702627 of a Common Share of MAG for each share of Gatling held. Following the Gatling Acquisition, Gatling became a wholly owned subsidiary of the Company and the Company thereby acquired a 100% interest in the Larder Project. See “General Development of the Business – Other Exploration Properties – The Larder Project.”

On October 5, 2022, MAG announced the publication of its inaugural sustainability report for the 2021 year.

Juanicipio

Commissioning Updates

On September 13, 2022, MAG provided a commissioning update for Juanicipio, reporting that MAG had received communication from Fresnillo that all construction activities related to final tie-in to the electrical grid had been completed and all systems were ready to be energized. The Company further reported that, prior to making the final tie-in to the electrical grid, as a precautionary measure to ensure uninterrupted service to the surrounding area, the CFE had requested additional testing to verify compatibility between new and updated substation equipment installed by Minera Juanicipio and existing older CFE infrastructure.

On December 28, 2022, the Company reported that it had received confirmation from Fresnillo that final testing of the downstream power distribution and control systems at Juanicipio was complete. The entire system had been energized and the Juanicipio Mine was connected to the national power grid. In addition, the Company confirmed the conclusion of the additional testing requested by the CFE to verify compatibility between new and updated substation equipment.

For the year ended December 31, 2022, a total of 646,148 tonnes of mineralized material primarily from underground development at the Juanicipio Mine were processed through the nearby Fresnillo and Saucito facilities. Production before off-take agreement adjustments amounted to 9.250 million silver ounces and 22,253 gold ounces (4.1 million silver ounces and 9,791 gold ounces were attributable to MAG).

Drilling Program

Results of the Juanicipio 2021 exploration program (23 surface-based drill holes totaling 29,421 m) were reported in the Company’s first quarter 2022 Management’s Discussion and Analysis, and included the following highlights:

The Juanicipio 2022 exploration program was designed to expand and convert the Inferred Mineral Resources included in the Deep Zone into Indicated Mineral Resources and to explore other parts of the Juanicipio concession. 2022 drilling, using 5 surface rigs and one underground rig, was focused on infilling the Valdecañas Vein System including Anticipada, Pre-Anticipada and the Venadas structures. All assays from the 2022 exploration program were pending at year end.

2023 Annual Information Form

Year Ended December 31, 2023

Financing and Corporate Activities

On January 25, 2023, the Company announced that it had entered into an agreement with a syndicate of underwriters led by BMO Capital Markets and Raymond James Ltd. under which the underwriters had agreed to buy on a bought deal basis 2,735,000 Common Shares of the Company at a price of $14.65 per Common Share for gross proceeds of approximately $40 million (the “2023 Offering”). The Company granted the underwriters an option, exercisable at the offering price for a period of 30 days following the closing of the 2023 Offering, to purchase up to an additional 15% of the 2023 Offering to cover over-allotments.

Concurrently with the announcement of the 2023 Offering, the Company announced that it was undertaking a bought deal private placement of 843,000 Common Shares to be issued on a flow-through basis under the Income Tax Act (Canada) (the “Flow-Through Shares”) at a price of C$23.75 per Flow-Through Share for aggregate gross proceeds of C$20 million (the “Flow-Through Private Placement”). The Company granted the underwriters an option exercisable, in whole or in part, at any time up to 48 hours prior to the closing of the Flow-Through Private Placement, to purchase an additional 15% of the Flow-Through Private Placement to cover over-allotments.

On February 7, 2023, MAG announced that it had completed the 2023 Offering and had issued 2,905,000 Common Shares, which included 170,000 Common Shares issued upon the partial exercise of the over-allotment option, at a price of $14.65 per Common Share for gross proceeds of $42,558,250. MAG intends to use the net proceeds of the 2023 Offering to fund exploration at Juanicipio and MAG’s other projects including Deer Trail, certain sustaining capital requirements at Juanicipio not included in the initial project capital estimates, and for working capital and general corporate purposes.

On February 16, 2023, the Company announced the completion of the previously announced Flow-Through Private Placement, whereby a total of 969,450 Flow-Through Shares were issued, which included 126,450 Flow-Through Shares issued upon the full exercise of a 15% over-allotment option, at a price of C$23.75 per Flow-Through Share for aggregate gross proceeds of C$23,024,437.50. The Company reported that the total gross proceeds from the Flow-Through Private Placement would be used to incur expenses that are eligible “Canadian exploration expenses” that will qualify as “flow-through mining expenditures”, as such terms are defined in the Income Tax Act (Canada) (the “Qualifying Expenditures”), related to the Larder Project. The Company has until December 31, 2024 to incur and renounce the Qualifying Expenditures using the proceeds of the Flow-Through Private Placement.

On May 1, 2023, MAG announced the appointment of Gary Methven as Vice President, Technical Services of the Company, and the promotion of Jill Neff to Vice President, Governance and Corporate Secretary.

On September 18, 2023, MAG announced the publication of its second annual sustainability report for the 2022 year.

On October 4, 2023, the Company entered into a fully underwritten $40 million revolving credit facility (the “Facility”) with the Bank of Montreal. There is a provision for an accordion feature whereby, upon request, the facility may be increased to $75,000,000 any time prior to the maturity date, at the discretion of the lender. The Facility will bear interest on a sliding scale of SOFR or the lenders Base Rate on U.S. dollar commercial loans plus applicable margin on a sliding scale of between 200 and 400 basis points based on the Company’s leverage ratio. Interest incurred on drawn amounts is to be paid quarterly. Commitment fees on the undrawn portion of the Facility are calculated on a similar sliding scale of between 50 and 75 basis points, and are also to be paid on a quarterly basis. The term of the Facility is 34 months, maturing on August 4, 2026, at which date any drawn amount is required to be paid back in full. All debts, liabilities and obligations under the Facility are guaranteed by the Company’s material subsidiaries and secured by assets of the Company including the pledge of a material subsidiary. The Facility includes a number of customary covenants (liquidity, leverage, tangible net worth) and conditions including limitations on acquisitions and investments (excluding exploration and capital expenditures) funded using cash with no limitations when equity is used as a funding source. As of the date hereof, the Company has not drawn down any funds from the Facility.

2023 Annual Information Form

On December 21, 2023, MAG announced the appointment of Tom Peregoodoff to the Board, effective January 1, 2024. Mr. Peregoodoff will fill the vacancy to be created by the planned retirement on June 2024 of Dan MacInnis, who does not plan to seek re-election at the Company’s 2024 Annual General Meeting.

Juanicipio

Commissioning Updates

On April 20, 2023, MAG announced that it had been informed by Fresnillo that concentrate production at Juanicipio had commenced with the shipment of its first commercial lead and zinc concentrates in late March 2023, and that regular concentrate shipments would continue going forward

On June 5, 2023, the Company announced that commercial production had been achieved at the Juanicipio Mine, effective June 1, 2023. The Company reported that, following a successful commissioning period, the Juanicipio Mine, processing facility and other vital systems were operating in line with, or rapidly approaching design capacity. As at the date of the announcement, the Juanicipio mill was operating at approximately 85% of its design capacity of 4,000 tpd, with silver recovery consistently above 88%.

Production

The following are the production highlights for the year ended December 31, 2023:

Drilling Program

Results of the Juanicipio 2022 exploration program (32 surface-based drill holes totaling 25,858 m) were reported in the Company’s first quarter 2023 Management’s Discussion and Analysis.

The 2023 exploration program at Juanicipio, which focused on infill and step out drilling throughout the Valdecañas Vein system, was ongoing throughout 2023, with all assays pending at year end.

Recent Developments (Subsequent to December 31, 2023)

On March 5, 2024, the Company reported preliminary 2024 guidance for the Juanicipio Mine, with the following highlights:

On March 19, 2024, the Company announced that Marc Turcotte was promoted to the position of Chief Development Officer and, during early 2024, as part of the Company’s longer term succession planning, Dr. Lex Lambeck was promoted to the position of Vice President, Exploration.

2023 Annual Information Form

On March 27, 2024, the Company filed the 2024 Technical Report, which updated Mineral Resource estimates and a statement of Mineral Reserve estimates for the first time. For further information with respect to the 2024 Technical Report, please see the information set out under the heading “Mineral Projects – Juanicipio” in this AIF.

Please see the “Risk Factors” section of this AIF for more information about any risks relating to the Company’s business.

DESCRIPTION OF THE BUSINESS

General

For a general overview of the Company, Juanicipio, and the Company’s other exploration properties, please see the information set out under the heading “General Development of the Business – Overview” in this AIF.

Principal Markets

Metals are commonly sold as concentrates, often with several metals in a single concentrate. In the case of Juanicipio, lead (silver rich), zinc, and pyrite concentrates are being produced. The lead concentrate contains silver, gold and lead, the zinc concentrate contains silver, gold and zinc and the pyrite concentrate contains silver, gold and iron. Lead, zinc and pyrite concentrates are commonly sold as part of the world’s mining and metals industries. Juanicipio lead and zinc concentrates are being sold and treated at international benchmark market terms in Torreón, Mexico under off-take agreements with Met-Mex, an affiliate of Fresnillo. The basis of payments is the gross value of the metals that can be extracted and refined from the concentrates based on contained metal assays, with Met-Mex charging a base treatment charge and various deductions and payment terms as defined within the off-take agreements. The pyrite concentrate is generally sold to trading firms who blend the material with other concentrates to realize payable metal for Juanicipio.

Employees and Consultants

As of December 31, 2023, the Company had 12 employees and four consultants. This excludes employees and consultants of the Juanicipio Entities, in which the Company owns a 44% non-operating interest.

Specialized Skills and Knowledge

Many aspects of the Company’s business require specialized skills and knowledge. Such skills and knowledge include the areas of geology, mining, metallurgy, engineering, environmental issues, permitting, social issues and accounting. The Company believes it has the appropriate employees and consultants with experience in these specialized areas to meet its current needs.

Competitive Conditions

Competition in the mineral exploration and production industry is intense. The Company competes with a number of large, established mining companies with greater financial resources and technical facilities, for the acquisition and development of mineral concessions, claims, leases and other interests, as well as for the recruitment and retention of qualified employees and consultants and the equipment required to continue the Company’s exploration activities.

Economic Dependence

The Juanicipio property, in which the Company owns a 44% interest, is considered the only material property of the Company. The Company’s interest in Juanicipio is held through its indirect 44% shareholdings in the Juanicipio Entities and is governed by the terms of the Shareholders’ Agreement and by-laws with Fresnillo, which holds the other 56% interest. As a minority stakeholder in the Juanicipio Entities, the Company is subject to various risks (see “Risks Related to Minority Interest Investment in the Juanicipio Entities” in “Risk Factors” below).

2023 Annual Information Form

Corporate Social Responsibility

The Company is committed to delivering lasting and sustainable value to its people, stakeholders and communities. The Company’s approach to sustainability and responsible development integrates health, safety, environment and social responsibility into its business strategy.

The Company engages with groups which share its values and commitment to responsible mining. The Company’s commitment is supported by its policies, procedures and voluntary codes to which the Company adheres. The Company cares about the health and well-being of its people, communities and environment, and promotes a culture of zero harm.

Juanicipio

The Juanicipio Mine and property is located in the Fresnillo District of Mexico near Fresnillo’s Saucito and Fresnillo mines. As the operator of the Juanicipio Mine and of its wholly owned Saucito and Fresnillo mines, Fresnillo takes a ‘district approach’ to community relations in the area. The community relations team at Juanicipio often work in concert with their counterparts at the established Saucito and Fresnillo mines.

During 2023 at Juanicipio, extensive community projects were undertaken encompassing the areas of education, health, capacity building and microenterprise projects. Education projects for the communities near Juanicipio included “Picando Letras” reading workshops, and school garden projects. Environmental projects for the communities near Juanicipio included community cleanups followed by small-scale reforestation at four local secondary schools, as well as presentations to schools and the community on environmental topics of importance such as climate change, water and droughts. Education around the environment and waste management was discussed during the cleanup projects and at the annual environmental fair hosted by Fresnillo.

The capacity building projects collaborate directly with the municipality on productive ventures that include the formation and support of new microenterprises (bakery, barbershop and jewelry workshops). The sewing collective is now self-sustaining and is one of Juanicipio’s approved suppliers. The backyard poultry project, which started a few years ago as a pilot activity in the community, and has transitioned into a very successful project in conjunction with the municipality, benefitting approximately 60 families to date. The nopal forage project continues to be one of the more successful productive projects and has grown in size from the original 1-hectare pilot project to a multi family project an additional 3 hectares planted in 2023 for commercial sale and family livestock feed.

Deer Trail Project and Larder Project

Community engagement at the Deer Trail Project and Larder Project is managed directly by the Company, with stakeholder relations expanding through contributions to community events, sponsorships and certain initiatives where employees engage in smaller community activities. Community engagement efforts provide team members with opportunities to explain project strategy and performance, while receiving feedback and guidance on matters of importance to stakeholders, allowing for the consideration of stakeholder interests. The Larder Project has an exploration agreement with two local First Nations and is committed to supporting an Environmental Elders Committee composed of representatives from the two First Nations.

In 2023, the Company conducted a stakeholder mapping exercise at the Deer Trail Project. The process, known as Stakeholder360, identifies stakeholders, their concerns, social capital networks and overall sentiment (social license) towards the Deer Trail Project. In 2024, the stakeholder mapping exercise will be introduced to the Larder Project and repeated once again at the Deer Trail Project to measure progress and further stakeholder engagement initiatives.

Following the introduction of the grievance mechanism and social investment framework to the Larder Project in 2022, there have been zero incidents or concerns reported. Employees were given training on how and when to use the feedback mechanism tool, highlighting that it is intended to improve communication and proactively resolve issues of concern. The social investment framework aims to emphasize collaboration with local communities and provide support through employee volunteerism, donations, sponsorships, development programs and projects. The grievance mechanism tool and social investment framework have been used at the Company’s Deer Trail Project for many years, where they have also had zero grievances reported.

2023 Annual Information Form

Health and Safety

The Company is committed to the health and safety of its employees, consultants, business partners and communities in which the Company operates. The Company’s safety vision is to create a culture of zero harm and a workplace free of injuries and occupational illnesses. The Company requires its workers to participate in risk assessments involving their work, including job hazard analysis and field-level risk assessments, and workers are empowered to stop work if unsafe work practices or hazards are identified.

Juanicipio

The “I Care, We Care” safety management system has been fully adopted at Juanicipio and implementation is ongoing. The system identifies the most critical risks or risks with the greatest potential to harm individuals and, with collaboration from managers, supervisors, operators and contractors, implements the controls required to mitigate those risks. The system focuses on evaluating safety performance and monitors the progress of reducing High Potential Incidents and unsafe conditions in the workplace. There were no employee or contractor fatalities at Juanicipio in 2023.

Deer Trail Project and Larder Project

Risk awareness and emergency preparedness have been key focal points in the proactive safety program at the Deer Trail Project and Larder Project. Safety training at the Deer Trail Project in 2023 included extensive first aid and emergency response training, safe driving, wildlife awareness training and regular discussions around safety culture. Employees also received training to improve workplace safety inspection, hazard identification and risk mitigation techniques and they participated in monthly risk scenario planning exercises. Approximately 2.4% of total hours worked, were dedicated to safety training and risk awareness at the Deer Trail Project in 2023.

Safety training at the Larder Project in 2023 included proper preparation for seasonal conditions and driving, first aid and emergency response training, wildlife awareness training and discussions around safe working procedures. Employees also received training to improve workplace safety inspection, hazard identification and risk mitigation techniques and they participated in monthly risk scenario planning exercises. Approximately 2.9% of total hours worked, were dedicated to safety training and risk awareness at the Larder Project in 2023.

There were no employee or contractor fatalities, lost time injuries or reportable incidents recorded at either of the Deer Trail or Larder Projects in 2023.

Environmental, Social and Governance Matters

In 2023, the Company published its second annual sustainability report, which underscores MAG’s fundamental commitment to transparency with its stakeholders while providing a comprehensive overview of the Company’s environmental, social and governance (“ESG”) commitments, practices, and performance for the 2022 year. The 2022 Sustainability Report is supported by the MAG Silver 2022 ESG Data Table, which houses MAG’s historical ESG performance data. The 2022 Sustainability Report and ESG Data Table are available on the MAG Silver website at the following link: https://magsilver.com/esg/reports/. Information contained in or otherwise accessible through the Company’s website, including the 2022 Sustainability Report and ESG Data Table, do not form part of this AIF and are not incorporated into this AIF by reference.

The Company’s ongoing analysis of ESG matters continues to highlight the importance of climate change risks in the mining sector and the Company’s projects. An initial climate risk and opportunities register for Juanicipio was discussed with project personnel in 2022 and a comprehensive climate and sustainability risk assessment, peer review and resilience and scenario analysis began in 2023, the results of which will be detailed in MAG’s 2023 Sustainability Report, expected to be published in Q3 2024. Physical climate change risks are included in MAG’s risk register and are reviewed regularly by the Enterprise Risk Advisory Committee (“ERAC”) and reported to the Board. The Board has established a Technical Committee (the “Technical Committee”) which, in conjunction with the Health, Safety, Environment and Community Committee (the “HSEC Committee”), reviews technical aspects of safety and environmental risks, specifically climate change impacts and tailings management.

2023 Annual Information Form

In 2021, the Company joined the United Nations Global Compact, and in early 2022, completed an extensive review and internal assessment to understand MAG’s interaction with the United Nations’ Sustainable Development Goals. The Company has submitted a Communication on Progress to the United Nations Global Compact for the 2021 and 2022 calendar years, and intends to submit one for 2023 as well. The Company is also a member of the Silver Institute.

HSEC Committee

As part of its mandate to assist the Board in the oversight of ESG and sustainability matters, the HSEC Committee is responsible for reviewing MAG’s sustainability conduct including the Health, Safety, Environment and Social Responsibility Policies, the Human Rights Policy, and for monitoring the Company’s practices and performance in these areas. The HSEC Committee is currently comprised of the following members of the Board: Selma Lussenburg (Chair), Tim Baker, Dan MacInnis and Susan Mathieu. The HSEC Committee meets a minimum of four times per year and reports to the Board after each HSEC Committee meeting.

For additional information regarding the HSEC Committee, see “Directors and Officers” below.

Governance and Nomination Committee

The Governance and Nomination Committee of the Board also plays an important role in assisting the Board with its oversight of ESG matters. The Governance and Nomination Committee is responsible for developing and implementing governance guidelines and principles, providing governance leadership to the Company and monitoring governance programs and policies, including without limitation, the Code of Business Conduct and Ethics (the “Code of Conduct”) and the Anti-Bribery and Anti-Corruption Policy. The Governance and Nomination Committee regularly reviews MAG’s policies to ensure compliance with the applicable rules and regulations, and where necessary or desirable on account of governance trends that are appropriate for the Company, recommends changes, or the adoption of further policies, to the Board for approval. The Governance and Nomination Committee is currently comprised of the following members of the Board: Jill Leversage (Chair), Peter Barnes and Selma Lussenburg. The Governance and Nomination Committee meets a minimum of four times per year and reports to the Board after each meeting.

For additional information regarding the Governance and Nomination Committee, see “Directors and Officers” below.

Technical Committee

The mandate of the Technical Committee of the Board is to assist the Board in fulfilling its oversight responsibilities with respect to the Company’s operational performance and operating risks from a technical perspective. The Company’s operations include exploration and development projects, operating mines, projects in reclamation and projects being considered as acquisition targets. The Technical Committee is currently comprised of the following members of the Board: Susan Mathieu (Chair), Tim Baker, Dan MacInnis and Tom Peregoodoff. The Technical Committee meets a minimum of twice per year and reports to the Board after each Technical Committee meeting.

For additional information regarding the Technical Committee, see “Directors and Officers” below.

Health and Safety Policy

MAG is committed to the health, safety and welfare of its employees, directors, consultants and contractors, as well as the safety and well-being of their families and the communities surrounding the Company’s operations. The Company expects all team members to take responsibility for their personal safety and for the safety of others working around them. MAG is committed to working towards a culture of zero harm. Through a strong risk management approach, MAG engages with and trains employees and contractors under its direction to recognize, understand and mitigate hazards of the workplace to prevent incidents and injuries.

2023 Annual Information Form

In early 2023, the Company updated its Health and Safety Policy to strengthen its commitments to health and safety, namely around including the consideration of psychological risks and hazards in the workplace.

To achieve its health and safety commitments, MAG will:

Environmental Policy

MAG is committed to wise environmental stewardship. MAG recognizes the importance of its role in effectively managing risks related to climate change and greenhouse gas (GHG) emissions, water use, biodiversity, and tailings and mine waste. MAG employees care about protecting the environment for future generations while providing for safe, responsible and profitable projects by developing natural resources for the benefit of our stakeholders.

In early 2023, MAG updated its Environmental Policy to strengthen its commitments to minimizing its environmental impact and protecting the natural environment of the areas in which the Company works or has an interest in.

To achieve its environmental commitments, MAG will:

2023 Annual Information Form

Social Responsibility Policy

In 2023, MAG updated its Social Responsibility Policy to address the increasing importance of human rights and engaging with local and Indigenous communities through meaningful dialogue and cooperation. The Company takes a shared-value approach to local development activities to promote sustainable and lasting economic and social benefits. MAG is focused on building trust and respect, considerate of its stakeholders’ concerns, and making a positive difference in the communities in which the Company lives and works.

To achieve its social responsibility commitments, MAG will:

2023 Annual Information Form

Human Rights Policy

In 2023, MAG updated its Human Rights Policy to strengthen its commitment to promoting a culture of respect for human rights and inclusion that aligns with the United Nations Guiding Principles on Business and Human Rights, the International Labor Organization’s (“ILO”) Declaration on Fundamental Principles and Rights at Work, international humanitarian law and applicable local human rights legislation.

MAG strives to safeguard the promotion of human rights in the workplace and integrate human rights into its due diligence and risk assessment processes, and other policies and procedures.

To achieve its human rights commitments, MAG will:

Diversity, Equity, and Inclusion Policy

The Company believes in and embraces the benefits that diversity brings to its Board, members of senior management and all employees of the Company and its subsidiaries. Diversity, equity and inclusion promotes the recognition and use of all available talent, creates opportunities for innovation, drives strategic advantage to achieve the Company’s objectives and deliver positive results to its stakeholders through a range of perspectives, experiences and expertise. The Company is committed to fostering and cultivating a diverse, equitable and inclusive culture and workforce by selecting the best individuals to occupy its Board, senior management and other roles within the Company, free of bias or discrimination. Diversity, equity and inclusion are defined in MAG’s policy as follows:

“Diversity” includes any dimension that can be used to differentiate individuals or groups of people from one another, including without limitation, gender identity and gender expression, sexual orientation, age, language, race, nationality, cultural background, Indigenous status, religious beliefs, members of visible minorities and other ethnic distinctions, physical or mental abilities, marital or family status, education, regional and industry experience, and expertise.

2023 Annual Information Form

“Equity” eliminates social inequalities in people, processes and systems to provide equal access and opportunities for all individuals.

“Inclusion” allows all individuals or groups of people feel welcomed, valued, respected and leveraged in all environments.

The Company is committed to creating and supporting a diverse, equitable and inclusive workplace that recognizes and values differences, where everyone is treated fairly and with respect, and where all employees have equal opportunity to succeed. To achieve this commitment, MAG will:

MAG is committed to increasing Board and senior management diversity and has an annual target to achieve a minimum of 30% of the Board represented by gender diverse directors. Currently, 37.5% of MAG’s current Board are women. Going forward, MAG will continue its efforts to incorporate a broad range of diversity dimensions within the Board and management, while promoting a culture of equity and inclusion within the Company.

Code of Business Conduct and Ethics

The Company is committed to the highest standards of ethical business practice as is reflected in its Code of Conduct. The Company believes that following high standards of ethics and integrity is simply the right way to do business. Specific objectives of the Code of Conduct are to promote:

The Code of Conduct provides guidance on ethical and legal responsibilities and all Company personnel are expected to comply with the Code of Conduct.

2023 Annual Information Form

Anti-Bribery and Anti-Corruption Policy

The Anti-Bribery and Anti-Corruption Policy is critical to maintaining the Company’s corporate reputation and protecting the interests of its shareholders, employees, customers, suppliers, business partners, stakeholders and communities. The objective of the Anti-Bribery and Anti-Corruption Policy is to provide guidance and procedures that enable the Company to conduct its business in an honest and ethical manner when dealing with public officials and all other parties, and in compliance with all applicable laws and regulations pertaining to bribery and corruption. All directors, officers, employees and key consultants annually acknowledge MAG’s Anti-Corruption and Anti-Bribery Policy by signing a compliance certificate.

Whistleblower Protection Policy

The Company is committed to maintaining a system which allows it to receive, retain and address all complaints received relating to, among other things, accounting, internal accounting controls, auditing matters, violations of the Company’s Code of Conduct, violations of other internal policies and guidelines (including anti-bribery and corruption) or violations of any applicable law or regulation. The Board has delegated to the Audit Committee the responsibility for establishing procedures for (a) the confidential, anonymous submission by directors, officers, employees, consultants, contractors and other stakeholders of the Company of concerns regarding whistleblowing matters, and (b) the receipt, retention and treatment of complaints received by the Company regarding whistleblowing matters.

The Company has established an independent, third-party, whistleblower hotline through Integrity Counts, a Canadian provider of global ethics reporting services. Integrity Counts, as an independent and external administrator of this helpline, allows any employee, contractor or member of the public who becomes aware of a violation of the Company’s Code of Conduct, violations of other internal policies or guidelines or violations of any applicable law or regulations to anonymously report suspected violations. Submissions can be made in English, French or Spanish, twenty-four hours a day, seven days a week.

Enterprise Risk Management Framework

The Company is committed to improving its ability to create, enhance and protect enterprise value through the regular identification and management of risks in carrying on its business. The Company recognizes that risks represent both opportunities and threats, and therefore an effective, enterprise-wide risk management program is essential to enable the Company to pursue its strategic objectives and realize operational goals within an acceptable range of associated risk.

The ERAC, which is comprised of five members of the MAG management team, oversees the processes that are in place for identifying significant risks to the achievement of the Company’s objectives, and confirms that procedures are established to mitigate the impact of significant risks in the best interests of the Company’s stakeholders and in accordance with the risk appetite of the Company. The ERAC reports on the principal risks and mitigation strategies to the Audit Committee, the HSEC Committee and the Technical Committee on a quarterly basis, and to the Board at least annually, or more frequently as required.

All employees, directors, consultants and contractors providing services for or on behalf of the Company are responsible for incorporating the Company’s Enterprise Risk Management Policy and practices into planning and business decisions to support the achievement of the objectives stated therein.

The Company will provide appropriate resources to establish a culture where an enterprise-wide risk management program is:

2023 Annual Information Form

In addition, the Company has an established Corporate Crisis Management Team and Crisis Management and Communication Plan that provides guidelines for the successful and professional management and communication of business interruption events affecting MAG’s operations, reputation, employees and their families, contractors, neighbouring communities and the surrounding environment.

CARRYING ON BUSINESS IN MEXICO

The Company’s primary property interest is located in Mexico. A summary of the regulatory regime material to the business and affairs of the Company is provided below.

Mining Regulations

The exploration and exploitation of minerals in Mexico may be carried out by Mexican citizens or Mexican companies incorporated under Mexican law by means of obtaining concessions (covering exploration and exploitation). Due to the amendments to the Mining Law as of April 8, 2023, concessions are currently granted by the Mexican federal government for a period of thirty years from the date of their recording in the Public Registry of Mining. However, the period granted to those concessions issued before such amendment will continue to have their original term (i.e., 50 years). Likewise, the holders of mining concessions are authorized to carry out not only exploration work, but also exploitation works.

Holders of concessions may, within two years and until one year prior to the expiration of such concessions, apply for their renewal for a term of twenty-five years. Failure to apply prior to the expiration of the term of the concession will result in termination of the concession. Concessions are subject to annual work requirements and payment of mining duties which are assessed and levied on a semi-annual basis. Such concessions may be transferred or assigned by their holders, but such transfers or assignments must comply with the requirements established by the Mexican Federal Mining Law and be registered before the Public Registry of Mining in order to be valid against third parties. Such record has to be requested within the fifteen business days following the execution or notarization of the corresponding assignment of rights agreement.

Although the Ley de Inversión Extranjera (the Law of Foreign Investment) provides that mineral concessions may also be obtained by foreign citizens or foreign corporations, the Mexican Federal Mining Law provides that such concessions may only be granted to Mexican citizens or Mexican corporations. Thus, foreign citizens or corporations may only obtain mineral concessions through the establishment of a subsidiary in Mexico. Foreign investment in Mexican companies must comply with certain requirements set forth in the Law of Foreign Investment.

The Mexican Mining Law does not require payment of finder’s fees or royalties to the Government, except for: (i) a mining royalty fee of 7.5% and a 0.5% extraordinary governmental fee on precious metals (see “Mining Fees” below); and (ii) a discovery premium or economic consideration in connection with claims or allotments contracted directly from the Mexican Geological Service that have been awarded pursuant to a public bid process. Holders of mining concessions are also required to pay mining concession fees which are assessed and levied on a semi-annual basis and charged at a per hectare rate that increase over time the longer the concessions are held.

2023 Annual Information Form

On March 28, 2023, a legislative initiative aimed at amending multiple legal codes, including the Mexican Federal Mining Law (the “Federal Mining Law”), was presented to the Mexican Congress by the President of Mexico. The amendments pertain to, among other matters, granting of future mining permits and transfer of permits, shortening concession life, granting of future water permits, granting of exploration permits on behalf of exploration companies to the Mexican Geological Services, mine reclamation, profit-sharing requirements to distribute at least 7% of profits to local indigenous communities and management of mine waste. This initiative underwent a series of reviews and modifications, culminating in preliminary approval by the lower house of Congress, the Chamber of Deputies, on April 20, 2023. On April 29, 2023, the Mexican Senate approved the legislation. The amendments were approved by Mexico’s Federal Executive Branch and published in the Official Gazette of the Mexican Federation on May 8, 2023 bringing the amendments into law on May 9, 2023. The Company is conducting a thorough review and evaluation of potential implications specifically concerning its 44% interest in Juanicipio, including the treatment of concessions issued under previous legislation. Numerous legal challenges to the legality and constitutionality of several aspects of these changes have been filed with various Mexican courts and are pending adjudication. For further information, see “Risk Factors – Risks Related to the Regulatory Environment – Amendments to the Mexican Federal Mining Law.”

Foreign Investment Regulation

Foreign investment regulation in Mexico is primarily governed by the Law of Foreign Investment and its regulations. Foreign investment of up to 100% in Mexican mining companies is permitted. Companies with foreign investment in their capital stock must be registered with the National Registry of Foreign Investment which is maintained by the Ministry of Economy, and file certain reports and notices, including in certain circumstances, and under criterion determined by the Law of Foreign Investment, an annual report and/or quarterly reports with respect to the operations carried out during the preceding fiscal year which is necessary in order to renew their certificate of record with such registry.

Environmental Regulations

Mexico has federal, state and municipal laws and regulations, as well as international agreements related to the protection of the environment and natural resources (the “Environmental Laws”), including laws and regulations concerning water pollution, air pollution, noise pollution, hazardous substances and forest protection. The main federal Environmental Law in Mexico is the Ley General del Equilibrio Ecológico y la Protección al Ambiente (the General Law of Ecological Balance and Environmental Protection or the General Law), pursuant to which general environmental rules and policies have been promulgated addressing air pollution, hazardous substances and environmental impact among various others.

Another federal law particularly relevant for the mining sector is the Ley General para la Gestión Integral de los Residuos (the General Law for Integrated Waste Management) and its regulations the Reglamento de la Ley General para la Prevención y Gestión Integral de los Residuos (the Regulations to the General Law for Integrated Waste Prevention and Management), which regulate the generation, handling, transportation, storage and final disposal of hazardous waste, as well as the import and export of hazardous materials and hazardous wastes, and assign liability for ownership and possession of contaminated sites and for contaminating activities. The Ley General de Desarrollo Forestal Sustentable (the General Law of Sustainable Forestry Development) and its regulations are also relevant, as they address reforestation obligations and compensation measures on projects which may have a deforestation impact, which may include mining projects.

On June 7, 2013, the Ley Federal de Responsabilidad Ambiental (the Federal Law of Environmental Liability) was enacted, under which any person or entity that directly or indirectly (for action or omission) causes damage to the environment, will be held liable and obliged to: (i) repair the damage, or in the event that such repair is not possible; and (ii) pay compensatory damages, subject to a corresponding judicial, administrative or criminal proceeding.

Applicable Environmental Laws contemplate the creation and regulation of Areas Naturales Protegidas (Natural Protected Areas), which along with Programas de Ordenamiento Ecológico (Ecological Ordinance Programs), constitute two of the main instruments that will regulate the use of land in the areas within their jurisdiction, including restrictions on certain activities and sectors, such as the mining sector.

In addition, there are a series of “Mexican Official Norms” which are technical standards issued by competent regulatory authorities, pursuant to the Ley General de Metrología y Normalización (the General Law of Metrology and Standardization) and to other laws that include the aforementioned Environmental Laws, which establish standards relating to air emissions, waste water discharges, the generation, handling and disposal of hazardous wastes (including specific Mexican Official Norms for the handling of mining tailings, which are considered mining hazardous wastes) and noise control, among others. There are Mexican Official Norms regarding soil contamination (mainly with total petroleum hydrocarbons and heavy metals) and waste management (the “Ecological Standards”). Of particular importance to the mining sector are Mexican Official Norms NOM-120-SEMARNAT-2011 regulating environmental protection of mining activities in certain zones, and NOM-141-SEMARNAT-2003 which addresses certain aspects of tailings from mining activities, among other Ecological Standards applicable to mining activities.

2023 Annual Information Form

The Secretaría de Medio Ambiente y Recursos Naturales (the Ministry of the Environment and Natural Resources or SEMARNAT, for its initials in Spanish) is the federal agency in charge of establishing and overseeing environmental regulation at the federal level, including the General Law and federal statutes and the Environmental Laws, as well as the Ecological Standards. On enforcement matters the SEMARNAT acts mainly through the Procuraduría Federal de Protección al Ambiente (the Federal Bureau of Environmental Protection or PROFEPA, for its initials in Spanish) and in certain cases through other governmental entities under its control, such as the Comisión Nacional del Agua (the National Water Commission).

Environmental Laws also regulate environmental protection in the mining industry in Mexico. In order to comply with these laws, a series of permits, licenses and authorizations must be obtained by a concession holder during the exploration and exploitation stages of a mining project. Generally, these permits and authorizations are issued on a timely basis after the completion of an application and the fulfillment of the necessary requirements by a concession holder. Additionally, periodic reporting of hazardous wastes and federal air emissions and federal wastewater discharges to Federal authorities is required under the Environmental Laws. To the best of the Company’s knowledge, all of the Company’s property interests are currently in compliance with the applicable Environmental Laws.

The possible impact on the Company’s operations from noncompliance or delays in required environmental approvals are discussed below in “Risk Factors”, specifically “Environmental regulations are becoming more onerous to comply with, and the cost of compliance with environmental regulations and changes in such regulations may reduce the profitability of the Company’s operations and the Juanicipio Entities’ operations.”

There are also legal and environmental obligations required to restore a mining operation to certain local standards upon closing the Company’s mining operations. The required restoration activities include demobilization and removal of structures, mine rehabilitation, plant dismantling, as well as sanitation and reforestation of affected areas. The obligation generally arises when the mine is developed, and the environment is altered at the place of production. The Company records and accrues closure cost estimates on its property interests.

Indigenous Communities

In the case of a mineral claim located within a land where an Indigenous or Afro-Mexican town or community is located, before issuing the corresponding mining concession title, the Ministry of Economy first needs to obtain the consent from such town or community approving the development of a mine.

In addition, the applicant must carry out a social impact assessment and obtain the authorization for the environmental impact statement, as well as to carry out the prevention, mitigation and indemnification measures.

Currency

The official monetary unit of Mexico is the Mexican peso. The currency exchange rate freely floats and the country has no currency exchange restrictions. Nevertheless, following the significant devaluation of the Mexican peso in December 1994, uncertainties continue with respect to the financial situation of Mexico and the volatility of the Mexican peso. See “Risk Factors” below, specifically those risk factors dealing with currency fluctuation and inflation.

2023 Annual Information Form

The following table presents a five-year history of the average annual exchange rates to convert one United States dollar into Mexican pesos, calculated by using the average of the exchange rates on the last day of each month during the given year.

Value Added Tax (“VAT”) also known as “IVA”

In Mexico, VAT is charged on the sale of goods, rendering of services, lease of goods and importation of the majority of goods and services at a rate of 16%. Proprietors selling goods or services must collect VAT on behalf of the Mexican Government. Goods or services purchased incur a credit for VAT paid. The resulting net VAT is then remitted to, or collected from, the Government of Mexico through a formalized filing process.

The Company has traditionally held a VAT receivable balance due to the expenditures it incurs whereby VAT is paid to the vendor or service provider. Collections of these receivables from the Government of Mexico often take months and sometimes years to recover, but the Company has to date been able to recover all of its VAT paid. The Juanicipio Entities also hold VAT receivable balance, and the collections of these receivables, if not recovered on a timely basis, can be credited against VAT payable.

Income Tax Regime

The corporate tax rate is 30%.

Dividends

Dividends paid from accumulated previously taxed earnings by Mexican companies to foreign residents of Mexico are subject to withholding tax at the 10% rate. However, dividends in excess of previously taxed earnings are subject to the corporate tax rate on a grossed-up basis at the distributing company level. The effective rate after gross-up is 42.86%. For this purpose, Mexican businesses must maintain a previously taxed earnings account (Cuenta de Utilidad Fiscal Neta, or CUFIN).

Under existing Canada-Mexico tax treaties, this dividend withholding tax rate is reduced to 5%. 

Profit Sharing

Mexican companies are required to distribute to its employees 10% of the company’s adjusted taxable income of the business (known as PTU). The PTU base is similar to taxable income for income tax purposes with certain exceptions, including no carry forwards of net operating losses. All employees have a right to receive the PTU, with the exception of managing directors and board members. The PTU was subject to review along with the amendments to the Federal labour law on outsourcing (see “Amendments to the Federal labour law on labour subcontracting (or “outsourcing”)” under the “Risk Factors” heading below) and now is capped at either three months’ salary or the average of the distribution of profits received in the past three years, whichever is more favourable to the employee.

Tax Losses

Net operating losses (“NOLs”) may be carried forward for 10 years; however, no carryback is allowed. The amount of NOLs that may be used in a particular tax year is adjusted for inflation for the period from the first month of the second half of the tax year when the loss was incurred until the last month of the first half of the tax year when the NOL is used.

2023 Annual Information Form

Mining Fees

The Mexican legislation includes several mining fees as follows:

Mining concession holders that fail to develop mining works in accordance with the Mining Law, during a consecutive two-year period within the first eleven years of the term of the concession, will pay on a semi-annual basis an additional mining fee equivalent to 50% to the maximum current mining duty. If the failure to carry out works remains unchanged, starting on the twelfth year, the additional fee will be doubled.

Tax Law for the State of Zacatecas

The Government of the State of Zacatecas published the Ley de Hacienda del Estado de Zacatecas (the Tax Law for the State of Zacatecas), which came into effect on January 1, 2017 and imposes environmental taxes on activities, such as: (i) extraction of materials other than those regulated by the Federal Mining Law; (ii) emissions to the atmosphere; (iii) discharges of industrial waste into the soil and water; and (iv) deposit of industrial waste.

The Juanicipio Entities’ operations are in the State of Zacatecas, and this tax law applies to the Juanicipio Mine. Minera Juanicipio challenged the legality of such taxes and in 2017 obtained an injunctive relief from a federal court, but the State of Zacatecas appealed this decision. In 2019, the Supreme Court of Justice of the Nation issued a final ruling on the matter with respect to Minera Juanicipio, in which the Court determined that:

The annual cost to Minera Juanicipio of complying with the two taxes is not considered significant at this time and management’s assessment is that it will not have an impact on the viability of Juanicipio.

RISK FACTORS

Investing in the Company’s securities involves a high degree of risk. In addition to the other information included or incorporated by reference in this AIF, investors should carefully consider the risks described below before purchasing the Company’s securities. If any of the following risks actually occur, the Company’s business, financial condition, financial performance and prospects could materially suffer. As a result, the trading price of the Company’s securities, including the Common Shares, could decline and investors might lose all or part of their investment. The risks set out below are not the only risks the Company faces; risks and uncertainties not currently known to the Company or that are currently deemed to be immaterial may also materially and adversely affect the Company’s business, financial condition, financial performance and prospects. Investors should also refer to and carefully consider the information disclosed in the Company’s Canadian and U.S. regulatory filings available on SEDAR+ at www.sedarplus.ca and the SEC website at www.sec.gov, as such information may be modified herein, prior to making an investment in the Company.

2023 Annual Information Form

Risks Relating to the Company’s Business Operations

Estimates of Mineral Resources and Mineral Reserves are based on interpretation and assumptions and are inherently imprecise.

The Mineral Resource and Mineral Reserve figures referred to in the 2024 Technical Report, this AIF and the documents incorporated herein by reference have been determined and valued based on assumed future prices, cut-off grades and operating costs. However, until mineral deposits are actually mined and processed, any Mineral Resources and Mineral Reserves must be considered estimates only. Any such estimates are expressions of judgment based on knowledge, mining experience, analysis of drilling results and industry practices. Estimates can be imprecise and depend upon geological interpretation and statistical inferences drawn from drilling and sampling analysis, which may prove to be unreliable. In addition, the grade and/or quantity of precious metals ultimately recovered may differ from that indicated by drilling results. Further, estimates of Mineral Reserves may not be able to be mined or processed profitably.

There can be no assurance that precious and base metals recovered in small-scale tests will be duplicated in large-scale tests under on-site conditions or in production scale. The grades of the reported Mineral Resource estimates are uncertain in nature and it is uncertain whether further technical studies will result in an upgrade to them. Further drilling on the mineralized zones is required to complement the current bulk sample and add confidence in the continuity of mineralized zones in comparison to the current block model. Any material change in the quantity of mineralization, grade or mineralization to waste ratio or extended declines in market prices for silver and to a lesser extent prices for gold, zinc, and lead, may render portions of the Company’s mineralization uneconomic and result in reduced reported mineralization. Any material reductions in estimates of mineralization, or of the Company’s ability to extract this mineralization, could have a material adverse effect on the Company’s results of operations or financial condition.

There is no guarantee that licenses and permits required by the Company or Minera Juanicipio to conduct business will be obtained, which may result in an impairment or loss in the Company’s mineral properties.

The Company’s and Minera Juanicipio’s current and anticipated future operations, including further exploration, development and production activities on the Company’s properties, require permits from various national, state/provincial and local governmental authorities. The Company and Minera Juanicipio may not be able to obtain all necessary licenses and permits that may be required to carry out exploration, development and mining operations at their projects. In addition, the grant of required licenses and permits may be delayed for reasons outside the Company’s and Minera Juanicipio’s control. Failure to obtain such licenses and permits on a timely basis, or failure to comply with the terms of any such licenses and permits that the Company and Minera Juanicipio do obtain, may adversely affect their respective business as the Company and Minera Juanicipio would be unable to legally conduct their intended exploration, development, production of a commercially viable material, or mining work, which may result in increased costs, delay in activities or the Company or Minera Juanicipio losing its interest in its mineral properties.

Rights to use the surface of the Company’s mineral properties are not guaranteed.

The mineral properties in which the Company has an interest are generally located in remote and relatively uninhabited areas. Some properties, like Juanicipio, are near towns and other habitations, but there are currently no areas of interest to the Company within its mineral concessions that are overlain by significant habitation or industrial users. However, there are potential overlapping surface usage issues in some areas. Some surface rights are owned by local communities or “Ejidos” and some surface rights are owned by private ranching or residential interests. The Company will be required to negotiate the acquisition of surface rights in those areas where it may wish to develop mining operations. In some areas the Company has been required or is in the process of negotiating compensation for surface rights holders in order to secure right of access. In some areas, surface right compensation has been negotiated and is awaiting formal government expropriation in its favour. The Company’s interest in a property or project could be adversely affected by an inability to obtain surface access permissions, or by challenges, regardless of merit, to existing surface access agreements.

2023 Annual Information Form

There has been a trend in Mexico of increasing Ejido challenges to existing surface right usage agreements. The Company has already been impacted by this trend at its Cinco de Mayo project. Any further challenges to the access or exploration of any of the properties in which the Company has an interest may have a negative impact on the Company, as the Company may incur delays and expenses in defending such challenge and, if the challenge is successful, the Company’s interest in a property could be materially adversely affected.

At the Larder Project in Ontario, the Company has an exploration agreement in place with two local First Nations.

Most exploration projects do not result in commercially mineable deposits.

Exploration for minerals and development of mining projects is a highly speculative venture necessarily involving substantial risk. The expenditures made by the Company on exploration and development described herein may not result in discoveries of commercial quantities of minerals.

The commercial viability of a mineral deposit is dependent upon a number of factors which are beyond the Company’s control, including but not limited to the attributes of the deposit, commodity prices, government policies and regulation and environmental protection. Fluctuations in the market prices of minerals may render resources and deposits containing relatively lower grades of mineralization uneconomic. Further exploration or delineation will be required before a final evaluation as to the economic and legal feasibility of any of the Company’s properties is determined. Even if the Company completes its exploration programs and is successful in identifying additional mineral deposits, it will have to spend substantial funds on further drilling and engineering studies before it will know if it has a commercially viable mineral deposit. Most exploration projects do not result in the discovery of commercially mineable mineral deposits.

Estimates of Mineral Reserves and Mineral Resources, mineral deposits and production costs can be affected by such factors as environmental permit regulations and requirements, Indigenous communities’ rights, weather, environmental factors, unforeseen technical difficulties, unusual or unexpected geological formations and work interruptions. As a result, there is a risk such estimates are inaccurate. There can be no assurance that precious metals recovered in small-scale tests will be duplicated in large-scale tests under on-site conditions or in production scale. The probability of an individual prospect ever having Mineral Reserves is extremely remote. If a property does not contain any Mineral Reserves, any funds spent on exploration and development of that property will be lost. The failure of the Company to find additional economic mineral deposits on its exploration concessions will have a negative effect on the Company.

The properties in which the Company has an interest are located primarily in Mexico.

The Company’s primary operations are currently conducted in a foreign jurisdiction, Mexico, and, as such, the Company’s operations are exposed to various levels of political, economic and other such risks and uncertainties. Risks and uncertainties include, but are not limited to, extreme fluctuations in currency exchange rates; high rates of inflation; labour unrest; the risks of war or civil unrest; expropriation and nationalization; renegotiation or nullification of existing concessions, licenses, permits and contracts; illegal mining; changes in taxation policies; prohibitions on restrictions for carrying out mining activities due to legal actions by Indigenous communities; restrictions on foreign exchange and repatriation; and changing political conditions, currency controls and governmental regulations that favour or require the awarding of contracts to local contractors or require foreign contractors to employ citizens of, or purchase supplies from, a particular jurisdiction. In addition, there have recently been reports of increased domestic and international political unrest, police and military enforcement action against drug cartels and a corresponding increase in violent crime in Mexico.

Criminal activities, or the perception that criminal activities are likely, may disrupt operations, hamper the ability to hire and keep qualified personnel and impair access to sources of capital. Risks associated with conducting business in the region include risks related to personnel safety and asset security. Risks may include, but are not limited to, kidnappings of employees and contractors, exposure of employees and contractors to local crime related activity and disturbances, exposure of employees and contractors to drug trade activity, and damage or theft including future precious metal shipments, if any. These risks could result in serious adverse consequences including personal injuries or death, property damage or theft, limiting or disrupting operations, restricting the movement of funds, impairing contractual rights and causing the Company to shut down operations, all of which may expose the Company to costs as well as potential liability. Such events could have a material adverse effect on the Company’s cash flows, earnings, results of operations and financial condition and make it more difficult for the Company to obtain required financing. Although the Company is developing procedures regarding these risks, due to the unpredictable nature of criminal activities, there is no assurance that the Company’s efforts will effectively mitigate risks and safeguard personnel and Company property.

2023 Annual Information Form

Mexico is currently subject to political instability, changes and uncertainties, which may cause changes to existing governmental regulations affecting mineral exploration and mining activities. Mexico’s status as a developing country may make it more difficult for the Company to obtain any required financing for its projects. Any changes in governmental laws, regulations, economic conditions or shifts in political attitudes or stability in Mexico are beyond the control of the Company, and may adversely affect the Company’s business, including its interest in Juanicipio.

Economic and political instability may affect the Company’s business.

The volatile global economic environment has created market uncertainty and volatility in recent years. Recent negative market trends and periods of instability in the market for metal commodities and related products as a result of global economic uncertainty, reduced confidence in financial markets and other macro-economic events that have been experienced in recent years, such as shifts in monetary policy in response to COVID-19, supply chain disruptions and/or heightened rates of inflation. These macro-economic events negatively affected the mining and minerals sectors in general, and the Company’s market capitalization has been significantly reduced in periods of market instabilities. Many industries, including the mining industry, are impacted by these market and economic conditions. Global financial conditions remain subject to sudden and rapid destabilizations in response to economic shocks.

A slowdown in the financial markets or other economic conditions, including but not limited to consumer spending, employment rates, business conditions, rates of inflation, fuel and energy costs, consumer debt levels, lack of available credit, cost of available credit, the state of the financial markets, interest rates and tax rates, may adversely affect the Company’s growth and profitability. Future economic shocks may be precipitated by a number of causes, including political conflict and unrest, world health pandemics, a significant rise or significant decrease in the price of oil and other commodities, supply chain disruptions, increases in inflation rates, the volatility of metal prices, geopolitical instability, terrorism, the devaluation and volatility of global stock markets and natural disasters. Any sudden or rapid destabilization of global economic conditions could impact the Company’s ability to obtain equity or debt financing in the future on terms favorable to the Company or at all. In such an event, the Company’s operations and financial condition could be adversely impacted.

There are no assurances with respect to the relative strength and stability of future metal markets. The Company’s liquidity and long term ability to raise the capital required to execute its business plans may be affected by market volatilities.

The Company’s future profitability and the viability of development depends in part upon the world market price of silver, and to a lesser extent other metals including gold, lead, zinc and copper. Prices fluctuate widely and are affected by numerous factors beyond the Company’s control. The price of silver is influenced by factors including industrial and retail supply and demand, exchange rates, inflation rates, changes in global economies, confidence in the global monetary system, forward sales of silver and other metals by producers’ market activities, and speculators, as well as other global or regional political, social or economic events. The supply of silver and other metals consists of a combination of new mine production and existing stocks held by governments, producers, speculators and consumers, which could increase due to improved mining and production methods.

Prices and availability of commodities consumed or used in connection with exploration, development and mining, such as natural gas, diesel, oil and electricity, fluctuate and are subject to potential inflationary pressures, and these fluctuations affect the costs of production at various operations. These fluctuations can be unpredictable, can occur over short periods of time and may have a material adverse impact on the Company’s operating costs or the timing and costs of various projects.

2023 Annual Information Form

The Company assesses on a quarterly basis the carrying values of its mineral properties. Should market conditions and commodity prices worsen and persist in a worsened state for a prolonged period of time, an impairment of the Company’s mineral properties may be required.

Community relations may affect the Company’s business, including its interest in Juanicipio.

Maintaining a positive relationship with the communities in which the Company operates, including with respect to Juanicipio, is critical to continuing successful exploration, development and mining operations. As Fresnillo is the operator of Juanicipio, the community relations maintained with respect to that project lie outside the direct control of the Company. Community support for operations is a key component of a successful exploration, development and operation of a mine or exploration/development project. As a business in the mining industry, the Company may come under pressure in the jurisdictions in which it explores, develops and operates, to demonstrate that other stakeholders benefit and will continue to benefit from the Company’s commercial activities. The Company may face opposition with respect to the Company’s current and future development, exploration projects and mining operations which could materially adversely affect the Company’s business, results of operations, financial condition and share price.

The Company’s activities may be impacted by the spread of COVID-19 or other virus outbreaks.

The COVID-19 pandemic or any future emergence and spread of similar pathogens could have an adverse impact on global economic conditions (including monetary policy and inflation) which may adversely impact the Company’s operations and the operations of the Company’s suppliers, contractors and service providers, and may negatively impact future fiscal periods in the event of prolonged disruptions associated with the pandemic. A sustained slowdown in global growth or demand, or a significant slowdown, could have an adverse effect on the price and/or demand for the Company’s products. COVID-19 and efforts to contain it, including any future restrictions on travel or other advisories issued, may have a significant effect on metal prices and demand, and potentially broader impacts on the global economy.

The economic impact of the COVID-19 pandemic may cause reduced customer demand, supply chain disruptions and increased government regulations, all of which may negatively impact the Company’s business and financial condition.

In addition, any future emergence and spread of COVID-19 or similar pathogens, could have a material adverse impact on global economic conditions, which may adversely impact: the market price of the Common Shares, the Company’s operations, its ability to raise debt or equity financing for the purposes of mineral exploration and development, delay of certain infrastructure contracts, and the operations of the Company’s suppliers, contractors and service providers.

Emerging climate change regulations could result in significant costs and climate change may result in physical risks to a mining company’s operations.

Governments are moving to introduce climate change legislation and treaties at the international, national, state/provincial and local levels. Regulations relating to greenhouse gas emission levels (such as carbon taxes) and energy efficiency are becoming more stringent. If the current regulatory trend continues, and the increased transitional risks evolve as society and industry work to reduce their reliance on carbon, the operating costs could increase at its operations. In addition, the physical risks of climate change may also have an adverse effect on the Company’s operations. These physical risks include changes in rainfall rates, rising sea levels, reduced water availability, higher temperatures, increased snowpack and extreme weather events. Such events could materially disrupt the Company’s operations if they affect the Juanicipio site, impact local infrastructure or threaten the health and safety of the Company’s or Fresnillo’s employees and contractors, and there can be no assurances that the Company or Fresnillo as operator of Juanicipio will be able to predict, respond to, measure, monitor or manage the physical risks posed as a result of climate change factors. Climate-related risks could also result in shifts in demand for certain commodities, including precious metals. The Company’s own operations are exposed to climate-related risks as a result of geographical location. The Company has sought to reduce its environmental footprint and located its operations in appropriate facilities; however, the Company’s operations may be adversely affected by climate change factors. Therefore, such an event could result in material economic harm to the Company.

2023 Annual Information Form

The Company acknowledges international and community concerns around climate change. The Company supports initiatives consistent with international initiatives on climate change. While some of the costs associated with reducing greenhouse gas emissions may be offset by increased energy efficiency and technological innovation, the increased government regulation may result in increased costs at some of its mining operations if the current regulatory trend continues.

The occurrence of any climate change violation or enforcement action may have an adverse impact on the Company’s operations, the Company’s reputation and could adversely affect the Company’s results of operations. As well, environmental hazards caused by third parties may exist on a property in which the owners or operators of the mining projects are not aware at present, and which could impair the commercial success, levels of production and continued feasibility and project development and mining operations on these properties.

Risks Relating to Financing the Company’s Business Operations

Adequate funding may not be available, resulting in the possible loss or dilution of the Company’s interests in its properties.

Sufficient funding may not be available to the Company for further exploration, development and operation of its property interests. Failure to obtain such additional financing could result in delay or indefinite postponement of further exploration, development and operation of the Company’s properties. If the Company becomes unable to meet its share of costs incurred under agreements to which it is a party, the Company may have its property interests subject to such agreements reduced as a result or even face termination of such agreements. In the case of Juanicipio, all costs relating to the project are required to be shared by the Company and Fresnillo pro-rata based on their ownership interests in the Juanicipio Entities, and if either party does not fund pro-rata, their ownership interest will be diluted in accordance with the Shareholders’ Agreement.

The Company has an option to earn-in to the Deer Trail Project, and also has options to acquire interests in other mineral property claims. In order to obtain ownership of such mineral claims, it must make payments to the current owners and incur certain exploration expenditures on those properties. Accordingly, additional financing will be required to secure ownership of these mineral properties. Failure of the Company to make the requisite payments in the prescribed time periods may result in the Company losing its entire interest in the subject property and the Company will no longer be able to conduct certain aspects of its business as described in this AIF.

The Company may not have sufficient funds to: (a) fund its proportionate share of the Juanicipio Entities required capital contributions; (b) fund the required annual exploration expenditures and royalty payments under the option agreement governing the Company’s option to consolidate and acquire 100% of the Deer Trail Mine and surrounding Alunite Ridge area in Piute County, Utah; (c) make the minimum expenditures to maintain its properties in good standing under applicable laws; (d) make the corresponding payments of semi-annual governmental (mining) duties to maintain its properties in good standing under applicable law; and (e) make the minimum expenditures to earn its interest in such properties. In such event, in respect of any of the properties, the Company may dilute its interest in such property interest, seek to enter into a partnership or joint venture, sell the subject property or elect to terminate its option.

The Company may require new capital to continue to operate its business and to continue with exploration, development and operation of its properties, and additional capital may not be available when needed, if at all.

Substantial expenditures are required for commercial operations and if financing for such expenditures is not available on acceptable terms, the Company may not be able to justify commercial operations.

Substantial expenditures are required to establish and process Mineral Reserves through drilling, to develop processes to extract the Mineral Resources and, in the case of new properties, to develop the mining and processing facilities and infrastructure at any site chosen for extraction. Although substantial benefits may be derived from the discovery of a major deposit, Mineral Resources may not be discovered in sufficient quantities to justify continued commercial operations, or the funds required for development may not be obtained at all or on terms acceptable to the Company.

2023 Annual Information Form

The Company’s expenditures are currently funded from its cash balances, which are the proceeds of previous equity financings. The Company may require additional capital in the future from either equity or debt offerings to meet its project-related expenditures, as it is possible that the Company will not generate sufficient cash flow to meet all of its future expenditure requirements.

The Company’s future liquidity may depend upon its ability to repatriate cash from Juanicipio or arrange significant additional debt or equity financing.

The Company’s future liquidity may depend upon the ability of the Company to obtain the necessary financing to complete the development of its interests and achieve profitable production or, alternatively, upon the Company’s ability to dispose of its interests on a profitable basis. Given the Company incurred losses from inception to 2020, and does not have any operating cash flow within its control, there can be no assurance that positive cash flows generated by Juanicipio will be distributed to the Company, additional capital or financing will be available if needed, or that, if available, the terms of such financings will be acceptable to the Company. If the Company raises additional funds through the sale of equity securities or securities convertible into equity securities, shareholders may have their equity interest in the Company diluted.

The Company has a history of losses and values attributed to the Company’s assets may not be realizable.

The Company has a history of losses and, prior to 2020, no income from its investment in Juanicipio. The revenues generated at Juanicipio in 2020-2023 from processing mineralized development material through the Fresnillo processing plants, and in 2023 from the commercial production of mineralized development material at the Juanicipio plant, net of processing and treatment charges, were being used by the Juanicipio Entities to offset initial project capital and working capital cash requirements.

Prior to 2020, the Company had no proven history of performance, earnings or success. The amounts attributed to the Company’s exploration concessions in its financial statements represent acquisition, exploration and development costs and should not be taken to represent realizable value with certainty. The Company anticipates continued losses until a project enters commercial production on a profitable basis. If the Company is unable to generate revenues with respect to its properties on a consistent basis, the Company will not be able to earn profits which would adversely affect its business and prospects.

The Company has historically had negative cash flows.

The Company has experienced net losses in the past and may incur similar losses in the future until and unless it can derive sufficient cash flows from its investments in mineral projects. Future negative cash flows could have an adverse effect on the market price of the Common Shares.

Risks related to the Facility

The Facility includes certain customary restrictive covenants. The Company does not currently anticipate any significant risk in complying with the financial ratios or financial covenants contained in the Facility. However, if the current facts and circumstances faced by the Company were to change to unexpected operational issues or due to other factors beyond the Company’s control, such changes could result in the Company being subject to certain restrictions under, or being found in default of, the Facility. Future exploration work and development of the properties in which the Company has an interest may depend upon the Company’s ability to repatriate capital from its interest in the Juanicipio Mine, obtain financing through joint venturing of projects, raise additional debt or equity financing, maintain the Facility or raise financing through other means. Failure to gain access to such financing on a timely basis may have an adverse impact on the business of the Company.

2023 Annual Information Form

Risks Relating to the Development and Operation of Juanicipio

Uncertainties and risks relating to the operation of the Juanicipio Mine.

The Company is subject to inherent uncertainties and risks related to the operation of the Juanicipio Mine, the principal of which include: problems with the processing plant; delays and cost overruns associated with contractors; delays and cost overruns associated with COVID-19; delays and cost overruns associated with production timelines; budget overruns due to changes in costs of power, fuel, labour, materials and supplies; underground development; and potential opposition from non-governmental organizations, environmental groups or local groups which may delay or prevent activities.

Minera Juanicipio has prepared budgets for mineralized material to be mined and processed and the related operating and sustaining capital expenditures for Juanicipio, but no assurance can be given that such budgeted material processed and costs will be achieved. Failure to achieve cost estimates or material increases in costs could have an adverse impact in future cash flows, profitability, results of operations and financial condition. It is common in new mining operations to experience such unexpected costs, problems and delays during start-up and operation. In addition, delays in mineral production often occur. Accordingly, the Company cannot provide assurance that its activities will result in profitable mining operations at the Juanicipio Mine.

The Company’s capital and operating costs, production schedules and economic returns are based on certain assumptions which may prove to be inaccurate.

The Company’s expected operating and capital costs, production estimates, anticipated economic returns and other projections, estimates and forecasts for its mineral properties that are included in this AIF and the documents incorporated by reference herein are based on assumed or estimated future metals prices, cut-off grades, operating costs, capital costs, rates of inflation, metallurgical recoveries, that the actual ore mined is amenable to mining or treatment, environmental considerations, labour volumes, permitting and other factors, any of which may prove to be inaccurate. The 2024 Technical Report includes estimates of future production, development plans, operating costs, capital costs and other economic and technical estimates for Juanicipio. These estimates are based on a variety of factors and assumptions and there is no assurance that such production plans, costs or other estimates will be achieved. Actual production, costs and financial returns may vary significantly from the estimates depending on a variety of factors, many of which are not within the Company’s control.

The Company’s operating and capital costs are affected by the cost of commodities and goods, such as explosives, fuel, electrical power and supplies.  Significant declines in market prices for gold, silver and other metals could have an adverse effect on the Company’s economic projections. Management of the Company assumes that the materials and supplies required for operations, development and commercial production will be available for purchase and that the Company will have access to the required amount of sufficiently skilled labour. As the Company relies on certain third-party suppliers and contractors, these factors can be outside its control and an increase in the costs (due to inflation, impacts of the Russia and Ukraine conflict, the Israel-Hamas war or otherwise) of, or a lack of availability (due to supply chain disruption or otherwise) of, commodities, goods and labour may have an adverse impact on the Company’s financial condition. The Company may experience difficulty in obtaining the necessary permits for its exploration, development or operational activities, if such permits are obtained at all, and may face penalties as a result of violations of permits or other environmental laws, which may cause delays and increases to projected budgets. Any of these discrepancies from the Company’s expected operating and capital costs, production schedules and economic returns could cause a material adverse effect on the Company’s business, financial condition and results of operations.

The Company has in the past, and may in the future, provide estimates and projections of its future production, costs and financial results. In addition, Fresnillo, as operator of Juanicipio, has in the past, and may in the future, provide estimates and projections of future production, costs and financial results expected from Juanicipio.

2023 Annual Information Form

Juanicipio capital requirements contemplated in the 2024 Technical Report are subject to volatility and uncertainty.

The continued development and operation of Juanicipio will use significant amounts of commodities, consumables and other materials. Prices for steel, concrete, fuel and other materials, commodities and consumables required for mine development can be volatile and price changes can be substantial, occur over short periods of time and be affected by factors beyond control of the project operator. Higher costs for construction materials like steel and concrete, the impact of the Mexican peso exchange rate on various development inputs, or tighter supplies can affect the costs and timing of the project development.

The continued development of Juanicipio will also utilize significant amounts of large and small equipment that may be critical to the development and operation of the project. Repeated and/or unexpected equipment failures and/or unavailability of equipment could cause interruptions or delays in the development.

Further, there is no certainty that the estimates described in the 2024 Technical Report will be realized. Any changes in the mine plan, mine design and/or scope of operations from those envisioned in the 2024 Technical Report may have a significant adverse impact on capital costs than is currently expected.

Mineral projects, such as Juanicipio, are uncertain and it is possible that actual capital and operating costs and economic returns will differ significantly from those estimated for project production.

The operation of the mine at Juanicipio requires significant expenditures to achieve planned production targets. The economic feasibility of mineral projects is based on many factors, such as: estimation of Mineral Reserves, anticipated metallurgical recoveries, environmental considerations and permitting, future silver prices, and anticipated capital and operating costs of such projects.

Estimates of Mineral Resources, Mineral Reserves and anticipated cash operating costs are, to a large extent, based upon the interpretation of geologic data obtained from drill holes and other sampling techniques, and other factors. As a result, it is possible that actual capital, operating costs, production costs and economic returns will significantly differ from those currently estimated for Juanicipio.

Any of the following events, among others, could affect the profitability of Juanicipio: unanticipated changes in grades and tonnes of development and mineralized stope material to be mined and processed; unanticipated adverse geologic conditions; unanticipated adverse geotechnical conditions; unanticipated metallurgical recovery problems; incorrect data on which engineering assumptions are made; availability of labour; costs of processing and refining facilities; delays resulting from future pandemics similar to COVID-19; availability of economic sources of power; adequacy of water supply; adequate access to the site; unanticipated transportation costs; government regulations (including regulations with respect to the environment, prices, royalties, duties, taxes, permitting, restrictions on production, quotas on exportation of minerals); fluctuations in silver prices; and accidents, labour actions and force majeure events.

The Juanicipio Mine plan and design and the financial results may not be consistent with the 2024 Technical Report.

The 2024 Technical Report is based on both Mineral Resource and Mineral Reserve estimates and reflects a processing capacity of 4,000 tpd. Although the Company believes the 2024 Technical Report reflects the mine plan and design that Fresnillo as operator will operate, Fresnillo may adopt alternate mine plans and other changes, and the scope of operations, if any, may differ materially from those presented in the 2024 Technical Report.

Although Fresnillo has indicated to the Company that the permits for mine plan and design were received in 2018, there is no assurance that future required permits will be issued on a timely basis or at all. (See “There is no guarantee that licenses and permits required by the Company or the Juanicipio Entities to conduct business will be obtained, which may result in an impairment or loss in the Company’s mineral properties” above).

2023 Annual Information Form

The 2024 Technical Report includes estimated Inferred Mineral Resources that are considered too speculative geologically to have the economic considerations applied to them that would enable them to be categorized as Mineral Reserves and there is no certainty that the estimates described in the 2024 Technical report will be realized. There is no guarantee that development and operation will be carried out in accordance with the 2024 Technical Report, and if carried out, that operating or financial results will be consistent with the 2024 Technical Report.

The continued operation of Juanicipio may be adversely impacted by a lack of access to a skilled workforce.

The continued development and operation of Juanicipio will depend on availability of a skilled workforce, including, but not limited to, mining and mineral, metallurgical and geological engineers, geologists, environmental and safety specialists, and mining operators to explore and develop the project. Inadequate access to an available skilled workforce (including as a result of COVID-19 outbreaks or restrictions), could compromise many aspects of the project’s feasibility, viability and profitability, including, but not limited to, the production schedules, capital and operating costs.

Labour Risks.

Juanicipio is and will be dependent on its workforce, and that of its specialized contractors, to extract and process minerals, and is therefore sensitive to its ability to source skilled labour in country, to a labour disruption of the project’s operations or to changes to laws. Fresnillo, as operator of Juanicipio, endeavours to maintain good relations with its workforce and specialized contractors in order to minimize the possibility of strikes, lockouts and other stoppages at its work sites. Relations between the Juanicipio Entities and its employees and contractors may be impacted by changes in labour relations that may be introduced by, among other things, employee groups, unions and the relevant governmental authorities in Mexico. As the Juanicipio Entities’ operations depend upon the efforts of its employees and contractors, the operations would be adversely affected if it failed to maintain satisfactory labour relations. In addition, relations between the Company and its employees and contractors may be affected by changes in labour and employment laws. Changes in such legislation or in the relationship between Minera Juanicipio and its employees and contractors may have a material adverse effect on the Company’s business, results of operations, financial condition or prospects.

The continued operation of Juanicipio may be adversely impacted by lack of access and availability of infrastructure, power and water, and other matters.

The continued operation of Juanicipio will require access to and an ability to maintain adequate and reliable infrastructure, including roads, power sources and water systems. If the required infrastructure is not readily available, it may have to be built, and there is no assurance that it can be built in a timely manner or at all. There is no assurance that the Juanicipio Entities can access and maintain the infrastructure needed, or, where necessary, obtain rights of way, government authorizations and permits to construct, or upgrade the same at a reasonable cost, in a timely manner, or at all. Access to infrastructure may also be interrupted by natural causes, such as drought, floods, earthquakes and other weather phenomena, or man-made causes, such as blockades, sabotage, conflicts, government issues, political events, protests, rationing or competing uses, as well as global pandemics.

Inadequate, inconsistent or costly infrastructure could compromise many aspects of the project’s feasibility, viability and profitability, including, but not limited to the capital and operating costs.

Amendments to the Federal labour law on labour subcontracting (or “outsourcing”).

Labour reform legislation on subcontracting and outsourcing in Mexico was published on April, 23, 2021 (the “Reform”). The Reform, amends several Mexican laws, including the Federal labour law, and seeks to, amongst other things, regulate outsourcing as follows: (i) to prohibit the use of subcontracting as it has historically been used in Mexico; and (ii) to allow an exception for specialized services under regulated circumstances. This Reform legislation came into effect on September 1, 2021.

2023 Annual Information Form

The Reform changes are not expected to have a significant impact on the viability of Juanicipio. However, with various restrictions on hiring contractors, Fresnillo, as operator, internalized a portion of its workforce and now performs much of the development work directly rather than outsourcing it to contractors, and hence invest in equipment not previously planned to be utilized in underground operations.

Other general tax amendments are referred to under the risk factor titled “Mexican Foreign Investment and Income Tax Laws apply to the Company” below.

Juanicipio development decisions.

The actual scope, operating results and production results of Juanicipio may differ from the scope, operation results and production results envisaged in the 2024 Technical Report. Mineral Resources that are not Mineral Reserves do not demonstrate economic viability and there is no certainty that Mineral Resources will ever become Mineral Reserves. There can be no certainty that the results in the 2024 Technical Report will be realized. Fresnillo is the project operator and the actual continued exploration, operation and production may be materially different than as contemplated in the 2024 Technical Report. As a result, there are additional risks as to the extent of capital and operating costs, mineral recovery and financial viability of the project.

The Company may encounter certain transportation and refining risks that could have a negative impact on its operations.

Mined materials and mineral concentrates containing combinations of metals that are produced at the Juanicipio Mine are transported to refiners and smelters. This type of process involves certain environmental and financial risks. The Company could be subject to potential significant increases in transportation charges and treatment and refining charges. Transportation of such materials and mineral concentrates is also subject to numerous risks including, but not limited to, delays in delivery of shipments, roadblocks, theft and other criminal activities, civil unrest, weather conditions and environmental liabilities in the event of an accident or spill. The Company could be subject to limited smelter availability and capacity and could also face the risk of a potential interruption of business from a third-party beyond the Company’s control, which in both cases could have a material adverse effect on the Company’s business, operations, financial performance and financial condition. There is no assurance that smelting, refining or transportation contracts for the Juanicipio Mine’s production will be entered into and/or renewed on acceptable terms or that the counterparties to such contracts will meet their respective obligations thereunder. If the Company is unable to effectively process and refine its materials and mineral concentrates on acceptable terms or if the counterparties to any smelting, refining and transportation contracts fail to meet their respective obligations thereunder, the Company’s business, operations, financial performance and financial condition could be materially adversely impacted.

Risks Relating to the Company’s Property Titles

The Company’s mineral properties are subject to title risk and any challenge to the title to any of such properties may have a negative impact on the Company.

The Company’s mineral property rights, including its indirect interest in Juanicipio, may be subject to prior unregistered agreements, transfers and claims, and title may be affected by, among other things, undetected defects. Title to, and the area of, the mineral interests held by the Company may be disputed. A full investigation of legal title to the Company’s property interests has not been carried out at this time. Accordingly, title to these property interests may be in doubt. Other parties, including, without limitation, Indigenous communities, may dispute title or access to the properties in which the Company has an interest. The Company’s property interests may also be subject to prior unregistered agreements or transfers or land claims, and title may be affected by such undetected defects. Any challenge to the title or access to any of the properties in which the Company has an interest may have a negative impact on the Company as the Company will incur delay and expenses in defending such challenge and, if the challenge is successful, the Company may lose any interest it may have in the subject property.

2023 Annual Information Form

Indigenous rights claims.

Certain of the Company’s mineral properties, and in particular the Larder Project, may now or in the future be the subject of Indigenous rights claims, including treaty rights and Métis rights claims. The legal nature of Indigenous claims is a matter of considerable and evolving complexity. In a number of court decisions, the Supreme Court of Canada has affirmed the obligation on the Crown to consult with Indigenous peoples prior to authorizing the development of resources in Indigenous territory, such as mineral development. Treaties between the Crown and Indigenous people enshrine certain rights, and impose certain obligations on the Crown with respect to the treaty area. Métis rights and aboriginal title may also be claimed, and may require consultation and accommodation which can affect the development of Mineral Resources.

The impact of any such claim on the Company’s interest in its mineral properties cannot be predicted with any degree of certainty and no assurance can be given that the exercise or recognition of Indigenous rights in the areas in which the Company’s mineral properties are located, including by way of negotiated settlements or judicial pronouncements, would not have an adverse effect on the Company’s activities. In addition, there is no assurance that the Company will be able to maintain practical working relationships with Indigenous groups which would allow it to ultimately develop the Company’s mineral properties.

Title opinions provide no guarantee of title and any challenge to the title to any properties may have a negative impact on the Company.

Although the Company has or will receive title opinions for any concessions in which it has or will acquire a material interest, there is no guarantee that title to such concessions will not be challenged or impugned. In Mexico, a title opinion does not provide absolute comfort that the holder has unconditional or absolute title. Any challenge to the title or access to any of the properties in which the Company has an interest, including its indirect interest in Juanicipio, may have a negative impact on the Company as the Company will incur expenses in defending such challenge and, if the challenge is successful, the Company may lose any interest it may have in the subject property.

Titles to the properties in which the Company has an interest that are not registered in the name of the Company may result in potential title disputes having a negative impact on the Company.

All of the agreements under which the Company may earn interests in properties, including any indirect interest acquired through Minera Juanicipio, have either been registered or been submitted for registration with the Mexican Public Registry of Mining or the applicable Canadian or US authority, but title relating to the properties in which the Company may earn its interests may be held in the names of parties other than the Company. Any of such properties may become the subject of an agreement which conflicts with the agreement pursuant to which the Company may earn its interest, in which case the Company may incur expenses in resolving any dispute relating to its interest in such property and such a dispute could result in the delay, indefinite postponement of further exploration, development, construction and operation of properties or the possible loss of such properties.

Risks Related to Minority Interest Investment in Juanicipio

The Company is a minority shareholder and non-operator of the Juanicipio Entities and therefore is dependent on, and subject to, the decisions of the majority shareholder and operator of the Juanicipio Entities.

Although the Company has representation on both the boards and technical committees of the Juanicipio Entities, the terms of the Shareholders’ Agreement and corporate by-laws governing the operation of the Juanicipio Entities provide effective control to Fresnillo over many of the activities and operating decisions of the Juanicipio Entities, including decisions with respect to cashflows of such entities, since it holds a majority (56%) of the shares of the Juanicipio Entities. While a limited number of decisions of the shareholders or the directors of the Juanicipio Entities require a special majority of 60%, and in one instance 75%, giving the Company an effective veto over any such decisions, the Company is a minority shareholder and non-operator of Juanicipio and is dependent on Fresnillo to manage and operate the affairs of the Juanicipio Entities and to do so in compliance with the Shareholders’ Agreement (which, among other things, requires Fresnillo to manage and operate the Juanicipio Entities in accordance with best industry practices), the by-laws of each of the Juanicipio Entities and applicable Mexican law. If Fresnillo manages the affairs of the Juanicipio Entities in a manner that results in violation(s) of the Shareholders’ Agreement, by-laws or applicable laws, such violation(s) may have an adverse impact on the Company. Any disputes under the Shareholders’ Agreement are subject to arbitration in Mexico under applicable Mexican laws.

2023 Annual Information Form

Fresnillo, as operator of Juanicipio, has the ability to undertake certain actions, legal or otherwise, which may result in the shareholders of the Juanicipio Entities having to fund cash calls. The Shareholders’ Agreement calls for adjustments to the interests of the shareholders in the Juanicipio Entities where either shareholder fails to fund cash calls within certain specified periods. If the Company fails to fund cash calls, it risks having its interest reduced, may lose its effective veto power over certain decisions and ultimately could be diluted out of the Juanicipio Entities altogether. Fresnillo is a much larger entity with far greater access to financial resources than the Company.

As operator, Fresnillo has control of the timing of cash calls, cash distributions and the timing thereof, relationships with contractors and employment matters together with other operational matters. The Company’s lack of control over such matters could have an adverse impact on the Company.

The Company holds its Juanicipio interest through a minority shareholding in the Juanicipio Entities and therefore may be adversely impacted by disputes amongst the shareholders.

The Company’s 44% interest in the Juanicipio Entities is subject to the risks normally associated with the conduct of incorporated businesses with multiple shareholders. The existence or occurrence of one or more of the following circumstances and events, for example, could have a material adverse impact on the Company’s operations and financial condition or the viability of its interests held as a shareholder: disagreement between shareholders on how to conduct business efficiently; inability of the shareholders to meet their obligations to the business operations or third parties; or litigation arising between shareholders.

Minera Juanicipio and Equipos Chaparral are organized through corporations that are formed under and governed by the laws of Mexico. The laws in Mexico do not provide all of the same protections that are available to shareholders of corporations that are formed under the laws of Canada or the United States. Accordingly, any dispute between the Company and Fresnillo as the shareholders of Minera Juanicipio and Equipos Chaparral could have a materially adverse effect on the Company.

In 2010, MAG initiated arbitration proceedings with the International Court of Arbitration of the International Chamber of Commerce. In May 2011, the Company announced that it had received a favourable ruling, dated April 28, 2011, of a three-member arbitral panel of the International Court of Arbitration of the International Chamber of Commerce with respect to the arbitration proceedings against Fresnillo. In its ruling, the arbitral tribunal awarded MAG $1.86 million in damages. Although this dispute between the Company and Fresnillo was ultimately determined in favour of the Company, there can be no guarantee that future disputes between the parties will not arise and lead to further litigation proceedings, the outcome of which is uncertain.

The Company has significant shareholders that may be able to exert influence over the direction of the Company’s business.

Based upon the Company’s review of the insider reports filed with System for Electronic Disclosure by Insiders (SEDI) with respect to Fresnillo, Blackrock Investment Management (“Blackrock”) and Van Eck Associates Corp. (“Van Eck”), and their respective affiliates, as at the date of this AIF, the Company believes that each holds approximately 9.05%, 15.54% and 9.02%, respectively, of the Common Shares. Accordingly, Fresnillo, Blackrock and Sprott, either in unison and/or individually, may have some influence in determining the outcome of any corporate transaction or other matter submitted to the shareholders of the Company for approval, including business combinations and any proposed sale of all or substantially all of the Company’s assets. Unless full participation of a number of shareholders takes place in such shareholder meetings, Fresnillo, Blackrock and/or Van Eck may be able to approve on its own, or effectively prevent the approval, of any such significant corporate transactions.

2023 Annual Information Form

Further, the significant ownership of Common Shares by Fresnillo, Blackrock and Sprott may affect the market price and liquidity of the Common Shares. The effect of these rights and their influence may impact the price that investors are willing to pay for Common Shares. If any of these parties sells a substantial number of Common Shares in the public market, the market price of the shares could decrease.

The presence of a dominant shareholder like Fresnillo, that is the operator of Juanicipio, and has substantial property holdings surrounding Juanicipio, may give rise to potential conflicts of interest, as Fresnillo’s interests may differ from, or be adverse to, the interests of the Company’s other shareholders. Without the consent and cooperation of Fresnillo, the Juanicipio Entities may be prevented from entering into transactions that would be beneficial to the Company and its other shareholders.

Risks Relating to the Regulatory Environment

Amendments to the Mexican Federal Mining Law.

On March 28, 2023, a legislative initiative aimed at amending multiple legal codes, including the Federal Mining Law, was presented to the Mexican Congress by the President of Mexico. The amendments pertain to, among other matters, granting of future mining permits and transfer of permits, shortening concession life, granting of future water permits, granting of exploration permits on behalf of exploration companies to the Mexican Geological Services, mine reclamation, profit-sharing requirements to distribute at least 7% of profits to local indigenous communities and management of mine waste. The amendments were brought into law on May 9, 2023. The Company is conducting a thorough review and evaluation of potential implications specifically concerning its 44% interest in Juanicipio, including the treatment of concessions issued under previous legislation. Numerous legal challenges to the legality and constitutionality of several aspects of these changes have been filed with various Mexican courts and are pending adjudication. Minera Juanicipio is committed to monitoring these judicial proceedings with the utmost attention. For further information, see “Carrying on Business in Mexico – Mining Regulations”.

The environment in which the Company operates may not adhere to international standards with respect to security and human rights.

The Company’s operations, development projects and exploration activities extend to jurisdictions which may be considered to have an increased degree of security risk and criminal activity. The impacts of these risks could impede the exploration, development and operation of the Company’s mines in these countries. See also the risk factor “The properties in which the Company has an interest are located primarily in Mexico”.

In addition, civil disturbances and criminal activities, such as trespass, illegal mining, sabotage, theft and vandalism, have caused disruptions at certain of the Company’s operations. The Company has taken certain measures to protect its employees, property and production facilities from these risks. The measures that have been implemented by the Company cannot guarantee that such incidents will not continue to occur and such incidents may halt or delay production, increase operating costs, result in harm to employees or trespassers, decrease operational efficiency, increase community tensions or result in criminal and/or civil liability for the Company or its employees and/or financial damages or penalties.

The manner in which the Company’s personnel respond to civil disturbances and criminal activities can give rise to additional risks where those responses are not conducted in a manner that is consistent with international standards relating to the use of force and respect for human rights. The Company has implemented a number of measures and safeguards which are designed to assist its personnel in understanding and upholding these standards. The implementation of these measures will not guarantee that the Company’s personnel will uphold these standards in every instance. The failure to conduct security operations in accordance with these standards can result in harm to employees or community members, increased community tensions, reputational harm to the Company or result in litigation, criminal and/or civil liability for the Company or its employees and/or financial damages or penalties.

2023 Annual Information Form

It is not possible to determine with certainty the future costs that the Company may incur in dealing with the issues described above at its operations. However, if the number of incidents increases, costs associated with security, in the case of civil disturbances and illegal mining, may also increase, affecting profitability.

The Company is subject to anti-corruption laws.

The Company is subject to anti-corruption laws under the Canadian Corruption of Foreign Public Officials Act, and the U.S. Foreign Corrupt Practices Act, which generally prohibit companies from bribing or making other prohibited payments to foreign public officials in order to obtain or retain an advantage in the course of business. Corruption, extortion, bribery, pay-offs, theft and other fraudulent practices may occur in Mexico or any other jurisdiction in which the Company may conduct business. The Company cannot ensure that its employees or the employees of the Juanicipio Entities or other agents will not engage in such prohibited practices, for which the Company or the Juanicipio Entities could face severe penalties, reputational damage and other consequences that could have a material adverse effect on the Company’s business and financial condition. The Company has adopted the Code of Conduct and the Anti-Bribery and Anti-Corruption Policy to promote legal and ethical business conduct by its directors, officers and employees. The Company cannot, however, provide assurance that the Code of Conduct or the Anti-Bribery and Anti-Corruption Policy, or other policies or procedures that it may adopt, will be sufficient to protect against corrupt activity. In particular, the Company may not be able to prevent or detect corrupt activity by employees or third parties, such as sub-contractors or of Juanicipio operator, Fresnillo, for which the Company might be held responsible.

The Company may be required by human rights laws to take actions that delay the advancement of its projects.

There are various international and national laws, codes, resolutions, conventions, guidelines and other materials that relate to human rights (including rights with respect to health and safety and the environment surrounding the Company’s operations). Many of these materials impose obligations on government and companies to respect human rights. Some mandate that government consult with communities surrounding the Company’s projects regarding government actions that may affect local stakeholders, including actions to approve or grant mining rights or permits. The obligations of government and private parties under the various international and national materials pertaining to human rights continue to evolve and be defined. One or more groups of people may oppose the Company’s current and future operations or further development, new development or production at its projects or operations. Such opposition may be directed through legal or administrative proceedings or expressed in manifestations, such as protests, roadblocks or other forms of public expression against the Company’s activities and may have a negative impact on its reputation. Opposition by such groups to the Company’s or the Juanicipio Entities’ operations may require modification of, or preclude the operation or development of, its projects or may require the Company or the Juanicipio Entities to enter into agreements with such groups or local governments with respect to its projects, in some cases causing considerable delays to the advancement of its projects.

The Company’s activities within Mexico are subject to extensive laws and regulations governed by Mexican regulators.

The Company’s activities, including but not limited to the operations at Juanicipio, are subject to extensive laws and regulations governing worker health and safety, employment standards, waste disposal, protection of historic and archaeological sites, mine development, protection of endangered and protected species, Indigenous communities’ rights and other matters. Specifically, the Company’s Mexican mining concessions are subject to regulation by the Mexican Department of Economy - Dirección General of Mines, the environmental protection agency of Mexico, Comisión Nacional del Aqua, which regulates water rights, and the applicable Mexican mining laws. Mexican regulators have broad authority to shut down and/or levy fines against facilities that do not comply with regulations or standards.

Mexican foreign investment and income tax laws apply to the Company.

Under the applicable foreign investment laws of Mexico, there is presently no limitation on foreign capital participation in mining operations; however, the applicable laws may change in a way which may adversely impact the Company and its ability to repatriate profits. Under applicable Mexican income tax laws, dividends paid out of “previously taxed net earnings” are not subject to Mexican corporate taxes. Otherwise, dividends are subject to the Mexican income tax at the corporate level, which presently is 30% over a gross up basis (amount of the dividend times 1.4286), payable by the Mexican company as an advance of its annual income tax. There is a withholding tax on dividends paid by a Mexican company to Mexican individuals and non-Mexican shareholders of 10% applicable to earnings generated as of 2014; “previously tax net earnings” generated until 2013 are not subject to this withholding tax. This withholding tax rate may be reduced under the applicable Tax Treaties to avoid double taxation entered by Mexico.

2023 Annual Information Form

Corporations with their tax residence in Mexico are taxed on their worldwide income, which include all profits from operations, income from investments not relating to the regular business of the corporation and capital gains. The current corporate income tax rate in Mexico is 30%. As of January 1, 2014, a mining royalty fee is in effect in Mexico of 7.5% on income before tax, depreciation, and interest, as well as an extraordinary governmental fee on precious metals, including gold and silver, of 0.5% of gross revenue.

On December 31, 2016, the State Government of Zacatecas, Mexico published a new tax law for the state (Ley de Hacienda del Estado de Zacatecas), which came into effect on January 1, 2017 and imposes environmental taxes on activities, such as (i) extraction of materials other than those regulated by the Federal Mining Laws of Mexico; (ii) emissions to the atmosphere; (iii) discharges of industrial waste into the soil and water, and (iv) deposit of industrial waste. After various legal challenges, two of the taxes were declared constitutional and two taxes unconstitutional for Minera Juanicipio. The annual cost to Minera Juanicipio of complying with the two taxes deemed constitutional is not considered significant at this time and management’s assessment is that it will not have an impact on the viability of Juanicipio. However, this is an example of a type of tax that can occur in the future.

The Mexican VAT is a refundable tax levied on the value added to goods and services, and is imposed on corporations that carry out activities within Mexican territory, including (i) the sale or other disposition of property; (ii) the rendering of independent services; (iii) the granting of temporary use of property; or (iv) the importation of goods and services. The standard value added tax rate is currently 16% but is subject to periodic review and change by the relevant Mexican tax authorities. The Company and the Juanicipio Entities have traditionally held a VAT receivable balance due to the expenditures they incur whereby VAT is paid to a vendor or service provider. Collections of these receivables from the Government of Mexico often take months and sometimes years to recover. The Company to date has been able to recover the majority of its VAT paid, and in the case of the Juanicipio Entities, any VAT not recovered on a timely basis will be applied against VAT payable on sales from production or leasing income. The recoveries of future VAT paid, and possible extended delays in recoveries common in Mexico, could adversely affect exploration, development and operating costs.

Legislative changes in the VAT effective January 1, 2017 may prevent mining companies during the exploration stage from requesting VAT refunds, unless they are certain they will eventually operate and generate revenue. Future legislative changes in Mexico are not predictable and may have a negative effect on the Company and its operations.

The Company may fail to maintain adequate internal control over financial reporting pursuant to the requirements of the Sarbanes-Oxley Act.

Management has documented and tested its internal control procedures in order to satisfy the requirements of Section 404 of the Sarbanes-Oxley Act. The Sarbanes-Oxley Act requires an annual assessment by management of the effectiveness of the Company’s internal control over financial reporting. The Company may fail to maintain the adequacy of its internal control over financial reporting as such standards are modified, supplemented or amended from time to time, and the Company may not be able to conclude, on an ongoing basis, that it has effective internal control over financial reporting in accordance with Section 404 of the Sarbanes-Oxley Act.

The Company’s failure to satisfy the requirements of Section 404 of the Sarbanes-Oxley Act on an ongoing, timely basis could result in the loss of investor confidence in the reliability of its financial statements, which in turn could harm the Company’s business and negatively impact the trading price or the market value of its securities. In addition, any failure to implement required new or improved controls, or difficulties encountered in their implementation, could harm the Company’s operating results or cause it to fail to meet its reporting obligations. If the Company expands, the challenges involved in implementing appropriate internal control over financial reporting will increase and will require that the Company continues to monitor its internal control over financial reporting. Although the Company intends to expend time and incur costs, as necessary, to ensure ongoing compliance, it cannot be certain that it will be successful in complying with Section 404 of the Sarbanes-Oxley Act.

2023 Annual Information Form

The Company follows Canadian disclosure practices concerning its Mineral Resources and Mineral Reserves which allow for different disclosure than is required for domestic U.S. reporting companies.

The Company’s Mineral Resource and Mineral Reserve estimates are not directly comparable to those made by domestic U.S. reporting companies subject to the SEC’s reporting and disclosure requirements, as the Company reports Mineral Resources and Mineral Reserves in accordance with Canadian practices. These practices are different from the practices used to report Mineral Resource and Mineral Reserve estimates in reports and other materials filed by domestic U.S. reporting companies with the SEC.

Unless otherwise indicated, technical disclosure regarding our properties included or incorporated by reference herein, including all Mineral Resource and Mineral Reserve estimates contained in such technical disclosure, has been prepared in accordance with the requirements of NI 43-101 and the CIM Definition Standards. NI 43-101 is a rule developed by the Canadian Securities Administrators that establishes standards for all public disclosure an issuer makes of scientific and technical information concerning mineral projects.

Canadian standards, including NI 43-101, differ significantly from the disclosure requirements of the SEC Modernization Rules. The Company is not required to provide disclosure on its mineral properties under the SEC Modernization Rules and provides disclosure under NI 43-101 and the CIM Definition Standards. Accordingly, information contained in this AIF, or the documents incorporated by reference herein, may differ significantly from the information that would be disclosed had the Company prepared the Mineral Resource and Mineral Reserve estimates under the standards adopted under the SEC Modernization Rules. See “Cautionary Note to United States Investors”.

Any enforcement proceedings under Canada’s Extractive Sector Transparency Measures Act against the Company could adversely affect the Company.

The Extractive Sector Transparency Measures Act (Canada) (“ESTMA”) requires public disclosure of certain payments to governments by companies engaged in the commercial development of minerals which are publicly listed in Canada. Mandatory annual reporting is required for extractive companies with respect to payments made to foreign and domestic governments, including aboriginal groups. ESTMA requires reporting on the payments of any taxes, royalties, fees, production entitlements, bonuses, dividends, infrastructure reporting or structuring payments to avoid reporting. If the Company becomes subject to an enforcement action or is in violation of ESTMA, this may result in significant penalties or sanctions which may also have a material adverse effect on the Company’s reputation.

Risks Relating to the Company’s Securities

Funding and property commitments may result in dilution to the Company’s shareholders.

The Company may sell equity securities in public offerings (including through the sale of securities convertible into equity securities) and may issue additional equity securities to finance operations, exploration, development, project construction, acquisitions or other projects. The Company cannot predict the size of future issuances of equity securities or the size and terms of future issuances of debt instruments or other securities convertible into equity securities or the effect, if any, that future issuances and sales of the Company’s securities will have on the market price of the Common Shares. Any transaction involving the issuance of previously authorized but unissued Common Shares, or securities convertible into Common Shares, would result in dilution, possibly substantial, to security holders. Exercises of presently outstanding stock options (“Options”) may also result in dilution to security holders.

The Board has the authority to authorize certain offers and sales of additional securities without the vote of, or prior notice to, shareholders. Based on the need for additional capital to fund expected expenditures and growth, the Company may issue additional securities to provide such capital. Such additional issuances may involve the issuance of a significant number of Common Shares at prices less than the current market price for the Common Shares.

2023 Annual Information Form

Sales of substantial amounts of the Company’s securities, or the availability of such securities for sale, could adversely affect the prevailing market prices for the Company’s securities and dilute investors’ earnings per share. A decline in the market prices of Company’s securities could impair the Company’s ability to raise additional capital through the sale of securities should the Company desire to do so.

The price of the Company’s Common Shares is volatile.

Publicly quoted securities are subject to a relatively high degree of price volatility. It should be expected that continued fluctuations in price will occur, and no assurances can be made as to whether the price per share will increase or decrease in the future. In recent years, the securities markets in the United States and Canada have experienced a high level of price and volume volatility, and the market price of many companies, particularly those considered exploration or development stage companies, such as the Company, have experienced wide fluctuations in price which have not necessarily been related to the operating performance, underlying asset values or prospects of such companies. The factors influencing such volatility include pandemics, macroeconomic developments in North America and globally, and market perceptions of the attractiveness of particular industries.

The price of the Common Shares is also likely to be significantly affected by short-term changes in precious metal prices or other mineral prices, currency exchange fluctuations and the Company’s financial condition or results of operations as reflected in its earnings reports. Other factors unrelated to the performance of the Company that may have an effect on the price of the Common Shares include the following: the extent of analyst coverage available to investors concerning the business of the Company may be limited if investment banks with research capabilities do not follow the Company’s securities; lessening in trading volume and general market interest in the Company’s securities may affect an investor’s ability to trade significant numbers of securities of the Company; the size of the Company’s public float may limit the ability of some institutions to invest in the Company’s securities; and a substantial decline in the price of the securities of the Company that persists for a significant period of time could cause the Company’s securities to be delisted from an exchange, further reducing market liquidity.

Securities class-action litigation often has been brought against companies following periods of volatility in the market price of their securities. The Company may in the future be the target of similar litigation. Securities litigation could result in substantial costs and damages and divert management’s attention and resources.

There is no assurance of a sufficient liquid trading market for the Company’s Common Shares in the future.

Shareholders of the Company may be unable to sell significant quantities of Common Shares into the public trading markets without a significant reduction in the price of their Common Shares, or at all. There can be no assurance that there will be sufficient liquidity of the Company’s Common Shares on the trading market, and that the Company will continue to meet the listing requirements of the TSX or the NYSE American or achieve listing on any other public listing exchange.

Most of the Company’s mineral assets are located outside of Canada.

Most of the Company’s mineral assets are located outside of Canada. As a result, it may be difficult for investors to enforce within Canada any judgments obtained against the Company or its officers or directors, including judgments predicated upon the civil liability provisions of applicable securities laws. In addition, there is uncertainty as to whether the courts of Mexico and other jurisdictions would recognize or enforce judgments of Canadian courts obtained against the Company or its directors and officers predicated upon the civil liability provisions of the securities laws of Canada or be competent to hear original actions brought in Mexico or other jurisdictions against the Company or its directors and officers predicated upon the securities laws of Canada. Further, any payments as a result of judgments obtained in Mexico should be in pesos and service of process in Mexico must be effectuated personally and not by mail.

2023 Annual Information Form

The Company, its directors, officers and management (with the exception of the Chief Exploration Officer and the Vice President, Exploration) and all of its material assets are located outside of the United States, which makes it difficult for U.S. litigants to effect service of process, or enforce, any judgments obtained against the Company or its officers or directors.

Substantially all of the Company’s assets are located outside of the United States and the Company does not currently maintain a permanent place of business within the United States. In addition, most of the directors and officers are nationals and/or residents of countries other than the United States, and all or a substantial portion of such persons’ assets are located outside the United States. As a result, it may be difficult for U.S. litigants to effect service of process or enforce any judgments obtained against the Company or its officers or directors, including judgments predicated upon the civil liability provisions of the securities laws of the United States or any state thereof. In addition, there is uncertainty as to whether the courts of Canada, Mexico and other jurisdictions would recognize or enforce judgments of United States courts obtained against the Company or its directors and officers predicated upon the civil liability provisions of the securities laws of the United States or any state thereof, or be competent to hear original actions brought in Canada, Mexico or other jurisdictions against the Company or its directors and officers predicated upon the securities laws of the United States or any state thereof. Further, any payments as a result of judgments obtained in Mexico could be in pesos and service of process in Mexico must be effectuated personally and not by mail.

The Company has outstanding common share equivalents which, if exercised, could cause dilution to existing shareholders.

The Company has common share equivalents issued consisting of Common Shares issuable upon the exercise of outstanding exercisable Options and warrants or issuable upon the conversion of restricted share units (“RSUs”), performance share units (“PSUs”) and deferred share units (“DSUs”) each convertible into one Common Share. Options are likely to be exercised when the market price of the Company’s Common Shares exceeds the exercise price of such Options. RSUs and PSUs may be converted at any time by the holder subject to vesting conditions, and the DSUs may only be converted by a departing director of the Company. The exercise of any of these instruments and the subsequent resale of such Common Shares in the public market could adversely affect the prevailing market price and the Company’s ability to raise equity capital in the future at a time and price which it deems appropriate. The Company may also enter into commitments in the future which would require the issuance of additional Common Shares and the Company may grant additional share purchase warrants, Options, RSUs, PSUs and DSUs. Any share issuances from the Company’s treasury will result in immediate dilution to existing shareholders’ percentage interest in the Company.

The Company has not paid dividends and may not pay dividends in the immediate future.

Payment of dividends on the Company’s Common Shares is within the discretion of the Company’s Board and will depend upon the Company’s future earnings, if any, its capital requirements and financial condition, and other relevant factors. The Company anticipates that all available funds will be invested to finance the growth of its business for the immediate future.

The Company could in the future be classified as a ‘passive foreign investment company’ (“PFIC”), which could have adverse U.S. federal income tax consequences for U.S. holders of Common Shares.

U.S. investors should be aware that they could be subject to certain adverse U.S. federal income tax consequences in the event that the Company is classified as a PFIC for U.S. federal income tax purposes. The determination of whether the Company is a PFIC for a taxable year depends, in part, on the application of complex U.S. federal income tax rules, which are subject to differing interpretations, and the determination will depend on the composition of the Company’s income, expenses and assets from time to time and the nature of the activities performed by the Company’s officers and employees. The Company believes that MAG was a PFIC for the 2019 and prior financial years. With the start of the underground production at the Juanicipio Mine and the Company’s attributable revenue under the PFIC determination rules, the Company no longer believes it is a PFIC as of the 2020 fiscal year. Prospective investors should consult their own tax advisers regarding the likelihood and consequences of the Company being treated as a PFIC for U.S. federal income tax purposes, including the advisability of making certain elections that may mitigate certain possible adverse U.S. federal income tax consequences but may result in an inclusion in gross income without receipt of such income.

2023 Annual Information Form

Other Business Risks

Mineral exploration is a highly competitive industry.

The mineral exploration, development and production industry is intensely competitive in all of its phases and the Company must compete in all aspects of its operations with a substantial number of large established mining companies with greater liquidity, greater access to credit and other financial resources, newer or more efficient equipment, lower cost structures, more effective risk management policies and procedures and/or greater ability than the Company to withstand losses. The Company’s competitors may be able to respond more quickly to new laws or regulations or emerging technologies or devote greater resources to the expansion of their operations, than the Company can. In addition, current and potential competitors may make strategic acquisitions or establish cooperative relationships among themselves or with third parties. Competition could adversely affect the Company’s ability to acquire suitable new producing properties or prospects for exploration in the future. Competition could also affect the Company’s ability to raise financing to fund the exploration, development and operation of its properties or to hire qualified personnel. The Company may not be able to compete successfully against current and future competitors, and any failure to do so could have a material adverse effect on the Company’s business, financial condition or results of operations.

Environmental regulations are becoming more onerous to comply with, and the cost of compliance with environmental regulations and changes in such regulations may reduce the profitability of the Company’s operations and the Juanicipio Entities’ operations.

Environmental legislation on a global basis is evolving in a manner that will ensure stricter standards and enforcement, increased fines and penalties for non-compliance, more stringent environmental assessment of proposed development, the possibility of affected parties pursuing class action lawsuits and a higher level of responsibility for companies and their officers, directors and employees. The Company’s operations and the operations of the Juanicipio Entities at Juanicipio are subject to environmental regulations promulgated by government agencies from time to time. Environmental legislation provides for restrictions and prohibitions of spills, release or emission of various substances produced in association with certain mining industry operations, such as seepage from tailing storage facilities, which could result in environmental pollution. Failure to comply with such legislation may result in the imposition of fines and penalties. In addition, certain types of operations require submissions to and approval of environmental impact assessments. Environmental legislation is evolving in a manner which means stricter standards and enforcement, and more stringent fines and penalties for non-compliance. Environmental assessments of proposed projects carry a heightened degree of responsibility for companies and directors, officers and employees. The cost of compliance with environmental regulations and changes in such regulations may reduce the profitability of the Company’s operations and the operations of the Juanicipio Entities. Compliance with environmental laws and regulations may require significant capital outlays on behalf of the Company and the Juanicipio Entities and may cause material changes or delays in the Company’s and the Juanicipio Entities’ intended activities. The environmental impact assessments may impose the condition to the Company or the Juanicipio Entities of obtaining the authorization from the Indigenous communities where the mining activities are to be carried out.

Tailings Storage Facility / Permit Risks

The extraction process for silver and other metals will produce tailings, which is the sand-like material mixed with water that remain following the metal extraction process. Tailings are stored in engineered facilities (“tailings storage facilities” or “TSF”), which are designed, constructed, operated and closed in conformance with international design standards and best practices. A delay in obtaining permits relating to the TSF, a failure of the TSF walls or poor tailings management safety protocols, once operational, may adversely impact the Company’s business, operations and financial performance. 

Natural disasters can pose a threat to the stability of the tailings dam walls and pose a risk beyond the Company’s control. The failure of a tailings dam wall can result in suspension of operations, injuries, death in extreme cases, government inspections, increased cost and public relation concerns. Should a breach of these facilities occur due to extreme weather, seismic event, or other incident, the Company could suffer a material financial impact on the Company’s operations and financial condition. See “Natural Disasters”.

2023 Annual Information Form

The initial concept for tailings deposition at Juanicipio was to construct a starter cell, with initial capacity for 14-16 months’ production, and to construct a second larger cell during the initial year of operation. The granting of construction permits for the second cell have been delayed, and as a contingency, Juanicipio installed a fully culvert-contained transport pipeline to the nearby Saucito TSF to facilitate tailings deposition while awaiting the permit and construction of the second Juanicipio tailings cell.

The Company may experience difficulties managing and integrating acquisitions.

The Company continually seeks opportunities to acquire or invest in businesses that could expand, complement or otherwise relate to MAG’s current or future business. The Company may also consider, from time to time, opportunities to engage in joint ventures or other business collaborations with third parties to address particular market segments. These activities create risks, such as: (i) the need to integrate and manage the businesses acquired with MAG’s own business; (ii) additional demands on the Company’s resources, systems, procedures and controls; (iii) disruption of the Company’s ongoing business; and (iv) diversion of management’s attention from other business concerns. Moreover, these transactions could involve: (i) substantial investment of funds or financings by issuance of debt or equity securities; (ii) substantial investment with respect to operational integration; and (iii) the acquisition or disposition of product lines or businesses. Also, such activities could result in one time charges and expenses and have the potential to either dilute the interests of existing shareholders or result in the issuance of, or assumption of debt. Such acquisitions, investments, joint ventures or other business collaborations may involve significant commitments of financial and other resources of MAG. Any such activities may not be successful in generating revenue, income or other returns to MAG, and the resources committed to such activities will not be available to the Company for other purposes. Any inability to address risks associated with acquisitions or investments in businesses may negatively affect MAG’s operating results. Additionally, any impairment of goodwill or other intangible assets acquired in an acquisition or in an investment, or charges to earnings associated with any acquisition or investment activity, may materially reduce the Company’s earnings, which, in turn, may have an adverse material effect on the price of Common Shares.

The Company or the Juanicipio Entities may be subject to litigation, the disposition of which could negatively affect the Company’s profits to varying degrees.

All industries, including the mining industry, are subject to legal claims, with and without merit. Due to the nature of its business, each of the Company and the Juanicipio Entities may, in the future, be subject to claims (including class action claims and claims from government regulatory bodies) based on allegations of negligence, breach of statutory duty, public nuisance or private nuisance or otherwise in connection with its operations or investigations relating thereto. Defense and settlement costs can be substantial, even with respect to claims that have no merit. Due to the inherent uncertainty of the litigation process, the litigation process could take away from management time and effort and there can be no assurance that the resolution of any particular legal proceeding will not have a material adverse effect on the Company’s operations and financial position. Results of litigation are inherently uncertain and there can be no assurances as to the final outcome. The Company’s liability insurance may not fully cover such claims. See also “The Company holds its Juanicipio interest through a minority shareholding in the Juanicipio Entities and therefore may be adversely impacted by disputes amongst the shareholders.”

If either the Company or the Juanicipio Entities, through the operator Fresnillo, are unable to hire, train, deploy and manage qualified personnel in a timely manner, particularly in Mexico, their ability to manage and grow its business will be impaired.

Recruiting and retaining qualified personnel is critical to the Company’s and the Juanicipio Entities’ success. As Fresnillo is the operator of Juanicipio, the ability to recruit and retain qualified personnel with respect to that project lies outside the direct control of the Company. The number of persons skilled in acquisition, exploration, development and operation of mining properties is limited and competition for such persons is intense. As business activity grows, additional key financial, administrative and mining personnel, as well as additional operations staff may be required, particularly in Mexico. The Company or Minera Juanicipio may not be successful in attracting, training and retaining qualified personnel as competition for persons with these skill sets increases. If the Company or Minera Juanicipio is not successful in attracting, training and retaining qualified personnel, the efficiency of its operations could be impaired, which could have an adverse impact on the Company’s future cash flows, earnings, results of operations and financial condition.

2023 Annual Information Form

It may be particularly difficult to find or hire qualified personnel in the mining industry who are situated in Mexico, to obtain all of the necessary services or expertise in Mexico, or to conduct operations on the Company’s projects (including Juanicipio) at reasonable rates. If qualified personnel cannot be obtained in Mexico, the Company or Minera Juanicipio may need to obtain those services outside of Mexico, which will require work permits and compliance with applicable laws, and could result in delays and higher costs to the Company.

In addition, the COVID-19 pandemic or the personal security risk in Juanicipio area may cause reduced availability to skilled workers for the Company.

Cyber security risks may impact the Company’s business.

The Company’s information systems, and those of its counterparties, third-party service providers and vendors, are vulnerable to an increasing threat of cyber security risks. Unauthorized parties may attempt to gain access to these systems or the Company’s information through fraud, deceit or other means.

The Company’s operations depend, in part, on how well the Company and its suppliers, as well as counterparties, protect networks, equipment, information technology (“IT”) systems and software against damage from a number of threats. The Company has entered into agreements with third parties for hardware, software, telecommunications and other services in connection with its operations. The Company’s operations also depend on the timely maintenance, upgrade and replacement of networks, equipment, IT systems and software, as well as pre-emptive expenses to mitigate the risks of failures. A cyber-attack or failure of information systems could, depending on the nature and degree of any such failure, adversely impact the Company’s reputation and results of operations. Cyber-attacks to the Company’s head office could result in damage or loss of data and operational capability. Cyber-attacks to Juanicipio can render systems down for a longer period of time or destruction of data which could impact development and ultimate operations.

Although to date the Company has not experienced any known losses relating to cyber-attacks or other data/information security breaches, there can be no assurance that the Company will not incur such losses in the future. The Company’s risk and exposure to these matters cannot be fully mitigated because of, among other things, the evolving nature of these threats. Cyber security and the continued development and enhancement of controls, processes and practices designed to protect systems, computers, software, data and networks from attack, damage or unauthorized access remain a priority for the Company, but there is no assurance that actions taken by the Company will be sufficient to eliminate the risks.

Any future significant compromise or breach of the Company’s data/information security, whether external or internal, or misuse of data or information, could result in additional significant costs, fines, lawsuits and damage to the Company’s reputation. In addition, as the regulatory environment related to data/information security, data collection and use, and privacy evolves, with new and constantly changing requirements applicable to the Company’s business, compliance with those requirements could also result in additional costs. The Company may be required to expend additional resources to continue to modify or enhance protective measures or to investigate and remediate any security vulnerabilities. Any of these factors could have a material adverse effect on the Company’s results of operations, cash flows and financial position.

Natural Disasters

The Company is subject to risks typical in the mining business. These include, but are not limited to, operational issues such as unexpected geological conditions and natural disasters, such as earthquakes, that cause unanticipated increases in the costs of extraction or leading to cave-in and rock bursts, particularly as mining moves into deeper levels. Major cave-ins, flooding, storms or other natural disasters could also occur under extreme conditions. Such occurrences could result in damage to, or destruction of, mineral properties or production facilities, personal injury or death, environmental damage, delays in mining, monetary losses and possible legal liability. As a result, the Company may incur significant liabilities and costs that could have a material adverse effect upon its business, results of operations and financial performance.

2023 Annual Information Form

Infrastructure, including electricity supplies, that may be currently available and used by the Company may, as result of natural disaster, be destroyed or made unavailable or available in a reduced capacity. Were this to occur, operations at the Company’s properties may become more costly or have to be curtailed or even terminated, potentially having serious adverse consequences to the Company’s financial condition and viability that could, in turn, have a material adverse effect on the Company’s business, results of operations or financial performance.

The Company has insurance in amounts that it considers to be adequate to protect itself against certain risks of mining and processing caused by natural disasters. However, the Company may become subject to liability for hazards which it cannot insure against or which it may elect not to insure against because of premium costs or other reasons. In particular, the Company is not insured for environmental liability or earthquake damage. See “Tailings/Permit Risks” above.

The Company may face equipment shortages, access restrictions and a lack of infrastructure.

The majority of the Company’s interests in mineral properties are located in remote and relatively uninhabited areas. Such mineral properties, including the Company’s interest in Juanicipio, will require adequate infrastructure, such as roads, bridges and sources of power and water, for future exploration and development activities. The lack of availability of these items on terms acceptable to the Company, and in the case of Juanicipio, on terms acceptable to the operator (Fresnillo), or the delay in availability of these items could prevent or delay exploitation or development of the Company’s mineral property interests. In addition, unusual weather phenomena, sabotage, government or other interference in the maintenance or provision of such infrastructure could adversely affect the Company’s operations and profitability. Natural resource exploration, development, processing and mining activities are dependent on the availability of mining, drilling and related equipment in the particular areas where such activities are conducted. A limited supply of such equipment or access restrictions may affect the availability of such equipment to the Company and the Juanicipio Entities and may delay exploration, development or extraction activities. Certain equipment may not be immediately available or may require long lead time orders. A delay in obtaining necessary equipment could have a material adverse effect on the Company’s operations and financial results.

The Company is dependent on its key personnel, none of whom are insured by the Company.

The Company is dependent upon the continued availability and commitment of its key management, employees and consultants, whose contributions to immediate and future operations of the Company are of central importance. The Company relies on its President & CEO, George Paspalas, and its other officers, who have entered into written employment agreements with the Company, for the day-to-day operation of the Company, its projects and the execution of the Company’s business plan. The Company has not obtained “key man” insurance for any of its management. The loss of any member of the senior management team could impair the Company’s ability to execute its business plan and could therefore have a material adverse effect on the Company’s business, results of operations and financial condition. The loss of George Paspalas in particular could have a negative impact on the Company until he is replaced.

Foreign currency fluctuations and inflationary pressures may have a negative impact on the Company’s financial position and results.

The Company’s property interests in Mexico make it subject to foreign currency fluctuations and inflationary pressures which may adversely affect the Company’s and the Juanicipio Entities’ financial position and results. Exploration and development programs conducted by the Company and the Juanicipio Entities in Mexico, are partially funded in Mexican pesos and any appreciation in Mexican currency against the U.S. dollar will increase the costs of carrying out these operations in Mexico.

The Company has determined that its functional currency is the U.S. dollar; however, it maintains a portion of cash balances and other net monetary assets in Canadian dollars and Mexican pesos in order to fund expenditures in such currencies. The Company is therefore exposed to currency risks and exchange losses may be realized on a devaluation of either the Canadian dollar or Mexican peso.

2023 Annual Information Form

The fluctuations of the Mexican peso also expose the Company to a deferred tax expense in relation to temporary differences between the book and tax base of its Mexican non-monetary assets, and specifically the tax base of the Company’s investment in the Juanicipio Entities. The tax base of this investment is determined in a different currency (Mexican peso) than the book value which is based on the functional currency (U.S. dollar). Changes in the Mexican peso/U.S. dollar exchange rate can give rise to temporary differences that result in deferred tax liability and deferred tax expense in accordance with IAS 12 Income Taxes.

In Canada, administrative overheads are primarily denominated in Canadian dollars, and an appreciation in the Canadian dollar relative to the U.S. dollar will increase the Company’s overhead costs as reported in U.S. dollars.

Steps taken by management to address the consequences of foreign currency fluctuations may not eliminate or reduce any adverse effects, and the Company does not use any derivative instruments to reduce its exposure to fluctuations in foreign exchange rates. Accordingly, the Company may suffer losses due to adverse foreign currency fluctuations. The Company also bears the risk of incurring losses occasioned as a result of inflation in Mexico.

Conflicts of interest may arise among the Company’s directors as a result of their involvement with other natural resource companies.

Most of the Company’s directors do not devote their full time to the affairs of the Company. Some of the directors and some of the officers of the Company are also directors, officers or shareholders of other natural resource or public companies, and as a result they may find themselves in a position where their duty to another company conflicts with their duty to the Company. Although the Company has policies which address such potential conflicts, and the Business Corporations Act (British Columbia) has provisions governing directors in the event of such a conflict, none of the Company’s constating documents or any of its other agreements contain any provisions mandating a procedure for addressing such conflicts of interest. There is no assurance that any such conflicts will be resolved in favour of the Company. If any such conflicts are not resolved in favour of the Company, the Company may be adversely affected.

The Company may be subject to reputational risk.

As a result of the increased usage and the speed and global reach of social media and other web-based tools used to generate, publish and discuss user-generated content and to connect with other users, companies today are at much greater risk of losing control over how they are perceived in the marketplace. Damage to the Company’s reputation can be the result of the actual or perceived occurrence of any number of events, and could include any negative publicity (for example, with respect to the Company’s handling of environmental matters or the Company’s dealings with community groups), whether true or not.

The Company places a great emphasis on protecting its image and reputation, but the Company does not ultimately have direct control over how it is perceived by others. Reputation loss may lead to increased challenges in developing and maintaining community relations, decreased investor confidence and an impediment to the Company’s overall ability to advance its projects, thereby having a material adverse impact on financial performance, cash flows and growth prospects.

Mining operations generally involve a high degree of risk and potential liability and insurance coverage may not cover all potential risks associated with the Company’s operations.

Unusual or unexpected formations, power outages, labour disruptions, theft of assets, Indigenous communities complaints, industrial accidents, flooding, explosions, cave-ins, seismic activity, rock bursts, landslides, pollution, inclement weather, fire, mechanical equipment failure and the inability to obtain suitable or adequate machinery, equipment or labour are several of the hazards and risks involved in the conduct of exploration programs in the Company’s mineral properties, including Juanicipio, any of which could result in personal injury or death, damage to property, environmental damage and possible legal liability for any or all damage. There was a fatality at Juanicipio in 2014. Safety measures have been implemented by the Company and Fresnillo; however, there are no assurances that these measures will be successful in preventing or mitigating future accidents. The Company maintains insurance against risks in the operation of its business in amounts that it believes to be reasonable. Such insurance, however, contains exclusions and limitations on coverage and the Company’s insurance may not cover all potential risks associated with the Company’s operations, including the operations in Juanicipio. There can be no assurance that any such insurance will continue to be available, will be available at economically acceptable premiums or will be adequate to cover any resulting liability.

2023 Annual Information Form

In some cases, such as with respect to environmental risks, coverage is not available or considered too expensive relative to the perceived risk. Losses resulting from any uninsured events may cause the Company to incur significant costs that could have a material adverse effect on the Company’s operations and financial condition. In addition, from time to time, the Company and the Juanicipio Entities may be subject to governmental investigations and claims and litigation filed on behalf of persons who are harmed while at its properties or otherwise in connection with the Company’s operations. To the extent that the Company or the Juanicipio Entities are subject to personal injury or other claims or lawsuits in the future, it may not be possible to predict the ultimate outcome of these claims and lawsuits due to the nature of personal injury litigation. The Company does not carry political risk insurance. Similarly, if the Company or the Juanicipio Entities are subject to governmental investigations or proceedings, they may incur significant penalties and fines, and enforcement actions against them could result in the closing of the Company’s mining operations. If claims and lawsuits or governmental investigations or proceedings are finally resolved against the Company or the Juanicipio Entities, as applicable, the Company’s financial performance, financial position and results of operations could be materially adversely affected.

Metal prices and marketability fluctuate and any decline in metal prices may have a negative effect on the Company.

Metal prices, including silver, gold, zinc, lead and copper prices, have fluctuated widely in recent years. The marketability and price of any metals that may be acquired or produced by the Company may be affected by numerous factors beyond the control of the Company. These factors include delivery uncertainties related to the proximity of potential Mineral Reserves to processing facilities and extensive government regulation relating to price, taxes, royalties, allowable production land tenure, the import and export of minerals and many other aspects of the mining business.

Declines in metal prices may have a negative effect on the Company and on the trading value of its shares.

MINERAL PROJECTS

The Company’s material property at the date of this AIF is its 44% ownership (Fresnillo holds the remaining 56%) in the Juanicipio Entities, which hold Juanicipio.

Mexican mining concessions are issued by the Federal Government of Mexico. All concessions held by Minera Juanicipio are up to date with respect to Mexican Mining Concession Taxes and work filing requirements.

The majority of the Company’s mineral properties are located in remote and relatively uninhabited areas. There are currently no areas of interest to the Company within its mineral concessions that are overlain by significant habitation or industrial users. Notwithstanding this there are potential surface usage issues in some areas. Some surface rights are owned by local communities or “Ejidos” and some surface rights are owned by private ranching or dwelling interests. Exploration activities are not typically materially impacted by competing surface rights issues, although in some areas the Company has been required to negotiate compensation for surface rights holders in order to secure right of access. The Company is required to negotiate either leases or acquire surface rights outright in those areas where it may wish to develop mining operations. At Juanicipio, Minera Juanicipio has acquired some surface rights overlying the Valdecañas and Juanicipio Veins.

In some of the more remote property locations, the access to water, power and basic infrastructure is limited or non-existent. Any mining operations undertaken in such areas will need to take the supply of such requirements into consideration. For the Juanicipio property, the available supply, or the ability to establish supply, of water, power and infrastructure is considered to be adequate or manageable.

2023 Annual Information Form

Juanicipio

The Juanicipio Mine is located in the Fresnillo District, Zacatecas State, Mexico, approximately 6 kilometres west of the mining town of Fresnillo, and covers approximately 7,679 hectares. The Company initially acquired a 100% interest in Juanicipio in 2003. From 2005 to 2007, Peñoles earned a 56% interest in Juanicipio by conducting $5 million of exploration on the property and purchasing $1 million worth of Common Shares of the Company at market price at the time of purchase. In December 2007, Lagartos and Peñoles established Minera Juanicipio to hold and operate all mineral and surface rights related to Juanicipio. In 2008, Peñoles transferred its 56% interest of Minera Juanicipio to Fresnillo pursuant to a statutory merger. Fresnillo is the operator of Minera Juanicipio, which is governed by the Shareholders’ Agreement and its corporate by-laws. Pursuant to the Shareholders’ Agreement and Minera Juanicipio’s corporate by-laws, each shareholder is to provide funding pro rata to its interest in Minera Juanicipio, with Fresnillo contributing 56% and the Company, through Lagartos, contributing 44%, respectively, and if either party does not fund pro rata, their ownership interest will be diluted in accordance with the Shareholders’ Agreement. On December 27, 2021, for various business reasons, the Company and Fresnillo incorporated Equipos Chaparral, S.A. de C.V. in the same ownership proportions as Minera Juanicipio for the purpose of holding the Juanicipio plant and mining equipment to be leased to Minera Juanicipio.

The major asset associated with Juanicipio is a high-grade silver-gold-lead-zinc epithermal vein deposit. An NI 43-101-compliant technical report commissioned by Minera Juanicipio on behalf of the Company, the 2024 Technical Report, was filed on SEDAR+ on March 27, 2024.

Summary

The following summary of the Juanicipio property is extracted from the 2024 Technical Report. The complete report can be viewed on SEDAR+ at www.sedarplus.ca and is incorporated by reference into this AIF. The detailed disclosure, including project description and location, climate, local resources, infrastructure, physiography, history, geological setting, exploration, mineralization, drilling sampling and Mineral Resource and Mineral Reserve estimates, are contained in the 2024 Technical Report. Defined terms and abbreviations used herein and not otherwise defined shall have the meanings ascribed to such terms in the 2024 Technical Report. The monetary values shown in the 2024 Technical Report are in U.S. dollars ($) and are reported on a 100% basis, unless otherwise denoted.

Introduction

The 2024 Technical Report on the Juanicipio property has been prepared by AMC of Vancouver, Canada on behalf of MAG Silver and is reporting updated Mineral Resource estimates and a statement of Mineral Reserve estimates for the first time. The 2024 Technical Report has been prepared in accordance with the requirements of NI 43-101 of the Canadian Securities Administrators for lodgement on SEDAR+.

MAG Silver holds a 44% interest in Minera Juanicipio, the Mexican incorporated joint venture (JV) company that owns (100%) of the Juanicipio property. Fresnillo owns 56% of Minera Juanicipio and is the project operator. The Juanicipio property is located in Zacatecas State, Mexico. Internal feasibility‑level studies completed in 2018 (2018 study work) on behalf of Minera Juanicipio were used to advance the project to construction in April 2019. Underground production of mineralized development material commenced in the third quarter of 2020 and commercial production was declared in mid-2023. Mine operations are still in a ramp-up stage. Nameplate processing capacity of 4,000 tpd was achieved in Q3 2023, with mine ore production averaging about 3,700 tpd in the latter part of the year (approximately 1.3 Mt per annum (“Mtpa”)). Optimization and efficiency improvements are to be worked on in 2024.

Indicated and Measured Mineral Resource estimates are reported for the Valdecañas vein, which constitutes the major part of the Valdecañas vein system. Inferred Mineral Resource estimates are reported for the Valdecañas, Ramal 1, Venadas, and Anticipada parts of the Valdecañas system, and for the Juanicipio vein. Mineral Reserve estimates are reported for the first time and are based on the Measured and Indicated Mineral Resources.

2023 Annual Information Form

Mineral Resource estimates are current as of 31 May 2023 and were prepared by Fresnillo; they have been reviewed by Mr. J. M. Shannon, an independent consultant, who takes Qualified Person responsibility for those estimates. Mineral Reserve estimates are current as of 31 May 2023 and were also prepared by Fresnillo; they have been reviewed by Mr. P. Salmenmaki, of AMC, who takes Qualified Person responsibility for those estimates. The Report has an effective date of 4 March 2024.

The 2024 Technical Report provides an update to the Preliminary Economic Assessment (PEA) which was reported in the “MAG Silver Juanicipio NI 43-101 Technical Report, Amended and Restated, Zacatecas State, Mexico”, (the “2017 AMC Technical Report”). This was prepared by AMC for MAG Silver, with an effective date 21 October 2017, and a revised date 19 January 2018.

The monetary values shown in the 2024 Technical Report are in US dollars ($) unless stated otherwise.

Location

The Juanicipio property is situated about 6 kilometres (km) to the south-west of the city of Fresnillo, which is located about 60 km north-west of the state capital, Zacatecas City. Zacatecas City has a population of approximately 140,000 and is located about 550 km north-west of Mexico City. Zacatecas City is serviced by daily flights from Mexico City. Surface rights to the part of the Juanicipio property where Mineral Resources have been identified are held by Minera Juanicipio.

Geology and Mineralization

The Juanicipio deposit comprises two significant silver-gold epithermal vein systems: the Valdecañas vein system and the Juanicipio vein. The Valdecañas vein system includes the Valdecañas vein itself and four structures named Ramal 1, Venadas, Pre-Anticipada and Anticipada. The Juanicipio vein is located about 1,100 metres (m) south of the Valdecañas vein. Both systems strike east-southeast with an average dip of about 58 degrees (°) south-west. The more recently discovered vertical vein Venadas crosses the Valdecañas vein perpendicularly. The Valdecañas vein hosts most of the Mineral Resources currently estimated on the Juanicipio property.

The Valdecañas vein system has undergone multiple mineralizing events as suggested by various stages of brecciation and quartz sealing, local rhythmic microcrystalline quartz-pyrargyrite-acanthite banding, and open-space cocks-comb textures and vuggy silica. The vein system exhibits the characteristic metal zoning of the principal veins in the Fresnillo district where high grade silver with lower grade lead and zinc transitions to higher grade lead and zinc with less silver with increasing depth.

Exploration and Drilling

Most exploration work on the Juanicipio property has consisted of drilling, both from surface and underground, and underground channel sampling, which has been carried out since 2020. Limited soil sampling programs were carried out until 2017 and exploration to that point was focused on the Valdecañas area. A few additional exploration targets were identified and are discussed in Section 7 of the 2024 Technical Report. Approximately 5% of the concessions have been explored or drilled.

Fresnillo, the operator of Minera Juanicipio, commenced a surface mapping and detailed sampling program in 2016 to assist with identifying additional structures hosting mineralization on the Juanicipio property. This program incorporated hyperspectral analyses of surface and drill core coupled with the collection of 255 rock samples from outcrops exhibiting deformation / veining and alteration. The results of this program have helped improve the conceptual model of epithermal mineralization in the Fresnillo district (Figure 8.1 in the 2024 Technical Report). The results were also used to create a detailed structural and hyperspectral map (Figure 9.1 in the 2024 Technical Report). The dashed white line in Figure 9.1 shows the location of the schematic section in Figure 8.1.

In 2003 and 2004, MAG Silver drilled nine core drillholes totalling 7,346 m. From August 2005 until May 2023, MAG Silver and Fresnillo, on behalf of the joint venture, have drilled a total of 499 core drillholes totalling 380,738 m on the Juanicipio property (Table 10.1 in the 2024 Technical Report). Most of the drilling targeted the Valdecañas vein system. 4,537 channels totalling 4,677 m has been collected since October 2019.

2023 Annual Information Form

Drilling has been commonly collared using HQ (64 millimetres (mm) core diameter) equipment, reducing to NQ (48 mm core diameter) and BQ (37 mm core diameter) as necessary. The current drilling contractor, Devico, has been using wedges or cement plugs every 30 m to give a deviation up to 9°. Diamond drilling has been carried out using Boart Longyear LF-90 and Atlas Copco CS-14 and CS‑3001 drill rigs.

Overall drillhole spacing varies from 70 m to 100 m along strike and 50 m to 100 m down dip in the plane of mineralization. Core recovery is generally good except in extremely fractured near-surface rock, argillite, or wider fault structures.

Mineral Resource Estimates

The Mineral Resources for the Juanicipio deposit have been prepared by Mr. Gerardo Elly Merino Angel, Resource Geologist of Fresnillo Operations S.A. Mr. John Morton Shannon, P.Geo. reviewed the methodologies and data used to prepare the resource estimates and is satisfied that they comply with reasonable industry practice. Mr. John Morton Shannon takes responsibility for these estimates.

This estimate is dated 31 May 2023 and supersedes the previous estimate outlined in the 2017 AMC Technical Report. The previous estimate had an effective date of 21 October 2017, and included drilling up to December 2016.

The data used in the current estimate includes results of all drilling carried out on the Juanicipio property up to 31 May 2023. Depletion by mining is also up to that date. The database consists of 488 surface and underground diamond drillholes and 972 channel samples.

Mineralization is hosted in six veins within the two major vein systems. Each of the veins has been wireframed separately. Estimates were also done separately, resulting in six block models.

Leapfrog Geo was used to construct the geological domains and to prepare assay data for geostatistical analysis. Leapfrog EDGE version 4.0.5 was used for geostatistical analysis and variography. Datamine RM was used to construct the block model, estimate metal grades, and report out Mineral Resources. Grade interpolation for Au, Ag, Pb, Zn, and Fe were carried out using Ordinary Kriging (OK) for the Valdecañas, Ramal 1, Anticipada, Pre-Anticipada, and Juanicipio veins. For the Venadas vein inverse distance cubed (ID3) was chosen as the interpolation method. The bulk density was estimated into the block model using ID3 for all veins.

The current estimate is summarized in Table 1.1 and expanded in Table 14.16 in the 2024 Technical Report.

Table 1.1         Juanicipio Mineral Resources at 31 May 2023

Source: AMC based on Fresnillo data, 2023.

Notes:

2023 Annual Information Form

The Qualified Person is not aware of any known environmental, permitting, legal, title, taxation, socioeconomic, marketing, political, or other similar factors that could materially affect the stated Mineral Resource estimates. This part of Mexico is regarded as a good jurisdiction to operate in, with a solid framework addressing the factors mentioned above.

Fresnillo has been working in the region for decades and operates an additional two major mining operations at Fresnillo and Saucito. It is aware of any local aspects of operating in the district.

Mineral Reserves

The Mineral Reserve statement for the Juanicipio Mine is provided in Table 1.2. Mineral Reserve estimates are based on a cut-off value that considers mining, processing, and general and administration costs, with a variable trucking cost for each mining block. The variable component of the operating cost is generally a small fraction of the overall cost and Mineral Reserves are largely reported above a value of $150/t ore for cut and fill stopes and $122/t ore for longhole stopes. Some marginal ore that may lie on the fringes of other stopes that require development is included at a variable marginal cost that is generally above $121 for cut-and-fill and $93 for longhole stopes. Mineral Reserves are based on Measured and Indicated Mineral Resources only. Mineral Reserves (100% basis) are reported as of 31 May 2023, as shown in Table 1.2.

Table 1.2         Summary of Mineral Reserves as of 31 May 2023

Source: AMC / Fresnillo, 2023.

Notes:

2023 Annual Information Form

Geotechnical Considerations

Rock Mass Characterization

The rock mass at Juanicipio was divided into four geotechnical domains based on lithology domains, including:

Both Bieniawski’s RMR89 (Rock Mass Rating) and Barton’s Q system have been used for the rock mass classification for Juanicipio. In development and stoping operation to date, encountered ground conditions have been largely aligned with those projected from the 2018 study work geotechnical assessment. In terms of RMR89, rock qualities in the volcanic domain vary considerably from ‘Very Poor’ to ‘Good’, which is largely associated from weathering and alteration. The fault zones are generally ‘Poor’ to ‘Fair’. Rock qualities of the sedimentary and vein domains are typically ‘Fair’ to ‘Good’, with some ‘Very Poor’ to ‘Poor’ ground being encountered in the vicinity of faults or shale.

Open Stope Stability

The open stope stability assessment in the 2018 study work indicated that:

In stoping operations to date, stope design criteria have been adjusted to account for differences in ground conditions including adverse fault structures and unfavourable bedding planes of shale encountered. Figure 1.1 presents the current geotechnical guideline of stoping and backfilling for different rock mass conditions.

2023 Annual Information Form

Figure 1.1         Geomechanical guideline for stoping and backfilling

Source: Juanicipio, 2024.

6 m long single strand Ø16 mm cable bolts on a 3 m (longitudinal) by 3.5 m (radial) staggered pattern have been installed in the back of stopes as required; 8 m long cablebolts with the same space pattern have been installed at the intersections of stope backs and access drives.

Cavity Monitoring System (CMS) surveying has indicated that footwall ELOS is typically less than 0.4 m, and the hangingwall ELOS is typically within the range of 0.5 m to 1.2 m. Excessive hangingwall overbreak up to 3 m - 3.5 m has been encountered in Poor rock mass conditions or due to the adverse bedding planes of shale.

Ground Support Requirements

The geotechnical support design for Juanicipio underground mining developed during the 2018 study work has been adjusted based on site specific experience. Table 1.3 presents the current primary ground support requirement based on RMR89.

Table 1.3         Ground support requirements for primary support.

2023 Annual Information Form

Secondary support, such as cablebolts, are designed for large spans in intersections, stope backs, and chambers if the primary support is inadequate. Cablebolt design (lengths and bolting pattern) may vary due to local conditions (excavation dimensions, structures orientations and rock mass qualities) and is assessed on a case-by-case basis.

Spiling is also used at Juanicipio for drifting through Poor ground to prevent unravelling causing overbreak or large instabilities, and limit overbreak due to adverse structures. As required, 12 m long Ø20 mm cement grouted steel bars have been used as spiles and installed above excavation profiles on a 0.5 m spacing prior to development.

Mining Concept

Previous studies considered longhole open stoping (LHOS) with waste rockfill as the preferred mining method; however, in the wider stopes that have been identified at deeper levels, cemented rock fill is planned to be utilized where more than one longitudinal pass is required. Some cut and fill stoping is planned in the upper areas where the ore is thin or ground conditions are deemed ‘Poor’. The steady state production throughput is planned to be approximately 4,000  tpd.

Mineable Shape Optimizer (MSO) has been used to generate stope shapes of mineralization projected to be economically viable. The stopes have then been checked to remove any outlying stopes that would not be economic when the cost of access development is included. Utilizing the selected stopes, the mine design has been updated to allow for changes in the Mineral Resource while maintaining the same underground infrastructure and ventilation strategy as proposed in the 2018 study work. As-built wireframes of the latest development were also provided and included in the mine design. Any mined-out development or stopes were flagged in the model as part of the Mineral Reserve estimation process.

The mine access is via twin declines to the top of the mineralization, with a third (conveyor) decline that is located near the process plant in the Linares valley. The twin main declines access the orebody before splitting into three internal ramp systems that access the ore on a 20 m sub-level spacing, with central accesses to the vein as well as footwall drives to the extents of the mineralization to allow placement of rock fill. Stopes 20 m high (floor to floor) are designed to be mined from the extents back to the central access (retreat) with rock fill placed within 20 m of the retreating face.

The three internal ramps used to access the ore are shown in a projection in Figure 1.2. Waste accesses are developed in the footwall to provide access for backfill directly off the main ramp systems east and west along strike.

2023 Annual Information Form

Figure 1.2         Access development composite plan layout (over three production levels)

Source: Fresnillo 2023.

Note: Projection and not to scale.

Truck haulage is currently used for transporting ore and waste from the mine workings to surface. It is planned to purchase and install a conveyor in the conveyor ramp from 2024 to 2025 as the primary life-of-mine method for transporting ore to the process plant. Until the conveyor is installed and fully operational, ore is continuing to be trucked to surface.

Once the conveyor is in place, ore will be trucked to an ore pass feeding the underground crusher, which is located on 1950 RL, from where it will be transferred to surface via the conveyor (base at 1940 RL). The decline portal for the conveyor is near the processing plant location in the Linares valley.

All waste not placed directly in stopes has been planned to be trucked to surface via the twin main access declines, where it will be stockpiled and later used for backfilling stopes as they are mined out.

The ventilation system for Juanicipio is designed as a ‘pull’ system, with primary exhaust fans located on surface at the top of each of the two primary exhaust raises. The crusher and tipple are planned to be ducted to an exhaust raise and through to surface. The conveyor decline is planned to exhaust both to the conveyor portal and to the crusher exhaust raise. This ensures that the conveyor decline is ventilated independently. Fresh air is delivered into the mine from the two main declines as well as fresh air raises from surface. Fresh air is distributed underground through the declines as well as internal fresh air raises. Internal return air raises carried with the production ramps connect to a dedicated exhaust airway and the return air raises to surface. The Juanicipio Mine design includes an underground workshop at 1850 RL with fuel bay, and an underground magazine at 1920 RL. As such, some fresh air will be supplied to these areas, with the exhaust from each location reporting to a dedicated return air raise.

2023 Annual Information Form

Figure 1.3 is an illustration of the mine as a whole, showing the as-built development, the conveyor route to surface, and the twin decline access ramps.

Figure 1.3         Overall mine layout

Source: AMC, 2024.

Note: Not to scale.

During pre-production all mobile equipment for development was supplied by a contractor. Since production has begun, stoping has been undertaken by the owner while all development has remained with contractors. An estimate of the mobile equipment fleet requirements was developed based on meeting the demands of the development and production schedule.

Equipment has been selected based on projected productivities, but also considering the practical travel distances between mining zones. As the time to travel from one zone to another could be significant, the planned fleet size for the major pieces of development and production equipment has been based on most pieces being dedicated to a single mining zone. The haul truck fleet sizes, however, have been based on projected ore and waste tonnages as well as the haulage distances to each destination.

Development and production cycle times were evaluated to assist in the determination of the overall mining fleet. A typical development cycle analysis included consideration of jumbo drilling, face charging, mucking, scaling, and bolting, as well as intersection cable bolting, scaling, and shotcreting as required. A typical production cycle analysis consisted of longhole drilling, stope charging, mucking, and backfilling.

2023 Annual Information Form

Labour requirements are based on an operating schedule of two, 12-hour shifts per day, 350 days per year. This is reduced to approximately 17.0 effective working hours per day after considering travel time, lunch breaks, pre-shift meetings, and other miscellaneous breaks. The workforce estimates have been largely based on operating experience to date and on a productivity analysis of underground activities and the physical requirements of the mine schedule. The underground workforce, as well as geology and survey, is made up of three rotations working a 10-days on and 5-days off schedule. Other technical support staff, mining supervisors and general and administration employees operate on a 5-day per week working schedule. The underground crew numbers are based on the equipment requirements to complete the work as planned. Additional personnel are included to cover absenteeism.

Personnel numbers will fluctuate over time to some extent as per the development and production schedule requirements. Peak total for the mine at full production is estimated to be approximately 1569, with a maximum number on site during the day shift.

Mineral Processing

The Juanicipio processing plant commenced operation in March 2023. Prior to that date, Juanicipio ore was largely processed at the neighbouring Saucito plant.

The Juanicipio plant has a nominal capacity of 4,000 tpd and consists of a comminution circuit with primary crushing and a semi-autogenous grinding mill and ball mill, followed by sequential flotation to produce a silver-rich lead concentrate, then a zinc concentrate, and then a gold-silver-bearing pyrite concentrate. Ultimately, ore crushing will be at an underground crusher, with delivery to the mill stockpile via a conveying system that will exit the mine at the portal adjacent to the mill.

The separate lead, zinc, and pyrite concentrates are thickened, filtered, and stockpiled. Lead and zinc concentrates are stored in separate concentrate storage areas with capacity for seven days of operation. The shipment of concentrates is carried out from Monday to Saturday using a front-end loader and specialized concentrate trucks, which transport the concentrates directly to a smelter or to a port or rail system for onward shipment.

Pyrite concentrates are similarly stored, with a first successful concentrate shipment recently achieved. The Qualified Person notes that the process to produce pyrite concentrates has been in an optimization phase.

Total plant feed for the plant operating period from March to December 2023 was 956,914 t. Average grades for the period were 1.28 g/t Au, 489 g/t Ag, 1.20% Pb, 2.14% Zn, and 6.23% Fe. Average planned grades from Juanicipio mining for the period were 1.21 g/t Au, 434 g/t Ag, 1.10%Pb, and 1.99% Zn.

Gold, silver, lead, and zinc recoveries averaged 69.4%, 87.6%, 89.9%, and 90.5%, respectively, for the March to December 2023 period, compared to planned values of 75.8%, 87.1%, 86.3%, and 74.5%, respectively.

Commissioning and ramp-up have generally gone well, with the plant achieving designed throughput and designed silver, lead and zinc recoveries and concentrate grades. Gold recovery has improved as ramp-up and circuit optimization have progressed, with 71.4% being achieved in December 2023. The Qualified Person notes that, as of February 2024, the Knelson centrifugal concentrator to recover some of the gravity recoverable gold and silver early in the process flow is functioning, with full implementation imminent. The Qualified Person also acknowledges the continuing testing and process development being conducted by the plant’s operators to improve all processing aspects, including for gold recovery, and recommends continuation of the program.

Average mill recoveries of payable metal used to estimate revenue in the financial model are summarized in Table 1.4.

Table 1.4         Mill recoveries

2023 Annual Information Form

Project Infrastructure

A 6.5 km access road, mostly over hilly terrain, accesses the main declines portal site from the mill, with the plant site being connected to the main highway by a 1.4 km road. Both the 1.4 km two‑lane sealed road, which is suitable for use by heavy vehicles, and the access road to the main portals area are fully constructed and in operation.

Power is currently supplied to a main substation at the processing site via a 115 kilovolts (kV) overhead power line connected to the state-owned power grid. From the mill, a 13.2 kV power line has been extended to the conveyor drive, with a similar line to the main mine portals location. Fibre-optic cable has been installed from the mill control room to the underground mine via the conveyor decline and via the mine overland power line, which extends past the entrance to the conveyor decline and out to the underground mine main portal area. The fibre-optic cable fed into the underground mine from two locations provides some redundancy and greater communications reliability.

With completion of a Reverse Osmosis plant in 2023 and optimizing the consumption of treated municipal wastewater, all process water requirements are satisfied through the exclusive use of treated wastewater, thus eliminating any freshwater requirements from third parties. There are two additional wastewater treatment plants on site to reuse service water for dust control and irrigation of green spaces on the Juanicipio property. Potable water is purchased from local providers as required.

Detailed design of the tailings storage facility (TSF) for Juanicipio was undertaken by Knight Piésold. It is estimated that the Juanicipio processing plant will produce approximately 12.2 Mt of tailings for surface storage over the anticipated mine life of approximately 13 years. Mill tailings will be discharged to a TSF which has a total volume capacity of approximately 8.5 Mt as currently designed. It is envisaged that the remaining required tailings storage will come from potential deepening of the Cell 2 basin (currently being pursued), a future expansion to the TSF through construction of an adjacent cell, and / or from a vertical raise of the dam.

The TSF is designed for two construction and operational phases. Stage 1 will be constructed to a crest elevation of 2,217 m above mean sea level (“amsl”) and will have a maximum height of approximately 33 m. Stage 1 consists of two adjacent cells, Cell 1 to the west and Cell 2 to the east, that share an intermediate berm between the two. When the facility is at its ultimate configuration, Stage 2, the maximum height of the dam will be approximately 38 m, with a crest elevation of 2,222 m amsl. The Stage 1 dam may be considered a starter dam, encircling three sides of the geomembrane-lined tailings storage basin; the fourth side of the facility is created by the natural hillside slope. Only the outer dam will be raised during Stage 2 construction, thus the intermediate berm between Cells 1 and 2 will be covered with tailings during Stage 2 operations. For both the Stage 1 and Stage 2 configurations, the upstream and downstream slopes of the dam are designed to 2.5:1.0 H:V, with a crest width of 10 m.

The Juanicipio TSF features a homogeneous dam (i.e., non-zoned) founded upon native materials. Following site stripping, foundation preparation consists of removing all unsuitable soil strata (i.e., loose, caliche-rich) until reaching a competent layer as determined by site engineers. The dam contains a basal drainage system, consisting of a blanket drain built below the downstream portion of the dam to control potential seepage. Seepage that reaches the blanket drain is conveyed to collection drains along the outer perimeter of the dam, and then discharged into geomembrane-lined collection ponds. Seepage collected in the ponds is recirculated to the TSF, to the processing plant, or, as permitted by geochemical testing and regulations, discharged directly into the downstream environment.

Surface water management at the TSF is facilitated primarily by two non-contact diversion channels, one along the east side of the dam and the other along the south end and west sides of the facility. The channels are verified to accommodate run-on from the 1,000-year storm event as required by Comisiόn Nacional de Agua (“CONAGUA”). The east diversion channel is concrete-lined and the south/west channel is geotextile and riprap lined to deter erosion. Both channels feature energy dissipators at their termini prior to flow discharging into the downstream native environment. The TSF does not contain an operational spillway as it has been designed to store rainfall and run-on associated with the 72-hour probable maximum precipitation (“PMP”).

2023 Annual Information Form

Underground Infrastructure

The ore handling system is based around a nominal 4,000 tpd production capacity, approximately equivalent to 216 tonnes per hour (tph) over a 24-hour period, based on a capacity factor of 1.3. This allows for excess capacity in the ore handling system relative to any potential disconnection between the mine and mill. Ore is currently trucked to surface and then to the mill stockpile. Once the conveyor system to surface is in operation, ore transport from various mining levels will be by truck haulage to the crusher on 1950 RL. The crushed material will then be placed on a load-out belt that feeds the first of two sequential underground conveyors that bring the material to surface. At surface, a third conveyor delivers the material to an 8,000 tonne capacity stockpile that is adjacent to the mill.

Later in the mine life, an internal shaft (“winze”) may be considered to allow hoisting of crushed ore from the loading pocket on 1300 RL up to the loading bin on 1950 RL. From there, the ore would be conveyed out of the mine via the existing conveyor system. An alternative arrangement using vertical conveyors is also being evaluated. Access to the top of the proposed winze or vertical conveyor is already developed. The selected hoisting facility would accommodate the production capacity of 1.4 Mtpa, with spare capacity built-in.

Development waste is either hauled to surface by trucks via the twin access declines or placed directly into stopes as backfill. All waste hauled to surface to date is stored near the current portal and has been largely used for construction material. As mining progresses, additional waste required for subsequent backfilling is planned to be delivered down a waste pass driven as close to the deposit as practicable, and then distributed to the stopes.

Separate explosives magazines have been developed for detonators and high explosives (ANFO and packaged emulsion explosives). The primary explosives magazine has a concrete floor and is fitted with an overhead manual lifting system for handling bulk ANFO explosive. The explosives magazines are located on 1920 RL.

Although the main maintenance workshop is located on surface, all major scheduled planned maintenance and rebuilds will take place in the underground workshop. The underground workshop is located on 1850 Level and has multiple service bays with overhead cranes. The workshop is also being fitted with lunchroom, workstations, communications room, and emergency facilities.

Mobile electrical compressors supply compressed air for the underground operations and primary equipment such as longhole drills have their own mobile compressors. The main compressor is located near the No 2 fan on surface above the portals of the twin declines. Air supply to the underground workshop is from this compressor via the main decline.

Refuge station chambers with 30-person capacity are used for emergencies; these chambers are portable for flexibility of location at the most appropriate areas of the mine.

The groundwater inflow into the mine was estimated using pre-drilling ahead of ramp development. SRK conducted the groundwater studies and provided the predrilling program. There are two temporary pump stations already in operation that together can handle 2,500 gallons per minute (gpm). The main pump station on 1850 Level has three pumps installed with a fourth available on stand-by. The current capacity is 5,000 gpm. A second permanent pump station is planned for 1650 Level that will pump to the 1850 Level station. A further main pump station is planned for the bottom of the mine (1250 Level) with a capacity of 2,500 gpm. It is estimated that the current and planned pump stations should provide sufficient capacity for the life of the mine.

The overall plan for handling groundwater is an advanced dewatering strategy that will largely depend on accessing the lower levels of the mine well ahead of stope production. This early development approach provides a means for installing a series of dewatering holes and sumps that will dewater sections of the mine prior to production mining. The risk of flooding will be partially mitigated by this early development strategy and by the provision of spare pumping capacity.

In 2023, the majority of Juanicipio process and operational water requirements was sourced from dewatering underground workings, with the water used primarily for mine development and dust control. Juanicipio also purchased potable well water from third parties for mine development and domestic use.

2023 Annual Information Form

Environmental, Permitting, and Social Aspects

Environmental investigations included baseline assessments and initial studies required under Mexican Environmental Laws, inclusive of a Regional Environmental Impact Statement (MIA-R).

The mine is in a region that hosts several significant mining operations where the community is accustomed to mining activities. The Qualified Person is not aware of any environmental permitting or licensing requirements to which the Juanicipio property has been or will be subject other than the normal mine permitting and licensing requirements as set forth by the Mexican Government.

Fresnillo, on behalf of Minera Juanicipio, has confirmed that the project does not have any environmental obligations or liabilities identified to date.

Key permits and licenses for the project are in place and Fresnillo has indicated that all the land included in the design and operation of the Juanicipio Mine has been purchased. There is no further expected requirement in this regard.

Climate change aspects were not specifically addressed in the Mineral Reserve estimation, but the Qualified Person considers that, for Juanicipio, any impacts would not have a material effect.

Project Development and Production Schedule

Underground production of mineralized development material at Juanicipio commenced in the third quarter of 2020 and commercial production was declared in mid-2023. Mine operations are still in a ramp-up stage.

Nameplate processing capacity of 4,000 tpd was achieved in Q3 2023, with mine ore production averaging about 3,700 tpd in the latter part of the year (approximately 1.3 Mtpa). Optimization and efficiency improvements are to be worked on in 2024.

The productivity assumptions used for scheduling are shown in Table 1.5.

Table 1.5         Productivity assumptions

Source: Fresnillo, 2023.

All scheduling is carried out using Enhanced Production Scheduling (EPS) software. During the EPS scheduling, additional dilution ranging from 1% to 5% for mucking and other sources, as well as mining recovery factors are applied (95% for longhole stoping and 98% for cut and fill). Stopes are then checked for economic viability (above cut-off) and any uneconomic stopes removed from the mine plan and Mineral Reserve estimate.

The EPS production schedule is summarized in Table 1.6. The schedule provides a sequence of mining events that are driven by defined constraints. The Qualified Person notes that, for the Juanicipio Economic Analysis, the EPS schedule has been adjusted to include actual values for 2023. The Qualified Person also notes that, for the LOM total values, there are only minor and non-material differences between those in the Ore Reserve estimate and those in the production schedule.

2023 Annual Information Form

Table 1.6         EPS production schedule by year

Source: Fresnillo, 2023.

Project Capital Costs

AMC completed a capital cost estimate as part of the 2018 study work. Since then, Fresnillo has advanced the project through detailed engineering, project construction, and initial mine development and stoping leading to achievement of commercial production in mid-2023. Internal estimates for the remaining Juanicipio capital, inclusive of sustaining capital and as of 31 May 2023, total $453 M. A summary of projected capital costs is shown in Table 1.7.

Table 1.7         Summary of projected capital costs

Note: Numbers may not compute exactly due to rounding.

Site Operating Costs

The operating costs used for the evaluation of project economics are based on actual operating costs and benchmark costs for similar operations in the area. Average LOM operating costs from the latest cost model for the 2023 Mineral Reserves are summarized as follows:

For cut-off purposes, the average cut-off values used were $122/t for longhole stopes and $150/t for cut-and-fill stopes to also cover the LOM sustaining capital costs for mining, processing, and G&A; and the operating management fee (totalling $36/t). Similarly, marginal cut-off values generally above $93/t for longhole stopes and $121/t for cut-and-fill stopes were used.

Offsite Costs (Concentrate Transport, Treatment, and Refining Costs)

Market contracts are in place for the Juanicipio ore. Lead and zinc treatment charges of $198/dry metric tonne (dmt) concentrate and $320/dmt concentrate, respectively, are applied. Freight costs are $37/wet metric tonne (wmt) and $36/wmt for the lead and zinc concentrate, respectively. Refinery costs of $17/oz for gold and $1/oz for silver are also incorporated into the NSR calculations.

2023 Annual Information Form

A first delivery of pyrite concentrate to an overseas buyer was recently achieved. The terms for that shipment included payment for 50% of the final silver and gold content in the concentrate. The same terms have been assumed for the economic assessment in the 2024 Technical Report.

Taxes

The tax provisions include a conventional profit-based tax using the 30% corporate tax rate currently in effect. A 7.5% special mining duty is applied on earnings after allowable expenses and before taxes, and a 0.5% gross revenue royalty is applied on all gold and silver revenues.

Projected Sales

Project economics have been assessed using the following metal prices, which were selected after discussion with Fresnillo and MAG Silver representatives and referencing current market and recent historical prices, values used in other recent mineral projects reporting on SEDAR+, and forecasts in the public domain:

Existing terms of current concentrate sale agreements have been assumed for the economic assessment. For the purposes of this report, it is assumed that all lead, zinc, and pyrite concentrates over the LOM are transported to Torreón, Mexico for smelting.

Economic Analysis

All dollar values are considered constant and are in US dollars ($) unless otherwise stated. The cost estimate was prepared with a base date of Year 1 (2023) and use constant Year 1 dollars (no inflation). For net present value (NPV) estimation, all costs and revenues are discounted at 5% from the base date. An exchange rate of MXP19:US$1, a corporate tax rate of 30%, special mining duty of 7.5%, and 0.5% gross gold and silver revenue royalty have been assumed.

To facilitate assessment of economic viability, production physicals from the EPS schedule as of 31 May 2023 were uploaded into a simplified economic model. The start date for the economic analysis is 1 June 2023, with all discounted metrics reflecting that start date. For simplicity, the period June to December of 2023 is treated as a full year when applying discounting. The economic model includes current estimates for LOM capital and operating costs. 2023 ore production and operating cost values in the economic model are ‘Actuals’ from June to December as indicated by Minera Juanicipio monthly reports. The results of the analysis show that the project continues to maintain positive and robust economics.

2023 Annual Information Form

Table 1.8 provides a summary of the key inputs and results of the economic analysis. Over a 13‑year operating life, the mine is projected to generate approximately $1,656M pre-tax NPV and $1,224M post-tax NPV at 5% discount rate.

Table 1.8         Key inputs and results of economic analysis

Notes:

1 Life-of-mine (LOM) average recoveries to concentrates.

2 Selling costs include penalties, treatment, transportation, and refining costs.

3 Includes mine operating costs, milling, and mine G&A.

4 Undiscounted from 1 June 2023. Cash flow after employee profit sharing benefit (PTU).

5 Discounted from 1 June 2023. Depreciation expenses of $453 M (for the remaining project and sustaining capital), and sunk costs of $840 M (prior to 31 May 2023) are recognized in the tax calculations.

Interpretations, Conclusions, and Recommendations

Drilling

In the opinion of the Qualified Person, the drilling strategy and procedures used by Fresnillo on the Juanicipio property conform to generally accepted industry best practices and are suitable for this deposit. The drilling information is sufficiently reliable, and the drilling pattern is sufficiently dense to interpret with confidence the geometry and the boundaries of silver, gold, zinc, and lead mineralization in the Valdecañas vein system, and the Juanicipio vein. All diamond drill core sampling has been conducted by appropriately qualified personnel under the direct supervision of appropriately qualified geologists.

The Qualified Person is not aware of any drilling, sampling, or recovery factors that could materially impact the accuracy and reliability of diamond drilling results from the Valdecañas vein system, or the Juanicipio vein.

2023 Annual Information Form

Sample Preparation, Analyses, and Security – QA/QC Recommendations

Fresnillo has recently implemented a quality assurance and quality control (“QA/QC”) program that combines key elements to monitor accuracy, precision, and sample contamination during sample preparation and analysis. The Qualified Person makes the following recommendations for future QAQC programs:

2023 Annual Information Form

Sample Preparation, Analyses, and Security - Conclusions

The Qualified Person considers sample preparation and analytical and security protocols employed by Fresnillo to be acceptable. The Qualified Person has reviewed the QA/QC procedures used by Fresnillo including certified reference materials, blank, duplicate and umpire data and has made some recommendations. The Qualified Person does not consider these to have a material impact on the Mineral Resource estimate and considers the assay database to be adequate for Mineral Resource estimation.

Data Verification

The Qualified Persons consider the assay database to be acceptable for Mineral Resource estimation.

Mineral Resources Interpretation and Conclusions

Six veins have been estimated. All are classified as Inferred except for portions of the Valdecañas vein, which have been classified as Measured and Indicated. The development of the underground operation with dense drilling and underground sampling has enabled the classification of Measured Resources on this vein for the first time. Measured material consists of 8.5% of the Measured and Indicated material on this vein.

Since the last Mineral Resource reported by MAG in 2018, Measured and Indicated tonnes have increased by 32.5%. Average LOM silver grades have decreased by 27.4% and average gold grades have decreased by 11.4%; average lead and zinc grades have increased by 37.0% and 44.6% respectively. This reflects additional drilling in the lower, more base-metal-rich part of the deposit.

Inferred tonnes increased by 15.8%. In the Inferred category, silver grades have increased by 1.7%, lead grades have decreased by 2.0% and zinc grades have increased by 30.8%. The gold grades decreased in the Inferred Resource by 26.4%.

In regard to the management of the current Mineral Resource, reconciliation from the resource model to the short-term model and to what is actually produced is recommended to be pursued further.

Mineral Resource Estimate Recommendations

These items would be budgeted as part of the mine operating costs.

Recommended exploration work is shown below in Table 1.9, along with estimated costs. The work is to be carried out by two groups: Operations and Exploration.

2023 Annual Information Form

Table 1.9         Proposed program and cost estimate*

*Note: Totals may not compute exactly due to rounding.

Mineral Reserve Estimate Interpretations, Conclusions, and Recommendations

Mineral Reserves are reported at an NSR cut-off value of $122 for longhole stoping and $150 for cut and fill. Mineral Reserves are based only on Measured or Indicated Resources. The total Proven and the Probable Mineral Reserves are:

Relevant dilution and mining recovery factors have been applied in the estimation of Mineral Reserves.

The Qualified Person considers that the Reserves for Minera Juanicipio as stated herein are consistent with industry standards and are suitable for public reporting purposes.

In regard to the Mineral Reserves, the following recommendations are made:

Mining Interpretation, Conclusions, and Recommendations

2023 Annual Information Form

Geotechnical

In regard to geotechnical aspects, the following recommendations are made:

2023 Annual Information Form

Infrastructure Interpretation, Conclusions, and Recommendations