Geology and Mineralization

The Lagoa Salgada property is located at the north-western end of the Iberian Pyrite Belt ("IPB"); a 250 km long by 30-50 km wide, geographical and geological area that extends along much of the southern Iberian Peninsula, from Spain into Portugal. The belt is a thrust faulted volcano sedimentary sequence with local sub-aqueous volcanic centers that host volcanogenic massive sulphide (VMS) deposits. VMS deposits are stratabound and partly strataform, deposits of sulphide minerals formed by hydrothermal fluids that are exhaled onto the seafloor and can be classified into three types according to their mineral content: Cu-type, Zn-Cu-type and Zn-Pb-Cu-type. VMS deposits are generally Cu-rich at the base and Zn-rich at the top. The deposits are generally interpreted to be syngenetic in origin, however, mineralization ranges from sulphide precipitates to re-worked sulphide/silicate sediments and local sulphide replacement and remobilized mineralization located in close proximity to felsic submarine volcanic centers. Within the Iberian Pyrite Belt, VMS deposits vary in size from a few hundred thousand tonnes to greater than 200 million tonnes and have been dated at Upper Devonian to Lower Carboniferous in age. The Iberian Pyrite Belt is one of the most important VMS districts in the world, hosting more than 80 known deposits, and has been mined for more than 4500 years.

The Lagoa Salgada Deposit is a blind deposit as the entire property is covered by a palaeo-fluvial fan that ranges in thickness up to 200 metres within the Tertiary Sado Basin and averages 135 metres over the deposits. The Tertiary sedimentary rocks lie unconformably on top of the rocks of the Volcano-Sedimentary Complex of the Iberian Pyrite Belt. This sequence of rocks ranges in age from Upper Famenian to Middle Visean and are represented on the Property by a northwest-southeast lineament, approximately 3.5 km long and 1 km wide.

There are four types of mineralization at Lagoa Salgada:

• Primary massive sulphide mineralization.
• Gossan mineralization resulting from weathering of the primary mineralization.
• Copper-rich stringer mineralization.
• Zinc, lead, copper, silver stockwork mineralization which appear to be later and structurally controlled. (epigenetic)

To date, the mineralized system at the North Zone has been drill tested over a strike length of approximately 450 metres and appears to be open to the south and east. Recent ground IP survey has identified an anomaly that extends over 1.7 km to the southeast along strike, and similar to that of the North Zone deposit. The furthest of this anomaly has been drill tested and hosts the Central and South Zone deposits.

Gossan mineralization results from the weathering of primary massive sulphide mineralization. It is preserved at Lagoa Salgada as a result of the Tertiary sedimentary rocks covering the palaeosurface, in a situation analogous to the Las Cruces copper deposit in Spain. Gossan mineralization at Lagoa Salgada seems to be comprised of a lead-rich leached cap, underlain by a precious metal-rich, supergene enrichment zone.

Copper-rich stringer mineralization consists of sulphide veins and stringers in chloritic altered volcanic rocks, and represents alteration associated with the feeder system to the massive sulphide mineralization. This type of mineralization is well-developed in other IPB deposits such as Feitais (Aljustrel) and Neves Corvo.

The zinc, lead, copper and silver-rich stockwork mineralization consist of open space filling of sulphide veinlets in chloritic altered volcanic rocks. This mineralization appears to be later and structurally controlled between the brittle and ductile deformed rocks.

The Lagoa Salgada deposit is a VMS deposit that consists of at least one distinct lens of massive sulphide mineralization that was deposited on the sea floor as a result of precipitation from the venting of metal-rich hydrothermal fluids. These fluids typically exploit faults and fractures planes as fluid pathways and create a large zone of hydrothermal alteration in the rocks below the deposits. VMS deposits are typically characterized by clusters of on echelon lenses occurring within a distinct stratigraphic interval. The extensive alteration zone on the Property suggests that hydrothermal activity was prolonged over a long period of time and that additional lenses associated with separate alteration zones may exist.

The North Zone consists of a massive sulphide lens with a slight anticlinal fold with a current strike length of approximately 450 metres long by 175 metres wide. The North Zone deposit is bound to the west by a sharp fault contact and appears to remain open to the east and to the south. It is also host to stockwork mineralization, bounding the massive sulphides at depth and partially to the east. A gossan cap of supergene mineralization has been outlined that overlies the majority of the deposit.

The Central and South Zone deposits appear to be stockwork mineralization and is generally enriched in zinc, lead, copper and silver, however, pyrite poor as compared to the North Zone. The upper northern portion of the Central & South Zone deposits appear to be Pb-Zn enriched, as noted in one drill hole (LS_ST_01). They are also overlain by the tertiary sedimentary units. Both the copper and the lead-zinc enriched portions of the deposit have not yet been fully delineated.

Exploration work in 2018 and 2019 was designed to expand and better defined both deposits and to investigate the region between the deposits where the IP ground survey has outlined a continuous anomaly. In addition, some regional exploration work on the rest of the property is also planned to prioritize future exploration targets.