Gold Developers: Growth Beyond the Gold Price

Gold developers: growth beyond the gold price

Amarillo Gold (AGC CN): Initiating with BUY rating and C$0.70/sh PT RISK RATING: HIGH Ascot Resources (AOT CN) Initiating with BUY rating and C$1.80/sh PT RISK RATING: HIGH Euro Sun Mining (ESM CN): Initiating with BUY rating and C$1.05/sh PT RISK RATING: HIGH Rio2 (RIO CN): Initiating with BUY rating and C$1.60/sh PT RISK RATING: HIGH Geopacific Resources (GPR AU): Maintain BUY rating and A$1.95/sh PT RISK RATING: HIGH Sabina Resources (SBB CN): Maintain BUY rating and C$3.65/sh PT RISK RATING: HIGH

We think underlying growth, not gold price, will be the key share price driver in the next two years, so we highlight six growth stocks here that at or near DFS. Explorers are seeing discoveries following drill-funding, but this is speculative, and exposed to current frothy valuations. Producers’ 3Q20 cash-flow inflection was impressive, but needs US$2,100/oz for a QoQ repeat and is exposed to rising AISC. Developers offer the sweet spot given (a) this equity-hungry catalyst- light sector missed some of the producer / explorer re-rate, (b) ability to re-rate into production at a flat gold price, and (c) a re-rate bar higher than ever. Specifically, Tier 1/2 producers currently trade at 9.2-12.0% FCF yield; the six developers covered average Y2 45% FCF yield, presenting a simple investment case. In fact, as miners lower cut-off grades and catch up strip, we would suggest delivered FCF yields will contract. As such, an EV/100koz pa of production of US$687-546m for Tier 1/2 producer is as relevant, with six developers here averaging just US$266m/100koz pa. The final silver-lining of the strong gold price is higher FCF and ECM support during high-risk ramp up periods, meaning the ultimate risk, a share-count blow out, is diminished. One word of warning to either valuation and specifically to M&A is the risk of juniors seeking ‘reserve prices for resources’. We suggest that M&A, especially on better-valued names, needs a DFS to de-risk sufficiently for the bidding company’s board, and DFS’ rarely hit PEA/Scoping outcomes. All six names here have a completed DFS, or a new or revised/revalidated DFS is scheduled for this or the next quarter. Amarillo: simple Brazil open pit with plenty of exploration upside Amarillo offers a simple and deliverable 100kozpa, 4.4:1 strip, 2.5Mtpa pittable CIL project in central Brazil. Management includes significant Brazilian building and operating experience and we expect a US$100m debt package to finalise financing shortly, with first production expected in 2H22. We estimate the stock is trading at 0.4xNAV. Ascot Resources: on the cusp of build start in prime on-infrastructure BC location Targeting a 150-200kozpa brownfield redevelopment in BC, benefitting from roads, hydro grid power access and an existing mill building. The market is discounting significant caution but we estimate that the early near-mill ounces pay back mine capital and the share price, leaving the rest as upside. We estimate that the company is trading at 0.4x NAV. Euro Sun Mining: overlooked porphyry developer offers long life returns and scalability A low valuation from permitting pessimism is set to reverse in our view as permitting continues at pace for 2021 target completion. ESM offers nearly 20 years at 120-140koz AuEq and a >50% annual FCF yield. A DFS incorporating the Rovina deposit (1Q21) paves the way for first production by 2024. We estimate the stock trades at 0.1x NAV. Geopacific: 100koz pa vanilla open pit in Papua New Guinea with revalidated DFS due this quarter This vanilla pit in Papua New Guinea saw a step-change with new CEO Tim Richards this year, former GM of neighbour Simberi. The 1Moz 1.1g/t reserve supports ~100koz pa through a 2.4Mtpa CIL, with a revalidated DFS due this quarter. A US$100m debt package is being finalised for 1Q21 build start. We estimate the stock trades at 0.2xNAV. Rio2: simple heap leach with scale-up potential. Alex Black of Rio Alto success returns to offer a scalable heap leach developer targeting a 100kozpa 20ktpd heap leach operation in the Chilean Atacama with scope to expand. The 5Moz resource base means that this is a long life 25% FCF yield generator that could grow into a 300koz pa producer. We estimate the stock trades at 0.3x NAV. Sabina Gold & Silver: Nunavut developer with revised DFS in 1Q21 to hit SCPe C$2bn NAV Sabina is targeting ~200koz pa over 12 years from its permitted Back River mine in Nunavut. Although a 2.5Moz 6.3g/t reserve is already in place, we expect the 1Q21 FS to incorporate a remodel (add ounces and grade profile), reschedule (bring UG forward), and re-size (staged expansion from 3ktpt to 4ktpd). We estimate the stock trades at 0.5xNAV.

All prices in this report as of November 13 unless otherwise noted Sprott Capital Partners Equity Research

SECTOR OVERVIEW ...... 4

AMARILLO GOLD ...... 6 INVESTMENT THESIS ...... 7 VALUATION ...... 9 RECCOMENDATION: INITIATE COVERAGE WITH BUY RATING AND C$0.70/SH PT ...... 10 ASSET SUMMARY ...... 14

ASCOT RESOURCES ...... 23 INVESTMENT THESIS ...... 24 VALUATION ...... 29 RECOMMENDATION: INITIATE COVERAGE WITH BUY RATING AND C$1.80/SH PT ...... 30 ASSET SUMMARY ...... 32

EURO SUN MINING ...... 37 INVESTMENT THESIS ...... 38 VALUATION ...... 42 RECOMMENDATION: INITIATE COVERAGE WITH BUY RATING AND C$1.05/SH PT ...... 44 ASSET SUMMARY ...... 46

RIO2 GOLD...... 54 INVESTMENT THESIS ...... 55 VALUATION ...... 60 RECOMMENDATION: INITIATE COVERAGE WITH BUY RATING AND C$1.60/SH PT ...... 60 ASSET SUMMARY ...... 63

GEOPACIFIC RESOURCES ...... 69 SABINA SILVER & GOLD ...... 72

Sprott Capital Partners Equity Research

Developer sector note, 17 November 2020

Producers offer low FCF yields Tier 1 producers currently average a 9% FCF yield as share prices keep up with gold prices, while Tier 2 producers have a wider range, averaging 12%. On face value, investors see this as cyclically high levels, up from ~5-7% in 2H18, as a good reason to hold these names; who wouldn’t if they could generate their market cap in cash in the next ten years. However, the market has an uncanny knack of getting it right in our view – in this case, the issue at hand is the ‘dirty little secret’ of gold miners: margins – they are price inelastic. Specifically, ‘why would we throw out economic’ ore is a legitimate question a GM would ask, simply meaning that grades fall with rising prices, meaning mine lives extend, but margins face pressure in a rising gold price. Figure 1. 2021 consensus FCF yield for Tier 1 and Tier 2 gold producers average 9.2% and 12.0%, respectively

Sibanye-Stillwater Centerra Oceana Gold Kinross Endeavour Anglogold Equinox Harmony Polymetal Silver Lake Lundin Gold Fields SSR Mining Kirkland Lake Pretium New Gold Polyus Centamin B2Gold Teranga Regis Northern Star Yamana Fresnillo St Barbara Evolution Barrick Hecla Saracen Newmont Buenaventura Newcrewst Eldorado Alamos Agnico Eagle IAMGOLD -- 5% 10% 15% 20% 25% (5%) -- 5% 10% 15% 20% 25% 30% Source: S&P Capital IQ, 6 November, 2020

Mine lives, not margins, grow with gold prices The number one hurdle for the industry right now is declining reserves. The solution: lower the cut-off grade. Next – costs rise. This is the sad truth about gold mining, no matter what the gold price, margins never seem to improve sustainably. While investors look on greedily at ‘potential’ FCF yields for next year, we see two missing elements in this category; (i) QoQ revenue growth isn’t able to repeat 3Q20 performance until gold hits US$2,100/oz, and (ii) with cut-off grades falling, costs will rise and expansion capex will need to increase to sustain production. This means investors waiting for the mountain of cash may well end up holding diminishing assets with rising costs, and pincer movement that ends in lower share prices. Figure 2. Gold price vs AISC per oz since 2000

US2,500/oz

US2,000/oz

US1,500/oz

US1,000/oz

US500/oz

-- 2000 2005 2010 2015 2020 AISC (US$/oz) Gold price (US$/oz)

Source: Gold price from US Fed Bank of St Louis (FRED); AISC from S&P Market Intelligence

Sprott Capital Partners Equity Research

Developer sector note, 17 November 2020

Six developers whose value in production is far above current value We think a ‘perfect’ storm has arisen for developers: CY20 saw explorers reach highs on enthusiasm that must now be backfilled. Producers deservedly enjoyed outperformance. However, unfunded developers saw a glass ceiling from either being pre-funding ‘cum equity’, or post-funding catalyst light. That was and is the pull keeping share prices down. Concurrent with this is the push: firstly, we see higher producer valuations than ever with Tier 1 and Tier 2 producers over 1Moz and 200koz pa, respectively, trading at US$687-546m EV per 100koz of annual production, even as industry AISC averaged US$937/oz last year. Next, equity and debt are readily available for mine builds, and finally project economics look better than ever at spot gold prices. This leaves the opportunity: six developers covered here trade at a weighted average of US$266m / 100koz pa, or US$212m excluding Sabina, and this is adjusted for unfunded build capex, working capital and G&A, so approximates a fully-funded fully-diluted basis. And here it is: ~80% and ~150% upside T3 and T2 producer valuation metrics, respectively. Figure 3.Producer EV per 100kozpa valuations

EV/100koz pa (US$/oz) EV/100koz pa (US$/oz AuEq)

1,250 1,250 Tier 1 SCP developers Tier 2 WDO WDO Tier 3 1,000 1,000 Linear (Tier 1) LUG LUG EVN FRESPOLY NST PLZL GOR GOR SSRM NCMAEM 750 RMS 750 RMS KL HL NEM MUX PVG SMI SMI MUX AGIBVN ABX PG PG BTO SELG SELG EDV VGCX VGCX YRI SLR OGC OGC 500 DRD PRU 500 DRDSLR 1194 PRU TGZ EQX GFIANG PAF 1194 PAF SBMRRL SBB CDE K ROXG RSG ROXG SBB RED JAG REDJAG RSG NGD ELD POG AOT GSC CXB GSC 250 SHG ESM 250 CXB CEYCGG SSW AGC SHG AOT ESM CG HAR RIO HUM AR TXG AMI RIO AGCHUMAMI AR ZIM IMG GPR GCM GPR 3330 GPR MINEROS GPR GCM GAU GAUMINEROS - - ATRI 50 100 150 200 250 300 50 500 5,000 Production (koz AuEq pa) Production (koz AuEq pa) Source: Bloomberg, Tier 1 ≥1Moz pa, Tier 2 ≥200koz pa, Tier 3 ≥US$200m EV, prod’n = last revenue / Au px. SCP developer EV is current + unfunded capex Developers carry risk, but high gold price mitigates common ‘upside down Lassonde curve’ Below we show price performance for recently commissioned gold mines. Whilst this ostensibly follows gold price, most share price growth actually occurred within 2Y post funding, a good precedent for names covered here. A lot can wrong before production, and investors could flag yields over 30% as indicating bankruptcy risk rather than upside. However, we reiterate that that most important upside of high gold-prices is the virtuous circle of ability to protect the share count in event of technical issues. Figure 5 shows consistent equity returns from the point of financing, diminishing and/or retreating thereafter. It sounds obvious, but the point of cash-flow-inflection is the point of outsized returns for higher-risk one-asset builds, or lower-risk lower-leverage second- or third-mine builds. Figure 4. Share price performance since mine funding announcement of selected developers

Source: S&P Capital IQ

Sprott Capital Partners Equity Research

Developer sector note, 17 November 2020

Putting it all together Amarillo, Euro Sun, Geopacific, and Rio2 have technically standard open-pit projects that average 100%+ uplift potential to similar producers, despite relatively low execution risk. Ascot is a high grade, low capex brownfield project that has 75% upside as a standalone to the T3 average and >100% upside to other Canadian producers on both metrics. Sabina is the best undeveloped deposit in a tier one jurisdiction in our view with >50% upside to the valuation of similar peers. We believe that it is an attractive takeout target and our analysis suggests that a major could comfortably offer a >50% premium for SBB and still generate upside. If we are in a flat gold price environment, these names offer return for execution risk and we believe the returns on offer outweigh the risks. Figure 5. Implied upside on year two production and FCF yield vs producing peer averages EV/100koz per year FCF yield SCPe EV per 100kozpa Upside to tier average multiple Upside to tier average multiple Devlopers covered in this report Y2 prodn (koz) (US$m) T1 T2 T3 Avg T2/3 FCF Yield (%) T1 T2 T3 Avg T2/3 Amarillo 106 148 364% 269% 226% 247% 40% 333% 230% 163% 222% Ascot 160 216 218% 153% 124% 138% 34% 268% 180% 123% 145% Eurosun 161 266 158% 105% 81% 93% 69% 654% 474% 357% 254% Geopacific 108 192 258% 185% 152% 168% 80% 772% 564% 429% 333% Rio 2 104 217 216% 152% 122% 137% 25% 177% 111% 68% 113% Sabina 258 401 71% 36% 20% 28% 24% 167% 104% 62% 56% Majors (T1, >1Moz) 687 9% Intermediates (T2, 200koz to 1Moz) 546 12% Smaller producers (T3, <200koz, >$250m EV) 483 15% Source: SCPe, Bloomberg market data for peers

M&A accretive on production and FCF yield Feasibility studies, have for many years all ‘got the memo’ with US$750±50 AISC estimates. With gold at $1850/oz and the industry AISC average at US$900-950/oz, this simply isn’t realistic, but nor is it necessary. Based on our analysis, a multi asset producer could offer a 100% premium for our developers profiled and still achieve an accretive transaction on FCF yield and production per share, and that is based on current mine plans alone. Sabina is a special case in this group as we believe that SBB is more likely to be acquired by a T1 or upper T2 producer, which could comfortably offer a >50% premium (we estimate up to 100%) and achieve an accretive transaction with significant exploration and underground conversion upside. Another important point for names covered here is that producers will not pay reserve prices for resources and this is where having a DFS is instrumental in our view. While costs might be understated (and our analysis adjusts for this), the detailed reserve, geotechnical, and metallurgical work is critical for a producer buying a greenfield project. All six of our profiled developers have either an existing DFS or have guided the market that they should release one within the next six months. Figure 6. SCPe year two FCF yields against current producer 2021 consensus estimated FCF yields FCF Yield (%) FCF Yield (%) 80% 80% GPR GPR Tier 1 SCP developers 70% ESM 70% ESM Tier 2 Tier 3 60% 60%

50% 50% AGC GCM GCM 40% GPR 40% AGC GPR AOT AOT 30% HUM GAU 30% HUM GAU SSW RIO SBB RIO SBB TXG CG Re-rate into GSC RSG GSCRSG EDV 20% 20% TGZCGG production VGCX VGCX NGDSSRM POG PVG ANG RMS CXB OGC LUG RMS CXBOGC LUGSBMRRL YRI K 10% GOR SLR 10% GOR SLR EQX BTO HARPOLYKL GFI PG ROXG PG ROXG HLCEYBVN NST PLZL NEMABX KNT WDO AMI PRU KNTWDO AMI PRU AGICDE ELD EVN FRES NCMAEM AR AR SAR 0% 0% IMG

-10% -10% 50 100 150 200 250 300 50 500 5,000 Production (koz AuEq pa) Production (koz AuEq pa) Source: Bloomberg, Tier 1 ≥1Moz pa, Tier 2 ≥200koz pa, Tier 3 ≥US$200m EV, prod’n = last revenue / Au px. SCP developer EV is current + unfunded capex

Sprott Capital Partners Equity Research

Amarillo Gold (AGC CN) Brazilian developer poised for construction

RECOMMENDATION: BUY PRICE TARGET: C$0.70/sh RISK RATING: HIGH

SHARE DATA A conventional low-strip 100kozpa gold project in Brazil Shares (basic, FD, FF FD) 382 / 471 / 471 Amarillo Gold is developing the Posse gold project in Goiás, central Brazil, a 90- Share price (C$/sh) C$0.35/sh 100kozpa gold project targeting construction commencement in H1 2021. Per 52-week high/low C$0.375 / C$0.11 the 2020 DFS, Posse is a 2.5Mtpa single open pit, CIL operation with LOM Market cap (C$m) 134 production of 902koz over 10 years at 1.18g/t and a 4.4:1 strip ratio for AISC of SCPe net cash 1Q20 + raise (C$m) 61 US$738/oz and initial capex of US$145m. Higher grades should enable average 1.0xNAV5% @ US$1850/oz (C$m)* 431 1.0xNAV5% FD (C$/sh)* 0.91 annual production of 102kozpa in the first four full years of production. Amarillo Project P/NAV today (x, FD) 0.38x completed a C$57.2m equity raise in August 2020, and is currently finalising a Average daily value (C$000, 3M) 170 debt package to complete project funding. The project enjoys strong local support and a consistent permitting regime and we expect receipt of the FINANCIALS CY22E CY23E CY24E installation licence (LI) shortly. Gold sold (000oz) 41 106 102 Revenue (C$m) 101 262 251 Experienced management team with Brazil build track-record AISC (US$/oz) 968 1,014 915 Amarillo‘s management team has extensive mine permitting, construction, and Income (C$m) (3.3) 55.6 51.8 operating experience in Brazil. CEO, Mike Mutchler, was formerly COO of Largo EPS (C$) (0.01) 0.12 0.11 Resources, leading the construction of a vanadium mine in Northern Brazil. PER (x) (49.0) 2.9x 3.2x Posse project manager, Frank Baker, was responsible for construction of two CFPS (C$) 0.02 0.18 0.17 P/CF (x) 22.1x 2.0x 2.0x processing plants in Brazil in gold and copper respectively. Country manager EBITDA (C$m) 6.3 82.9 80.1 Arão Portugal, was the Brazil Co-Country Manager and VP at Yamana Gold, EV/EBITDA (x) 9.7x 1.7x 1.3x where he had direct involvement with eight gold projects in the country. Strong economics even with conservative inputs TIME VALUE: 1850/oz 1Q21 1Q22 1Q23 1xNAV5% FF FD (C$m) 474 483 503 Project economics are robust due to advantages that include a low strip ratio, 1xNAV5% FF FD (C$/sh) 1.24 1.05 1.09 grid power, and existing nearby infrastructure that reduces capex and opex. We RE-RATE: 1850/oz 1Q21 1Q22 1Q23 layer on conservative cost estimates, at US$2.10/t mined (vs US$1.63/t in the 1.2xNAV5% FF FD (C$m) 568 579 603 DFS), and US$4.00/t G&A (vs US$0.79/t), which benchmarked to be 1.2xNAV5% FF FD (C$/sh) 1.49 1.26 1.31 conservative vs similar current operations in Brazil. Whilst this increases SCPe 0.50 5.0 LOM AISC to US$951/oz, we estimate that Posse generates a 34% IRR and Volume (m shares) US$272m NPV, highlighting a robust and high return project. 0.40 Share price (C$/sh) 4.0 Optionality through along-strike growth, and second project 0.30 3.0 Amarillo also control 10km of strike along trend directly north of Posse. Three of 0.20 2.0 the targets on the trend had mineralisation intercepted in previous drilling, and

Share price (C$) priceShare provide the potential to extend or bulk out mine life. In addition, Amarillo own the

0.10 1.0 (m) vol. Average daily Lavras do Sul project in Southern Brazil, which has an inferred resource of

0.00 - 523koz at 0.84g/t with potential to grow into a second project for AGC.

Feb-20

Aug-20

Nov-19 Nov-20

May-20 Initiation coverage with BUY rating and C$0.70/sh PT Source:S&P Capital IQ Our Amarillo DCF model conservatively lifts opex and capex from the DFS, which drives an asset NAV5%-1850 of US$272m. Adding US$46m of cash on Justin Chan +44-203-931-6772 balance sheet, US$20m of ITM options, and Lavras do Sul ounces at US$50/oz [email protected] (US$33m), and deducting G&A and finance costs, we estimate1xNAV5%-1850 of

US$323m, or C$0.91/sh. We initiate coverage with a 0.75xNAV5%-1850 C$0.70/sh Brock Salier, PhD +44-203-931-6771 price target. [email protected]

Amarillo Gold, 17 November 2020

Investment case Amarillo Gold is progressing the Posse Gold project towards production, expected in 2H22. The project is located in the state of Goiás, in an area with good infrastructure, a supportive local population, and an attractive operating environment in a primarily agricultural area (the main local industry is saffron cultivation for export). The mine is a brownfield site that operated at commercial scale from 1992-1995; this is not a greenfield development in a dense native forest. Amarillo is awaiting the imminent grant of the Installation Licence (‘LI’), which should allow them to commence construction of the mine. With an equity financing of C$57.2m completed in July 2020, Amarillo is targeting debt completion (SCPe US$110m), to finalise project financing. Figure 7: (A) Posse project setting (B) Posse project location (C)

Source: Amarillo Gold Posse is scoped as a 2.5Mtpa operation based on a reserve of 911koz at 1.18g/t from a single open pit, with a moderate life of mine strip ratio of 4:4 to 1. This results in a 9.6-year mine life with average annual production of 84kozpa totalling 811koz, with higher grades in the first four full years (2023-2026), producing an average of 103kozpa at 1.43g/t. The DFS, published in June 2020, shows a project NPV5% of US$183m and a project IRR of 25% at a gold price of US$1400/oz. Maintaining DFS cost inputs, we calculate NPV5%-US$1,850 of US$363m, with a 43% IRR. We model a base case with higher operating costs (US$2.10/t mined and US$4.00/t of G&A vs US$1.63/t and US$0.78/t, respectively), and estimate an SCPe NPV5%-US$1,850 of US$272m and IRR of 34% with LOM AISC of US$951/oz. Figure 8: SCPe Production profile

150 1,500 AISC(US$/oz)

100 1,000

50 500

Production (koz Au) (kozProduction -- -- 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 Production (koz) AISC (US$/oz) Source: SCPe Conventional open pit gold mine with modest capex, strong IRR, NPV and payback Posse is a technically standard open pit project with a conventional CIL flowsheet. Peak annual material movement over the life of mine is ~20 Mt, all from a single open pit. The mine design utilises conventional load and haulage mining equipment, using five 74t excavators and 34 45t tipper trucks. The flowsheet is a conventional crush-grind- CIL, with an addition of a pre-oxidation stage post grind, which is a technology that has seen increased usage over

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Amarillo Gold, 17 November 2020 the past decade (e.g. Macassa, Timmins, Kibali) with good results. The DFS outlines a 2.5Mtpa plant with gold recoveries just under 90%. Posse will utilise tailings dry-stacking, which we believe significantly de-risks the permitting and social licence aspects of the project. Wet tailings have become a controversial issue in Brazil in the wake of highly publicised tailings dam failures in Brazil in recent years. Dry stacking results in additional capital costs of US$6m of pre-production and US$6m of sustaining capex, and US$1.00/tonne of operating costs, compared to a conventional wet tailings facility; however, project economics remain robust and we believe that this is a positive trade-off for the project. Higher grades in early years drive attractive economics and provide exploration opportunity to ‘fill in’ plan As the chart below illustrates, years 1-4 see higher production as the feed grades are >1.4g/t over that time period. In year 5-9 grade drop close to the reserve grade of 1.18g/t, but then drop to below 1g/t in years 9-11 as 5.2Mt @ 0.7g/t stockpiled in early mine years are processed with no mining costs incurred. The mine life extension from the single open pit is dependent on the gold price at the end of life of mine allowing for another higher strip pushback. Figure 9: SCPe throughput and grade profile 3,000

1.50 (g/t) grade Head

2,000 1.00

1,000 0.50

Tonnes milled (kt) -- -- 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 Throughput (Mt) Grade (g/t Au) Source: SCPe A management team with mine construction and operation experience in Brazil Amarillo has a strong executive team with extensive development experience in Brazil. CEO Mike Mutchler is a mining engineer who was in charge of successfully developing the Maracás Menchen vanadium mine in Bahia state in his previous role as COO of Largo Resources. At 2.0Mtpa, Maracás Menchen is of similar scale to Posse, which had a significantly more complex mineral separation portion of the processing plant. Posse Project Manager, Frank Baker, brings metallurgical expertise and was responsible for construction and commissioning of Yamana Gold’s São Francisco heap leach processing plant (since sold to Aura Minerals) and building Brazil’s first copper heap-leach and SX-EW plant for then privately-owned Mineraçao Caraiba (now owned by Ero Copper). Arão Portugal leads the licensing process and social relations efforts; he served as Administration Vice President of Yamana Gold where he was involved in eight Brazilian projects, including two in Goiás state. We believe his in- state experience in Goiás is particularly advantageous given the significant state-level jurisdiction in the permitting process. Updated reserve increases confidence and decreases risk Table 1: Changes in reserves and resources in 2020 DFS Mara Rosa 2020 DFS 2018 PFS Change P&P Reserve (Koz) 911 1,087 -16% P&P Reserve grade (g/t) 1.19 1.42 -16% M&I Resource (Koz) 1,180 1,270.0 -7% M&I Resource grade (g/t) 1.1 1.3 -15% Source: Amarillo Gold The 2020 DFS outlines a mineable reserve of 902koz at 1.18g/t, updated from the 2018 estimate of 1,087koz at 1.42g/t. The resource estimation methodology changed to ordinary kriging (OK) from multiple indicator kriging (MIK) for the 2020 estimate, driven by Amarillo. The company believed that MIK overstated the Resource, particularly at the disseminated fringes of mineralisation, and that ordinary kriging provided a more conservative estimate, backed by improved understanding after 12,700m of drilling in 2018. We believe that the new Reserve estimate is more conservative, and there may be potential for positive reconciliation, particularly in the more central parts of the orebody, where drilling suggests that grade increases with density relative to the Reserve model.

Sprott Capital Partners Equity Research

Amarillo Gold, 17 November 2020

Operating comps indicate that Posse grade and strip compare favourably Table 2: Selected peer operating costs Posse DFS Aurizona RDM Fazenda Pilar Tucano Chapada LOM average 3Q20 YTD* 3Q20 YTD* 3Q20 YTD* 3Q20 YTD* 3Q20 YTD* 2019 LOMP Company Amarillo Equinox Equinox Equinox Equinox Great Panther Lundin State Goiás Maranhao Minas Gerais Bahia Goiás Amapa Goiás Mining OP OP OP UG UG OP OP Processing CIL CIL CIL CIL CIP CIL Flotation Mill Throughput (Mtpa) 2.5 3.2 2.7 1.3 1.5 1.6 24.0 Milled grade (g/t) 1.18 1.34 1.00 1.51 0.88 1.90 0.15g/t Au / 0.24% Cu AISC (US$/oz AuEq) 738 936 951 928 1,136 1,209 1.38/lb Cu C1 Strip ratio (x) 4.4 6.2 9.2 -- -- 16.0 1.1 Au recovery (%) 89.9 89.4 85.3 91.0 91.2 91.3 83% Cu / 57% Au Mining cost (US$/t mat) 1.60 1.92 1.67 20.29 29.57 -- 2.06 Processing cost (US$/t) 10.45 8.54 8.27 10.06 8.91 -- 3.31 G&A (US$/t) 0.79 4.09 1.81 4.12 2.87 -- 1.02 Tailings haulage (US$/t) 1.00 - -- - Cost per tonne (US$/t) 13.84 26.43 27.03 34.47 41.35 32.00 9.12 Source: Amarillo Gold, Equinox Gold, Great Panther Mining, Lundin Mining, SCPe Operating costs: The project has significant operating cost benefits, including grid power, road access, competitive skilled labour costs, and a significant BRL-denominated cost component. Per company guidance, ~60% of the operating costs in Brazil are linked to the Real, therefore recent weakness in the currency against the USD (down ~25% over the last 12 months) should be significantly positive for operating margins against USD-denominated revenues. Current spot is at 5.5 per USD vs the DFS base case of 4.2x. The 2020 DFS estimated mining costs of US$1.63/t, processing costs of US$11.50/t (including US$1.60/t in dry stacking costs) and US$0.79/t for G&A costs. The key assumptions included contractor mining and grid power costs of US$0.0645/kWh. Table 2 above compares the DFS operating costs for Posse and other similar-sized and relevant operating mines in Brazil, including the Aurizona and RDM mines owned by Equinox Gold, and the Tucano Mine owned by Great Panther Mining. Comparing the results, we believe that mining costs are more likely to be in the $2.00-2.50/t range based on operating results at Equinox, Great Panther, and Lundin (Chapada) at current FX. Processing costs in the study are higher than comparable peers; this is likely a result of a more complex flowsheet, including pre-oxidation, tailings filtration and tailings stacking and we see some potential for outperformance of the study. G&A costs are estimated well below peer actuals in the DFS; the range is ~US$4.00/t in the northeastern states and ~US$2-3/t in the states with better infrastructure. Capital Costs: In our view, the DFS capital cost estimate of US$145.2m (including US$6m working capital) is in line with other peers in Brazil. This includes Aurizona’s US$146m initial capital budget and EQX’s estimate of US$103m for Santa Luz, a proposed 2.7Mtpa operation. We assume a build capital cost of US$150m, plus US$5.5m of working capital with some additional conservatism built into the estimate for contingencies. This is in line with our capex estimate of US$151m for Geopacific Resources, which is building a project of similar scale.

Valuation and funding We value Amarillo using a DCF using a 5% discount rate and US$1850/oz flat forward gold price. In addition to our US$150m capital cost assumption, we add US$8m of working capital and US$3m of G&A prior to first gold pour. This creates a total funding requirement of US$162m. AGC has SCPe US$46m of cash at present, post the most recent C$57m raise, with US$17.5m of ITM options pre-first pour. We assume US$110m of project debt at a 12% lender IRR, taking overall project gearing to 63%. We assume that pre-production interest costs are capitalised. This generates a cash buffer of US$13m to first production.

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Amarillo Gold, 17 November 2020

Table 3: Summary of DFS and SCP modelled scenarios AGC SCPe Conservative Mara Rosa (100%) DFS DFS 1850 Case Mining inventory (000t) 23.8 >> >> >> Au grade (g/t) 1.18 >> >> >> Mining inventory AuEq (000oz) 902 >> >> >> Strip ratio (x) 4.4 >> >> >> Au recovery (%) 89.9% >> >> >> Throughput rate (Mtpa) 2.5 >> >> >> LOM throughput (Mt) 23.8 >> >> >> Production Au LOM (000oz) 811 >> >> >> Mining cost (US$/t) 1.63 >> 2.10 2.50 Processing cost (US$/t) 11.45 >> 11.45 12.00 G&A (US$/t) 0.79 >> 3.98 3.98 Royalty (%) 3.75% >> >> >> LOM C1 costs (US$/oz AuEq) 615 623 809 889 LOM AISC (US$/oz AuEq) 738 732 951 1,030 Total build capex (US$m) 139 >> 150 150 Total sustaining capex (US$m) 21 >> 30 30 Gold price (US$/oz) 1,400 >> 1,850 >> Tax rate (%) 34% >> 34% >> Discount (%) 5% >> 5% >> LOM FCF (US$m) 280.6 269.0 382.8 340.2 Project NPV post-tax (US$m) 183 183 272 236 IRR post-tax (%) 25% 26% 34% 30% Payback (years) 2.60 3.50 3.00 3.25 Source: SCPe, Amarillo Gold US$272m base case NPV and >30% IRR base case generate attractive returns After matching Amarillo’s NPV and IRR, using the same inputs, we increase lift gold to our LT US$1850/oz price assumption. We assume mining costs of US$2.10/t, slightly above the reported YTD actuals at Aurizona and RDM and in line with Chapada’s 2019 LOMP (noting a weakened BRL since). We see this as reasonable as the two operations are of similar scale and other factors are offsetting; Posse is in a more developed area but Aurizona has the benefit of several years of operating experience. We assume processing costs are in line with the DFS at US$11.50/t; there may be upside to this noting that costs are above peers but the plant does have some additional elements. We increase our G&A cost estimate to US$4.00/t, which we believe is likely to be conservative given Posse’s location. This increases our SCPe AISC to US$938/oz from US$738/oz in the DFS, which establishes an operation that is in line with the cost and production profile of other open pit operations in country. This generates an NPV5%-1850 of US$272m. Even in our conservative case, in which we increase mining costs to US$2.50/t, processing to US$12.00/t, and G&A to US$4.00/t, to match Aurizona, the project generates competitive AISC with IRR of 30% and implied NAVPS upside 2x the current share price and Amarillo’s market cap of C$134m. Recommendation: initiate coverage with BUY rating and C$0.70/sh price target Our Amarillo price target is based on our base case DCF valuation, at a LT gold price of US$1850/oz. Based on these inputs, Posse project NAV5% is US$272. We add US$46m in cash, US$20m from ITM options, and US$50/oz for Lavas Do Sul ounces (US$33m). We assume no further equity funding, with US$110m of project debt at a 12% lender IRR, taking project gearing to approximately 60%. We then deduct Amarillo’s corporate G&A and finance costs to arrive at 1xNAV5%-1850 of US$323m or C$0.91/sh. We apply a 0.75x NAV multiple, in line with the other developers to arrive at a price target of C$0.70/sh, which suggests price upside of 100% to our target. Attractive entry valuation results in quick paybacks, leaving much of mine life as upside We estimate that once in production, at US$1850, AGC should generate FCF yields above 40% from its first full year of production (2023) through year eight of mine life (2030). We estimate that the company should return to a net cash position after nine quarters of production (~225koz), leaving the remaining 70% of mine life as upside. Cumulative free cash flow yield reaches 100% after ~550koz, or ~60% of the Reserve base, leaving significant room for upsize from exploration, or at depth optionality if gold prices increase. We estimate that AGC generates ~US$58m of FCF per year from 2023-2030. Even on a conservative FCF yield of 15-20% in the early years, this implies a market cap of US$250-350m vs AGC’s current EV of US$55m and capex of SCPe US$150m, showing excellent cash on cash returns.

Sprott Capital Partners Equity Research

Amarillo Gold, 17 November 2020

Figure 10: FCF yield: Averages 50% in during full years of production 160% 300% FCF yield (%) Cumulative (%) 120% 200% 80% 100% 40% --

-- FCF yieldFCF(%) (40%) (100%) (80%) (200%) 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 Source: SCPe Robust downside protection We estimate that a gold price of US$1359/oz (a 27% decrease from our LT US$1850/oz price estimate) would move our NAVPS estimate to equal the current share price, which represents significant downside protection in the investment thesis. Other single factor sensitives on the current share price show similar downside protection. We estimate that the implied discount rate at US$1850/oz is 25%. At $1850/oz and 5%, the project could withstand a 57% in opex to set NAVPS to the current share price; this would result in LOM AISC of US$1407/oz, which we believe is very conservative given that comparable assets (Aurizona, RDM, Tucano) are operating at costs well below, even at higher strip ratios and similar grades. Finally, we estimate that the share price could withstand a 154% increase in capex to set NAVPS to the current share price; equivalent to US$350m initial capex which is, in our view, a magnitude higher than is reasonable for a brownfield build in a non-remote location. Figure 11: Downside protection analysis – what sets 1x NAV to the current share price

Gold price -27% Opex +57% Capex +154% Discount rate of 25% Source: SCPe Upside: Posse North (along strike extension) targets along strike could extend and fill in mine life We believe that the district potential at Posse is underexplored and has potential to fill in and extend the mine life. The Posse North structure has been mapped over 10km and the regional interpretation is that along this strike there are pull-apart structures which may house economic deposits. In addition, Amarillo gained access to 60km2 of exploration tenements in December 2019 when Eldorado Gold’s earn-in rights lapsed. The most immediate priority target is Pastinho, located 3.5km away from Posse. 900 metres of surface mineralisation have been outlined at the property with multiple structures of gold mineralisation intercepted in the SW portion of the Pastinho gold zone. The zone appears to thicken towards the NE. Best intercepts included 8m at 0.83g/t, 1m at 10g/t and 7.5m at 0.49g/t. The deposit is still open along strike and down-dip and will be drilled further to determine if Pastinho could form an economically viable satellite ore source. Upside: Lavros do Sul (second project) provides long-term growth option Amarillo also owns the Lavras do Sul project, located in the Rio Grande do Sul state in southern Brazil. The project contains a large, near surface, low grade gravity anomaly target and the regional geology is centred around a 130km2 circular shaped granodiorite intrusion. Mineralisation has been intersected in both oxides and fresh rock. The project hosts a 43-101 compliant Inferred resource of 523koz @ 0.84g/t, with mineralisation outcropping at surface and traced to depths of 70-90m. More than 22 prospects have been identified, focused around extensive historical gold workings and gold in soil anomalies. While at an early stage, the project has favourable metallurgy, excellent surrounding infrastructure, and potential for low strip targets due to near surface nature of the mineralisation defined to date.

Sprott Capital Partners Equity Research

Amarillo Gold, 17 November 2020

Figure 12: (A) Lavros do Sul plan view and (B) cross section

Source: Amarillo Gold

Why we like Amarillo  Technically straightforward open pit, CIL project  Compares favourably on grade/strip to existing Brazilian open pit operations  Located in central Brazil with better infrastructure and simpler terrain than NE-Brazil operations  Significant valuation discount to listed Brazilian producers Catalysts  4Q20: Receipt of the installation licence (LI)  1Q21: Debt financing  1H21: Build Start  2H22: First Pour Risks  Financing: The C$57.2m equity portion of the construction financing was raised by the Company in August 2020. We estimate US$100m (C$125m) in debt funding to cover the remainder of the capital expenses and upfront working capital, which is achievable in the current market environment in our view. Based on our estimated funding package, we estimate a cash buffer of US$13m (C$17m) pre-first pour.  Resource Modelling: Posse has had a number of resource and reserve updates since Coffee Mining completed the PFS, as understanding of the geology at the deposit increased with further drilling and sampling. The Measured and Indicated resource grade has decreased from 1.8g/t to 1.1g/t, with the resource size unchanged at 1.2 Moz. We believe the current resource has reduced risk from previous iterations with a more conservative ordinary kriging estimation method, plus greater data density from an additional 16,500m of drilling from 2018-2019. As with all orebodies, there remains the risk of estimation of both resource size and grade.  Unit mining and processing costs: Unit costs used in the Posse BFS are lower, particularly for mining costs, than the majority of operating peers have reported. We have adjusted our input costs to bring them in line with these operations, so we see this risk as mitigated. Even at peer cost levels, or higher, project economics are robust at current prices.  Permitting: Amarillo has already received the preliminary licence for the Posse project, which is the most important licence in the Brazilian permitting process, as it includes an environmental permit. The risks behind securing the remaining permits (Installation License and the Operating License) are lower, in our view, and we note that these are more state-led (as opposed to Federal).

Sprott Capital Partners Equity Research

Amarillo Gold, 17 November 2020

Ticker: AGC CN Price / mkt cap: C$0.35/sh, C$134m Project PNAV today: 0.38x Asset: Posse (Mara Rosa)

Author: J Chan / B Salier Rec/0.75xNAV PT: BUY, C$0.70/sh 1xNAV1Q21 FF FD: C$1.11/sh Country: Brazil

Commodity price CY20E CY21E CY22E CY23E CY24E Resource / Reserve AuEq (koz) AuEq (g/t) Gold price 1,813 1,850 1,850 1,850 1,850 Resource 1567koz 1.04g/t SOTP project valuation* Reserve 1041koz 1.12g/t US$m O/ship NAVx C$/sh Funding: uses Funding: sources Ungeared proj. @ build start (1Q21) 272 100% 1.00x 0.77 DFS capex US$139m SCPe 2Q20 cash + options / warrants US$22m G&A and finance costs (C$m) (47) 100% 1.00x (0.13) SCPe contingency US$11m Mine debt @ 60% gearing US$110m Cash 46 100% 1.00x 0.13 SCPe G&A + fin. cost to first Au US$3m Completed July equity raise US$43m Cash from options 20 100% 1.00x 0.06 SCPe working capital US$8m Lavras do Sul 532koz @ US$50/oz 33 100% 1.00x 0.09 Total uses US$162m Total proceeds US$175m Asset NAV5% US$1850/oz 323 0.91 *Cash from options expiring pre first pour

*Shares diluted for options, no further equity assumedMarket P/NAV5% 3Q20 0.38x Share data Asset value: 1xNPV project @ build start (C$m, ungeared)* Basic shares (m) 382.1 FD with build equity raise 471.3 Project NPV (C$m)* $1650oz $1750oz $1850oz $1950oz $2050oz FD with options (m) 471.3 8.0% discount 150 185 221 256 292 Ratio analysis CY20E CY21E CY22E CY23E CY24E 6.5% discount 169 207 245 283 320 Average shares out (m) 176.1 418.2 459.9 464.6 468.1 5.0% discount 191 231 272 312 352 EPS (C$/sh) (0.01) (0.02) (0.01) 0.12 0.11 Ungeared project IRR: 0% 0% 0% 0% 0% CFPS (C$/sh) (0.01) (0.00) 0.02 0.18 0.17 NPV5 (C$m)* $1650oz $1750oz $1850oz $1950oz $2050oz EV (C$m) 73.7 185.0 295.8 226.4 160.7 Mining cost: US$1.70/t 220 260 300 341 381 FCF yield (%) (7%) (68%) (58%) 43% 40% Mining cost: US$2.10/t 191 231 272 312 352 PER (x) (29.8x) (20.5x) (49.0x) 2.9x 3.2x Mining cost: US$2.50/t 162 203 243 283 323 P/CF (x) (30.4x) (73.9x) 22.1x 2.0x 2.0x 1xNAV5% (C$/sh) $1650oz $1750oz $1850oz $1950oz $2050oz EV/EBITDA (x) (34.1x) (83.2x) 9.7x 1.7x 1.3x 8.0% discount 0.57 0.67 0.77 0.88 0.98 Income statement CY20E CY21E CY22E CY23E CY24E 6.5% discount 0.62 0.73 0.84 0.95 1.06 Net revenue (C$m) - - 100.7 261.7 250.6 5.0% discount 0.68 0.80 0.91 1.03 1.15 COGS (C$m) - - (67.9) (124.3) (123.0) *Project level NPV, excl finance costs and central SGA, discounted to build start Gross profit (C$m) - - 32.8 137.4 127.6 Group valuation over time^ 3Q20 1Q21 1Q22 1Q23 1Q24 D&A, attrib (C$m) - - (9.6) (27.3) (28.2) Mara Rosa NPV (C$m) 366.3 464.5 632.5 570.6 504.2 Admin (C$m) (2.3) (2.2) (2.2) (4.0) (4.0) G&A and finance costs (C$m) (62.5) (63.6) (64.2) (47.1) (27.5) Others (C$m) 0.1 (0.0) - - - Net cash prior qtr (C$m) 60.9 12.5 (145.6) (81.1) (12.7) Finance cost (C$m) 0.0 (5.2) (18.0) (19.9) (14.9) Cash from options (C$m) 26.7 26.7 26.7 26.7 26.7 Taxes (C$m) - - (6.4) (30.6) (28.7) Lavras do Sul 532koz @ US$20/oz 33.4 33.4 33.4 33.4 33.4 Net income (C$m) (2.1) (7.4) (3.3) 55.6 51.8 NAV FF FD (C$m) 425 474 483 503 524 EBITDA (C$m) (2.2) (2.2) 30.6 133.4 123.6 Shares in issue (m) 382.1 382.1 459.9 459.9 466.3 Cash flow, attrib. CY20E CY21E CY22E CY23E CY24E 1xNAV5%/sh FF FD (C$/sh) 1.11 1.24 1.05 1.09 1.12 Net income (C$m) (2.0) (7.4) (3.3) 55.6 51.8 Equity ROI from spot (% pa) 254% 73% 46% 34% Add back D&A (C$m) - - 9.6 27.3 28.2 Geared company NAV diluted for mine build, net G&A and finance costs Less tax + net interest (C$m) - 5.4 18.1 - - 1xNAV FF FD (C$/sh)^ $1650oz $1750oz $1850oz $1950oz $2050oz Net change in wkg cap (C$m) 0.1 0.0 (17.1) (0.4) 0.6 10.0% discount 0.50 0.60 0.70 0.79 0.89 Add back other non-cash (C$m) (0.1) - - - - 7.5% discount 0.58 0.69 0.79 0.90 1.01 Cash flow ops (C$m) (2.0) (2.0) 7.3 82.4 80.6 5.0% discount 0.68 0.80 0.91 1.03 1.15 PP&E - build + sust. (C$m) (0.2) (100.0) (100.0) (12.7) (14.4) Geared project IRR: 0% 0% 0% 0% 0% PP&E - expl'n (C$m) (2.6) - - - - 1xNAV FF FD (C$/sh)^ $1650oz $1750oz $1850oz $1950oz $2050oz Cash flow inv. (C$m) (2.7) (100.0) (100.0) (12.7) (14.4) Mining cost: US$1.75/t 0.75 0.87 0.99 1.11 1.22 Share issue (C$m) 57.2 23.3 0.0 1.8 1.3 Mining cost: US$2.10/t 0.68 0.80 0.91 1.03 1.15 Lease payments (C$m) (0.0) - - - - Mining cost: US$2.50/t 0.59 0.71 0.83 0.95 1.06 Debt draw (repay) (C$m) - 117.3 29.3 (24.3) (53.2) ^Project NPV incl grp SG&A & fin. cost, +net cash; *diluted for mine build equity Cash flow fin. (C$m) 57.2 140.6 29.3 (22.5) (52.0) Production Y1 Y2 Y3 Y4 Y5 Net change in cash (C$m) 52.4 38.7 (63.4) 47.2 14.2 Gold production (000oz) 41 106 102 110 91 Balance sheet CY20E CY21E CY22E CY23E CY24E C1 cost (US$/oz) 1,142 774 803 749 898 Cash (C$m) 60.0 98.7 35.4 82.6 96.8 AISC cost (US$/oz) 1,247 968 1,014 915 1,015 Acc rec., inv, prepaid (C$m) 0.5 0.5 28.7 28.0 27.4 AISC = C1 + ug sustaining capex, Y1 = 12M to Jun 2023 PP&E + other (C$m) 34.5 134.5 224.9 210.3 196.5 Gold prod'n (LHS, 000oz) AISC (RHS, US$/oz Au) Total assets (C$m) 95.1 233.7 289.0 321.0 320.7 125koz 1100/oz Debt (C$m) - 122.7 170.2 145.8 92.6 100koz 1000/oz Accounts payable (C$m) 1.0 1.0 12.1 11.0 10.9 75koz 900/oz Others (C$m) 1.3 1.3 1.3 1.3 1.3 50koz 800/oz Total liabilities (C$m) 2.2 125.0 183.5 158.1 104.8 25koz 700/oz Sh'hlds equity + wrnts (C$m) 135.2 158.5 158.5 160.3 161.6 0koz 600/oz Retained earn'gs + rsvs (C$m) (42.4) (49.8) (53.1) 2.5 54.3 Y1 Y2 Y3 Y4 Y5 Liabilities + equity (C$m) 95.1 233.7 289.0 321.0 320.7 Source: SCPe

Sprott Capital Partners Equity Research

Amarillo Gold, 17 November 2020

Asset summary The Posse deposit is located on the Mara Rosa gold project (for ease we will refer to the development project as ‘Posse’) in Goiás state, in central-southern Brazil, 6km north of the town of Mara Rosa (pop. ~10k). The project is accessed by Belém-Brasília highway, the main N-S highway in Brazil, which passes by the project around 11km to the west of Posse. Infrastructure around the project is good, with Posse serviced by an extensive network of local roads and the Mara Rosa municipality airstrip. Power is to be supplied by the local grid (hydro), and there is significant available water sources with the project area having relatively high rainfall (1,500mm per annum, slightly more than Vancouver). The region is characterised by tropical savannah with moderately undulating topography. Figure 13: (A) Map of Posse and surrounding mines

Source: Amarillo Gold The Posse project includes 2,500ha of mining concessions, with an additional 6,000 hectares of exploration concessions. The operation is scoped as a simple drill and blast operation, from a single pit feeding a conventional CIL processing plant. The project has completed the necessary studies and is awaiting the Licence to Install, the final licence required pre-construction. An M&I resource of 1.2Moz @ 1.1g/t converted to a reserve of 902Koz @ 1.18g/t at 4.4x strip, with a 2.5Mtpa processing plant with a maximum annual rock movement of 20Mt rock movement. Project history Small scale surficial-alluvial mining dates back to the 1700s in the area. In the modern period, activity picked up in the 1970s and 1980s with the discoveries of the Chapada Au-Cu and the Crixas gold deposits by INCO, 30 and 100km SW of Mara Rosa, respectively. The Posse gold deposit was discovered by BHP in the early 1980s with additional ore feed from the Zacarias silver-barite deposit. BHP completed 12,300m of DD and RC drilling from 1981-1987, and sunk a 107m exploration shaft. BHP optioned out the Mara Rosa properties with Western Mining Corp. (WMC) in 1988 due to restriction on foreign ownership. WMC developed the property and produced 750kt at 3.5g/t from 1992-1995 from Posse with ore feed from Zacarias through the same mill. Ops were suspended in 1995 due to low prices, and the project subsequently changed hands several times until Amarillo purchased the project in 2003. Since 2003, Amarillo has drilled ~43,000m at the project of the total of ~66,000m drilled to date. Royalties and taxation The project is subject to a 0.45% royalty to a land owner (0.75% applicable on 60% of the reserve / resource), a 1.5% CFEM Federal Tax (1.5% of revenue) and a total of 3.75% NSR royalties, 1% for Franco Nevada and 2.75% to Royal Gold. In Goiás State, the total applicable profit tax rate is 34%, inclusive of both federal and state taxes.

Sprott Capital Partners Equity Research

Amarillo Gold, 17 November 2020

Geology The Mara Rosa District is situated within the Goiás Magmatic Arc (“GMA”), which is a 100km wide, NE-trending granite-greenstone terrane that extends approximately 700 km. The geology in the Mara Rosa District is principally delineated by three NE-striking, moderately-to-steeply NW-dipping belts of metamorphosed volcano sedimentary and associated intrusive rocks, referred to as the Western, Central, and Eastern Belts. Amarillo’s land position primarily covers the Eastern Belt, which in general strikes to the NE, and dips moderately to steeply to the NW, with a maximum thickness of 6 km. Figure 14: Geological map of the Mara Rosa project

Source: Amarillo Gold The Posse Deposit is hosted in a regional thrust, within a 50km structural zone with potassium alteration and lower- order Au-Cu-Mo mineralisation. The deposit has a hanging wall of grey gneiss and a footwall of amphibolites, which potentially captured the thrust movement. Mineralisation at Posse is developed along a 50-60° striking fault zone, with a 30m thick and 1km long mineralisation envelope. Higher gold values are associated with higher intensity of shearing and higher levels of sulphide mineralisation, with more intense shearing in the footwall. Exploration potential comes from the 10km long Posse North Gold Trend, where a 3km exploration program completed in 2020 has intercepted elevated gold values in the Araras, Speti 24, and Pastinho targets. The gold systems along the Posse North Gold trend are similar in style and nature as the main Posse Gold Deposit, with mineralising occurring along the contact of the gneissic unit and the metavolcanic sequence. Pastinho is the most initially promising target, with a current strike length of 1km, open along strike and down-dip, and identified to a depth of 150m. Whilst early, the prospects for Pastinho are attractive due to its shallower mineralisation compared to the another cutback of Posse; the strip ratio on the final Posse cutback is ~8:1. A programme of 5,000m of follow-up drilling is planned for next year.

Sprott Capital Partners Equity Research

Amarillo Gold, 17 November 2020

Figure 15: Regional (A) structural geology, (B) aeromagnetic and (C) radiometric maps

Source: Amarillo Gold Figure 16: (A) Posse North geophysical survey; (B) Pastinho target location of drill holes; (C) Aerial overview

Source: Amarillo Gold

Sprott Capital Partners Equity Research

Amarillo Gold, 17 November 2020

Reserves and resources Posse has an NI 43-101-compliant resource of 1.18Moz at 1.1g/t. Substantially all of the resource is in the Measured and Indicated categories with just 2koz of Inferred. The resource is constrained at US$1,500/oz with a cut-off grade of 0.35g/t Au. 77% of the M&I ounces with a total reserve of 911Koz @ 1.18g/t after adding dilution and disregaridng uneconomic resource ounces. Resource estimation was done using an ordinary kriging method and 5mE x 10mN x 5mRL blocks for estimation purposes. A 4% dilution and 4% ore loss factor has been applied to the Reserve. Table 4: Posse Gold project NI 43-101 resource Reserves Tonnes (Mt) Grade (g/t Au) Contained (koz) Proven 11.8 1.2 455 Probable 12 1.18 455 Total 23.8 1.19 911 Source: Amarillo, US$1400/oz, cut-off 0.37g/t Resources Tonnes (Mt) Grade (g/t Au) Contained (koz) Measured 14 1.2 540 Indicated 19 1.1 640 Inferred 0 0.52 2 Total 33 1.11 1,182 Source: Amarillo, US$1,500/oz, cut-off 0.35g/t Au, inclusive of reserves Mining The Posse mine design is based around a conventional drill and blast open pit operation from a single open pit to an ultimate depth of 220m in eight stages. Pre-stripping is planned to take 15 months once finance is completed, Q1 2021, at a cost of US$8.8m. The average strip ratio over the first four years is 5.4:1 (excluding pre-strip), with an ultimate life-of-mine strip ratio of 4.4:1. Mining volumes reach a maximum of 20Mtpa in years 2-5 of the mine plan, largely in fresh rock during those years. Current mine schedule has mining ending in year nine, with stockpiled low grade ore averaging 0.65g/t processed over the last eight quarters of the mine life. Figure 17:SCPe mine schedule in line with the DFS

20,000 10.0 (waste:ore) StripRatio 15,000 7.5 10,000 5.0 5,000 2.5

Tonnesmined (kt) -- -- 2022 2023 2024 2025 2026 2027 2028 2029 2030 Ore mined (000t) Waste Mined (000t) Strip ratio (x)

Source: SCPe based on the DFS mine schedule Ore will be mined in five-metre benches for improvements in selectivity, with waste being mined in 10-metre benches. The overall slope angles are 45.5° in the footwall and 48.1° in the hanging wall with 13m ramps and ramp gradient of 10%. Load and haulage over the life of mine will take place using five 74t excavators and 34 tipper 45t trucks. 100% of fresh rock and 30% of the saprolite will be blasted. ROM haulage will be over short distances, with the processing plant to be located 600m away from the final pit limits. Waste is to be stored in six separate waste dumps located around the final pit with the low-grade ore placed in a single stockpile located between the open pit and the processing plant.

Sprott Capital Partners Equity Research

Amarillo Gold, 17 November 2020

Figure 18:Planned phases of the Posse Pit

Source: Amarillo The DFS case assumes mining is to be done by a contractor, thus lowering the upfront capital costs. The DFS mining cost estimate is US$1.63 tonne of material, which is below its Brazilian peers; we use US$2.30/t as our base case estimates, in line with Aurizona, and slightly above Chapada and RDM. Figure 19: Outline of Posse Pit

Source: Amarillo Gold Metallurgy and Processing The processing plant will be built to a capacity of 2.5Mtpa with a flowsheet including three stage crushing (primary jaw crusher followed by two-stage cone crushers), two-stage ball mill grinding, pre-leach thickening, pre-oxidation and CIL. Importantly, Posse will utilise dry tailings stacking, which requires tailings detoxification and filtration as components to the overall flowsheet. A pre-oxidation stage has been added to reduce the consumption of dissolved oxygen and cyanide in the cyanidation step, and thus to an improvement in the metallurgical recovery. The flowsheet utilises conventional technologies used in gold processing plants globally. Availability assumptions are 65% for crushing, 90% for processing and 85% for tailings filtration, respectively.

Sprott Capital Partners Equity Research

Amarillo Gold, 17 November 2020

Figure 20: (A) Posse Processing plant flowsheet

Source: Amarillo Gold The optimal grind size is 53µm, with 36-hour average leach residence time. There is limited variability in the ore with the different locality composites all providing consistent recoveries in the 90% range. There are no deleterious elements presents apart from auriferious tellurides, and test work shows good recoveries from a combination of the finer grind, and the addition of a pre-oxidation stage. The back end of the plant includes a tailings filter press to enable dry stacking of tailings. Given the heightened level of concern around tailings dams in country, dry stacking should be beneficial for both permitting and social licence to operate. The dry tailings facility will accommodate 23.8 Mt dry tonnes with dry tailings material trucked to the storage pile. Key infrastructure Posse is located with an area with good infrastructure, with some of the key elements described below:  Power supply: Total installed power load will be 14.6 MW with the operating load of 11.9 MW. The DFS estimated that usage will peak at ~11MW, with an average load of ~9MW (80-90% of power consumption is at the plant). The power supply will be supplied through a 138 kV transmission line constructed over a distance of 67km from the town of Porangatu to the mine site. The power will be supplied by the State of Goiás Energy Authority, CELG.  Water Supply: water to be supplied from the nearby river Rio do Ouro via two vertical centrifugal pumps to a water storage dam via a water pipeline. The dam will be built on compacted landfill. The main source of process water will be reclaimed from tailings filtration and stored in the tailings filtration tank. Around 136 m3 /h of raw water capture will be required from Rio do Ouro for six months during the rainy season.  Airstrip: existing 800m airstrip serving the Mara Rosa municipality; this does not require upgrading. Figure 21: (A) Posse mine site layout

Source: Amarillo Gold

Sprott Capital Partners Equity Research

Amarillo Gold, 17 November 2020

Permitting Brazilian permitting process involves three main stages in the permitting process, the preliminary licence (LP), the installation licence (LI), and finally the licence to operate (LO). The granting of the LP is regarded as the most important licence, as it outlines the basic parameters of the project for approval by the relevant authorities. The relevant authority for Amarillo is the State of Goiás Department for the Environmental and Sustainable Development. The LP, including an Environmental Impact Study, was issued to Amarillo in 2016. The LI and LO stages layer in additional detail, following the basic parameters stipulated in the LP. The application for the LI to allow mine construction / commissioning was lodged in December 2019 and is expected before the end of 2020. The Governor Goiás state signed a Protocol of Intent in May 2020, to signal support for the project. Amarillo received a Water Use Permit for the mine in July from the country’s National Water Agency; this was a precondition to receiving the LI. The LO can only be granted after mine commissioning, and requires inspection of the constructed operation to ensure compliance with the relevant codes and the provisions of previous licences. Whilst permit timelines are exposed to delays, we expect AGC to receive its permits in a ‘when not if’ situation that is expected to resolved in 2020 or early 2021 at the latest. Posse is a conventional gold project that is further de- risked by the use of the dry stack tailings disposal method. The state of Goiás has several active commercial mining operations, and the surrounding area is primarily agricultural; this is not a tribal or undisturbed area. Lavras do Sul The Lavras do Sul gold project is located in the state of Rio Grande do Sul of Southern Brazil and encompasses 19 km2 of exploration permits and private mineral holdings. Mineralisation is hosted in structurally controlled alteration zones with two known zones of mineralisation, Butiá and Cerrito. The town of Lavras do Sul (population ~8,000) is located between the two zones, approximately 4km equidistant, with good local infrastructure. The project has seen significant artisanal activity with around 350koz mined from near surface oxides. Rio Tinto was first attracted to the area in 2004 by analogy with Paracatu, a profitable Brazilian gold mine owned by Kinross. The concept was that there might be a large oxide gold blanket of less than 4g/t that can be mined at relatively low cost. This work did not indicate a targeted >10Moz oxide resource in that area and the project was vended to Amarillo in 2006. Drilling to date resulted in a low grade resource shown in Table 5. Figure 22: (A) Lavras do Sul geology (B) Lavras do Sul location

Source: Amarillo Gold The gold mineralisation in both zones is open in a number of directions. The mineralisation is associated with pyrite and hosted in structurally controlled alteration zones in the granite. Most of the resource is based on angled holes which intercepted the sulphide zone, leaving the oxide zones largely untested. Rio’s metallurgical test work showed CIL recoveries of 85% which indicated free milling mineralisation. Amarillo’s current focus is the Butia zone, with a 5,000m resource expansion drilling programme underway. Table 5. Lavras Do Sul NI 43-101 resource Resources Tonnes (Mt) Grade (g/t Au) Contained (koz) Indicated 6.4 1.05 216 Inferred 12.9 0.74 307 Total 19.3 0.84 523 Source: Amarillo, cut-off 0.3g/t Au

Sprott Capital Partners Equity Research

Amarillo Gold, 17 November 2020

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Sprott Capital Partners Equity Research

Amarillo Gold, 17 November 2020

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NOT RATED ((N/R): The stock is not currently rated

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Sprott Capital Partners Equity Research Ratings:

Summary of Recommendations as of November 2020 BUY: 26 HOLD: 0 SELL: 0 UNDER REVIEW: 0 TENDER: 1 NOT RATED: 0

TOTAL 27

1 As at the end of the month immediately preceding the date of issuance of the research report or the end of the second most recent month if the issue date is less than 10 calendar days after the end of the most recent month

Sprott Capital Partners Equity Research

ASCOT RESOURCES (AOT CN) BC’s next high grade gold mine

RECOMMENDATION: BUY PRICE TARGET: C$1.80 RISK RATING: HIGH

SHARE DATA C$1.10/sh Restarting the Premier Mine in BC’s Golden Triangle Shares (basic, FD) 276 / 292 Led by ex-Quadra-FNX CFO/SVP Bus Dev, Derek White, and his team, Ascot 52-week high/low 1.40 / 0.37 Market cap (C$m) 303 is developing the Premier Gold Project in BC’s Golden Triangle, 25km by paved Net cash (debt) (C$m) 16 road from Stewart, BC. Ascot has consolidated 253km2 of licences in two 1.0xNAV5% @ US$1850/oz (US$m) 760 1.0xNAV7% FD (p/sh) C$2.62 packages (PGP and Red Mountain), built a 3.1Moz 7.5g/t Au resource, and P/NAV (x) 0.42x delivered a C$341m NPV5%-1400 DFS on a conservative 1.2Moz reserve, based Average daily value (C$k, 3M) 235.6 on a 2500tpd restart of the Premier mill, fed by the three Premier deposits

FINANCIALS CY22E CY23E CY24E initially, with Red Mountain being permitted and brought into production later. Gold produced (000oz) 105 160 149 Existing advantages: location, low capex and high grade Revenue (C$m) 258 393 366 AISC (US$/oz) 965 903 952 As a BC brownfield site, Premier benefits from existing paved roads, grid Income (C$m) 8.0 (1.1) (5.9) hydropower, an ice-free port within 25km, and existing site infrastructure EPS (C$/sh) 0.27 0.45 0.44 including a cleared site, mill building, permitted TMF and water treatment plant. PER (x) 4.1x 2.4x 2.5x The C$147m capital estimate (US$110m) for a +150koz pa producer is one of CFPS (C$/sh) 0.20 0.42 0.44 the most capital efficient development projects globally. The 3.1Moz resource is P/CF (x) 3.6x 2.1x 2.1x high grade at 7.5g/t, and the 1.2Moz 6.1g/t reserve is based on conservative EBITDA (C$m) 136.6 218.5 190.7 dilution assumptions, supported by >900km of drilling at Premier, with >500km EV/EBITDA (x) 2.6x 1.1x 0.7x and >180km drilled at PGM and Red Mountain by Ascot since 2007. SPOT VALUATION 1Q20E 1Q21E 1Q22E Low-risk oz generate FCF payback rapidly 1xNAV7% FD (C$/sh) 3.14 2.16 2.53 ROI to 1xNAV (% pa) 0% 96% 52% We estimate FCF will cover build debt (SCPe C$100m) by 230koz of production, 1.2xNAV7% FD (C$/sh) 3.77 2.59 3.04 cover initial capital by 275koz, and, on a cumulative per share basis, more than ROI to 1.2xNAV (% pa) 0% 136% 66% cover the current share price by 750koz. These ounces ar44e covered by high confidence ounces defined at Big Missouri, Silver Coin, Premier and/or Marc SOTP 1xNAV5% US$1850/oz US$m C$/sh Zone, leaving the next SCPe 670koz production as upside. Premier NPV 3Q20 798 2.39 Central SG&A & fin costs 3Q20 (89.1) (0.27) Upside to current share price even under stress-test case Exploration 34.9 0.10 Net cash 1Q20 16.5 0.05 We believe that the current share price is simply too pessimistic with regards to Cash raised 50.0 0.15 implied outcomes. We estimate the share price is 1x NAV5% breakeven at a flat TOTAL 760 2.43 gold price of US$1408/oz, or a 23% decrease in grade vs SCPe 5.8g/t (i.e. a 2.0 2.00 4.5g/t LOM grade is being priced in), or a 56% increase in LOM operating costs (C$267/t vs our already conservative estimate of C$172/t). Flipping the 1.5 1.50 sensitivity, based on US$1850/oz, the share price implies a 21% effective

1.0 1.00 discount rate, which we believe is excessive for a Canadian brownfield project. Volume Volume C$m in Price Price (C$/sh) 0.5 0.50 Initiate coverage with BUY rating and C$1.80/sh 0.75xNAV5%-1850 PT We model Ascot on a DCF basis, using the FS as a starting point but adding 0.0

2.0Mt at 5.05g/t Au assuming 60% conversion and 33% mining dilution on 2.2Mt

Feb-19 Feb-20

Nov-18 Nov-19 Nov-20

Aug-19 Aug-20 May-20 May-19 of near-infrastructure (<100m) inferred resources at PGP. We have pushed back Source: S&P Capital IQ Red Mountain to late in year three of the mine life, and conservatively increased underlying unit costs by 20%. We initiate with a BUY recommendation and Justin Chan +44-203-931-6771 0.75xNAV5%-1850 C$1.80 PT. We estimate the stock is trading at just 0.4x our [email protected] unfunded NAVPS or 0.5x our fully funded estimate.

Brock Salier, PhD +44-203-931-6772 [email protected]

Ascot Resources, 17 November 2020

Investment thesis Building the next 150-200koz producer in BC We believe that the market perceives complexity and risk in Ascot’s development plan, but what it is missing is that the project generates rapid payback that leaves much of the mine plan (the more complex ounces) as upside. Based on our estimates, the core of the project (Premier re-development, inferred oz conversion, existing mill redevelopment, Marc Zone) generate FCF breakeven with conservative cost, capex and conversion assumptions layered on, leaving half of the reserve, inferred oz, and exploration as upside. Ascot trades at 0.5x fully diluted and funded NAV using even our most conservative mine plan scenarios and we see 3x upside potential if the feasibility study can be delivered with modest Reserve conversion. Figure 23: SCPe Production Profile – Attractive low cost producer 1,250 250

1,000 200

750 150 (koz)

500 100 AISC (US$/oz)AISC

250 50

- - 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031

Production (koz) AISC (US$/oz)

Figure 24: FCF yield at US$1850 – Cumulative FCF equals share price early in mine life 200% FCF yield (%) Cumulatifve (%) 150%

100%

50%

-50% 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031

Figure 25: Headroom before fully diluted/funded NAVPS falls to current share price

Gold price -25% Head grade -23% Opex per tonne +56% Capex +161% Or a discount rate of +21% Source: SCPe

Sprott Capital Partners Equity Research

Ascot Resources, 17 November 2020

Overview Ascot is developing the Premier Gold Project, located 20km from the town of Stewart in BC’s Golden Triangle. targeting a 2,500tpd UG operation. Ascot first optioned into the property in 2007 under previous management and first attempted to develop the project as a low-grade bulk tonnage open pit project. Its development approach changed in late 2017 when current management took control of the company. It has since reoriented its focus on high grade UG deposits and consolidated the Premier, Big Missouri, Silver Coin and Red Mountain properties into a 3.1Moz at 7.5g/t resource inventory to feed redevelopment of the Premier Mill. Figure 26: Location map

Source: Ascot Resources The project benefits from grid power access, a mill building on a cleared site, paved roads, a water treatment plant, a permitted TMF, and portals into the Premier, Big Missouri, and Silver Coin orebodies with 1500m of rehabilitated decline and drift development. At Red Mountain, there is an existing portal and decline into the Marc zone of the orebody. PGP is currently in care and maintenance with existing permits for reclamation and water discharge and the Nisga’a, BC, and Canadian Governments confirmed in 2018 that PGP will not need to undergo an environmental assessment and instead follow the more expedited Mines Act Permit Amendment (MAPA) route. Ascot’s feasibility study is based on commencement of mining at Silver Coin and Big Missouri with Red Mountain entering production late in year two. Our base case is based on Ascot’s feasibility study, but with Red Mountain development pushed back to year four. Low capital intensity due to grade and existing infrastructure Capex intensity is sub-US$800 per oz of capacity using the feasibility study capex estimate of C$147m, while even on our more conservative C$170m capex estimate, capital intensity is still well below US$1000/oz vs the global average of US$4610/oz (per WoodMac). This is achievable due to modest annual volumes (2500tpd, ~900ktpa) due to Ascot’s high grade resource base (7.5g/t resource, 6.0g/t diluted reserve), and a further reduced scope of works thanks to existing infrastructure already in place.

Sprott Capital Partners Equity Research

Ascot Resources, 17 November 2020

Figure 27: Existing infrastructure: Mill building, access roads, and TSF already in place

Source: Ascot Resources Lowest risk oz generate attractive returns, leaving rest as upside Even using our more conservative capex and opex estimates (C$170m and C$172/t vs C$147m and C$139/t, respectively), we estimate that the project should achieve debt repayment (C$100m) after ~230koz of production, capital repayment after 275koz, and fully diluted and fully funded FCF per share (ie cumulative FCF equals the current share price) repayment after 745koz of production vs an initial Reserve of 1.2Moz and an SCPe mine inventory of 1.5Moz. Thus, even on our conservative capex and opex estimate, roughly 2/3 of the Reserve base is mined after capital repayment on the current share price, and the initial share purchase price is covered after 2/3 of the initial Reserve. Table 6. Summary of main zones at Premier and Red Mountain PGP Red Mtn Premier Silver Coin Big M Marc AV JW Reserve (mt) 1,028 1,794 809 892 1,086 569 Reserve grade (g/t Au) 5.2 4.8 7.2 7.5 6.4 5.1 Reserve (koz) 172 279 186 216 225 93 M&I (Mt) 1,298 1,597 1,116 738 952 441 M&I grade (g/t) 8.5 7.6 8.4 10.6 8.0 6.8 M&I (koz) 353 390 300 251 246 97 Inferred (Mt) 1,753 523 1,897 1 0 Inferred grade (g/t) 6.7 7.0 8.3 1.0 7.8 0 Inferred (koz) 379 118 508 0 0 0 Reserve conversion (% oz) 49% 71% 62% 86% 92% 96% 2-7, first of RMP deposits to Active yrs of mine life 4.25-7.5 1-4.25 1-3 2-7 - not further specified 2-7 - not further specified mine Max mining rate (tpd) 1,264 1,384 836 1250 tpd combined 70% LH 78% LH retreat 81% RP/CF Longitudinal LH retreat or Transverse LH and undercut Transverse LH and undercut Mining method 19% UC LH 19% UC LH undercut LH LH LH Access Portal Portal Portal Ramp w/upper and lower portal Grind size (p80 um) 80 80 80 20 20 20 Au Recovery 97-99% 95% 93% 92% 81% 90% BWI (kwh/t) 15.6-17.7 15 15 19 19 22 Source: SCPe

The economics are more than covered by the most attractive ounces in the mine plan. In our view, this includes the three Premier deposits, plus conversion of Premier inferred oz near the current mine plan, plus or minus the Red Mountain Marc Zone. The Premier deposits are supported by >900,000m of drilling, are high grade and structurally controlled at the local scale, and have existing development and are within a maximum 17km haul to the plant. The Marc Zone at Red Mountain features wide, easily-mined zones, is the highest grade at Red Mountain, and showed better test recoveries at a coarser grind and a lower BWI. The Marc Zone is also the most heavily drilled (<25m spacing vs 25-30 for the AW and JV zones), is accessed by the existing portal, and was the subject of a bulk sample in 1996.

Sprott Capital Partners Equity Research

Ascot Resources, 17 November 2020

Significant near-infrastructure inferred oz conversion opportunity Of the 4.2Mt of inferred tonnes at Big Missouri, Premier and Silver Coin, 2.2Mt or 53% are within 53% of existing or planned mine infrastructure. At an undiluted grade of 7.5g/t, the material is drilling constrained (rather than below economic cutoff), with noted difficulties with orientation and access associated with surface drilling. Figure 28. Near infrastructure Inferred oz at Big Missouri, Premier and Silver Coin

Source: Ascot Resources Ni 43-101 feasibility study, May 2020 Applying a 60% reserve conversion ratio to this material (consistent with PGP’s M&I to reserve conversion ratio) and 33% average grade dilution yields a further 318koz at 5.05g/t or ~2 year of production. Of this, 1.1Mt (1.25 years) are drawn from Big Missouri and Silver Coin. We have incorporated this into our base case with converted Big Missouri and Silver Coin material filling the mill through year 3 of production, pushing Red Mountain development back by a year, whilst converted Premier material adds one year of production onto the back end of the mine life. We have offset this with C$20m of initial capex (incl C$6m of exploration) and C$32m of sustaining capex reflecting additional mine development and additional TSF capacity. This adds C$198m to our NPV estimate, gives Ascot more timing flexibility on its development of Red Mountain, and de-risks the oz needed to generate FCFPS payback. Figure 29. SCPe per oz AISC margin and EBITDA margin 1,000 100% 900 800 80% 700 600 60% 500 400 40%

AISM AISM (US$/oz) 300 200 20% 100 - 0% 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031

All-in-sustaining margin per oz (US$/oz) EBITDA margin (%)

Source: SCPe

Sprott Capital Partners Equity Research

Ascot Resources, 17 November 2020

High margins and current valuation leave considerable upside for stress testing We have conservatively assumed a 20% increase in operating unit costs vs the FS to C$172/t; this gives a 75% gross operating margin at US$1850/oz. The FS estimates LOM capex costs of C$52.5/t including C$29/t of sustaining capex vs SCPe C$49/t including C$27/t of sustaining, which we feel is reasonable given our modelled mine life extensions which are near existing infrastructure. Adding royalties (C$115/oz) and corporate G&A (C$7.5/yr, C$10/t LOM), we estimate AIC per tonne of C$250/t before tax, vs LOM revenue of C$420/t, leaving significant room for stress tests. Using our fully diluted NAV per share estimate (5% DR, US$1850/oz), we estimate a US$1417/oz breakeven price (i.e. price that implies Ascot is trading at 1xNAV), and the breakeven discount rate of 21%. The same sensitivity for head grade implies a 23% lower head grade than the FS (4.4g/t head grade implied), or a 56% increase in op costs (implied costs of C$271/t or US$1343/oz LOM AISC). Figure 30. Grade drives attractive per tonne margins

Source: SCPe Valuations for comparable producers are at a significant premium Single asset peers in premium jurisdictions (Australia, USA, Canada) trade at a significant premium to NAV. Specifically, we estimate those with >100koz pa (GOR AU, PVG CN, LUG CN, WDO CN, VIT CN) average US$7,435/oz of annual production (ie US$743m/100koz pa). This suggests potential market cap of >US$1bn if Ascot can deliver a 150kozpa producer, very much an achievable target in using average Y1-5 production; this increases to $1.1bn using nearby producer Pretium’s multiple to annual production. On like-for-like resource ounce multiples, Ascot would trade at US$843m at the peer group average. Figure 31. Ascot and Tier I jurisdiction single asset producers – EV/oz produced (LHS), EV/oz resource (RHS)

Source: S&P Capital IQ, company data for R&R, production based on BB consensus 2021E production Economics We base our development scenario on Ascot’s DFS, a 2,500tpd operation starting with mining at Premier, at the Big Missouri and Silver Coin deposits. We converted 1.3Mt @ 8.0g/t Au of inferred material at Big Missouri and Silver Coin into reserves, diluting to 1.1Mt @ 5.4g/t for 198koz. We therefore push back Red Mountain development by one year, starting up late in Y4 of production. We similarly converted 930kt @ 6.7g/t of inferred from Premier to add to the end of the mine life; this dilutes to 820kt @ 4.5g/t, adding ~1 year of mine life. We conservatively lift operating costs from US$139/t in the DFS to US$172/t, including US$120/t mined at Premier and US$125/t at Red Mountain (inclusive of C$11/t of haulage costs). We assume 95.4% gold recovery at Premier deposits and 86.8% at Red Mountain in line with the DFS. We have also added C$22m of contingency to our capex estimate, including royalty repurchases, and additional exploration and capex (for example UG drilling platforms) to be consistent with converted inferred oz scenario. Overall capital intensity remains the same on an LOM per tonne basis.

Sprott Capital Partners Equity Research

Ascot Resources, 17 November 2020

Table 7. Summary of SCPe scenarios vs the DFS

AOT DFS inventory SC Pe Premier Premier + Premier Mine (100% ) DFS DFS $1850 1,900 $1850 1,900 Only Mark Zn Mining inventory (000t) 6,168 6,177 6,177 6,177 8,287 8,287 5,742 6,685 AuEq grade (g/t) 5.89 5.89 5.89 5.89 5.75 5.75 5.41 5.63 Mining inventory AuEq (000oz) 1,168 1,170 1,170 1,170 1,533 1,533 1,000 1,209 Au recovery (% ) 92% 91% 91% 91% 92% 92% 95% 94% LOM throughput (Mtpa) 851 852 852 852 1,143 1,143 792 922 Production AuEq Y1-5 (000oz pa) 154 155 155 155 157 157 135 157 Production AuEq LOM (000oz) 148 148 148 148 153 153 103 123 Mining & haul costs (C $/t mined) 97 97 122 122 122 122 120 121 Proc & tailings costs (C $/t milled) 31 31 35 35 35 35 35 35 G&A costs (C $/t milled) 11.3 11.3 15.0 15.0 15.0 15.0 15.0 15.0 LOM C 1 costs (US$/oz AuEq) 642 612 755 745 753 753 768 754 LOM AISC (US$/oz AuEq) 769 767 931 922 923 925 967 945 Total build capex (C$m) 161 163 163 163 168 168 159 183 Total sustaining capex (C $m) 178 177 177 177 209 209 194 209 Exchange rate (USD/CAD) 0.76 0.76 0.76 0.75 0.75 0.75 0.75 0.75 G old price (US$/oz) 1,400 1,400 1,850 1,900 1,850 1,900 1,850 1,850 Project NPV post-tax (C$m) 342 337 570 628 782 831 477 572 IRR post-tax (% ) 51% 48% 72% 78% 82% 86% 72% 72% Payback (years) 1.8 1.8 1.0 0.8 1.1 0.9 1.0 1.4 Source: SCPe; *note NPVs and IRRs are calculated at build start for consistency with the DFS

Valuation Based on the inputs and project NPV shown on the previous page, we show our project NAV and sensitivities below. Our project NPV5% of C$798m (at present assuming 2Q20 build start) at US$1850/oz is increased by C$21m by adding cash and ITM options. We add US$25/oz of value for oz outside the mine plan, and subtract C$37m for G&A and central costs (C$7.5/yr of G&A assumed). Our project NPV stays positive down to a gold price of US$1,068/oz and at spot flat, we calculate a breakeven discount rate of 21%. At a 5% discount rate, we calculate that a gold price of US$1417/oz would set our NAVPS to the current share price, while this rises to a price of US$1,483/oz at an 8% discount rate. Table 8. Valuation, sensitivities and funding assumptions Group-level SOTP valuation 3Q20 Valuation over time 1Q20E 1Q21E 1Q22E 1Q23E 1Q24E C$m O/ship NAVx C$/sh Mines NPV (US$m) 761 803 980 954 845 Premier NPV 3Q20 798 100% 1.0x 2.73 Cntrl G&A & fin costs (US$m) (94) (88) (82) (42) (11) Central SG&A & fin costs 3Q20 (89) - 1.0x (0.31) Net cash at 1Q (US$m) 10 (84) (52) 66 179 Exploration ($25/oz) 35 100% 1.0x 0.12 1xNAV (US$m) 677 631 846 978 1,013 Cash and restr. cash 2Q20 31 - 1.0x 0.14 1xNAV share px FD (C$/sh) 3.14 2.16 2.53 2.93 3.04 Debt 2Q20 (15) - 1.0x (0.07) P/NAV (x): 0.35x 0.51x 0.43x 0.38x 0.36x 1xNAV5% US$1850/oz 760 2.62 ROI to equity holder (% pa) 0% 96% 52% 39% 29% *above diluted for options but not fundraises, fellow diluted for build raise 1.2xNAV share px FD (C$/sh) 3.77 2.59 3.04 3.52 3.64 1xNAV5% US$1850/oz - Fully Funded 810 2.43 ROI to equity holder (% pa) 0% 136% 66% 47% 35% 1xNAV sensitivity to gold price and discount / NAV multiple Funding: uses Funding: sources 1xNAV asset (US$m) $1500oz $1700oz $1850oz $2000oz $2200oz DFS capex C$147m SCPe 2Q20 cash + options C$37m 7% discount 392 575 713 850 1,033 SCPe contingency+royalty buyback C$18m Mine debt @ 60% gearing C$120m 5% discount 445 647 798 949 1,151 SCPe G&A + fin. cost to first Au C$10m Build equity @ Spot C$50m 3% discount 506 729 896 1,064 1,286 SCPe working capital C$16m Valuation (C$/sh) $1500oz $1700oz $1850oz $2000oz $2200oz Total uses C$190m Total proceeds C$207m 0.5xNAV 0.68 0.99 1.21 1.44 1.74 *Cash from options expiring pre first pour 0.8xNAV 1.02 1.48 1.82 2.16 2.61 1.0xNAV 1.36 1.97 2.43 2.88 3.49 Source: SCPe We have assumed a project gearing level of ~60%, with a funding package of C$120m of debt at 10%, with a C$50m equity fundraise at the current share price. Based on our base case scenario and SCPe LT gold price of US$1850/oz, we estimate a fully diluted (pre-funded) NAV per share of C$2.62 or C$2.43 per share inclusive of our assumed funding assumptions. We see significant re-rating opportunity for Ascot into production, as NAVPS increases to C$3.04/sh after the first year of production, while a producer multiple of 1.2x NAV would put the share price at C$3.52/sh once in production, 3x the current share price. This is corroborated by FCF yields; on the current share price we estimate an average FCF yield of 31% over the LOM on the current share price, vs the producer peer group averages of 10-20%, suggesting 1.5-3x uplift potential.

Sprott Capital Partners Equity Research

Ascot Resources, 17 November 2020

Recommendation: initiate coverage with BUY rating and C$1.80/sh PT While we do believe that there is low-hanging exploration upside, Ascot is now an execution story, with 100%+ uplift potential from successful delivery of the DFS alone. The key moving parts are the ultimate funding package, and timing of Red Mountain permitting and development. On funding, we have assumed equity is funded at the current share price, despite our view that the shares are undervalued at present. On Red Mountain timing, we have built in a buffer of one year which we think is justifiable on conversion of near infrastructure inferred ounces that should be much more easily drilled from underground. We initiate with a BUY rating and price target of C$1.80/sh based on 0.75x our fully diluted and funded NAV per share estimate of C$2.43/sh. Once in production, we still see re-rating potential vs our price target as i) estimated NAVPS is ~40% higher than our target price once in production and ii) similar peer companies trade above 1x NAV. Producer peer NAV, FCF yield and EV per oz multiples suggest that there is a further 50% uplift potential from our target price. Why we like Ascot 1. Development stage 150kozpa project in Canada 2. Grade and existing infrastructure result in low initial capex 3. Inferred conversion opportunities near UG infrastructure mine plan 4. Attractive valuation gives wide room to deliver returns Catalysts  4Q20: Mines Act Permit Application  1Q21: Funding package for capex  1H21: 2800tpd optimisation studies  1H21: Assumed construction start  Mid-2022: Assumed first production Risks Reserve and Resource: The geology is complex with multiple zones, orientations and widths. However, the reserve and resource are supported by >900,000m of drilling at Premier, and at Red Mountain, drill spacing is <25m in the Marc Zone and 25-30m at the AV and JW zones. Mining: The mine plan utilises a number of mining methods, therefore managing productivity and performance (on dilution, stope dimensions, etc will be important. As a brownfield site, there is extensive operating historical information about stable slope spans, grade continuity, groundwater flow, and existing UG access for verification. We believe risk is reduced as there are at least two UG ore sources at any given time in the mine life. Hauling: The primary risk item in our view is that several sections of the Red Mountain haul road between KM 14 and the lower portal are identified as requiring grades of up to 18%. Alternatives are being explored but safety measures and protocols have been identified. Processing: We view metallurgy at Premier as low-risk with test work showing high recoveries at a 80um grind, moderate BWI, and strong historic recoveries. Red Mountain ore is more difficult with a fine 20um grind and concentrate thickener needed. Ascot intends to batch treat ore, with Red Mountain ore bypassing the gravity concentrator to a fine regrind, and thickener before entering the CIL. 590kg of samples from 6 zones were tested from Premier with 36 samples from 3 zones (Marc, AV, JW) tested from Red Mountain; the sampling procedure appears robust. Water inflows: Water inflows are moderate at Red Mountain (five pumping stations). The Premier mine is expected to have a high inflow rate and 11 pumping stations are planned. Six stations are planned at Silver Coin and five at Big Missouri. Water treatment: There is an existing WTP which is to be replaced by a new treatment system as part of the restart of operations, this is budgeted in the capex. Water from dewatering of Silver Coin and Big Missouri is to be pumped into the mined out S1 pit at Big Missouri.

Sprott Capital Partners Equity Research

Ascot Resources, 17 November 2020

Tailings: The existing TSF is to be reinforced with 1.3Mt of material to achieve a capacity of 6.5Mt. Further tradeoff studies are necessary to determine potential beyond 6.5Mt. The TSF is rock lined on three sides and lifts are to maintain a 2:1 slope using centreline lifts. Permitting: Ascot must receive a positive MAPA determination and conclude an agreement with the Nisga’a before proceeding with the project. As Red Mountain is being permitted after Premier, there is a risk of delay on the Red Mountain permit affecting the mine plan. In our view this is mitigated by the potential to convert inferred ounces at Big Missouri and Silver Coin.

Ticker: AOT CN Price / mkt cap: 1.1/sh, C$303m Market P/NAV: 0.42x Assets: Premier Gold Project

Author: J Chan / B Salier Rec / 0.75xNAV PT: BUY / C$1.80 1xNAV2Q20 FD: C$5.40/sh Country: Canada

Group-level SOTP valuation 2Q20 3Q20 Resource / Reserve Mt 000oz EV/oz C$m O/ship NAVx C$/sh Measured, ind. & inf. 12.80 3098 150 Premier NPV 3Q20 798 100% 1.0x 2.73 Proven & probable 6.12 1170 397 Central SG&A & fin costs 3Q20 (89) - 1.0x (0.31) Share data Basic FD FD+FF Exploration ($25/oz) 35 100% 1.0x 0.12 Shares out (m) 275.8 292.0 333.7 Cash and restr. cash 2Q20 31 - 1.0x 0.14 Funding: uses Funding: sources Debt 2Q20 (15) - 1.0x (0.07) DFS capex C$147m SCPe 2Q20 cash + options C$37m 1xNAV5% US$1850/oz 760 2.62 SCPe contingency+royalty buyback C$18m Mine debt @ 60% gearing C$120m *above diluted for options but not fundraises, fellow diluted for build raise SCPe G&A + fin. cost to first Au C$10m Build equity @ Spot C$50m Cash raised 50 - 1.0x 0.15 SCPe working capital C$16m 1xNAV5% US$1850/oz - Fully Funded 810 2.43 Total uses C$190m Total proceeds C$207m 1xNAV sensitivity to gold price and discount / NAV multiple *Cash from options expiring pre first pour 1xNAV asset (US$m) $1500oz $1700oz $1850oz $2000oz $2200oz Commodity price CY18A CY19A CY20E CY21E CY22E 7% discount 392 575 713 850 1,033 Gold price (US$/oz) 1,259 1,378 1,749 1,850 1,850 5% discount 445 647 798 949 1,151 Ratio analysis CY18A CY19A CY20E CY21E CY22E 3% discount 506 729 896 1,064 1,286 FD shares out (m) 158.5 215.2 292.0 333.7 333.7 Valuation (C$/sh) $1500oz $1700oz $1850oz $2000oz $2200oz EPS (US$/sh) 0.048 (0.030) (0.024) (0.015) 0.220 0.5xNAV 0.68 0.99 1.21 1.44 1.74 CFPS before w/c (US$/sh) (0.01) (0.03) (0.01) (0.01) 0.20 0.75xNAV 1.02 1.48 1.82 2.16 2.61 EV (US$m) (7) 9 294 388 356 1.0xNAV 1.36 1.97 2.43 2.88 3.49 FCF yield (%) neg neg (0) (0) 13.3% Valuation over time 1Q20E 1Q21E 1Q22E 1Q23E 1Q24E PER (x) - - (32.8) (45.5) 4.1x Mines NPV (US$m) 761 803 980 954 845 P/CF (x) - - (63.8) (60.7) 3.6x Cntrl G&A & fin costs (US$m) (94) (88) (82) (42) (11) EV/EBITDA (x) 1.3x (1.2x) (48.3x) (77.5x) 2.6x Net cash at 1Q (US$m) 10 (84) (52) 66 179 Income statement CY18A CY19A CY20E CY21E CY22E 1xNAV (US$m) 677 631 846 978 1,013 Revenue (US$m) - - - - 258 1xNAV share px FD (C$/sh) 3.14 2.16 2.53 2.93 3.04 COGS (US$m) - - - - (116) P/NAV (x): 0.35x 0.51x 0.43x 0.38x 0.36x Gross profit (US$m) 0 0 0 0 142 ROI to equity holder (% pa) 96% 52% 39% 29% Expenses (US$m) (3) (1) (5) (7) (5) 1.2xNAV share px FD (C$/sh) 3.77 2.59 3.04 3.52 3.64 Impairment & other (US$m) 1 1 0 - - ROI to equity holder (% pa) 136% 66% 47% 35% Net finance costs (US$m) (0.2) (1.0) (0.8) - (18.0) Geared company NAV diluted for mine build, net G&A and finance costs Tax (US$m) 9.9 (0.6) - - (33.9) 2Q22 1xNAV FF FD (C$/sh)^ $1500oz $1700oz $1850oz $2000oz $2200oz Minority interest (US$m) - - - - - 9.0% discount 1.07 1.57 1.95 2.33 2.83 Net income attr. (US$m) 8.0 (1.1) (5.9) (7.0) 84.9 7.0% discount 1.20 1.76 2.17 2.58 3.13 Cash flow CY18A CY19A CY20E CY21E CY22E 5.0% discount 1.36 1.97 2.43 2.88 3.49 Profit/(loss) after tax (US$m) 6 (8) (7) (5) 74 Geared project IRR: 52% 69% 82% 95% 111% Add non-cash items (US$m) (9) 3 2 - 11 2Q22 1xNAV FF FD (C$/sh)^ $1500oz $1700oz $1850oz $2000oz $2200oz Less wkg cap / other (US$m) 1 (2) 1 - (17) 20.0% increase in cost per tonne 0.86 1.49 1.95 2.40 3.01 Cash flow ops (US$m) (2) (7) (4) (5) 68 10.0% increase in cost per tonne 1.12 1.74 2.19 2.64 3.25 PP&E (US$m) - (0) (5) (131) (36) 0.0% increase in cost per tonne 1.36 1.97 2.43 2.88 3.49 Other (US$m) (3) (5) (0) - - 2Q22 1xNAV FF FD (C$/sh)^ $1500oz $1700oz $1850oz $2000oz $2200oz Cash flow inv. (US$m) (15) (23) (8) (131) (36) 10.0% change in grade 1.84 2.50 3.00 3.50 4.17 Debt draw (repayment) (US$m) - - - 106.2 - 0.0% change in grade 1.36 1.97 2.43 2.88 3.49 Equity issuance (US$m) 3.0 15.9 35.3 41.7 - -10.0% change in grade 0.87 1.44 1.85 2.26 2.80 Other (US$m) (0.2) 11.7 (3.1) - - Premier (000oz) Group AISC (US$/oz) Cash flow fin. (US$m) 2.8 27.5 32.2 147.8 - 200koz US$1200/oz Net change post forex (US$m) (14) (2) 20 12 32 150koz US$1100/oz Balance sheet CY18A CY19A CY20E CY21E CY22E Cash (US$m) 7 4 24 37 68 100koz US$1000/oz Accounts receivable (US$m) 0 1 0 0 10 50koz US$900/oz Inventories (US$m) 0 1 0 0 23 0koz US$800/oz PPE & exploration (US$m) 115 172 190 320 345 CY22E CY23E CY24E CY25E Other (US$m) 3 5 6 6 6 Production (100%) CY22E CY23E CY24E CY25E CY26E Total assets (US$m) 125 183 221 363 452 Premier (000oz) 105 160 149 156 176 Debt (US$m) - 1 1 121 121 Premier cash cost (US$/oz) 742 708 770 736 660 Other liabilities (US$m) 17 34 45 31 47 Premier AISC (US$/oz) 929 880 927 912 846 Shareholders equity (US$m) 152 198 231 273 273 Group (000oz) 105 160 149 156 176 Retained earnings (US$m) (44) (50) (57) (62) 12 Group cash cost (US$/oz) 829 795 856 823 747 Minority int. & other (US$m) - - - - - Group AISC (US$/oz) 965 903 952 936 867 Liabilities+equity (US$m) 125 183 221 363 452 Source: SCPe

Sprott Capital Partners Equity Research

Ascot Resources, 17 November 2020

Assets Premier Gold Project, Golden Triangle, British Columbia, Canada In total, Ascot has 253km2 of licence areas split into two licence packages. I) Premier (“PGP”) is located 25km from Stewart and consists of the Premier, Big Missouri and Silver Coin deposits, which were initially on adjoining licences held by separate owners but have been consolidated by Ascot since 2017. II) Red Mountain Project (“RMP”), is located 15km NE of Stewart and is currently accessed by helicopter. Ascot acquired the RMP in 2019 via its acquisition of IDM Mining, to consolidate the projects in a high grade underground hub-and-spoke concept. PGP is accessible via the paved Grand Duc Road from Stewart. The site has paved roads to the mill build, power station, TMF and the underground portals. At peak, the mine is expected to have 110 employees with 40 active per shift. Employees are to be bussed from Stewart, where they are expected to reside (no remote camp or FIFO). Figure 32 Asset location

Source: Ascot Resources and VRIFY History The Golden Triangle: Premier was the first discovery in the Golden Triangle and commenced production in 1918, other notable past producing mines include Eskay Creek (>3Moz Au at 49g/t and >160Moz Ag at 2400g/t) and Snip (~1Moz at 27.5g/t from 1991-1999). Whilst very high grade, the mines of the area were burdened by a lack of infrastructure and the burden of generating their own power. Highway extension projects commenced in the 1960s and today, BC Highway 37 runs through the area, from Kitimat at its southern point, to the Yukon Border in the north. An ocean port for the export of concentrate was built in Stewart, and a 700kV transmission line was built through the area, powered by a three-dam 277MW hydroelectric facility 70km NW of Stewart. Pretium’s 400kozpa Brucejack mine became the area’s newest producer in 2017 with a current Reserve of 4.2Moz at 8.4g/t Au and 2017-2019 production of 883koz at 9.7g/t. Premier’s early history: Exploration started in the late 1800s and Premier was discovered in 1910. Premier was the first discovery in the Golden Triangle and commenced production in 1918; shares in the Premier Mining Company returned 200% from 1921-1923. Post WWI, the mine was in production continuously from 1918-1952, first as a DSO operation from 1918-1921, then with a 200tpd mill which was expanded to 440tpd in 1926 and 500tpd in 1933. The historic Premier mine produced 1.8Moz and 41Moz Ag at grades of 12.15g/t Au and 269g/t Ag. After the 1953 shut down from low metal prices, Westmin acquired the property in 1978 and built a new 2,000tpd-nameplate mill, with peak throughput of 2,850tpd. From 1989-1996, the operation produced 260koz of gold and 5.1Moz Ag (320koz AuEq) from three small pits and underground, but was shut down in 1996 due to low metal prices. Boliden acquired the project in 1998. Table 9. Historic production at Premier-Dilworth Tonnes Grade Ounces Historic production (000t) (g/t AuEq) (000oz AuEq) 1918-1953 (DSO + 200-500tpd mill) 5,599 12.97 2,335 1989-1996 (2,000tpd mill) 3,040 3.27 320 Total 8,639 9.56 2,655 Source: Ascot and Westmin historical records; the Premier mill achieved a high of 2,850tpd

Sprott Capital Partners Equity Research

Ascot Resources, 17 November 2020

Recent history: Ascot acquired Dilworth in 2007 and then Premier-Big Missouri in 2009 via earn-ins. Ascot completed the earn-in 4Q18 for a total C$11m and now holds 100% interest in both properties. Since 2009, Ascot drilled ~510,000m in 2,268 holes on the property and issued five resource updates (Figure 2). The key recent change was the appointment of Derek White as CEO in 4Q17. Derek was the former CEO of KGHM International, and VP Business Development at Quadra when it acquired FNX prior to the take-out of the combined company by KGHM. This appointment marks the shift from exploration to development. In 4Q18, Ascot completed the acquisition of 100% of the adjacent Silver Coin properties from Jayden and Mountain Boy. RMP was first discovered in 1989 and drilling on the Marc, AV, and JW zones continued from 1989-1994 with 406 holes that totalled 100,298m along with 2,000m of underground development. Seabridge acquired the property in 2002 and optioned the property to IDM Mining in 2014. IDM completed 230 holes for 49,667m from 2014-2018 before the company was acquired by Ascot in March 2019. Permitting Ascot is pursuing a two stage permitting approach. As a previously operating mine with a permitted TSF and water treatment plant, Premier should be eligible to pursue the Mines Act Permit Amendment (MAPA) route, rather than as a new operation, which would require a new EA to be filed. Red Mountain has an existing Environmental Certificate. Ascot is targeting submission of its permit amendment in H2. An amendment process has been agreed with the Nisga’a First Nation and a benefits agreement was signed in April 2019. Geology Ascot’s deposits sit in the Upper Triassic to Lower Jurassic Hazelton group that formed in an island-arc setting and later accreted onto the North American continent. The host package comprises flows, tuffs, and lapilli tuffs in tightly folded and weakly metamorphosed (greenschist facies) andesitic volcanics. Mineralization formed in the early Jurassic with multiple stages and fluid pulses. The mineralization styles are variable, from intermediate- sulphidation epithermal style veins at Premier to more porphyry-related sulphide breccias and stockworks at Red Mountain. At Premier there are some veins with polymetallic character (Au-Ag-Zn-Pb-Cu) where base metals precipitated in addition to the ubiquitous precious metals that occur by themselves in the majority of the vein types. Figure 33: Regional scale geological map of the Golden Triangle and local scale map of the Premier licence

Source: Ascot Resources, DFS, May 2020

Sprott Capital Partners Equity Research

Ascot Resources, 17 November 2020

Mining The feasibility use owner mining with a leased fleet (2B Jumbos, 10t LHDs, 30t haul trucks, bolters, shotcreters and LH drills). Mining starts at Silver Coin and Big Missouri, with 64% of ore from long-hole stoping, 14% undercut long-hole, 12% room and pillar, 2% cut and fill with residual development ore. Drift and in-ore development is 4.5x4.5m for 30t trucks, with 5-10 active stopes. Most ore at Silver Coin will see 78% LH retreat stoping; at Big Missouri 81% of mining is room and pillar given the shallower dip there. 70% of ore at Premier is to be mined by LH stoping. At Red Mountain 72% of mining will be LH, with the upper zones (Marc) mined by LH retreat and the JW-AV zones transverse LH stoping, with cemented backfill. Red Mountain is scheduled for year two of production, but Ascot is working to move this back in the mine schedule as it is value accretive if near development ounces at Big Missouri and Silver Coin can be converted and added to reserves. Production is expected to reach 2,500tpd from the Premier deposits (Big Missouri and Silver Coin) in year two, moving to 1,250tpd once Red Mountain enters production, thus maintaining total throughput of 2,500tpd. Figure 34 Mine design at Big Missouri (top left), Silver Coin (top right), Premier (lower left) and R Mount. (lower right)

Source: Ascot Resources, DFS, May 2020 Processing The Premier mill design comprises a 2,500tpd nameplate SAB to CIL circuit ahead of smelting to doré. According to Westmin records, the mill operated with a 54um grind size and achieved 91% Au and 45% Ag recoveries from 1989-1996. Ascot is planning to refurbish the mill in the same configuration but with additional Knelson concentrator, intensive leach reactor (ILR) and electrowinning (EW) to replace the previous Merrill Crowe circuit. PEA-level metallurgical test work in 4Q18 included samples from Premier, Big Missouri and Silver Coin at a grade range of 2.87g/t-9.08g/t Au. These demonstrated average recoveries of 97% for gld and 65% silver. The circuit will be optimised for a grind size of 80um for Premier ore (90um for red Mountain). Red Mountain ore is harder, and contains variable pyrrhotite in addition to pyrite. Gold is fine-grained and does not report to the gravity circuit. Ascot intends to add a fine grind (to 25um) and pre-leach thickener to the circuit and batch treat Red Mountain ore. Power consumption is expected to be 15MW at the plant and 1MW at each portal. Infrastructure Power is from the Long Lake station ~800m south of the processing plant with a new substation to be constructed for the required 15MW, with 1MW at each of the portals. The TFS requires a 1.2Mm3 increase to the existing facility, reshaping to a 2:1 slope via centreline lifts over the LOM. The existing water treatment plant is to be replaced by a high-density sludge lime water-treatment and ammonia treatment plants. The existing Grand Duc road will be supplemented by a 17km mine road, with a 24km to Red Mountain to be developed, including 14.5km off all season access and 12km private road to the upper portal. Red Mountain power is via generator. Development timeline A 40 week construction is planned, with Red Mountain is to be developed in Y2, following permitting. We push Red Mountain to Y3, a value accretive approach given expected Big Missouri and Silver Coin reserve additions.

Sprott Capital Partners Equity Research

Ascot Resources, 17 November 2020

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Sprott Capital Partners Equity Research

Ascot Resources, 17 November 2020

SPROTT CAPITAL PARTNERS EXPLANATION OF RECCOMENDATIONS: Should SCP issue research with recommendations, the research rating guidelines will be based on the following recommendations:

BUY: The stocks total returns are expected to be materially better than the overall market with higher return expectations needed for more risky securities markets

NEUTRAL: The stock’s total returns are expected to be in line with the overall market

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TENDER: The analyst recommends tendering shares to a formal tender offering

NOT RATED ((N/R): The stock is not currently rated

Research Disclosure Response

1 SCP and its affiliates collectively beneficially owns 1% or more of any class of the issuer's equity securities2 NO

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Sprott Capital Partners Equity Research Ratings:

Summary of Recommendations as of November 2020 BUY: 26 HOLD: 0 SELL: 0 UNDER REVIEW: 0 TENDER: 1 NOT RATED: 0

TOTAL 27

2 As at the end of the month immediately preceding the date of issuance of the research report or the end of the second most recent month if the issue date is less than 10 calendar days after the end of the most recent month

Sprott Capital Partners Equity Research

Euro Sun Mining (ESM CN) Long-life European porphyry project with 10Moz scale potential

RECOMMENDATION: BUY PRICE TARGET: C$1.05/sh RISK RATING: HIGH

SHARE DATA C$0.35/sh Mine builder in the emerging West Tethyan District Shares (basic, FD) 169 / 177 52-week high/low 1.40 / 0.37 With a multi-millennia mining history, the West Tethyan belt has enjoyed a Market cap (C$m) 59 resurgence as investors and majors are drawn in by the region’s geological Net cash (debt) (US$m) 15 1.0xNAV5% @ US$1850/oz (US$m) 488 upside, skilled but cheap workforces, and world class infrastructure. Euro Sun 1.0xNAV5% FD (C$/sh) C$3.70 is developing the Rovina Valley Gold Project (RV) in Romania with a 28km2 1.0xNAV5% FD + FF (C$/sh) C$1.03 P/NAV (x) 0.09x property with three porphyry deposits containing a total of 10.1Moz of M&I Average daily value (C$k, 3M) 192.1 ounces (AuEq). The company is finalizing a feasibility study by year end

FINANCIALS CY24E CY25E CY26E targeting a 130kozpa producer with first production in mid-2023. Gold produced (000oz AuEq) 109 161 152 Straightforward low strip porphyry benefitting from infrastructure Revenue (US$m) 199 296 277 AISC (US$/oz AuEq) 796 763 912 ESM has the key traits of successful porphyry mines: low costs and good Income (US$m) 35.5 68.8 49.5 metallurgy. Advantages include cheap grid power at 7.4c/kWh; low strip ratio at EPS (C$/sh) 0.21 0.41 0.29 1.9x LOM; simple geology; mining (open pit), and metallurgy (flotation to PER (x) 1.7x 0.9x 1.2x CFPS (C$/sh) 0.11 0.20 0.16 produce a Cu-Au concentrate); and a skilled local labour force that does not P/CF (x) 1.1x 0.6x 0.8x require FIFO expats. These result in SCPe unit costs of US$16.5/t (0.27g/t EBITDA (US$m) 89.5 138.5 100.3 AuEq) of ore, delivering strong margins on a grade of 0.67g/t AuEq. EV/EBITDA (x) 3.0x 1.3x 1.2x Initiate coverage with BUY rating and C$1.05/sh price target SPOT VALUATION 1Q20E 1Q21E 1Q22E The 2019 PEA provides a starting point, outlining a 20ktpd (7.2Mtpa) open pit to 1xNAV5% FD (C$/sh) 1.05 1.55 1.12 ROI to 1xNAV (% pa) 0% 344% 79% flotation operation producing 108koz Au and 6kt Cu per year (130koz AuEq) 1.2xNAV5% FD (C$/sh) 1.26 1.86 1.34 based on exploitation of just the Colnic deposit. Excellent logistics drive ROI to 1.2xNAV (% pa) 0% 433% 96% US$340m initial capex, with AISC of US$878/oz AuEq (co-product). We model a similar scenario per the PEA for Colnic, increase unit costs and sustaining SOTP 1xNAV5% US$1850/oz US$m C$/sh Rovina Valley NPV 3Q20 548 4.14 capex by 20%, and add in the Rovina deposit, which management has guided Central SG&A & fin costs 3Q20 (157.1) (1.19) will be incorporated into the feasibility study. We have assumed 60% debt and Exploration 82.4 0.62 equity funded at 0.2x NAV. We apply a 0.75x multiple to this and US$50/oz for Net cash 1Q20 14.6 0.11 resources outside our mining inventory to reflect ounce upside. As such, we TOTAL 488 3.68 initiate with a BUY rating and C$1.05/sh PT. On our estimates, ESM is currently Cash raised 166 2.0 2.00 trading at 0.1x unfunded NAVPS or 0.3x SCPe fully-funded NAVPS.

1.5 1.50 Delivery of Colnic alone could deliver a double on FF NAVPS

1.0 1.00 We estimate that ESM is trading at just 0.5x fully funded NAVPS on a Colnic- only scenario, even with our conservative unit cost (increased by 20% over PEA)

0.5 0.50 Price (C$/sh) Price Volume in C$m in Volume and sustaining capex (increased to US$86m from US$12m) estimates. We

0.0 estimate an NPV5%-$1850/oz-$3.00/lb of US$348m and IRR of 19%.

Feb-19

Feb-20

Aug-19

Aug-20

Nov-18

Nov-19

Nov-20 May-19 Source: S&P Capital IQ May-20 Rovina and Ciresata could double NAV on conservative conversion Majors favour porphyries for good reasons: They tend to offer long asset lives that deliver a robust return profile and multi-cycle exposure, shifting emphasis Justin Chan +44-203-931-6772 to execution, rather than cycle timing. In Rovina Valley’s case, the Rovina and [email protected] Ciresata deposits offer this LT optionality. Adding 50Mt from Rovina (30Mt Brock Salier, PhD +44-203-931-6771 containing 463koz Au and 102kt Cu) increases our NPV estimate by US$211m [email protected] (US$0.30/sh FF) and IRR to 23%. Incorporating Ciresata (58Mt for 1.9Moz Au and 104kt Cu) in a bulk stoping operating increases NPV by US$279m, or C$0.43/sh to C$1.66/sh, IRR to 27%, and mine life to 24 years in total.

Sprott Capital Partners Equity Research

Euro Sun Mining, 17 November 2020

Investment thesis PEA / Colnic provides 2x upside on ‘base case’ with Rovina and Ciresata as upside in porphyry district Euro Sun (formerly Carpathian) is developing the >10Moz AuEq (>7Moz Au alone) Rovina Valley Project in west- central Romania. The project comprises three porphyry deposits, Colnic (~2.3Moz Au and ~140kt Cu), Rovina (~1.1Moz Au and ~290kt Cu) and Ciresata (4.0Moz Au and 250kt Cu). The company’s licence covers 29km2 of the Carpathian fold belt, which hosts Majdanpek ~4Moz, Bor ~5Moz, Timok ~3Moz and Chelopech ~4Moz. The project was advanced by Carpathian gold through the 2010s but was starved of funds when Carpathian’s development of the RDM project in Brazil ran into financial difficulty. The company was restructured in 2015 with the sale of RDM to Brio Gold to refocus on Rovina Valley, and in 2016, CEO Scott Moore joined as part of a suite of management changes. The key improvements to the project were a +10% increase in gold recovery in 2017, ratification of the Mining Licence in 2018, and an updated PEA released in 2020 showing attractive economics on a 12-year mine life based on the a low-strip open pit of the Colnic deposit. A Feasibility is targeted before year end that ESM has foreshadowed will incorporate the Rovina deposit into the mine inventory on a largely unchanged initial capex based on ~US$350m. Figure 35 (A) Location map and (B) West Tethyan gold belts

Source: Euro Sun Mining, February 2019 PEA

Majors and mid-tiers target porphyries as M&A targets for a reason While splashy high grade greenstone or epithermal drill results excite retail investors, porphyries are sought after M&A targets by mid-tiers and majors and have a track record of delivering long-term returns. Porphyries typically have long mine lives, consistent geology / predictable grade profiles, and often multi-deposit district potential. Operationally the benefits are i) consistent orebodies enable focus on execution over interpretations - ie ‘logistics plays’; ii) ability to deliver significant operational benefits from initial investment in infrastructure; and iii) ability to scale mining and processing – larger equipment, lower unit costs. Strategic / financial benefits include i) lower risk due to long life, which reduces impact of short term price fluctuations on life of asset returns; and ii) typically large resource tails provide optionality and torque to price rises. Figure 36: Recent porphyry M&A transactions

Acquiror Vendor/Acquired Asset Year Reserve Resource Price (US$m) Newcrest Imperial Metals Red Chris (70%) 2019 2.7Moz Au, 1.3Mt Cu 20Moz Au, 6Mt Cu 830 Zijin Freeport McMoRan Timok Lower (72%) 9.6Moz Au, 14.3Mt Cu 240 2.6 Moz Au, 1.3Mt Cu - UZ Zijin Nevsun Timok Upper + 28% of Lower* 2018 1,517 9.6Moz Au, 14.3Mt Cu - LZ Centerra Aurico Kemess 2017 1.9Moz Au, 300kt Cu 5.6Moz Au, 1.2M Cu 240 First Quantum Lumina Copper Taca Taca 2014 13.0 Mt Cu 470 First Quantum Antares Haquira 2010 6.1 Mt Cu 460 Source: S&P Capital IQ, Newcrest Mining, Imperial Metals, Freeport McMoRan SEDAR, Centerra, First Quantum

Sprott Capital Partners Equity Research

Euro Sun Mining, 17 November 2020

Rovina Valley ticks all the bulk tonnage requirements: simple mining, processing and logistics Successful porphyries depend on logistics and execution and Rovina Valley benefits from technical ease of execution. Mining: Colnic and Rovina are both low strip open pits, 1.9x for Colnic (PEA) and SCPe for Rovina 1.7x, respectively, outcropping near surface. The host rock is competent, enabling 12-24m bench heights, 10-14m bench widths and slopes of 43.5-48.5°. Ciresata is higher grade but with ~60m of overburden and at current prices is more likely to be developed as a bulk underground (more on this later). Processing: The processing route is a simple crush, grind (75um) and column flotation, with high recoveries 82% Au and 89% Cu for Colnic and SCPe 72% Au and 93% Cu for Ciresata, reflecting grades. Logistics are excellent including the nearby town of Brad (20 mins by road, pop 14.5k), grid power at <7c/kWh, and rail access at the town of Brad for concentrate shipment. On the property, the deposits are near spaced with rolling hills with water and waste/dry stacking locations on site. Team: ESM’s technical team includes COO Sam Rasmussen, former CEO of Kamoto Copper and GM of Tenke Fungurume during its construction. Figure 37: Map of Deposits and long section of Colnic PEA pit shell

Source: Euro Sun Mining This is not Certej or Rosia Montana – Federal permits received, remaining permits are local level only and progressing quickly We believe that investors are currently heavily discounting ESM due to the perception that Romania is an anti- mining jurisdiction; we strongly disagree with this conclusion. Euro Sun is advanced in its permitting process and has already received key Federal permits required to commence construction. The Mining License was received in November 2018 and required sign off from the six relevant Romanian federal Ministers – Environmental, Finance, Justice, Economy, the Secretary General of the Government, and the Prime Minister. The remaining permits are local level (County of Hunedora) urbanism permits: i) the Land Usage Permit (rezoning) and ii) Technical Design (ie the construction permit + ESIA). The culmination of the two results in receipt of the Construction Permit. Figure 38: Comparison between Rovina Valley, Certej, and Rosia Montana Euro Sun Eldorado Gabriel Rovina Valley Certej Rosia Montana Throughput (Mtpa) 7.2 3 13-15 Total LOM material mined (Mt) 376* 160 472 Total LOM material processed (Mt) 138* 47 215 Proposed processing route Flotation Flotation, POX, CIL CIL Cyanide in process? No Yes Yes Tailings management Dry stack Wet tailings, TSF Wet tailings, TSF LOM wet tailings produced (million cubic metres) n/a 56 250

Source: SCPe, Eldorado Gold, Euro Sun Mining, Gabriel Resources *Using SCPe mine inventory, PEA inventory includes 251Mt of ore and waste mined and 86Mt processed from just Colnic deposit

Sprott Capital Partners Equity Research

Euro Sun Mining, 17 November 2020

Flotation and dry stack tailings resolve the major permitting and ESG risks other projects suffer Euro Sun has resolved past and potential concern and now ticks all the ESG and permitting boxes – no cyanide in process, dry stack tailings, independent board and a clean corporate structure. The 2017 breakthrough of using column flotation (+10% recovery) has enabled a flotation based flowsheet, eliminating cyanide from the metal extraction process. We believe this is critical: a cyanide spill from the Aural Mine in the Baia Mare Mining District in 2000 raised concerns significantly and we believe the cyanide issue is a key differentiator between Rovina Valley and the difficulties faced by Certej and Rosia Montana. ESM has also opted for dry stack tailings, which generate higher operating costs but addressed a key permitting and social concern, as well as saving on sustaining capex due to no one-off TSF lifts. Other ESG / social licence considerations: Rovina benefits from grid power which is an environmental and cost benefit; Romania’s grid generation includes 49.5% renewables and 18% nuclear and costs are <7c/kWh. Social: the project only requires the relocation of six households and US$20m has been budgeted for site restoration on closure including revegetation. Local support for the project is strong; the nearby town of Brad has a long history of mining; the town was founded around a Roman era gold mine, had a modern mine that produced until 2006, and has a mining museum. We view relocation and consequently, local support, as a key difference between Rovina Valley and the Rosia Montana project, where the controversy around relocation of villages has mobilized local and urban opposition to the project. Governance: Six of seven Directors are independent. There are no royalties, streams or other related party liens on the asset. The consulting agreement and relationship with Forbes and Manhattan has been terminated. Table 10. Rovina Valley Resource estimate and SCPe Inventory Ore Au grade Au Cu grade Cu Cutoff (kt) (g/t) (koz) (%) (kt) Total Resource Colnic 0.3g/t AuEq 140,400 0.51 2,281 0.10% 139 Rovina 0.25% CuEq 121,310 0.28 1,101 0.24% 288 Ciresata 0.65g/t AuEq 163,000 0.77 4,014 0.15% 246 Total 424,710 0.54 7,396 0.16% 673 PEA inventory Colnic 85,739 0.58 1,599 0.10% 86 SCPe Inventory Colnic 85,739 0.58 1,599 0.10% 86 Rovina 50,000 0.35 563 0.30% 150 Total 135,739 0.50 2,161 0.17% 236 Source: SCPe, Euro Sun Mining

SCP mining inventory Rovina Valley comprises three deposits – Colnic (OP), Rovina (OP) and Ciresata (UG). The 2019 PEA was based on mining Colnic alone as a low strip open pit, delivering a 12-year mine life at 20ktpd. We match the PEA mining inventory from Colnic of 86Mt at 0.6g/t Au and 0.10% Cu. We have also added 50Mt at Rovina at an intermediate grade of 0.35g/t Au and 0.30%Cu, between the 30Mt near surface high grade portion at (0.48g/t Au and 0.34% Cu) and the overall grade of the orebody at 0.28g/t Au and 0.24% Cu. ESM has made clear that in the current price environment, it fully intends to do the Feasibility Study including Rovina. PEA inputs are sense checked against other developed country porphyry studies below. Atalaya’s mining cost estimate for Touro was driven by their actual costs the Proyecto Riotinto operation while Copper Mountain’s mining costs were also driven by actuals. The higher processing costs are justifiable on the basis of a smaller operation and finer grind; we note that Rovina benefits from grid power at <7c/kWh so overall processing costs should not be a step change difference from BC operations on a LFL basis. Rovina’s mining scenario was based on owner mining but with a leased mining fleet. We have conservatively lifted operating costs moderately to US$2.50/t mined, US$8.00/t processing and US$1.00/t G&A vs US$2.25/t mined, US$7.03/t processed and US$0.50/t G&A in the PEA; in total this increases op costs per tonne of ore by 16%.

Sprott Capital Partners Equity Research

Euro Sun Mining, 17 November 2020

Table 11: Rovina Valley cost inputs vs other developed market bulk tonnage estimates Project Red Chris Touro Copper Mountain Rovina Valley Company Imperial Atalaya Copper Mountain Euro Sun Study Feasibiltiy PEA LOM Plan PEA Year 2012 2018 2019 2019 Throughput (Mtpa) 10.95 6-10 16.43 7.20 Total material moved per year (Mtpa) 30-40 20-35 39.42 up to 35 Total inventory (Mt) 301.60 90.91 363.40 85.74 Au grade (g/t) 0.27 -- 0.11 0.58 Cu grade (%) 0.36% 0.43% 0.27% 0.10% Strip ratio 1.25 2.40 1.40 1.93 Processing Flotation Flotation Flotation Flotation Primary grind (P80 um) 150 125 150 75 Mining Cost (US$/t mined) 1.78 1.84 2.13 2.25 Processing Cost (US$/t ore) 3.48 5.64 4.44 7.03 G&A (US$/t ore) 1.28 3.34 0.36 0.50 Total direct (US$/t ore) 6.54 15.09 9.92 14.12 Source: SCPe, Red Chris 2012 Feasibility Study by Imperial Metals, Proyecto Touro Feasibility Study by Atalaya, 2019 Copper Mountain Life of Mine Plan

Valuation Our base case is at the PEA throughput run rate at 7.2Mtpa, with production from Colnic years 1-13, as per the PEA, with production from Rovina in years 13-19. This drives production of 89koz Au and 11kt Cu per year over the LOM including 121koz and 6kt Cu in the first five years. At higher prices we see potential to increase conversion subject to strip and grade tradeoffs, but this optionality is an important strategic source of upside for operators. We use a 5% discount rate and our long-term price assumptions of US$1850/oz Au and US$3.00/lb Cu. With this scenario the project NPV5%-1850/oz-3.00/lb stands at US$548m with a 23% IRR (lifting from NPV5%-1350-3.10/lb US$169m / 13.5% at the PEA gold price). Funding We model peak funding of US$413m, including US$13m of working capital. We include 60% gearing at 10% debt. We have assumed equity funding at 0.2x NAV per share (fully diluted by pre-funding), which we believe is a conservative multiple for a straightforward build. As a project located in the EU, we believe that Rovina Valley could qualify for export credit financing which could lower debt costs significantly below our 10% assumption. Below we show fully funded NAVPS sensitivity to the pre-funding NAV per share multiple. Figure 39: Fully funded NAVPS sensitivity to equity funding NAV multiple 5% DR, US$1850/oz, US$3.00/lb 0.5x 0.4x 0.3x 0.2x 0.1x Spot NAVPS (C$/sh FF) 1.65 1.49 1.30 1.03 0.63 0.91 Funding Price (C$/sh) 1.85 1.48 1.11 0.74 0.37 0.35 Source: SCPe Production profile Based on Colnic and Rovina, we estimate a 19-year mine life with LOM average annual production of 89koz Au and 11kt Cu for 128koz AuEq at LOM average AISC of US$1087/oz AuEq (co-product). Per the PEA schedule, we expect production to average 121koz Au and 6kt Cu in the first five years of Colnic’s mine life with lower costs due to higher grades. We have layered in Rovina following the completion of mining and processing of Colnic though in practice we would expect the lower grade stockpiles from Colnic to be processed at the end of Rovina’s mine life, which would provide additional upside to our modelled scenario.

Sprott Capital Partners Equity Research

Euro Sun Mining, 17 November 2020

Figure 40: SCPe production profile including Colnic and Rovina deposits

1,500 180 1,250 150

1,000 120 (koz) 750 90

500 60 AISC (US$/oz)AISC 250 30 - - 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040 2041

Production (koz Au) Production (copper as AuEq) AISC (US$/oz)

Source: SCPe Significant downside protection – even Colnic alone delivers 2x upside on a fully funded basis On just mining Colnic alone, Euro Sun is trading at 0.1x pre-funded FD NAVPS, or 0.5x fully funded NAV assuming equity is raised at spot, implying that there is 100% upside to fair value even under punitive funding scenarios. This leaves upside from i) financing catalysts / rerating, such as offtake and potential development bank debt; ii) Rovina; iii) uplift from US$1850/oz to spot; and iv) Ciresata. We estimate a NAVPS of C$1.92/sh at first pour, implying uplift of +450% in ~ 13 quarters vs the current share price. Table 12: Rovina Valley outputs using PEA and SCPe inputs PEA inventory SCPe Upside Rovina Valley (100%) PEA PEA SCPe 19,000 SCPe 1,900 SCPe 1,900 Gold price (US$/oz) 1,325 1,325 1,850 1,900 1,850 1,900 1,850 1,900 Copper price (US$/lb) 3.10 3.10 3.00 3.00 3.00 3.00 3.00 3.00 Deposits Colnic >> >> >> Colnic + Rovina Colnic + Rovina + Ciresata Mining inventory (000t) 85,739 >> >> >> 138,371 >> 196,371 >> Au grade (g/t) 0.58 >> >> >> 0.48 >> 0.62 >> Mining inventory Au (000oz) 1,585 >> >> >> 2,145 >> 3,890 >> Cu grade (%) 0.095% >> >> >> 0.168% >> 0.166% >> Cu contained (kt) 81.5 >> >> >> 232.8 >> 326.7 >> Strip ratio (waste:ore) 1.9 >> >> >> 1.8 >> 1.8 >> Au recovery (%) 82% >> >> >> 79.4% >> 81.9% >> Cu recovery (%) 89% >> >> >> 91.6% >> 90.8% >> LOM throughput (Mtpa) 7,200 >> >> >> 7,200 >> 7,200 >> Production Au Y1-5 (000oz pa) 121 >> >> >> 108 >> 108 >> Production Cu Y1-5 (ktpa) 7.5 >> >> >> 5.2 >> 5.2 >> Production Au LOM (000oz pa) 108 >> >> >> 89 >> 117 >> Production Cu LOM (000oz pa) 6.0 >> >> >> 11.1 >> 10.9 >> Mining & haul costs (US$/t mined) 2.25 >> 2.50 >> 2.50 >> 2.50 >> Proc & tailings costs (US$/t milled) 7.03 >> 8.00 >> 8.00 >> 8.00 >> G&A costs (US$/t milled) 0.50 >> 1.00 >> 1.00 >> 1.00 >> LOM C1 cost per tonne of ore (US$/t) 14.12 >> 16.31 >> 16.31 >> 16.31 >> LOM C1 costs (US$/oz AuEq) 794 >> 905 909 927 933 947 953 LOM AISC (US$/oz AuEq) 878 >> 1,067 1,074 1,087 1,097 1,098 1,107 Total build capex (US$m) 340 >> 350 >> 350 >> 350 >> Total sustaining capex (US$m) 12 >> 96 >> 178 >> 386 >> Project NPV post-tax (US$m) 169 166 401 401 586 629 865 925 IRR post-tax (%) 14% 12% 20% 20% 23% 24% 27% 28% Payback (years) 5.6 5.9 4.1 4.1 4.3 4.1 4.3 4.1 Source: SCPe, Euro Sun Mining At US$1850/oz Au and US$3.00/lb Cu and using our base case mining scenario, we see significant risk protection built into the share price; we measure this using implied 1x NAVPS5% sensitivities. A gold price of US$1,441/oz would set shares to 1x NAV or a discount rate of 12% using our price assumptions. Other sensitivity changes that would set 1x NAVPS to the current share price include a 16.5% fall in Au and Cu head grade, a 31% increase in operating costs per tonne (on our estimates which are already +16% on the PEA), or a capex increase of 77% (both initial and sustaining).

Sprott Capital Partners Equity Research

Euro Sun Mining, 17 November 2020

Figure 41: Downside protection priced in to current share price vs 1x NAV

Gold price -24% Head grade -16% Opex per tonne +31% Capex +77% Or a discount rate of +12%

Source: SCPe We estimate that initial debt could be repaid after 2.5 years of production and mine capital payback in after 5.5 years of production, ~30% of the way through our estimated mine life. Including the initial share purchase price, we estimate that a new purchaser of ESM shares would be repaid 7.5 years into the mine life vs our total LOM of 19 years, with Ciresata as further upside. Figure 42: SCPe FCF yield and cumulative FCF yield 100% 400%

50% 200%

0% 0%

-50% -200%

-100% -400% 2021 2023 2025 2027 2029 2031 2033 2035 2037 2039 2041

FCF yield (%, LHS) Cumulatifve FCF Yield (%, RHS)

Source: SCPe Ciresata could be significant value driver: even adding to the end of the mine life adds 48% to NPV To quantify future exploration upside, we also show a scenario adding just the higher grade portion of Ciresata (58Mt at 1.04g/t Au and 0.18% Cu for 1.94Moz Au and 104kt Cu undiluted; converted to 58Mt at 0.94g/t Au and 0.16% for 1.75Moz Au and 94kt Cu assuming 10% dilution and 10% ore loss). We assume US$150m of capex to establish a bulk stoping operation, with mining costs of US$20/t. Considering that the deposit begins 60m below surface, we believe that these costs are sufficiently conservative for an illustrative exercise. This adds US$279m of NPV (C$0.43/sh fully funded), and takes our NPV5%-1850/oz-3.00/lb to US$865m. Below we show NPV5%-1850/oz-3.00/lb (at present) sensitivity to capex and mining costs. Figure 43: (A) Ciresata NPV sensitivity to cost inputs NPV 5% (US$m) $400m capex $200m capex $150m capex $100m capex $50m capex $8.00/t mining cost 373 437 453 469 485 $12.00/t mining cost 315 379 395 411 427 $16.00/t mining cost 257 321 337 353 369 $20.00/t mining cost 199 263 279 295 311 $30.00/t mining cost 51 118 134 150 166 $40.00/t mining cost -109 -35 -17 0 18 Source: SCPe

Sprott Capital Partners Equity Research

Euro Sun Mining, 17 November 2020

Recommendation: Initiate coverage with BUY rating and C$1.05/sh PT

Based on our NPV5%-1850/oz-300/lb Colnic and Rovina scenario of US$555m, we assume final equity is done at 0.2x NAV, after debt completion. We apply a nominal US$25/oz to the 3.2Moz outside our inventory, and add US$16m cash. This takes our 1xNAV5%-1850 to US$488m. Adding cash raised (US$166m) but fully diluting for the assumed equity raised generates a fully funded NAVPS of C$1.37/sh. We apply a 0.75xNAV multiple, which we believe is fair considering the considerably punitive dilution assumptions, and still significant re-rating into production (SCPe 1xNAV at first pour is +83% above our target price). As such, we initiate coverage with a BUY rating and a 0.75xNAV5%-1850/oz-3.00/lb PT of C$1.05/sh. Table 13. Project valuation and sensitivities for Euro Sun Group-level SOTP valuation 3Q20 Valuation over time 1Q20E 1Q21E 1Q22E 1Q23E 1Q24E US$m O/ship NAVx C$/sh Mines NPV (US$m) 521 552 586 799 1,043 Rovina Valley NPV 3Q20 548 100% 1.0x 4.13 Cntrl G&A & fin costs (US$m) (153) (158) (162) (162) (151) Central SG&A & fin costs 3Q20 (157) - 1.0x (1.19) Net cash at 1Q (US$m) 7 161 (24) (240) (206) Exploration ($25/oz) 82 100% 1.0x 0.62 1xNAV (US$m) 375 554 400 396 686 Cash and restr. cash + ITM option cash 15 - 1.0x 0.11 1xNAV share px FD + FF (C$/sh) 1.05 1.55 1.12 1.11 1.92 Debt (0) - 1.0x (0.00) P/NAV (x): 0.33x 0.23x 0.31x 0.32x 0.18x 1xNAV5% US$1850/oz - fully diluted pre funded 488 3.70 ROI to equity holder (% pa) 0% 344% 79% 47% 53% *above diluted for options but not fundraises, below diluted for fund raises 1.2xNAV share px FD (C$/sh) 1.26 1.86 1.34 1.33 2.31 1xNAV5% US$1850/oz - fully funded 654 1.37 ROI to equity holder (% pa) 0% 433% 96% 56% 60% 1xNAV sensitivity to gold price and discount / NAV multiple Funding: uses Funding: sources 1xNAV asset (US$m) $1500oz $1700oz $1850oz $2000oz $2200oz DFS capex US$340m SCPe 2Q20 cash + options US$15m 7% discount 119 257 360 463 600 SCPe contingency US$10m Mine debt @ 50% gearing US$245m 5% discount 201 365 488 610 773 SCPe G&A + fin. cost to first Au US$50m Build equity @ Spot US$166m 3% discount 314 512 659 806 1,002 SCPe working capital US$13m Valuation (C$/sh) $1500oz $1700oz $1850oz $2000oz $2200oz Total uses US$413m Total proceeds US$426m 0.5xNAV 0.20 0.47 0.69 0.93 1.28 *Cash from ITM options 0.8xNAV 0.30 0.70 1.03 1.39 1.92 1.0xNAV 0.40 0.93 1.37 1.86 2.56 Source: SCPe Why we like Euro Sun 1. Excellent value at current share price: SCPe 56% average annual FCF yield over a 20-year mine life 2. Permitting risk lower than market perceives: Tailings dry stack, lack of relocation and recently ratified Mining Licence indicate that Rovina Valley is very different that Certej or Rosa Montana 3. Excellent logistics and public infrastructure reduce capex and opex 4. Porphyries have a successful track record for a reason: multi-cycle mine lives, low life-of-mine capital intensity, optionality to higher prices / lower cutoffs over time Catalysts  1Q21: DFS completion and announcement of summary results  2021: Finalisation of project finance and Urbanisation Permits  1H22: SCP modelled build start  1H24: SCP modelled first production Risks  Resource risk – While there is inherent risk in estimating grade and continuity between drilling results, we believe that Colnic, Rovina, and Ciresata show good geological continuity and grade consistency; this is not uncommon for a porphyry deposit.  Permitting / social licence – A valid mining permit has been granted; the zoning portion of the Urbanism Permit was received in June 2020 to allow the dual track urbanisation permit (PUZ) process to commence. While Certej and Rosia Montana had significant permitting challenges, we believe the risk is greatly mitigated for Rovina Valley due to its flotation (no cyanide) processing route and dry stack tailings disposal. The area has a long history of mining and desire for economic prospects is a key motivator.  Metallurgical risk – Detailed bench scale test work on column flotation of the Colnic deposit was included in the 2019 PEA. Whilst we expect detailed testing on the Rovina deposit to be included in the FS, at this time we have estimated column flotation recoveries, as only regular flotation recoveries from the 2010 PEA were publicly available.  Cost estimation risk – The operating cost inputs benchmark sensibly compared with peers operating on grid power. The scale of surrounding infrastructure reduces the scale of the build.

Sprott Capital Partners Equity Research

Euro Sun Mining, 17 November 2020

 Environmental – Local streams are not known to have fish. Water is to be drawn from a dam in the NE of the property. The project does not use cyanide and the tailings disposal method is dry stacking, which significantly reduces risk.  FX - the key currency exposures are the USD (revenue) and Romanian Leu, USD and Euro for labour and consumables. The PEA study estimated 4 RON per USD which is in line with the current rate.

Ticker: ESM CN Price / mkt cap: C$0.35/sh, C$59m Market P/NAV: 0.09x Assets: Rovina Valley Project

Author: Justin Chan / Brock Salier Rec / 0.75xNAV PT: BUY / C$1.05 1xNAV2Q20 FD: C$7.38/sh Country: Romania

Group-level SOTP valuation 2Q20 3Q20 FD Resource / Reserve Mt 000oz EV/oz US$m O/ship NAVx C$/sh Measured, ind. & inf. 424.71 7396 4 Rovina Valley NPV 3Q20 548 100% 1.0x 4.14 Mine inventory (SCPe) 193.74 4101 0 Central SG&A & fin costs 3Q20 (157) - 1.0x (1.19) Share data Exploration ($25/oz) 82 100% 1.0x 0.62 Basic shares (m): 169.0 FD shares (m): 176.7 FD + FF 475.8 Cash and restr. cash + ITM option cash 15 - 1.0x 0.11 Funding: uses Funding: sources Debt (0) - 1.0x (0.00) DFS capex US$340m SCPe 2Q20 cash + options US$15m 1xNAV5% US$1850/oz - FD pre build 488 3.70 SCPe contingency US$10m Mine debt @ 60% gearing US$245m *above diluted for options but not fundraises, below diluted for fund raises SCPe G&A + fin. cost to first Au US$50m Build equity @ Spot US$166m 1xNAV5% US$1850/oz - fully funded 654 1.37 SCPe working capital US$13m 1xNAV sensitivity to gold price and discount / NAV multiple Total uses US$413m Total proceeds US$426m 1xNAV asset (US$m) $1500oz $1700oz $1850oz $2000oz $2200oz *Cash from ITM options 7% discount 119 257 360 463 600 Commodity price CY20E CY21E CY22E CY23E CY24E 5% discount 202 365 488 610 773 Gold price (US$/oz) 1,764 1,850 1,850 1,850 1,850 3% discount 314 512 659 806 1,002 Ratio analysis CY20E CY21E CY22E CY23E CY24E Valuation (C$/sh) $1500oz $1700oz $1850oz $2000oz $2200oz FD shares out (m) 475.8 475.8 475.8 475.8 475.8 0.50xNAV 0.20 0.47 0.69 0.93 1.28 EPS (US$/sh) (0.018) (0.013) (0.019) (0.045) 0.075 0.75xNAV 0.30 0.70 1.03 1.40 1.92 CFPS before w/c (US$/sh) (0.02) (0.01) (0.02) (0.04) 0.08 1.00xNAV 0.40 0.93 1.37 1.86 2.56 EV (US$m) 53 (101) 82 298 264 Valuation over time 1Q20E 1Q21E 1Q22E 1Q23E 1Q24E FCF yield (%) (0) (0) (1) (2) 37.3% Mines NPV (US$m) 521 552 586 799 1,043 PER (x) (5.3) (7.4) (6.5) (2.8) 1.7x Cntrl G&A & fin costs (US$m) (153) (158) (162) (162) (151) P/CF (x) (6.4) (9.9) (6.5) (2.8) 1.1x Net cash at 1Q (US$m) 7 161 (23) (239) (205) EV/EBITDA (x) (6.8x) 16.9x (13.6x) (49.7x) 3.0x 1xNAV (US$m) 375 554 401 397 688 Income statement CY20E CY21E CY22E CY23E CY24E 1xNAV share px FD + FF (C$/sh) 1.05 1.55 1.12 1.11 1.93 Revenue (US$m) - - - - 199 P/NAV (x): 0.33x 0.23x 0.31x 0.31x 0.18x COGS (US$m) - - - - (104) ROI to equity holder (% pa) 344% 79% 47% 53% Gross profit (US$m) - - - - 95 1.2xNAV share px FD (C$/sh) 1.26 1.86 1.35 1.34 2.31 Expenses (US$m) - - (7) (8) (8) ROI to equity holder (% pa) 433% 96% 56% 60% Impairment & other (US$m) (0) - - - - Geared company NAV diluted for mine build, net G&A and finance costs Net finance costs (US$m) 0.3 - (3.1) (15.3) (24.5) 2Q22 1xNAV FF FD (C$/sh)^ $1500oz $1700oz $1850oz $2000oz $2200oz Tax (US$m) - - - - (12.6) 9.0% discount 0.06 0.25 0.44 0.64 0.96 Minority interest (US$m) - - - - - 7.0% discount 0.15 0.42 0.67 0.96 1.36 Net income attr. (US$m) (0.1) - (10.1) (23.4) 50.6 5.0% discount 0.30 0.70 1.03 1.40 1.92 Cash flow CY20E CY21E CY22E CY23E CY24E Geared project IRR: 13% 17% 20% 23% 27% Profit/(loss) after tax (US$m) (8) (6) (9) (21) 35 2Q22 1xNAV FF FD (C$/sh)^ $1500oz $1700oz $1850oz $2000oz $2200oz Add non-cash items (US$m) (1) - - - 17 20.0% increase in cost per tonne (0.01) 0.20 0.47 0.77 1.24 Less wkg cap / other (US$m) (1) - (0) - (13) 10.0% increase in cost per tonne 0.11 0.42 0.73 1.07 1.57 Cash flow ops (US$m) (10) (6) (9) (21) 40 0.0% increase in cost per tonne 0.30 0.70 1.03 1.40 1.92 PP&E (US$m) (4) (6) (175) (195) (6) 2Q22 1xNAV FF FD (C$/sh)^ $1500oz $1700oz $1850oz $2000oz $2200oz Other (US$m) - - - - - 10.0% change in grade 0.71 1.23 1.65 2.09 2.72 Cash flow inv. (US$m) (4) (6) (175) (195) (6) 0.0% change in grade 0.30 0.70 1.03 1.40 1.92 Debt draw (repayment) (US$m) (0.1) 30.6 122.5 91.9 - -10.0% change in grade 0.03 0.25 0.50 0.78 1.19 Equity issuance (US$m) 21.3 166.0 1.4 - - Other (US$m) (1.5) - - - - Rovina Valley (000oz AuEq) Rovina Valley AISC (US$/oz) Cash flow fin. (US$m) 19.7 196.6 123.9 91.9 - 200koz US$1100/oz Net change post forex (US$m) 5 185 (61) (124) 34 150koz US$1000/oz Balance sheet CY20E CY21E CY22E CY23E CY24E Cash (US$m) 7 191 131 6 40 100koz US$900/oz Accounts receivable (US$m) 0 0 - - 8 50koz US$800/oz Inventories (US$m) - - - - 21 0koz US$700/oz PPE & exploration (US$m) 5 11 186 381 369 CY24E CY25E CY26E CY27E CY28E Other (US$m) 2 2 2 2 2 Production (100%) CY24E CY25E CY26E CY27E CY28E Total assets (US$m) 13 204 318 389 440 Rovina Valley (000oz AuEq) 109 161 152 133 156 Debt (US$m) 0 31 153 245 245 Rovina Valley cash cost (US$/oz) 845 828 1,021 1,071 916 Other liabilities (US$m) 3 3 2 2 18 Rovina Valley AISC (US$/oz) 1,006 980 1,176 1,232 1,069 Shareholders equity (US$m) 242 408 409 409 409 Group (000oz) 109 161 152 133 156 Retained earnings (US$m) (232) (238) (247) (268) (233) Group cash cost (US$/oz) 715 701 847 883 767 Minority int. & other (US$m) 1 1 1 1 1 Group AISC (US$/oz) 796 763 912 958 830 Liabilities+equity (US$m) 13 204 318 389 440 Source: SCPe

Sprott Capital Partners Equity Research

Euro Sun Mining, 17 November 2020

Asset Overview Rovina Valley Project, NW Romania The Rovina Valley Project (RVP) is located in Judetul (County) Hunedora in the Transylvania region of Romania. The project is located in an area known as the ‘Golden Quadrilateral’ Mining District of the South Apuseni Mountains in west-central Romania, 300km north of Bucharest and 140 km E-NE of Timisoara. The project is 25km north of Deva (pop 61k) which is the county administrative centre, and 7km east of the historic mining town of Brad (pop 14.5k). The Rovina Exploitation Licence is 100% owned by SAMAX Romania SRL, a subsidiary of Euro Sun. The property was first acquired by Euro Sun in 2004 as a prospecting permit and was awarded the exclusive Exploration Licence in 2005. The regional climate is regarded as mild temperate continental with mean daily winter temperatures of -3° to -5°C, spring temperatures of 5-10°C from April, and summer temperatures from 10-20°C. Typical annual precipitation is 800-1,100mm (equivalent to Toronto at the low end and Vancouver at the upper end). Infrastructure The closest nearby populations are the towns of Brad (20 minutes by road) and Zlatna (30km East), while Deva is ~1 hour by road. Mining equipment and services can be provisioned from Timisoara (pop 319k) or Bucharest. The region has an existing 110kV grid, and the nearest power source is in the town of Criscor, located 5km SW. There is a rail line in Brad with direct connection to EU networks. The Cris River is the primary source of surface water, and flows just to the North and West of the licence area. Local unemployment is high at ~50% according to the PEA. Romania is part of the EU with access to the EU’s labour market, including skilled mining labour. Figure 44 (A) Asset location and (B) Map of local area

Source: Euro Sun Mining Regional Mining History: The Golden Quadrilateral has been mined since ancient times with evidence of gold mining dating back to the stone age. The town of Aburnus Maior was founded by the Romans during the rule of Trajan as a mining town. Mining restarted in the middle ages and expanded under the Austrian Empire. In the 1960s the Romanian Government initiated porphyry exploration in the South Apuseni Mountains including airborne geophysics and surface sampling, leading to state mining of the Rosia Poieni porphyry deposit, 27km NE of Colnic. Most of the former Government owned mines closed in 2006 ahead of Romania’s accession to the EU, as EU rules prohibiting state subsidy came into effect. Romania: Permitting/Laws as it relates to ESM The General Mining Law came into effect in 1998 and was amended in 2003. There is a 5% government royalty on non-precious metals and a 6% royalty on precious metals. The profit tax rate is 16% which is applicable after the repayment of initial capital. There are no requirements for state ownership. The Exploitation License for Rovina Valley was ratified on November 2018 and the remaining permits are county level urbanism permits for i) Technical Project Design approval (including EIA) and ii) land-use zoning approval. Together these form the dual track PUZ process. Receipt of permits is expected in CY21 ahead of construction in 1H22 for first production in 2024.

Sprott Capital Partners Equity Research

Euro Sun Mining, 17 November 2020

Project History Colnic and Rovina were identified by the state exploration company and drilling commenced in the 1970s with drilling, magnetics, sampling and trenching occurring into the 2000s. In 1999 Rio Tinto was granted a non-exclusive prospecting permit. In 2004 Rovina was acquired by SAMAX (Carpathian) and the exclusive Exploration License (93.5km2) was acquired in 2005. Extensive exploration (>165,000m) was undertaken leading to a PEA in 2010, but the focus of Carpathian shifted to developing the RDM project in Brazil. Exploration activity halted in 2012 as part of the process to move from an exploration to a Mining License. Geology The Rovina Valley project covers 27.7km2 of the Carpathian Fold Belt, an arcurate orogenic belt that extends south into Serbia and Bulgaria, and West into Austria and Switzerland. The belts formed during the late Cretaceous and Tertiary following closure of the Tethys Ocean. The porphyry mineralisation is believed to have formed during a second volcanic episode approximately 7.4-14.8Ma. The Colnic and Rovina deposits lie within an outlier of the Brad-Barza volcanic field while the Ciresata deposit lies within the eastern part of the field. Regional folds in this area tend to follow a SW-NE trend though some have been overturned into SW dipping structures. Mineralisation is hosted in hornblende-plagioclase and/or quartz diorites and hornfels Cretaceous sediments. Mineralisation displays moderate to intense potassic altered cores and strong quartz stockwork veining with disseminations of pyrite and chalcopyrite. Colnic and Ciresata are classified as gold-rich while Rovina is classified as a Cu-Au subtype. At Rovina, the host porphyries are generally cylindrical and vertical while at Colnic the porphyries are lobate with Mineralisation decreasing with depth and a phyllic altered cap preserved. Ciresata Mineralisation is centred on a relatively subvolcanic neck with significant mineralisation hosted in adjacent hornfelsed sediments. No significant skarn or epithermal mineralisation has been identified and no significant weather oxidation of hypogene sulphides is observed. Figure 45: Regional and Rovina Licence Area geology

Source: Euro Sun from 2019 PEA

Sprott Capital Partners Equity Research

Euro Sun Mining, 17 November 2020

Figure 46: Colnic, Rovina and Ciresata surface maps and lithological units

Source: Euro Sun Mining from 2019 PEA

Sprott Capital Partners Equity Research

Euro Sun Mining, 17 November 2020

Stanija Licence: Euro Sun acquired a prospecting permit for the Stanija property, located 3km east of the Rovina Valley Mining Licence. The Stanija Prospecting area totals 42km2.  Western Target Area: Previous exploration work has identified porphyry-style Au and Cu Mineralisation in surface trenches, UG works, outcrop rock chip sampling and RC and DDH drilling.  Eastern Target Area: Indications of porphyry-style Mineralisation at depth and epithermal vein-style Mineralisation near surface. Figure 47: Map of Stanija Prospecting Permit

Source: Euro Sun Mining from 2019 PEA Resource and inventory A total of 165,174m of drilling has been completed on the property since 1975 Including ~41km, 65km and 56km on Colnic, Rovina and Ciresata, respectively. Of this total, 120,256 of DD drilling was completed by Euro Sun between 2007-2012. Drilling at Colnic has been performed on 11 SW oriented 30-85m spaced sections and a perpendicular set of six sections, 60-80m spaced. Depth range between 100-550m averaging 320m. Drilling at Rovina has been performed on 12 SE oriented 55-85m spaced sections over 550x700m with depths ranging from 100-660m averaging 474m. Drilling at Ciresata has been performed on 15 (six by nine) NE oriented 300-130m (typically 40m) sections over an area of 600x 600m to depths between 102 and 301m averaging ~200m. Colnic and Rovina were constrained within conceptual pit shells at US$1500/oz Au and US$3.30/lb Cu. Colnic’s cut-off grade is 0.35g/t AuEq; Rovina’s cut-off grade is 0.25% CuEq and Ciresata’s is 0.65g/t Au. Ciresata was not constrained within a shell as it is amenable to UG extraction. Ordinary kriging was used to assign grades to the block model and the results reconcile closely to the nearest neighbor and inverse distance models, suggesting a consistent orebody.

Sprott Capital Partners Equity Research

Euro Sun Mining, 17 November 2020

Table 14: Rovina Valley 2019 Resource table RESOURCES (NI 43-101) Tonnes Grade Gold Cu grade Copper Cutoff Property Type Classification (kt) (g/t) (koz) (%) (kt) g/t Au Colnic 100% OP M&I 135,700 0.51 2,230 0.10% 137 0.35g/t Au 100% OP Inferred 4,700 0.34 51 0.05% 2 0.35g/t Au Total 140,400 0.51 2,281 0.10% 139 0.35g/t Au Rovina 100% OP M&I 106,410 0.30 1,010 0.24% 260 0.25% Cu 100% OP Inferred 14,900 0.19 91 0.19% 28 0.25% Cu Total 121,310 0.28 1,101 0.24% 288 0.25% Cu Ciresata 100% UG M&I 154,400 0.77 3,820 0.15% 234 0.65g/t Au 100% UG Inferred 8,600 0.70 194 0.14% 12 0.65g/t Au Total 163,000 0.77 4,014 0.15% 246 0.65g/t Au Total open pits M&I 242,110 0.42 3,240 0.16% 397 Inferred 19,600 0.23 142 0.16% 31 Total 261,710 0.40 3,382 0.16% 427 Total M&I 396,510 0.55 7,060 0.16% 631 Inferred 28,200 0.37 336 0.15% 43 Total 424,710 0.54 7,396 0.16% 673 Source: Euro Sun Mining 2019 PEA technical report; pit constrained for open pits, ordinary kriging 10x10x12m blocks for Colnic and Rovina, 10x10x5m for Ciresata Euro Sun noted that at both Colnic and Rovina, there are higher grade portions of each deposit that outcrop at surface. At Ciresata, ESM noted a higher grade core portion of the Resource that is contiguous enough to merit bulk extraction. Below we show the deposits at 2x the cutoff grade for the open pits and a 1g/t cutoff grade for Ciresata (only 1g/t and 2g/t were broken out in the technical report). Table 15: Rovina Valley Resource at higher cutoffs RESOURCES (NI 43-101) Tonnes Grade Gold Cu grade Copper Cutoff Property Type Classification (kt) (g/t) (koz) (%) (kt) g/t Au Colnic 100% OP M&I 46,800 0.76 1,140 0.13% 59 0.70g/t Au Rovina 100% OP M&I 30,300 0.48 470 0.34% 102 0.50% Cu Ciresata 100% UG M&I 58,600 1.04 1,960 0.18% 108 1.00g/t Au Total 58,600 1.04 1,960 0.18% 108 Total open pits M&I 77,100 0.65 1,610 0.21% 161 Source: Euro Sun Mining 2019 PEA technical report; pit constrained for open pits, ordinary kriging, 10x10x12m blocks for Colnic and Rovina, 10x10x5m for Ciresata Mining The PEA considers a mining plan to support 7.2Mtpa of mill feed over an initial 12.1-year mine life using conventional truck and shovel open pit mining. The LOM strip ratio for Colnic is 1.9:1 with a total of 96Mt of ore and 165Mt of waste. The mine plan contemplates 8.5 years of mining with the final 3.5 years of mine life from stockpiles. This accelerated mining plan enables the use of 136t trucks, peaking at 25 trucks to haul 34.5Mt of total material in year six. For simplicity we have modified the mine schedule to match the milling schedule. We have added 50Mt of material at Rovina at a strip of 1.7x for a total mine inventory of 138Mt and strip ratio of 1.8x. Minimum mining width is 60 metres with 12-24m bench heights. The ramp gradient is 10° and the ramp is designed to be wide enough to accommodate up to a 150t Komatsu HD1500. No mining dilution was assumed. The Colnic pit has three designed phases of 21.5Mt, 25.4Mt and 38.9Mt, respectively and strip ratios of 1.0x, 1.9x and 2.4x, respectively. The pit slope angles are 43.5-48.5°. ESM has estimated LOM mining operating costs of US$2.35/t based on owner mining and leased fleet; lease costs account for US$0.28/t. Waste material is to be stored in one waste storage facility and comingled with dry stack tailings, with two lifts over the LOM. Processing ROM will be tipped directly to the ROM bin through a ROM pocket with a rock breaker used to clear any build up. The primary crusher is designed to reduce material to a P80 of 140mm. Crushed material will be drawn by an apron feeder to a crushed material stockpile. Pan feeders will reclaim crushed material from the stockpile to the SAG mill, screening grates and ball mill to reduce material size to a P80 of 75µm. Material will then pass through a vibrating trash screen and into the flotation circuit, which follows a rougher-cleaner-scavenger configuration using column flotation cells. Scavenger concentrate will report to the regrind cyclone feed pump for grinding to a P80 of 13µm. First cleaner will have three 4.0m diameter x 8.0m height columns. Second cleaner will have two 3.0m diameter x 8.0m height columns and the third cleaner floatation will have one 3.0m diameter x 8.0m height column. Concentrate will then be thickened, dewatered and bagged. Tailings will be thickened, dewatered and filtered, for dry stack.

Sprott Capital Partners Equity Research

Euro Sun Mining, 17 November 2020

Overall estimated recoveries are 82% for gold and 89% for copper. The copper in concentrate grade is expected to average 21-22% over the LOM with the gold grade ranging from ~80-100g/t in high gold. For Rovina we have estimated recoveries of 72% for gold and 93% for copper based on higher copper and lower gold grades. Payability is estimated at 99% for Au in the PEA with TC/RCs of 8.5c/lb Cu and US$85/t of concentrate which we have matched in our estimates. Figure 48: Rovina Valley PEA plant schematic

Source: Euro Sun Mining

Sprott Capital Partners Equity Research

Euro Sun Mining, 17 November 2020

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Sprott Capital Partners Equity Research

Euro Sun Mining, 17 November 2020

SPROTT CAPITAL PARTNERS EXPLANATION OF RECCOMENDATIONS: Should SCP issue research with recommendations, the research rating guidelines will be based on the following recommendations:

BUY: The stocks total returns are expected to be materially better than the overall market with higher return expectations needed for more risky securities markets

NEUTRAL: The stock’s total returns are expected to be in line with the overall market

SELL: The stocks total returns are expected to be materially lower than the overall market

TENDER: The analyst recommends tendering shares to a formal tender offering

NOT RATED ((N/R): The stock is not currently rated

Research Disclosure Response

1 SCP and its affiliates collectively beneficially owns 1% or more of any class of the issuer's equity securities3 YES

7 The analyst preparing this report received compensation based upon SCP's investment banking revenue for the issuer NO

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Sprott Capital Partners Equity Research Ratings:

Summary of Recommendations as of November 2020 BUY: 26 HOLD: 0 SELL: 0 UNDER REVIEW: 0 TENDER: 1 NOT RATED: 0

TOTAL 27

3 As at the end of the month immediately preceding the date of issuance of the research report or the end of the second most recent month if the issue date is less than 10 calendar days after the end of the most recent month

Sprott Capital Partners Equity Research

Rio2 Gold (RIO CN) Low-cost start-up with scale up potential: initiating coverage

RECOMMENDATION: BUY PRICE TARGET: C$1.60/sh RISK RATING: HIGH

SHARE DATA Developer with management pedigree Shares (basic, FD, FF FD) 244 / 308 / 378 Rio2 is developing the >6Moz Fenix heap leach gold project in the Maricunga Share price (C$/sh) C$0.87/sh Gold Belt of Chile’s Atacama Region. The project designed as a 20ktpd heap 52-week high/low C$0.96 / C$0.18 leach producing ~100kozpa, with scope to expand to up to 80ktpd for Market cap (C$m) 212 >250kozpa. Management have done this before at Rio Alto Mining, and return SCPe net cash 2Q20 + raise (C$m) 37 much of the senior Rio Alto team to Rio2. Rio Alto was founded in 2006, acquired 1.0xNAV5% @ US$1850/oz (C$m)* 685 La Arena from IAMGOLD in 2010, and developed it into a >200kozpa producer 1.0xNAV5% FD (C$/sh)* 2.55 for US$50m capex. Rio also went on to acquire Shahuindo in 2014 before being Project P/NAV today (x, FD) 0.35x acquired by Tahoe for C$1.2bn in 2015, beating the GDXJ by >9x from 2009. Average daily value (C$000, 3M) 221 Low-cost start up with water in place FINANCIALS CY22E CY23E CY24E Rio2’s 2019 PFS outlined a 20ktpd heap leach (7.3Mtpa) producing an average Gold sold (000oz) - 20 86 93koz pa over the first 13 years with LOM AISC of US$997/oz, drawing from an Revenue (C$m) - 49 212 inventory of 1.83Moz at 0.49g/t. Initial capex of US$111m saw US$223m of LOM AISC (US$/oz) 1,138 981 982 FCF at US$1300/oz and SCPe US$554m at US$1850/oz. The small size Income (C$m) 20.8 39.8 78.3 EPS (C$) 0.06 0.11 0.22 enables RIO to truck water to the project from Copiapo at a cost of US$1.52/t PER (x) 14.3x 7.7x 4.0x (of ore) based on sensible and simple US$0.10/t/km and <4 trucks per hour. CFPS (C$) - - 0.09 Stage 2 optionality on large resource P/CF (x) - - 10.0x Fenix’s 5.0Moz 0.38g/t Au M&I resource, constrained within a US$1500/oz pit EBITDA (C$m) 17.8 27.8 42.7 shell, makes it very saleable. The 2014 PFS contemplated an 80,000tpd EV/EBITDA (x) 14.7x 12.7x 7.3x operation producing 228kozpa at AISC of US$928/oz and initial capex of

TIME VALUE: 1850/oz 4Q20 4Q21 4Q22 US$399m. On our estimates, the enlarged project adds US$144m of NPV5%-1850, 1xNAV5% FF FD (C$m) 415 735 742 or C$0.60/sh; and could benefit from further optimization including potential 1xNAV5% FF FD (C$/sh) 1.70 2.23 2.17 dump leaching. Water is the primary constraint, but we are confident that a local source will be established in due course. As to how and when a larger project 1.20 1.0 comes to fruition is not clear now, but the optionality to rising gold prices is 1.00 0.8 clearly strong.

0.80 0.6 Valuation completely discounts expansion potential 0.60 We value Rio2 using a DCF with a 5% discount rate, and spot flat LT gold price 0.4 0.40 of US$1850/oz. We have based our mine inventory on the PFS but

0.2 conservatively increased mining costs by 20%, as well as water trucking costs. 0.20 Share Share price (C$) This generates an NPV5%-1850 of US$438m. We have also added 0.2x NAV for 0.00 0.0 Average daily vol. (m) the enlarged project, and US$25/oz for 2.6Moz ounces either mine plan. This

puts the stock at just 0.3x NAV, which suggests the market ascribes no value to

Feb-20

Nov-19 Aug-20 May-20 expansion currently: free optionality is a good thing. Source:S&P Capital IQ, *build start, diluted for options not build Initiate coverage with BUY rating and C$1.60/sh price target

Justin Chan +44-203-931-6772 We model a US$110m finance package for Fenix, comprising US$66m of debt [email protected] and US$44m of equity at spot for a 367m FD share count. We value Fenix at build start, US$438m for the base case, plus US$28m for expansion potential Brock Salier, PhD +44-203-931-6771 (at 0.2x NAV), US$88m (US$25/oz) for ounces outside mine inventory, and [email protected] adjusted for G&A, cash and ITM options. Applying a 0.75x NAV5%-1850 multiple in line DFS peers, we initiate with a BUY rating and C$1.60/sh price target.

Rio2 Gold, 17 November 2020

Investment thesis Rio2 took form in October 2016 with the installation of a core of Rio Alto’s former management team, led by Alex Black (current CEO and President) and Klaus Zeitler. The company acquired the Fenix Project (then referred to as ‘Cerro Maricunga’) in Augst 2018, through a merger with Atacama Pacific. Atacama Pacific advanced the project to PFS in 2014. The 2014 PFS scoped an 80ktpd heap leach operation that demonstrated the ultimate scale potential of the project. Rio2 brought together Rio Alto’s management team that successfully developed the La Arena heap leach project and built a >US$1bn company which combined with Tahoe Resources in 2015 at a 335% premium to original listing price (2007). Under current management, the project has been re-scoped to a smaller 20ktpd operation that can be developed as is, and expanded in time as additional water solutions are locked in. Figure 49: Annotated Rio Alto share price history 7.00 35.0 6.00 7. 30.0 (C$m) Lidquidity Daily 5.00 25.0 9. 4.00 20.0 6. 3.00 4. 5 15.0 8. 3.

2.00 2. 10.0 Share Price (C$/sh) 1.00 1. 5.0

0.00 0.0

Nov 2009

Nov 2010

Nov 2011

Nov 2012

Nov 2013

Nov 2014

May 2009

May 2010

May 2011

May 2012

May 2013 May 2014

Source: S&P Capital IQ, Bloomberg, SCP (1) September 2010: Environmental Approval received for La Arena, construction commences with December first ore target; (2) October 2010: Updated R&R including 7-year mine life, oxide reserve of 827koz at 0.4gpt, final mine plan update before first production; (3) Jan/Feb 2011: Closes C$57.5m financing and completes earn-in acquisition of La Arena from Iamgold ; (4) May 2011: First production at La Arena; (5) June-August 2011: First full quarter of production – 9.4koz; (6) 2012: First full year of production – 201.1koz; (7) Agrees to acquired Sulliden Gold (Shahuindo project) for C$350m; (8) Enters agreement to merge with Tahoe Resources, valuing company at ~C$1.3bn Figure 50: (A) Regional and (B) local location map

Source: Rio2 2019 PFS shows digestible start-up option The 2019 PFS re-scoped the project to a slimmed down 20ktpd operation that could make use of already contracted water supply in Copiapo, trucking water to site. Management estimates that this reduced the development lead time by up to three years. The re-sized project significantly reduced upfront capex to US$111m (from US$399m) and focused on a higher grade, lower strip operation with an inventory of 1.37Moz at 0.49g/t and a strip ratio of 0.81x vs the 2014 PFS inventory of 3.74Moz at 0.40g/t and a 1.76x strip ratio. At 7.3Mtpa and an estimated recovery of 75%, the project should produce an average of 93kozpa over the first 13 years of mine life, followed by 3 years of low-grade stockpile processing.

Sprott Capital Partners Equity Research

Rio2 Gold, 17 November 2020

Figure 51: SCPe base case production profile based on the PFS

150 1,500

Production (koz) AISC (US$/oz) (US$/oz) AISC 100 1,000

50 500 Production (koz) Production

-- -- 2023 2025 2027 2029 2031 2033 2035 2037 2039

Source: SCPe, mine plan based on 2019 PFS with SCPe unit costs Water in the 2019 PFS: PFS LOM water costs of US$1.52/t ore are applied to 90L (0.09 tonnes) of water per tonne of ore. Rio2 has signed a water contract with Nueva Atacama (formerly Aguas Chanar) in Copiapo for 80L/s, nearly 4x estimated water consumption of ~24L/s. Based on a haul distance of 158km, we calculate a water plus haul cost of US 10.7 cents per tonne per km. Assuming 30t trucks, we estimate three trucks per hour. In our view, the number of trucks is feasible, as the road is a dual-lane paved highway with no major settlements except for the mines in the area. The haul cost is achievable in our view, but we have conservatively increased the cost estimate by 20% in our base case estimate. With a LOM EBITDA margin of 43% even on our stressed estimates, the project economics are robust, even if we were to further stress operating costs further (including water). Table 16. Water logistics – deliverable Key inputs Key outputs Litres per tonne of ore (L) 90 Water cost per tonne of ore (US$/t) 1.52 Tonnes of water per year (tpa) 756,864 Water cost per year ($m) 11.096 Tonnes of water per day (tpd) 2,074 Trucks per hour 2.9 Trucking distance (km) 158 Cost per tonne per km (US$) 0.107 Source: SCPe Stage 2 “big mine” value is very real, all the more in current commodity price environment At US$1850/oz, using the 2014 PFS inventory, and modelling modest economies of scale vs our 20ktpd scenario, we estimate that the enlarged project increase NPV5%-1850 by 38%to US$544m. The key modifications involved are primarily civil works, namely enlarging the leach pad to accommodate more material. The plant would require additional ADR columns and potentially additional crushing capacity. We estimate US$125m of capex to increase capacity, with US$100m of additional sustaining capex, primarily for pad expansions. We assume US$2.00/t mined, a 10% saving vs our 20ktpa scenario, with a 20% saving in processing costs at 80ktpd and a 30% reduction in G&A. We see the expansion as technically feasible with the key deliverable being a scale-able water solution. Water: The 2014 PFS assumed water costs of US$0.69/t assuming water is supplied via pipeline with the capex borne by a third-party supplier which then recovers the capital cost over the length of the supply contract. We assume water costs of US$1.00/t in our scenario analysis, assuming a third-party financed pipeline and LOM water provision contract. The 2014 PFS design included four pumping stations over the length of the pipeline. As the pipeline would be electrified, and we believe it would be highly likely that management would choose to extend grid power to site, resulting in unit cost savings vs the current assumptions premised on diesel gensets. Figure 52: Enlarged Project Scenario – SCPe production profile

400 1,600 AISC (US$/oz) AISC 300 1,200

200 800 Production (koz) Production 100 400

-- -- 2023 2025 2027 2029 2031 2033 2035 2037 Production (koz) AISC (US$/oz) Source: SCPe

Sprott Capital Partners Equity Research

Rio2 Gold, 17 November 2020

Simple metallurgy with good recovery on coarse crush Met testing shows high recovery at course size fractions, which is crucial for a bulk tonnage gold leach project. In PFS work, recovery ranged from 82% at 9mm, 79% at a crush size of 19mm (P80) to 77% at 100mm, which has been selected as the primary crush size. Fenix is an oxide deposit with negligible transitional or sulphide (<1.5% by weight) within the modelled resource. The rock is competent with fines only composing 1.5% of material by weight, and agglomeration is not required. Both of these factors are indicative that leach performance should be robust in our view. Experienced management team that delivered success at Rio Alto From its listing in April 2009 at C$0.28/sh, Rio Alto delivered significant share price outperformance, with a final share price of C$3.48/sh on its delisting in October 2015 following its acquisition by Tahoe Resources. The “company-maker”’ for Rio Alto was the acquisition of the La Arena deposit in Peru from IAMGOLD for US$47.6m and a 5.5% equity interest. The company successfully developed the project and produced >200koz in its first year of commercial production in 2012, ramping the heap leach from 10ktpd, to 24ktpd to 36ktpd over 18-months with capex to first production of US$50m. In 2014, Rio Alto negotiated the acquisition of Sulliden for its Shahuindo project in Northern Peru. In 2015, the company was acquired in a cash and stock transaction valued at C$1.2bn. Since the GDXJ’s inception in 2019, Rio Alto’s share price outperformed the GDXJ by >900%. Figure 53: Rio Alto share price vs the GDXJ since the GDJ’s inception in 2009 1500% Rio Alto GDXJ 1000%

500%

-500% Nov 2009 Nov 2010 Nov 2011 Nov 2012 Nov 2013 Nov 2014

Source: S&P Capital IQ Economics We base our development scenario on Rio2 2019 DFS, with the key parameters including a 20,000tpd operation deliver 7.3Mtpa of ore to the ROM pad with 13 years of ROM mine life and 3 years of low grade stockpile leaching for a total of 16 years. We have assumed water is trucked, in line with the PFS, leaving the enlarged project and a potential water pipeline as an upside scenario. We have increased mining costs ~20% from US$1.82/t to US$2.20/t as well as water trucking costs from US$1.52/t to US$1.84/t. We estimate processing and rehandle costs ~10% higher than the PFS, and leave G&A unchanged at US$1.99/t. This drives LOM FCF of US$654m with AISC of US$1,111/oz, NPV5%-1850 of US$438m and project IRR of 45% on initial capex of SCPe US$120m. Adding in the enlarged project, using the parameters as described on page 2 increases our NPV5% estimate to US$572m, however we leave this out of our base case but may revisit this in the future pending a new water arrangement to support the higher production rate. Funding We calculate a total remaining funding package of US$130m and assume 60% gearing for US$78m, which we have modelled at a lender IRR of 12%. This leaves US$52m of equity, which we have assumed is raised at the current share price. Rapid payback leaves most of mine life as upside We estimate an average FCF yield of 26% in years 2-6 of mine life, driving rapid payback, including FCF payback by the end of year three (or 288koz into the mine plan). Based on our estimates, cumulative FCF per share equals the current share price by year six of production or 685koz into the mine life, leaving the remaining ten years of production as upside.

Sprott Capital Partners Equity Research

Rio2 Gold, 17 November 2020

Figure 54: SCPe base case FCF yield and cumulative FCF yield 250% 200% 150% 100% 50% -- (50%)

(100%)

2026 2033 2020 2021 2022 2023 2024 2025 2027 2028 2029 2030 2031 2032 2034 2035 2036 2037

FCF yield (%) Cumulative (%)

Source: SCPe Figure 55: The Nueva Atacama grey water facility in Copiapo

Source: Rio2 New water solution key to unlocking further NPV from larger ounce base Water is the key opportunity that would enable throughput expansion above 20ktpd. The water contract with Nueva Atacama is for up to 80L/s, nearly 4x the 20ktpd water requirement of 24L/s. At 80ktpd, the 2014 PFS estimated a water requirement of 96L/s. An opportunity could be nearer mine water licenses, which would enable a shorter trucking distance. For the full 80ktpd, which we view as the largest plausible scenario, we believe a pipeline would likely be required. .Figure 56: (A) Fenix NPV sensitivity to water cost per tonne and (B) Fenix NPV vs mining cost per tonne Build start NPV5%-1850 1650.0Mt 1750.0Mt 1850.0Mt 1950.0Mt 2050.0Mt Water cost: US$0.75/t 360 430 501 571 641 Water cost: US$1.00/t 346 416 486 556 626 Water cost: US$1.52/t 316 386 457 527 597 Water cost: US$1.84/t 298 368 438 509 579 Water cost: US$2.00/t 289 359 429 499 569 Build start NPV5%-1850 $1650oz $1750oz $1850oz $1950oz $2050oz Mining cost**: US$1.50/t 377 448 518 588 658 Mining cost**: US$1.82/t 341 411 481 552 622 Mining cost**: US$2.00/t 321 391 461 531 601 Mining cost**: US$2.20/t 298 368 438 509 579 Mining cost**: US$2.50/t 264 334 404 475 545 Source: SCPe; base case US$1.84/t and US$2.20/t water and mining vs US$1.52/t and US$1.82/t PFS Quantifying upside from the ‘Big Mine’ Moving to the 2014 PFS inventory adds 179Mt at 0.33g/t for 1.914Moz with a strip ratio of 2.37x. We have assumed a 12-month build process with capex of US$125m for additional crushing capacity, ADR columns, pre-strip and additional earthworks. The enlarged mine inventory results in average annual production of 276koz over 8.5 years of mine life, generating US$362m of additional FCF against initial capex of SCPe US$125m. This adds an additional US$162m of NPV5%-1850 to our estimate. We have included this at a 0.2x multiple in our valuation as estimates are preliminary at this stage. The incremental ounces may benefit from a dump leach (i.e. bypass the crushing stage and leach whole ore), rather than heap leach due to the lower grade (i.e. less revenue lost from lower recovery) and potential to save capex and opex on crushing. We believe that there is opportunity to ramp up tonnage between 20ktpd and 80ktpd in a staged manner.

Sprott Capital Partners Equity Research

Rio2 Gold, 17 November 2020

Table 17: Fenix outputs using PFS and SCPe inputs Rio 2 SCPe Fenix (100%) 2019 2014 PFS 1850 Expansion Mining inventory (000t) 115.3 294.0 115.3 >> 294.0 Au grade (g/t) 0.49 0.40 0.49 >> 0.40 Mining inventory AuEq (000oz) 1,829 3,743 1,825 >> 3,739 Strip ratio (x) 0.8 1.8 0.8 >> 1.8 Au recovery (%) 75% 79% 75% >> 75% LOM throughput (Mtpa) 7.3 29.2 7.3 >> 7.3 Production Au LOM (000oz) 1,371 2,963 1,369 >> 2,804 Mining cost (US$/t) 2.42 1.38 2.41 2.85 2.33 Processing cost (US$/t) 4.06 2.37 4.10 4.59 3.79 G&A (US$/t) 1.99 0.54 1.99 >> 1.62 Royalty (%) 0.07% 0.07% 0.07% 0.24% 0.93% LOM C1 costs (US$/oz AuEq) 927 864 932 1,044 1,204 LOM AISC (US$/oz AuEq) 997 928 1,002 1,114 1,236 Pre-production capex (US$m) 111 399 111 120 >> Expansion capex (US$m) - >> >> >> 125 Total sustaining capex (US$m) 95 188 96 96 239 Gold price (US$/oz) 1,300 1,350 1,300 1,850 >> Tax rate (%) 27% 27% 27% >> >> USD / CAD 0.75 0.75 0.75 >> >> Discount (%) 5.0% 5.0% 5.0% >> >> LOM FCF (US$m) 223 685 219 650 933 Project NPV post-tax (US$m) 121 409 127 438 582 IRR post-tax (%) 27% 25% 22% 45% 44% Payback (years) 4.25 3.00 4.50 3.25 3.25 Source: Rio2 and SCPe estimates Dump leach potential could be value accretive depending on met test results Rio2 pared back the initial three-stage crushing to a single stage based on met test results. We believe there may be potential to pare this down further by going directly to a dump leach. A direct mine to pad dump leach, bypassing the crushing stage, would eliminate i) loading costs from the crusher to the heap leach (SCPe US$0.25/t); ii) crushing costs, which we estimate could save ~US$0.35/t of operating costs and ~US$25m of up front capex on the crusher and material handling system. Comparing the lost revenue for lower recovery against the cost savings on capex and opex, we estimate a breakeven recovery delta of 2.6%; if the recovery difference is less than this, we believe that a dump leach would be accretive to economics. For now, we have not modelled a dump leach, pending more definitive met testing results and a cost tradeoff study. On the larger 5Moz M&I resource base, the dump leach economics are likely to be more favourable given a lower overall resource grade and significant capex savings on additional crushing capacity. Using our 80ktpd scenario, we calculate that breakeven recovery increases to 5.8% on the incremental 60ktpd. Figure 57: Indicative dump leach tradeoff analysis Dump vs crush high level tradeoff calculation Total ore tonnes (Mt) 115 Total ore tonnes (Mt) 115 Gold grade (g/t Au) 0.49 Rehandle costs - PFS (US$/t) $0.25 In-situ value at US$1850 (US$/t) 29.3 Crushing costs (US$/t) - SCPe 50% of PFS proc costs (US$/t) $0.30 Total op cost savings (US$/t) $0.55

Estimated crusher capex costs - SCPe (US$m) $25.00 Total LOM in-situ value (US$m) $3,375.71 Total LOM Savings (US$m) $88.40 Breakeven Au recovery differential between crushing or direct dump leach (%) 2.6% Source: SCPe

Sprott Capital Partners Equity Research

Rio2 Gold, 17 November 2020

Valuation

We value Rio2 using NPV5%-1850 based on the PFS mine plan and sensitized using conservative cost estimates offsetting the higher gold price. This drives average annual production of 93kozpa over the first 13-years of the mine life, before the final three years of low grade stockpile stacking. We have increased mining costs ~20% from US$1.82/t to US$2.20/t as well as water trucking costs, while we have increased processing and rehandle by 10% while leaving G&A unchanged at US$1.99/t. This drives an NPV5% of US$438m. To this we add 0.2x the incremental NPV of our expanded 80ktpa scenario (0.2 x US$144m = US$28m), and US$25/oz for the 2.6Moz of resources that lie outside of the 80ktpd mine inventory (US$88m total). This gives Fenix a total asset-level (pre- corporate and cash/debt adjustments) NAV of US$570m or US$89/oz. Unweighted (i.e. valuing the 80ktpd scenario at 1x), the total NAV increases to US$685m or US$104/oz. Funding We estimate a build cost of US$120m (vs US$111m in the PFS), with additional G&A, finance costs, and working capital of US$33m in total between now and first gold pour. Subtracting cash and ITM options expiring before first gold pour, we generate a total build package of US$130m. We have assumed 60% debt at a 12% lender IRR, with 40% equity (US$52m) issued at spot. This generates a safety buffer of C$25m to first gold pour with a conservative estimate of first revenue in 1Q23.

Recommendation: initiate coverage with BUY rating and C$1.60/sh PT Taking our US$685m NAV, adjusting the expansion to 0.2x, we calculate pre-funded, fully-diluted, NAVPS of C$2.48/sh, putting Rio2’s current share price at 0.3x NAVPS. Layering in our funding assumption results in fully- funded NAVPS of C$2.20/sh. We apply a 0.75x NAV multiple to our fully funded and diluted NAVPS estimate, and initiate with a BUY rating and C$1.60/sh price target. 1x fully funded NAVPS increases to C$2.30/sh in year one of production, suggesting ~45% re-rating potential from our price target from development to production; this equates to 2.7x the current share price. Table 18. Project valuation and sensitivities for Rio2

SOTP project valuation* Asset value: 1xNPV project @ build start (C$m, ungeared) US$m O/ship NAVx C$/sh Project NPV (C$m)* $1650oz $1750oz $1850oz $1950oz $2050oz Ungeared proj. @ build start (1Q22) 438 100% 1.00x 1.90 10.0% discount 201 254 307 359 412 2014 PFS inventory 144 100% 0.20x 0.12 7.5% discount 244 305 365 426 486 G&A and finance costs (46) 100% 1.00x (0.20) 5.0% discount 298 368 438 509 579 Cash including recent equity raise 37 100% 1.00x 0.16 1xNAV5% (C$/sh) $1650oz $1750oz $1850oz $1950oz $2050oz Cash from options 25 100% 1.00x 0.11 10.0% discount 1.23 1.45 1.67 1.89 2.12 Additional ounces @ US$25/oz 88 100% 1.00x 0.38 7.5% discount 1.40 1.65 1.90 2.16 2.42 Asset NAV5% US$1850/oz 685 2.47 5.0% discount 1.60 1.90 2.20 2.49 2.79 Above diluted for options not mine build Market P/NAV5% 3Q20 0.34x Asset NAV5% US$1850/oz fully financed 737 2.20 Source: SCPe Why we like Rio2 1. Long life 90-100kozpa mine plan underpins valuation 2. Expansion potential to up to 300kozpa offers scalability to gold price 3. Management team has a proven track record of operational delivery and value creation 4. Cheap entry valuation for a technically vanilla heap leach project Catalysts  Financing package: 1H21  EIS Approval: 1H21  Pre-construction works and long-lead orders: 2Q21  Construction start: 4Q21  First gold pour: 2H22

Sprott Capital Partners Equity Research

Rio2 Gold, 17 November 2020

Risks  Permitting: Chile is regarded as a Tier-1 mining jurisdiction but permit timetables can be variable, even in established mining jurisdictions. We note the state of restriction due to Covid-19 has been persistent in Chile, and this may impact permit timing.  Water: The project is in an arid area with low annual rainfall (12mm per year). The 80L/s water contract with Nuevo Copiapo should help to mitigate this risk. For capacity expansions, finding additional water sources and transport solutions are likely to be necessary.  Geological: The disseminated nature of the mineralization and the relatively small difference between ordinary kriging and nearest neighbor grade estimates suggest good grade continuity with a robust resource estimation methodology. However, as with all deposits, the economics of the mine are highly dependent on grade estimates.  Metallurgical: We view this risk as relatively low given low sulphide or transitional content within the orebody and the selective and nearer surface sub-inventory that forms our base case. The crush is relatively course and agglomeration is not expected to be required. However, as a lower grade deposit, project economics are highly sensitive to gold recovery.  Development: The build is technically straightforward, with the primary works being site earthworks and pre-stripping. The arid climate should result in lower risks for earth moving, while the proximity to Copiapo should aid mobilization.  Labour Relations: Collective bargaining and worker relations are a major operating consideration at other operations in Chile, especially the large copper mines. While there have been strikes at individual operations, mining in country remains highly profitably and collective bargaining has rarely resulted in material production impact.

Sprott Capital Partners Equity Research

Rio2 Gold, 17 November 2020

Ticker: RIO CN Price / mkt cap: C$0.87/sh, C$212m Project PNAV today: 0.35x Asset: Fenix

Author: J Chan / B Salier Rec / 0.75xNAV PT: BUY, C$1.60/sh 1xNAV1Q21 FF FD: C$1.70/sh Country: Chile

Commodity price CY20E CY21E CY22E CY23E CY24E Resources and resevs Tons (Mt) Au (koz) Au (g/t) Gold price 1,779 1,850 1,850 1,850 1,850 Total Resource 547Mt 6373koz 0.36g/t SOTP project valuation* SCP 3Q20 mining inventory 115Mt 1825koz 0.49g/t US$m O/ship NAVx C$/sh Funding: uses Funding: sources Ungeared proj. @ build start (1Q22) 438 100% 1.00x 1.90 PFS including cont. capex US$111m SCPe 2Q20 cash + options US$31m 2014 PFS inventory 144 100% 0.20x 0.12 SCPe G&A + fin. cost to 1st Au US$23m Mine debt @ 60% gearing US$78m G&A and finance costs (46) 100% 1.00x (0.20) SCPe working capital US$10m Build equity at 40% US$52m Cash including recent equity raise 37 100% 1.00x 0.16 Total uses US$144m Total proceeds US$161m Cash from options 25 100% 1.00x 0.11 *Cash from options expiring pre first pour Buffer: US$17m Additional ounces @ US$25/oz 88 100% 1.00x 0.38 Share data Asset NAV5% US$1850/oz 685 2.47 Basic shares (m) 243.9 FD with build equity raise 377.7

Above diluted for options not mine build Market P/NAV5% 3Q20 0.34x FD with options (m) 307.6 Asset NAV5% US$1850/oz fully financed 737 2.20 Ratio analysis CY20E CY21E CY22E CY23E CY24E Asset value: 1xNPV project @ build start (C$m, ungeared) Average shares out (m) 212.8 330.2 330.2 353.7 363.5 Project NPV (C$m)* $1650oz $1750oz $1850oz $1950oz $2050oz EPS (C$/sh) 0.08 0.01 0.06 0.11 0.22 10.0% discount 201 254 307 359 412 CFPS (C$/sh) 0.06 0.01 - - 0.09 7.5% discount 244 305 365 426 486 EV (C$m) 163.1 187.5 261.5 371.4 319.2 5.0% discount 298 368 438 509 579 FCF yield (%) (7%) (14%) (45%) 14% 26% 1xNAV5% (C$/sh) $1650oz $1750oz $1850oz $1950oz $2050oz PER (x) 11.1x 77.9x 14.4x 7.7x 4.0x 10.0% discount 1.23 1.45 1.67 1.89 2.12 P/CF (x) 15.2x 77.9x - - 10.0x 7.5% discount 1.40 1.65 1.90 2.16 2.42 EV/EBITDA (x) 9.8x 50.8x 15.1x 13.4x 7.5x 5.0% discount 1.60 1.90 2.20 2.49 2.79 Income statement CY20E CY21E CY22E CY23E CY24E Build start NPV5%-1850 $1650oz $1750oz $1850oz $1950oz $2050oz Net revenue (C$m) - - - 49.5 212.4 Water cost: US$0.75/t 360 430 501 571 641 COGS (C$m) - - - (20.3) (92.5) Water cost: US$1.00/t 346 416 486 556 626 Gross profit (C$m) - - - 29.1 120.0 Water cost: US$1.52/t 316 386 457 527 597 D&A, attrib (C$m) (0.1) - - (2.7) (12.9) Water cost: US$1.84/t 298 368 438 509 579 Admin (C$m) (16.6) (3.7) (17.4) 1.4 77.3 Water cost: US$2.00/t 289 359 429 499 569 Expensed exploration (C$m) (0.1) - - - - Build start NPV5%-1850 $1650oz $1750oz $1850oz $1950oz $2050oz Finance cost (C$m) 0.1 - (2.6) (9.4) (8.9) Mining cost**: US$1.50/t 377 448 518 588 658 Taxes (C$m) - - - - (13.8) Mining cost**: US$1.82/t 341 411 481 552 622 Net income (C$m) 16.7 3.7 20.0 39.8 78.3 Mining cost**: US$2.00/t 321 391 461 531 601 Cash flow, attrib. CY20E CY21E CY22E CY23E CY24E Mining cost**: US$2.20/t 298 368 438 509 579 EBIT (C$m) 16.8 3.7 17.4 30.5 55.6 Mining cost**: US$2.50/t 264 334 404 475 545 Add back D&A (C$m) (0.1) - - (2.7) (12.9) *Project level NPV, excl finance costs and central SGA, discounted to build start Less tax + interest (C$m) 0.1 - (2.6) (9.4) (22.7) ** Mining costs per tonne excluding rehandle Wkg cap inc (dec) (C$m) 3.8 - - 13.8 5.0 Group val'n over time^ 4Q20 4Q21 4Q22 4Q23 4Q24 Add back other (C$m) 1.1 - - - - Fenix NPV (C$m) 340.2 588.3 655.3 820.2 796.4 Cash flow ops (C$m) 13.9 3.7 20.0 23.3 60.4 G&A and finance costs (C$m) (61.9) (65.3) (60.6) (55.4) (42.4) PP&E - build + sust. (C$m) (0.0) - (64.0) (105.1) (28.8) Net cash prior qtr (C$m) 23.7 99.7 25.8 (63.7) (2.9) PP&E - expl'n (C$m) (1.8) - - - - Cash from options (C$m) 25.0 25.0 25.0 25.0 25.0 Cash flow inv. (C$m) (1.8) - (64.0) (105.1) (28.8) Exploration 310koz @ US$50/oz 87.7 87.7 87.7 87.7 87.7 Share issue (C$m) 23.8 79.6 - 16.2 1.3 NAV FF FD (C$m) 415 735 733 814 864 Lease payments (C$m) - - - - - Shares in issue (m) 244.3 330.2 330.2 362.1 364.0 Debt draw (repay) (C$m) - 20.8 20.8 47.6 (63.8) 1xNAV5%/sh FF FD (C$/sh) 1.70 2.23 2.22 2.25 2.37 Cash flow fin. (C$m) 23.8 100.4 20.8 63.8 (62.5) Equity ROI from spot (% pa) 156% 60% 37% 29% Net change in cash (C$m) 36.0 104.1 (23.2) (18.0) (30.9) 1.2xNAV5%/sh FF FD (C$/sh) 2.04 2.67 2.66 2.70 2.85 EBITDA (C$m) (1.8) (7.4) 22.6 116.0 126.4 Production Y1 Y2 Y3 Y4 Y5 Balance sheet CY20E CY21E CY22E CY23E CY24E Gold production (000oz) 80 104 104 104 102 Cash (C$m) 22.0 120.5 70.0 34.1 31.1 TCC (US$/oz) 797 937 938 941 1,026 Acc rec., inv, prepaid (C$m) 7.2 7.2 7.2 28.0 36.7 AISC cost (US$/oz) 1,138 981 982 984 1,071 PP&E + other (C$m) 80.9 80.9 144.9 247.3 263.2 AISC = C1 + ug sustaining capex, Y1 = 12M to Jun 2023 Total assets (C$m) 110.1 208.7 222.1 309.5 331.0 Debt (C$m) - 20.8 44.2 97.8 34.0 Prodn (koz, LHS) AISC (RHS, US$/oz Au) 120koz 1200/oz Accounts payable (C$m) - - - 7.0 10.7 100koz 1100/oz 80koz 1000/oz Others (C$m) 3.4 3.4 3.4 3.4 3.4 60koz 900/oz Total liabilities (C$m) 3.4 24.2 47.6 108.2 48.1 40koz 800/oz 20koz 700/oz Sh'hlds equity + wrnts (C$m) 144.3 224.0 224.0 240.2 241.5 0koz 600/oz Retained earn'gs + rsvs (C$m) (37.6) (39.5) (49.5) (38.9) 41.5 Y1 Y2 Y3 Y4 Y5 Liabilities + equity (C$m) 110.1 208.7 222.1 309.5 331.0 Source: SCPe

Sprott Capital Partners Equity Research

Rio2 Gold, 17 November 2020

Asset overview Location and Regional Information Fenix is located in the Maricunga gold belt of Chile’s Atacama, approximately 117km NE from Copiapo (pop 175k). Copiapo is the regional population centre, and is a major staging hub for mining projects in the region, including Lundin’s Candelaria and Kinross’s La Coipa. The Argentinian border is 50km to the east. The project is accessed via the national road CH31, which passes within 20km the project, with the final 20km stretch covered by a gravel access road. Grid power passes within 25km of the project but a grid connection is not currently planned. The region is arid, with average annual rainfall of 12mm per year. Due to the lack of rainfall, there is no local population or sensitive flora or fauna on the project, however water is a major logistical consideration for the project. The effective tax rate in Chile is 27% and the effective royalty rate is 0.07%; there are no third party royalties on the project. Figure 58 (A) Asset location and (B) vegetation with gravel road visible

Source: Rio2 History Fenix, formerly known as Cerro Maricunga, was identified by private prospectors in the 1980s. In 2007, private owners (SBX) conducted trench sampling and mapping. Newcrest and Gold Fields conducted early sampling, trench and other early stage scoping work in 2007-2008 but elected to discontinue their interest. Between 2008 and 2010, SBX funded an extensive sampling, trenching, geophysical and met testing programme as well as eight maiden diamond drill holes. The company took the asset public on the TSX-V in October 2010, as ‘Atacama Pacific’. Atacama Pacific completed 33,438m between 2010-2011 and confirmed viability of heap leach processing through met testing in 2011. Additional drilling phases of 45,983m in 2011-2012, and 26,335m in 2012-2013, were completed leading to the 2014 PFS. In July 2018 Rio2 completed a business combination with Atacama Pacific and renamed the project “Fenix” to simplify references to the project and region. Since taking over the project, Rio2 completed over 7,066m of drilling, additional sampling, core reclogging, geological reinterpretation, and a re- scoping of the project to enable an accelerated development and permitting timeline. Permitting should enable start of earthworks by 4Q21 The key permits required to commence construction are EIS approval. The EIA was completed and filed in April 2020 and pre-construction works are expected to commence in 2Q21. Preparation of the sectoral permits is in process and the company has indicatively guided that it expects approval of the sectorial permits in 3Q21 to enable a 4Q21 construction start. Rio2 has obtained surface rights over the 843ha of Government-owned land required for commencement of project construction and has unencumbered access to the surface land for the mine installations and infrastructure, a key factor in the permitting process. Geology Regional: Fenix lies in the Maricunga belt of Northern Chile, which hosts a number of large tonnage Au-Cu and Cu-Au projects including Kinross’s La Coipa gold mine, Lundin’s Candelaria copper mine, and the ABX-NEM Norte Abierto JV (Caspiche, Cerro Casale). The belt is north to south trending with Paleozoic to Triassic basement geology intruded by Mesozoic-Cenozoic volcanic arcs and plutons related to the subduction of the Pacific plate

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Rio2 Gold, 17 November 2020 under the South American Plate. NW-NE oriented thrust faulting occurs with perpendicular transform faulting. Nearly 70Moz has been defined regionally including high sulphidation epithermal (Ojo de Agua and Volcan), low- sulphidation epithermal, and Au-Cu porphyry (Marte & Lobo, Maricunga and Aldebaran). Figure 59: Fenix (A) regional geology, and (B/C) license geology and targets

Source: Rio2 Deposit: Gold mineralization is sub vertical and is a bulk, disseminated style. Mineralisation is controlled by a NW- SE corridor consisting of volcanic rocks that host large breccia complexes bounded by along trend faulting structures. The total strike extension of defined mineralization is 2.5km NW-SE, up to 600m NE-SW (width) and to depths of up to 600m. The deposit is classified as a low-sulphidation epithermal style. Gold mineralization is disseminated and is associated with black banded quarts veinlets. Three zones have been defined, named Fenix North, Fenix Central and Fenix South, likely caused by post mineralisaion NE-trending normal faulting. Sulphides are rare, noted at <0.1wt%, mainly as pyrite. Rio2 notes that mineralization shows trace Cu, S and Hg, even at depths of up to 600m, and RIO believes that it is a pure oxide deposit, with no transitional or sulphide mineralization to the depths drilled. Resource and mine inventory The Fenix resource is comprised of three zones, North, Central and South. A total of 112,409m of drilling has been completed within the modelled mineralized zones along 50-m spaced NE-oriented sections, approximately perpendicular to the NE-trending mineralization. The resource was modelled using ordinary kriging. The variance between ordinary kriging and the nearest neighbor method was 5%, which is a reasonable level of variance. The resource is constrained within a US$1,500/oz pit shell and the reserve is constrained within a US$1,250/oz shell with modelled costs in line with the PFS with 10x10x10m blocks. This generates a reserve of 116Mt at 0.49g/t for 1.828Moz within a Measured and Indicated resource of 410.7Moz at 0.38g/t for 4.985Moz, with 136.6Mt at 0.32g/t for 1.388Moz of Inferred.

Sprott Capital Partners Equity Research

Rio2 Gold, 17 November 2020

Table 19: Fenix 3Q20 pit constrained reserve and resource Reserve Tonnes (Mt) Grade (g/t Au) Ounces (Moz) Waste (Mt) Strip Ratio Proven 53.0 0.51 0.866 Probable 63.0 0.47 0.962 Proven and Probable 116.0 0.49 1.828 93.550 1.240 Source: Rio2, 0.24 g/t cut-off, 3% mining dilution and 97% mining recovery, pit-constrained at US$1,500/ounce gold price

Resources Tonnes (Mt) Grade (g/t Au) Ounces (Moz) Measured 122.4 0.41 1.630 Indicated 288.3 0.36 3.355 Measured and Indicated 410.7 0.38 4.985 Inferred 136.6 0.32 1.388 Total Resource 547.3 0.36 6.373 Source: Rio2, 0.15 g/t cut-off,pit-constrained at US$1,500/ounce gold price Figure 60: Fenix Pit shell outline - plan view and section view looking NE

Source: Rio2 Mining On the current 20ktpd plan, the North and Central zones are part of an adjoining pit, while the South zone forms a discrete pit. All three zones are contained within a single pit shell at a $1500/oz cutoff. The strip ratio on the 20ktpd mine inventory is 0.81x (93.5Mt), increasing to 1.8x (517.4Mt) on the 2014 80ktpd PFS inventory. Mining operations are conventional drill and blast, load and haul open pit mining. Mine volumes peak at 20.5Mt in year seven of mining and average 16.1Mt over the 13-year mining period (the final three years are low-grade stockpile processing). The visual contrast of the dark quartz banding and the disseminated nature of the mineralization should reduce risk of ore loss and dilution in mining, in our view. Bench heights are 10m with an overall slope angle of 45-48°with inter ramp angles of 53.4°, 9.5m berm widths, and 75% bench face angles. Ramp widths are 14m with a maximum 10% haul road gradient. The PFS assumed contractor mining and the proposed fleet included two DM45drills, 5 x Cat 90t excavators, 3x CAT 966 Loaders for re-handling, and 53 x 43t haul trucks. Processing The process route design is a 1-stage crush, heap leach, ADR flowsheet. Higher grade material will be crushed to a P80 of 100mm using two semi-mobile jaw crushers. The crushed material will then be transported by conveyor to a stockpile and then from the stockpile to the leach pad via feeders and a conveyor belt. Lime will be added to material while on the conveyor, while agglomeration won’t be required per met testing to date. The leach pad area will be lined with an impermeable liner and the pad design has four stages over the LOM with total capacity for 129Mt. The irrigation will apply cyanide onto the pile with a 90-day irrigation cycle, leaching the gold into solution. Pregnant solution will be pumped to the PLS pond and then to the adsorption stage, which consists of five adsorption columns. Gold will be loaded onto carbons which will then pass through an acid wash and into the desorption circuit for electrolysis.

Sprott Capital Partners Equity Research

Rio2 Gold, 17 November 2020

Figure 61: Fenix PFS flowsheet schematic

Source: Rio2 from 2019 PFS Site infrastructure An 80L/s water supply contract has been signed with Nueva Atacama (formerly known as Aguas Chanar) in Copiapo, vs the project’s estimated water needs of 24L/s at the 20ktpd production rate currently contemplated in the PFS (21.8l/s for the processing operation and 2.2l/s for the camps, dust suppression and evaporation). Electricity is currently expected to be supplied by three 1.41MW diesel generators. Grid power is accessible within 25km of the project and connection is considered if the project is expanded. An onsite camp for 320 people will be built for the operations whilst admin and logistics support will be located in Copiapo. There is an existing access road from CH31 to the project but some sections have been marked for upgrade into a full mining project, including a 5.7km stretch bypassing the mine directly to the processing facility. In April 2020, Rio2 purchased existing facilities at MPSF, located 22km from the Fenix project, and just 2km from the proposed Fenix camp location. The facilities include a camp with grid and internet connection, a permitted 5L/s water borefield, and a fuel station to be reactivated. The 250-person camp could at minimum provide a construction camp for Fenix, with potential (under consideration), to utilise the facilities as part of the permanent camp design. Figure 62: Fenix Project site layout

Source: Rio2

Sprott Capital Partners Equity Research

Rio2 Gold, 17 November 2020

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This research report (as defined in IIROC Rule 3400) is issued and approved for distribution in Canada by Sprott Capital Partners LP (“SCP”), an investment dealer who is a member of the Investment Industry Regulatory Organization of Canada (“IIROC”) and the Canadian Investor Protection Fund (“CIPF”). The general partner of SCP is Sprott Capital Partners GP Inc. and SCP is a wholly-owned subsidiary of Sprott Inc., which is a publicly listed company on the Toronto Stock Exchange under the symbol “SII”. Sprott Asset Management LP (“SAM”), a registered investment manager to the Sprott Funds and is an affiliate of SCP. This research report is provided to retail clients and institutional investors for information purposes only. The opinions expressed in this report are the opinions of the author and readers should not assume they reflect the opinions or recommendations of SCP’s research department. The information in this report is drawn from sources believed to be reliable but the accuracy or completeness of the information is not guaranteed, nor in providing it does SCP and/or affiliated companies or persons assume any responsibility or liability whatsoever. This report is not to be construed as an offer to sell or a solicitation of an offer to buy any securities. SCP accepts no liability whatsoever for any loss arising from any use or reliance on this research report or the information contained herein. Past performance is not a guarantee of future results, and no representation or warranty, expressed or implied, is made regarding future performance of any security mentioned in this research report. The price of the securities mentioned in this research report and the income they generate may fluctuate and/or be adversely affected by market factors or exchange rates, and investors may realize losses on investments in such securities, including the loss of investment principal. Furthermore, the securities discussed in this research report may not be liquid investments, may have a high level of volatility or may be subject to additional and special risks associated with securities and investments in emerging markets and/or foreign countries that may give rise to substantial risk and are not suitable for all investors. SCP may participate in an underwriting of, have a position in, or make a market in, the securities mentioned herein, including options, futures or other derivatives instruments thereon, and may, as a principal or agent, buy or sell such products.

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Sprott Capital Partners Equity Research

Rio2 Gold, 17 November 2020

SPROTT CAPITAL PARTNERS EXPLANATION OF RECCOMENDATIONS: Should SCP issue research with recommendations, the research rating guidelines will be based on the following recommendations:

BUY: The stocks total returns are expected to be materially better than the overall market with higher return expectations needed for more risky securities markets

NEUTRAL: The stock’s total returns are expected to be in line with the overall market

SELL: The stocks total returns are expected to be materially lower than the overall market

TENDER: The analyst recommends tendering shares to a formal tender offering

NOT RATED ((N/R): The stock is not currently rated

Research Disclosure Response

1 SCP and its affiliates collectively beneficially owns 1% or more of any class of the issuer's equity securities4 YES

2 The analyst or any associate of the analyst responsible for the report or recommendation or any individual directly involved NO in the preparation of the report holds or is short any of the issuer's securities directly or through derivatives 3 An SCP partner, director, officer or analyst involved in the preparation of a report on the issuer, has during the preceding NO 12 months provided services to the issuer for remuneration other than normal course investment advisory or trading execution services 4 SCP has provided investment banking services for the issuer during the 12 months preceding the date of issuance of the NO research report or recommendation 5 Name of any director, officer, employee or agent of SCP who is an officer, director or employee of the issuer, or who serves NO in an advisory capacity to the issuer 6 SCP is making a market in an equity or equity related security of the issuer NO

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Sprott Capital Partners Equity Research Ratings:

Summary of Recommendations as of November 2020 BUY: 26 HOLD: 0 SELL: 0 UNDER REVIEW: 0 TENDER: 1 NOT RATED: 0

TOTAL 27

4 As at the end of the month immediately preceding the date of issuance of the research report or the end of the second most recent month if the issue date is less than 10 calendar days after the end of the most recent month

Sprott Capital Partners Equity Research

Geopacific Resources (GPR AU) 100kozpa vanilla open pit in PNG with strong new team

RECOMMENDATION: BUY PRICE TARGET: A$1.95/sh RISK RATING: HIGH

SHARE DATA Vanilla >100kozpa producer in PNG with new mine-builder CEO Shares (basic, FD, FF FD) 175 / 183 / 279 Geopacific’s Woodlark project is a vanilla open pit CIL in Papua New Guinea, Share price (A$/sh) C$0.56/sh with new CEO Tim Richards former GM of neighbour Simberi. The 1.04Moz 52-week high/low A$0.715 / A$0.21 reserve supports ~100koz pa through a 2.4Mtpa CIL. A revalidated DFS under Market cap (A$m) 98 Tim’s leadership is scheduled this quarter, allowing finalisation of an agreed Net cash 3Q20 (A$m) 24 US$100m debt package. The DFS budgeted ~US$775/oz AISC as the 4:1 strip 1.0xNAV5% @ US$1850/oz (A$m)* 568 offsets the 1.1g/t grade for nine year mining and 14 year processing. 1.0xNAV5% FD (A$/sh)* 3.11 Project P/NAV today (x, FD) 0.18x Project robust with conservative inputs, RAP speeds exploration Average daily value (A$000, 3M) 276 We prudently add ~14% to the DFS capex, increasing DFS mining costs by 40% and processing costs by 45% for a SCPe stressed case. We compare our DFS FINANCIALS CY22E CY23E CY24E and stress case costs to St Barbara’s Simberi mine, with stress-case AISC Gold sold (000oz) 51 115 106

3.0 Senior debt is at LIBOR +6.25-7.25% with price participation over 100koz 0.40 (7.5koz pq), paying the delta between US$1,475/oz and spot. The US$15m 2.0 callable gold stream is paid in exchange for 70% payment on 3.4% of production to 30koz and 1.7% on remaining. Key CPs for drawdown are equity, permits,

Share (C$) price Share 0.20

1.0 and construction contracts after detailed technical due diligence is completed. Average (m) daily vol. Average Maintain BUY rating and A$1.95/sh PT 0.00 -

Our Woodlark DCF is net of finance and G&A, modelling the debt and stream

Feb-20 Nov-19

May-20 as published. While FD share count is difficult to forecast ahead of upcoming catalysts, we use 279m FD post an A$70m equity raise. Our PT is based on Source:Fidessa; *diluted for options only ^and mine build 1xNAV5%-1850, not to show the value today but a potential ‘exit value’ approaching production. Based on our 4Q21 A$537m NAV we maintain our BUY rating and Brock Salier, PhD +44 (0)7400 666 913 A$1.95/sh PT. While the trajectory between now and first pour may twist and [email protected] turn, most scenarios see a 1xNAV of >A$2/sh once in production, which

Justin Chan +44 (0)7554 784 688 underpins our investment thesis, and strong positive view on the name. [email protected]

Geopacific Resources, 17 November 2020

Ticker: GPR AU Price / mkt cap: A$0.56/sh, A$98m Project PNAV today: 0.18x Asset: Woodlark Is.

Author: Brock Salier Rec / 1xNAV PT: BUY, A$1.95/sh 1xNAV1Q21 FF FD: C$2.40/sh Country:Papua New Guinea

Commodity price CY20E CY21E CY22E CY23E CY24E Resource / Reserve AuEq (koz) AuEq (g/t) Gold price 1,819 1,870 1,861 1,853 1,850 Resource 1567koz 1.04g/t SOTP project valuation* Reserve 1041koz 1.12g/t A$m O/ship NAVx A$/sh Funding: uses Funding: sources Ungeared proj. @ build start (1Q21) 524 100% 1.00x 2.87 DFS capex A$199m 3Q20 cash + pre-AU options A$30m Cash (3Q20) 24.4 100% 1.00x 0.13 SCPe contingency A$17m Mine debt @ 60% gearing A$112m Cash from options 3.6 100% 1.00x 0.02 SCPe G&A + fin. cost to first Au A$5m Callable gold stream A$20m Exploration 250koz @ US$50/oz 16.4 100% 1.00x 0.09 SCPe working capital A$13mBuild equity @ 30% premium A$70m Asset NAV5% US$1850/oz 568 3.11 Total uses A$233m Total proceeds A$231m

*Shares diluted for options but not mine build Market P/NAV5% 3Q20 0.18x *Cash from options expiring pre first pour Buffer: -A$2m Asset value: 1xNPV project @ build start (A$m, ungeared)* Share data Project NPV (A$m)* $1750oz $1850oz $1950oz $2050oz $2150oz Basic shares (m) 175.0 FD with build equity raise 278.7 8.0% discount 379 444 509 574 638 FD with options (m) 182.6 6.5% discount 412 482 551 620 689 Ratio analysis CY20E CY21E CY22E CY23E CY24E 5.0% discount 449 524 597 671 745 Average shares out (m) 145.8 265.7 278.7 278.7 278.7 Ungeared project IRR: 48% 53% 58% 63% 68% EPS (A$/sh) - - 0.16 0.40 0.27 NPV5 (A$m)* $1750oz $1850oz $1950oz $2050oz $2150oz CFPS (A$/sh) - - - 0.51 0.36 Mining cost: A$2.51/t 536 610 683 757 831 EV (A$m) 57.8 146.3 227.6 86.5 (12.8) Mining cost: A$3.00/t 493 567 641 714 788 FCF yield (%) - - - 90% 64% Mining cost: A$3.50/t 449 524 597 671 745 PER (x) - - 3.4x 1.4x 2.1x 1xNAV5% (A$/sh) $1750oz $1850oz $1950oz $2050oz $2150oz P/CF (x) - - - 1.1x 1.6x 8.0% discount 2.32 2.68 3.03 3.39 3.74 EV/EBITDA (x) - - 3.0x 0.5x (0.1) 6.5% discount 2.50 2.88 3.26 3.64 4.02 Income statement CY20E CY21E CY22E CY23E CY24E 5.0% discount 2.70 3.11 3.52 3.92 4.32 Net revenue (A$m) - - 126.4 285.0 261.1 *Project level NPV, excl finance costs and central SGA, discounted to build start COGS (A$m) - - 46.2 108.9 115.8 Group valuation over time^ 4Q20 4Q21 4Q22 4Q23 4Q24 Gross profit (A$m) - - 80.2 176.1 145.4 Woodlark NPV (A$m) 516.0 624.1 787.0 633.4 513.5 D&A, attrib (A$m) - - 13.3 29.3 25.8 G&A and finance costs (A$m) (121.5) (125.0) (121.4) (97.5) (67.2) Admin (A$m) 4.1 3.4 3.4 4.3 4.0 Net cash prior qtr (A$m) 24.4 18.3 (105.1) 40.4 148.8 Expensed exploration (A$m) 0.1 - - - - Cash from options (A$m) 3.6 3.6 3.6 3.6 3.6 Finance cost (A$m) (0.1) (0.1) 17.6 30.2 27.9 Exploration 250koz @ US$50/oz 16.4 16.4 16.4 16.4 16.4 Taxes (A$m) - - - - 12.9 NAV FF FD (A$m) 439 537 581 596 615 Net income (A$m) (4.0) (3.3) 45.9 112.3 74.7 Shares in issue (m) 182.6 278.7 278.7 278.7 278.7 Cash flow, attrib. CY20E CY21E CY22E CY23E CY24E 1xNAV5%/sh FF FD (A$/sh) 2.40 1.93 2.08 2.14 2.21 EBIT (A$m) (4.2) (3.4) 63.5 142.6 115.5 P/NAV 0.23 0.29 0.27 0.26 0.25 Add back D&A (A$m) - - 13.3 29.3 25.8 Geared company NAV diluted for mine build, net G&A and finance costs Less tax + net interest (A$m) (0.1) (0.1) 17.6 30.2 40.8 2Q22 1xNAV FF FD (A$/sh)^ $1750oz $1850oz $1950oz $2050oz $2150oz Net change in wkg cap (A$m) - 1.2 (28.0) 0.6 0.1 10.0% discount 1.58 1.79 2.00 2.21 2.42 Add back other non-cash (A$m) 0.3 1.0 1.0 0.3 - 7.5% discount 1.69 1.92 2.15 2.38 2.61 Cash flow ops (A$m) (3.8) (1.1) 32.2 142.5 100.6 5.0% discount 1.83 2.08 2.33 2.58 2.83 PP&E - build + sust. (A$m) (10.4) (110.0) (106.2) (1.3) (1.3) Geared project IRR: 37% 41% 45% 49% 52% PP&E - expl'n (A$m) - - - - - 2Q22 1xNAV FF FD (A$/sh)^ $1750oz $1850oz $1950oz $2050oz $2150oz Cash flow inv. (A$m) (10.4) (110.0) (106.2) (1.3) (1.3) Mining cost: A$2.51/t 2.18 2.43 2.68 2.93 3.18 Share issue (A$m) - 70.0 - - - Mining cost: A$3.00/t 2.01 2.26 2.51 2.76 3.01 Lease payments (A$m) - - - - - Mining cost: A$3.50/t 1.83 2.08 2.33 2.58 2.83 Debt draw (repay) (A$m) - 19.7 111.8 (8.4) (35.1) ^Project NPV incl grp SG&A & fin. cost, +net cash; *diluted for mine build equity Cash flow fin. (A$m) - 89.7 111.8 (8.4) (35.1) Production Y1 Y2 Y3 Y4 Y5 Net change in cash (A$m) (14.2) (21.4) 37.9 132.8 64.2 Gold production (000oz) 112 108 104 103 94 EBITDA (A$m) (3.3) 76.8 172.1 141.9 127.7 C1 cost (US$/oz) 621 761 818 925 1,028 Balance sheet CY20E CY21E CY22E CY23E CY24E AISC cost (US$/oz) 684 825 883 990 1,095 Cash (A$m) 23.8 2.5 45.6 183.4 247.5 AISC = C1 + ug sustaining capex, Y1 = 12M to Jun 2023 Acc rec., inv, prepaid (A$m) 2.1 1.0 29.6 28.9 28.8 PP&E + other (A$m) 52.5 162.5 255.4 227.4 202.9 Gold prod'n (LHS, 000oz) AISC (RHS, US$/oz Au) 500koz 1100/oz Total assets (A$m) 78.4 166.0 330.6 439.7 479.3 400koz 1000/oz Debt (A$m) - - 117.1 113.7 78.6 300koz 900/oz Accounts payable (A$m) 9.7 9.8 10.4 10.3 10.3 Others (A$m) 2.0 2.0 2.0 2.0 2.0 200koz 800/oz Total liabilities (A$m) 11.7 11.9 129.6 126.1 91.0 100koz 700/oz Sh'hlds equity + wrnts (A$m) 149.2 220.2 221.2 221.5 221.5 0koz 600/oz Retained earn'gs + rsvs (A$m) (82.5) (66.1) (20.2) 92.1 166.9 Y1 Y2 Y3 Y4 Y5 Liabilities + equity (A$m) 78.4 166.0 330.6 439.7 479.3 Source: SCP estimates

Sprott Capital Partners Equity Research

Geopacific Resources, 17 November 2020

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Sprott Capital Partners Equity Research

Geopacific Resources, 17 November 2020

SPROTT CAPITAL PARTNERS EXPLANATION OF RECCOMENDATIONS: Should SCP issue research with recommendations, the research rating guidelines will be based on the following recommendations:

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NOT RATED ((N/R): The stock is not currently rated

Research Disclosure Response

1 SCP and its affiliates collectively beneficially owns 1% or more of any class of the issuer's equity securities5 NO

2 The analyst or any associate of the analyst responsible for the report or recommendation or any individual directly involved NO in the preparation of the report holds or is short any of the issuer's securities directly or through derivatives 3 An SCP partner, director, officer or analyst involved in the preparation of a report on the issuer, has during the preceding NO 12 months provided services to the issuer for remuneration other than normal course investment advisory or trading execution services 4 SCP has provided investment banking services for the issuer during the 12 months preceding the date of issuance of the NO research report or recommendation 5 Name of any director, officer, employee or agent of SCP who is an officer, director or employee of the issuer, or who serves NO in an advisory capacity to the issuer 6 SCP is making a market in an equity or equity related security of the issuer NO

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Sprott Capital Partners Equity Research Ratings:

Summary of Recommendations as of November 2020 BUY: 26 HOLD: 0 SELL: 0 UNDER REVIEW: 0 TENDER: 1 NOT RATED: 0

TOTAL 27

5 As at the end of the month immediately preceding the date of issuance of the research report or the end of the second most recent month if the issue date is less than 10 calendar days after the end of the most recent month

Sprott Capital Partners Equity Research

Sabina Gold and Silver (SBB CN) 1Q21 DFS optimisation to speed, and grow, UG

RECOMMENDATION: BUY PRICE TARGET:C$3.65/sh RISK RATING: HIGH

SHARE DATA We think Canadian pre-producer Sabina has one of the most exciting Shares (basic, FD, FF FD) 326 / 338 / 409 undeveloped resources globally with 7.2Moz @ 6.2g/t. The far-north 52-week high/low C$2.01 / C$0.85 location is mitigated by a vanilla CIL and extremely high grades. Outside Market cap 912 the 2.5Moz @ 6.3g/t reserve, ‘jewel boxes’ could host >500koz of half- Net cash (debt) (C$m) 69.0 ounce material each, indicative of the ounce-upside on the belt. 1.0xNAV5% @ C$1850/oz (C$m) 2,049

1.0xNAV5% FD (C$/sh) 6.07 ‘Worlds best’ undeveloped gold project – in our view P/NAV (x) 0.46x Sabina is targeting ~200koz pa over 12 years from its permitted Back River mine Average daily value (C$000, 3M) 2060 in Nunavut. The 2.5Moz 6.3g/t reserve supported US$598/oz AISC in the 3Q15 FS defined at 6.3g/t, with and C$415m build capex from a 3,000tpd operation. FINANCIALS CY22E CY23E CY24E The 2015 DFS sees open pit ore from Y1 and UG ore from Y3, but limited to Gold sold (000oz) - - 165 828koz @ 7.4g/t, wth an NPV5% of C$480m at US$1,150/oz as published. Revenue (C$m) - - 400 AISC (US$/oz) - - 620 DFS NPV already at C$1.5bn at $1850/oz, so what’s the catch? Income (C$m) (6.2) (37.6) 187.0 Investors perhaps legitimately pushed back on the C$462m 2015 capex, not the EPS (C$) (0.02) (0.09) 0.47 least given the NPV1150 of C$480m at the time. At US$1,850/oz we estimate that PER (x) - - 5.9x NPV lifts to C$1.5bn, so a potential capex lift is not relevant to our thesis. Rather CFPS (C$) (0.01) (0.09) 0.62 than dilute in a weak market, the company has focussed on (a) drilling the P/CF (x) - - 4.5x 2.8Moz of UG resources not in reserve, and more recently (b) commencing an EBITDA (C$m) (4.9) (5.3) 280.6 exploration decline to break up the build, accelerate UG production, and lower EV/EBITDA (x) - - 4.1x the drill cost of adding further UG reserves. Just last week Sabina awarded detailed engineering contracts as a hybrid EPCM approach. EXIT VALUATION 4Q20 4Q21 4Q22

1xNAV5% FF FD (C$m) 2,265 2,391 2,507 So what could the 1Q21 DFS look like? Closer to C$2bn we think 1xNAV5% FF FD (C$/sh) 5.54 5.54 5.84 We expect the 1Q21 FS to incorporate a remodel (add ounces and grade profile), reschedule (bring UG forward), and re-size (staged expansion from 3.50 6.0 Volume Price 3ktpt to 4ktpd). Reserve growth should come from the Umwelt-Vault UG where 3.00 5.0 drilling included 32m @ 20g/t. Combined with a decline in place we expect these to accelerate from Y3 to Y1. With this much gold, a larger mill makes sense, we 2.50 4.0 model a Y3 expansion to 4ktpd. The result: an NPV5-1805 of C$2.0bn.

2.00 3.0 More upside to come? Despite best efforts the drill season is short, with the Llama and Nuvayak UGs 1.50 2.0

to benefit from CY21 drilling before adding at least 250koz each to reserves in Share (C$) price Share 1.00 1.0 our view. We see potential for further pit reserve growth also, if 500koz is

Average (m) daily vol. Average converted next year, this now takes the NPV to C$2.25bn. This still remains 0.50 - conservative in the long-run given the limited drilling undertaken on this project.

Maintain BUY rating and C$3.65/sh PT

Feb-20

Nov-19 Nov-20 Aug-20 May-20 We base our valuation on the 3.2Moz ‘1Q21 FS base case’, with NPV5%-1850 of Source: Fidessa C$2.0bn at build start converting to a 4Q21 NAV of C$2.0bn adding cash, and from options, but deducting central G&A and finance costs related to a C$325m Brock Salier, PhD +44 (0)7400 666 913 SCPe debt package. Diluting for C$220m equity at a conservative 10% premium [email protected] drives our FF FD C$4.88/sh value, lifting to C$6.12/sh in 2024 at first production.

Justin Chan +44 (0)7554 784 688 On this basis, we maintain our BUY rating and 0.75xNAV5% C$3.65/sh PT. [email protected]

Sabina Gold & Silver, 17 November 2020

Ticker: SBB CN Price / mkt cap: C$2.80/sh C$912m Market P/NAV 0.46x Asset: Back River

Author: B Salier / C Tonkin Rec. / 0.75x NAV PT: BUY, C$3.65/sh 1xNAV2023 FF FD: C$6.13/sh Country:Nunavut, Canada

Commodity price CY21E CY22E CY23E CY24E CY25E Resource / Reserve Au (koz) Au (g/t) Au (koz) Au (g/t) Gold price 1,850 1,850 1,850 1,850 1,850 Meas., indicated and inferred 7.2Moz @ 6.2g/t Pit reserve1.7Moz @ 5.9g/t SOTP project valuation Proven & probable 2.5Moz @ 6.3g/t UG reserve0.8Moz @ 7.4g/t C$m O/ship NAVx C$/sh Shares BASIC FD (options) FD (mine build) Back River 4Q20* 1,965 100% 1.0x 5.82 Basic shares (m) 325.8 337.7 409.1 Net cash 3Q20 69.0 - 1.0x 0.20 Project financing Company financing Cash from options 15.6 - 1.0x 0.05 Build capex (C$m) C$500m Mine equity (C$m) C$220m 2,049 6.07 Drilling/FS cost (C$m) C$20m Spot share price (C$/sh) C$2.80

*Diluted for options, not mine build Market P/NAV5%2019 0.46x G&A + finance in build (C$m) C$46m Raise @ +10% (C$/sh) C$3.08 Asset value: 1xNPV project @ build start (C$m, ungeared)* Y1 sea lift (C$m) C$47m Mine debt (C$m) C$325m NPV (C$m) $1650oz $1750oz $1850oz $1950oz $2050oz Mine build finance (C$m) C$613m Lender IRR (%) 13% 5% discount 1,680 1,865 2,049 2,234 2,419 Ratio analysis CY20E CY21E CY22E CY23E CY24E 7% discount 1,445 1,609 1,773 1,936 2,100 Average shares out (m) 318.5 358.2 397.2 397.2 397.2 9% discount 1,247 1,393 1,539 1,685 1,831 EPS (C$/sh) (0.02) (0.02) (0.02) (0.09) 0.47 Ungeared project IRR: 42% 45% 49% 52% 55% CFPS before w/c (C$/sh) (0.01) (0.01) (0.01) (0.09) 0.62 NAV5 1850 vs Vault UG (C$m) 7.0g/t 9.0g/t 11.0g/t 13.0g/t 15.0g/t EV (C$m) 860.4 813.5 1,053.2 1,434.0 1,164.2 UG tonnes: 566kt 1,880 1,944 2,009 2,074 2,138 FCF yield (%) - - - - 22% UG tonnes: 707kt 1,887 1,968 2,049 2,131 2,212 PER (x) - - - - 5.9x UG tonnes: 1061kt 1,905 2,026 2,147 2,268 2,389 P/CF (x) - - - - 4.5x *Project level NPV, excl finance costs and central SGA, discounted to build start EV/EBITDA (x) - - - - 4.1x SOTP company valuation^ 4Q20 4Q21 4Q22 4Q23 4Q24 Income statement CY20E CY21E CY22E CY23E CY24E Back River NPV (C$m) 1,940 2,099 2,329 2,739 2,760 Revenue (C$m) - - - - 399.7 Central G&A + fin. costs (C$m) (185) (168) (171) (151) (110) COGS (C$m) - - - - 96.5 Net cash (C$m) 69 49.0 91.9 (212.9) (158.4) Gross profit (C$m) - - - - 303.3 Cash from options (C$m) 15.6 15.6 15.6 15.6 15.6 D&A (C$m) 0.4 0.4 0.4 0.4 57.6 NAV (C$m) 1,840 1,995 2,265 2,391 2,507 Finance cost, central G&A (C$m) 4.3 4.6 4.9 36.4 43.2 1xNAV5%/sh FF FD (C$/sh) 5.45 4.88 5.54 5.84 6.13 Royalty & tax (C$m) - - - - 14.6 PT @ 0.8xNAV: 3.66 Net income (C$m) (4.9) (5.8) (6.2) (37.6) 187.0 1xNAV/sh FF FD @ 2Q21 (C$m, geared)^ Cash flow, attrib. CY20E CY21E CY22E CY23E CY24E 2Q21 NAV FF FD (C$/sh) $1650oz $1750oz $1850oz $1950oz $2050oz EBIT (C$m) (5.7) (5.8) (6.2) (6.5) 222.2 5% discount 3.94 4.41 4.88 5.34 5.81 Add back non-cash items (C$m) 1.4 1.2 1.2 1.2 58.5 7% discount 3.43 3.85 4.27 4.69 5.11 Less tax, finance costs (C$m) - - - (31.1) (35.2) 9% discount 2.99 3.37 3.75 4.13 4.51 Less wkg cap, add interest (C$m) (1.1) - - (43.6) 47.4 Geared project IRR: 35% 38% 41% 44% 47% Cash flow ops (C$m) (5.4) (4.6) (4.9) (80.0) 292.8 2Q21 NAV5 (C$/sh) vs Umwelt UG 7.0g/t 9.0g/t 11.0g/t 13.0g/t 15.0g/t PP&E (C$m) (11.1) (88.4) (125.7) (300.9) (22.9) UG tonnes: 566kt 4.45 4.61 4.77 4.94 5.10 Others (C$m) (30.4) - - - - UG tonnes: 707kt 4.46 4.67 4.88 5.08 5.29 Cash flow inv. (C$m) (41.5) (88.4) (125.7) (300.9) (22.9) UG tonnes: 1061kt 4.51 4.82 5.12 5.43 5.74 Share issue, capital lease (C$m) 57.1 220.0 - - - ^Project NPV less grp SG&A & fin. cost, +net cash, 40% equity at spot Debt draw (repay) (C$m) - - - 325.0 (108.3) Production (Y1 from 1Q24) CY24 CY25 CY26 CY27 CY28 Cash flow fin. (C$m) 57.1 220.0 - 325.0 (108.3) Gold production (000oz) 165 258 316 328 293 Net change in cash (C$m) 10.1 127.0 (130.6) (55.9) 161.5 C1 cost (US$/oz) 514 506 486 438 508 Balance sheet CY20E CY21E CY22E CY23E CY24E AISC cost (US$/oz) 620 590 544 489 573 Cash (C$m) 31.5 189.6 58.9 3.1 164.6 C3 cost (US$/oz) 781 1,041 695 639 724 Acc rec. + inventories (C$m) 4.6 4.6 4.6 48.1 48.1 AISC = C1 + ug sustaining capex, C3 = C1 + depreciation, Y1 = YT Sep 2022 PP&E (C$m) 79.9 167.9 293.2 593.7 559.0 Production (LHS, 000oz) AISC (RHS, US$/oz Au) Others (C$m) 436.6 405.6 405.6 405.6 405.6 400koz 700/oz Total assets (C$m) 552.6 768 762 1,050 1,177 Debt (C$m) - - - 325.0 216.7 300koz 600/oz Accounts payable (C$m) 2.9 2.9 2.9 2.9 50.2 200koz 500/oz Others (C$m) 46.3 46.3 46.3 46.3 46.3 100koz 400/oz Total liabilities (C$m) 49.2 49.2 49.2 374.2 313.2 Shareholders equity (C$m) 570.0 790.8 791.7 792.5 793.4 0koz 300/oz Retained earn'gs + rsvs (C$m) (66.6) (72.4) (78.6) (116.3) 70.7 CY24 CY25 CY26 CY27 CY28 Liabilities + equity (C$m) 552.6 768 762 1,050 1,177 Source: SCP estimates

Sprott Capital Partners Equity Research

Sabina Gold & Silver, 17 November 2020

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Sprott Capital Partners Equity Research

Sabina Gold & Silver, 17 November 2020

SPROTT CAPITAL PARTNERS EXPLANATION OF RECCOMENDATIONS: Should SCP issue research with recommendations, the research rating guidelines will be based on the following recommendations:

BUY: The stocks total returns are expected to be materially better than the overall market with higher return expectations needed for more risky securities markets

NEUTRAL: The stock’s total returns are expected to be in line with the overall market

SELL: The stocks total returns are expected to be materially lower than the overall market

TENDER: The analyst recommends tendering shares to a formal tender offering

NOT RATED ((N/R): The stock is not currently rated

Research Disclosure Response

1 SCP and its affiliates collectively beneficially owns 1% or more of any class of the issuer's equity securities6 YES

7 The analyst preparing this report received compensation based upon SCP's investment banking revenue for the issuer NO

8 The analyst has conducted a site visit and has viewed a major facility or operation of the issuer YES

9 The analyst has been reimbursed for travel expenses for a site visit by the issuer YES

Sprott Capital Partners Equity Research Ratings:

Summary of Recommendations as of November 2020 BUY: 26 HOLD: 0 SELL: 0 UNDER REVIEW: 0 TENDER: 1 NOT RATED: 0

TOTAL 27

6 As at the end of the month immediately preceding the date of issuance of the research report or the end of the second most recent month if the issue date is less than 10 calendar days after the end of the most recent month

Sprott Capital Partners Equity Research