Radius Gold Inc.
Annual Report 2022

Plain-text annual report

FINANCIAL REVIEW Fiscal Year Ended December 31, 2022 CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2022 (Expressed in Canadian Dollars) INDEPENDENT AUDITORS' REPORT TO THE SHAREHOLDERS OF RADIUS GOLD CORP. Opinion We have audited the consolidated financial statements of Radius Gold Inc. and its subsidiaries (collectively the "Company"), which comprise: ♦ ♦ the consolidated statements of financial position as at December 31, 2022 and 2021; the consolidated statements of income (loss) and comprehensive income (loss) for the years then ended; the consolidated statements of changes in equity for the years then ended; the consolidated statements of cash flows for the years then ended; and the notes to the consolidated financial statements, including a summary of significant accounting policies. ♦ ♦ ♦ In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Company as at December 31, 2022 and 2021, and its consolidated financial performance and its consolidated cash flows for the years then ended in accordance with International Financial Reporting Standards (“IFRS”). Basis for Opinion We conducted our audits in accordance with Canadian generally accepted auditing standards. Our responsibilities under those standards are further described in the Auditors’ Responsibilities for the Audit of the Consolidated Financial Statements section of our report. We are independent of the Company in accordance with the ethical requirements that are relevant to our audit of the consolidated financial statements in Canada, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained in our audits is sufficient and appropriate to provide a basis for our opinion. Key Audit Matters Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the consolidated financial statements for the year ended December 31, 2022. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. We have determined that there are no key audit matters to communicate in our auditors’ report. Other Information Management is responsible for the other information. The other information comprises the information included in Management’s Discussion and Analysis. 1 VANCOUVER1700–475 Howe StVancouver, BC V6C 2B3T: 604 687 1231F: 604 688 4675LANGLEY600–19933 88 AveLangley, BC V2Y 4K5T: 604 282 3600F: 604 357 1376NANAIMO201–1825 Bowen RdNanaimo, BC V9S 1H1T: 250 755 2111F: 250 984 0886SMYTHE LLP | smythecpa.comOur opinion on the consolidated financial statements does not cover the other information and we do not express any form of assurance conclusion thereon. In connection with our audit of the consolidated financial statements, our responsibility is to read the other information identified above and, in doing so, consider whether the other information is materially inconsistent with the consolidated financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. We obtained Management's Discussion and Analysis prior to the date of this auditors' report. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard. Responsibilities of Management and Those Charged with Governance for the Consolidated Financial Statements Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with IFRS, and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error. In preparing the consolidated financial statements, management is responsible for assessing the Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so. Those charged with governance are responsible for overseeing the Company’s financial reporting process. Auditors' Responsibilities for the Audit of the Consolidated Financial Statements Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors’ report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with Canadian generally accepted auditing standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements. As part of an audit in accordance with Canadian generally accepted auditing standards, we exercise professional judgment and maintain professional skepticism throughout the audit. We also: 2 VANCOUVER1700–475 Howe StVancouver, BC V6C 2B3T: 604 687 1231F: 604 688 4675LANGLEY600–19933 88 AveLangley, BC V2Y 4K5T: 604 282 3600F: 604 357 1376NANAIMO201–1825 Bowen RdNanaimo, BC V9S 1H1T: 250 755 2111F: 250 984 0886SMYTHE LLP | smythecpa.com♦ ♦ ♦ ♦ ♦ Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control. Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management. Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditors’ report to the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditors' report. However, future events or conditions may cause the Company to cease to continue as a going concern. Evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation. ♦ Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Company to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion. We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards. 3 VANCOUVER1700–475 Howe StVancouver, BC V6C 2B3T: 604 687 1231F: 604 688 4675LANGLEY600–19933 88 AveLangley, BC V2Y 4K5T: 604 282 3600F: 604 357 1376NANAIMO201–1825 Bowen RdNanaimo, BC V9S 1H1T: 250 755 2111F: 250 984 0886SMYTHE LLP | smythecpa.comFrom the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the consolidated financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditors’ report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication. The engagement partner on the audit resulting in this independent auditors' report is Michelle Chi Wai So. Chartered Professional Accountants Vancouver, British Columbia April 24, 2023 4 VANCOUVER1700–475 Howe StVancouver, BC V6C 2B3T: 604 687 1231F: 604 688 4675LANGLEY600–19933 88 AveLangley, BC V2Y 4K5T: 604 282 3600F: 604 357 1376NANAIMO201–1825 Bowen RdNanaimo, BC V9S 1H1T: 250 755 2111F: 250 984 0886SMYTHE LLP | smythecpa.com RADIUS GOLD INC. CONSOLIDATED STATEMENTS OF FINANCIAL POSITION (Expressed in Canadian Dollars) As at December 31 ASSETS Current assets Cash and cash equivalents (Note 5) Equity investments (Note 6) Receivables (Notes 8 and 17) Prepaid expenses and deposits (Note 17) Total current assets Non-current assets Long-term deposits (Note 17) Property and equipment (Note 9) Right-of-use asset (Note 10) Mineral property and royalty interests (Note 12) Investment in associate (Note 11) Total non-current assets TOTAL ASSETS LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities Accounts payable and accrued liabilities (Note 17) Current portion of lease liability (Note 10) Non-current liabilities Lease liability (Note 10) Total liabilities Shareholders' equity Share capital (Note 14) Obligation to issue shares (Note 17) Other equity reserve (Note 14) Accumulated other comprehensive loss Deficit Total shareholders' equity 2022 2021 $ 1,420,114 1,868,883 80,183 53,467 $ 1,532,698 739,729 31,884 59,379 3,422,647 2,363,690 123,098 6,970 121,097 37,402 - 288,567 123,098 8,533 181,564 126,667 1 439,863 $ 3,711,214 $ 2,803,553 $ 100,059 72,689 172,748 81,942 254,690 $ 84,332 64,260 148,592 154,631 303,223 56,728,904 120,625 7,260,439 (3,467,846) (57,185,598) 3,456,524 56,723,224 73,750 7,262,369 (3,297,261) (58,261,752) 2,500,330 TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 3,711,214 $ 2,803,553 APPROVED ON BEHALF OF THE BOARD OF DIRECTORS AND AUTHORIZED FOR ISSUE ON APRIL 24, 2023 BY: “Bruce Smith” , Director “William Katzin” , Director Bruce Smith William Katzin The accompanying notes form an integral part of these consolidated financial statements. 5 RADIUS GOLD INC. CONSOLIDATED STATEMENTS OF INCOME (LOSS) AND COMPREHENSIVE INCOME (LOSS) For the years ended December 31, 2022 and 2021 (Expressed in Canadian Dollars) Exploration expenditures (Note 17) Write-off of mineral property interests (Note 12) General and administrative expenses Amortization (Note 9) Depreciation of right-of-use asset (Note 10) Interest expense on lease liability (Note 10) Legal and audit fees Management fees (Note 17) Office and miscellaneous (Notes 13 and 17) Salaries and benefits (Note 17) Share-based compensation (Notes 15 and 17) Shareholder communications (Note 17) Transfer agent and regulatory fees (Note 17) Travel and accommodation (Note 17) 2022 2021 $ 732,140 - 732,140 $ 690,258 117,816 808,074 2,232 60,467 18,158 51,626 66,000 16,630 149,330 46,875 44,859 18,936 47,567 522,680 17,627 60,467 23,905 41,557 66,000 29,573 102,708 174,845 86,557 19,225 6,569 629,033 Loss from operations (1,254,820) (1,437,107) Investment income Foreign currency exchange gain (loss) Gain on reclassification as equity investment (Notes 6 and 11) Gain from mineral property option agreements (Note 12) Gain on disposal of equipment (Notes 9 and 17) Fair value loss on derivative investments (Note 7) 9,954 63,570 1,350,913 894,097 12,440 - 3,048 (6,669) - 488,705 62,964 (3,589) Net income (loss) for the year $ 1,076,154 $ (892,648) Other comprehensive income (loss) Items that will not be reclassified subsequently to profit or loss: Losses on sale of equity investments (Note 6) Fair value gains (losses) on equity investments (Note 6) Total comprehensive income (loss) (401,465) 230,880 (10,858) (169,594) $ 905,569 $ (1,073,100) Basic and diluted income (loss) per share (Note 3(i)) $0.01 $(0.01) Weighted average number of common shares outstanding 87,252,523 87,227,112 The accompanying notes form an integral part of these consolidated financial statements. 6 RADIUS GOLD INC. CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY For the years ended December 31, 2022 and 2021 (Expressed in Canadian Dollars) Number of common shares Share capital Obligation to issue shares Other equity reserve Accumulated other comprehensive loss Deficit Total Balance, December 31, 2020 87,118,550 $ 56,694,261 $ - $ 7,171,487 $ (3,116,809) $(57,369,104) $ 3,379,835 Loss for the year Obligation to issue shares (Note 17) Options exercised (Note 14) Transfer of other equity reserve on exercise of options Equity investments Share-based compensation (Note 15) - - - - - 73,750 125,000 18,750 - - - 10,213 - - - - - - - - - (10,213) - - - - - (180,452) 101,095 - Balance, December 31, 2021 87,243,550 56,723,224 73,750 7,262,369 (3,297,261) (58,261,752) Income for the year Obligation to issue shares (Note 17) Options exercised (Note 14) Transfer of other equity reserve on exercise of options Equity investments - - 25,000 - - - - 3,750 1,930 - - 46,875 - - - - - - (1,930) - - - - - (170,585) 1,076,154 - - - - (892,648) (892,648) - - - - - 73,750 18,750 - (180,452) 101,095 2,500,330 1,076,154 46,875 3,750 - (170,585) Balance, December 31, 2022 87,268,550 $ 56,728,904 $ 120,625 $ 7,260,439 $ (3,467,846) $(57,185,598) $ 3,456,524 The accompanying notes form an integral part of these consolidated financial statements. 7 RADIUS GOLD INC. CONSOLIDATED STATEMENTS OF CASH FLOWS For the years ended December 31, 2022 and 2021 (Expressed in Canadian Dollars) Cash provided (used in): OPERATING ACTIVITIES Net income (loss) for the year Items not involving cash: Amortization Gain on reclassification as equity investment Gain from mineral property option agreements Gain on disposal of equipment Depreciation of right-of-use asset Write off of mineral property interests Fair value loss of derivative investments Share-based compensation Changes in non-cash working capital items: Receivables Prepaid expenses and deposits Accounts payable and accrued liabilities Cash used in operating activities FINANCING ACTIVITIES Proceeds on issuance of common shares Repayment of lease obligation Cash used for financing activities INVESTING ACTIVITIES Purchase of equity investments Expenditures on mineral property acquisition costs Proceeds from mineral property option agreements Proceeds from sale of equity investments Proceeds from sale of equipment Purchase of property and equipment Cash provided by investing activities 2022 2021 $ 1,076,154 $ (892,648) 2,232 (1,350,913) (894,097) (12,440) 60,467 - - 46,875 (1,071,722) (48,299) 5,912 15,727 17,627 - (488,705) (62,964) 60,467 117,816 3,589 174,845 (1,069,973) 27,271 (29,661) (13,589) (1,098,382) (1,085,952) 3,750 (64,260) (60,510) - (940,682) 1,924,044 51,175 12,440 (669) 1,046,308 18,750 (56,596) (37,846) (26,065) (249,512) 644,883 5,270 62,964 (4,416) 433,124 Decrease in cash and cash equivalents (112,584) (690,674) Cash and cash equivalents, beginning of year 1,532,698 2,223,372 Cash and cash equivalents, end of year (Note 5) $ 1,420,114 $ 1,532,698 Supplemental Cash Flow Information (Note 21) The accompanying notes form an integral part of these consolidated financial statements. 8 RADIUS GOLD INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the years ended December 31, 2022 and 2021 (Expressed in Canadian Dollars) 1. CORPORATE INFORMATION Radius Gold Inc. (the “Company”) was formed by the amalgamation of Radius Explorations Ltd. and PilaGold Inc. effective on July 1, 2004 under the laws of British Columbia. The Company is engaged in the acquisition and exploration of mineral properties and investment in companies which hold mineral property interests. The address of the Company’s head office and principal place of business is 650 – 200 Burrard Street, Vancouver, BC, Canada V6C 3L6. 2. BASIS OF PREPARATION These consolidated financial statements have been presented on the basis that the Company will continue as a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. Statement of Compliance These consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (“IFRS”), as issued by the International Accounting Standards Board (“IASB”). The accounting policies set out in Note 3 have been applied consistently by the Company and its subsidiaries to all periods presented. Basis of Measurement These consolidated financial statements have been prepared on the historical cost basis, except for certain financial instruments measured at fair value. In addition, these consolidated financial statements have been prepared using the accrual basis of accounting, except for cash flow information. The consolidated financial statements are presented in Canadian dollars (“CDN”), which is the Company’s and its subsidiaries’ functional currency. The preparation of financial statements in compliance with IFRS requires management to make certain critical accounting estimates. It also requires management to exercise judgment in applying the Company’s accounting policies. The areas involving a higher degree of judgment or complexity, or areas where assumptions and estimates are significant to the consolidated financial statements are disclosed in Note 4. At the time these consolidated financial statements were prepared, the COVID-19 pandemic continued to cause disruptions to the global economy; however, it did not significantly impact the Company’s operations during the year ended December 31, 2022. 9 RADIUS GOLD INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the years ended December 31, 2022 and 2021 (Expressed in Canadian Dollars) 3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The accounting policies set out below have been applied consistently to all years presented in these consolidated financial statements. a) Basis of Consolidation These consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. A wholly owned subsidiary is an entity in which the Company has control, directly or indirectly, where control is defined as the power to govern the financial and operating policies of an enterprise so as to obtain benefits from its activities. All material intercompany transactions and balances have been eliminated on consolidation. Subsidiaries are deconsolidated from the date control ceases. Details of the Company’s principal subsidiaries at December 31, 2022 and 2021 are as follows: Name Minerales Sierra Pacifico S.A. Geometales Del Norte-Geonorte Radius (Cayman) Inc. b) Revenue Recognition Place of Incorporation Guatemala Mexico Cayman Islands Interest % 100% 100% 100% Principal Activity Exploration company Exploration company Investment Holding company The Company earns revenue from royalty agreements and is based on amounts contractually due. Royalty revenue is measured at fair value of the consideration received or receivable when the Company can reliably estimate the amount, pursuant to the terms of the royalty agreement. For royalty interests, revenue recognition generally occurs in the month of production from the royalty property. Royalty revenue may be subject to adjustment upon final settlement of estimated metal prices, weights, and assays. Adjustments recorded upon final settlement are offset against revenue when incurred. Variations between the estimated price recorded upon production and the actual final price set upon final settlement are caused by changes in market commodity prices, and result in an embedded derivative in the receivable. The embedded derivative is recorded at fair value each period until final settlement occurs, with changes in fair value classified as provisional price adjustments and included as a component of royalty revenue. As of December 31, 2022 and 2021, there was no embedded derivative. c) Investment in Associate Where the Company has significant influence over the financial and operating policy decisions of another entity, it is classified as an associate. Associates are initially recognized in the consolidated statement of financial position at cost. The Company's share of post-acquisition profits and losses is recognized in profit or loss, except that losses in excess of the Company’s investment in the associate are not recognized unless there is an obligation to fund those losses. Profits and losses arising on transactions between the Company and its associates are recognized only to the extent of unrelated investors' interests in the associate. The investor's share in the associate's profits and losses resulting from these transactions is eliminated against the carrying value of the associate. Any premium paid for an associate above the fair value of the Company's share of the identifiable assets, liabilities and contingent liabilities acquired is capitalized and included in the carrying amount of the associate. Adjustments to the carrying amount may also be necessary for changes in the Company's proportionate interest in the associate arising from changes in the associate's other comprehensive income. Such adjustments to the carrying amount are charged to operations as a gain or loss on dilution in the associate. Where there is objective evidence that the investment in an associate has been impaired, the carrying amount of the investment is tested for impairment in the same way as other non-financial assets. Upon discontinuing the use of the equity method, an investment, if a financial asset, is to be measured at fair value and the difference between the fair value and the carrying value of the investment recognized in profit or loss. 10 RADIUS GOLD INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the years ended December 31, 2022 and 2021 (Expressed in Canadian Dollars) 3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont’d) d) Foreign Currency Translation The functional and presentation currency of the Company and its principal subsidiaries is the Canadian dollar. Transactions denominated in a currency other than an entity’s functional currency are translated as follows: unsettled monetary items denominated in a foreign currency are translated into Canadian dollars at exchange rates prevailing at the date of the statement of financial position and non-monetary items are translated at exchange rates prevailing when the assets were acquired or obligations incurred. Foreign currency denominated revenue and expense items are translated at exchange rates prevailing at the transaction date. Gains or losses arising from the translations are included in profit or loss. e) Cash and Cash Equivalents Cash and cash equivalents include cash at banks and on hand, and other short-term, highly liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and are subject to an insignificant risk of change of value. f) Mineral Property and Royalty Interests Exploration and evaluation assets Acquisition costs for exploration and evaluation assets are capitalized and include the cash consideration paid and the fair value of common shares issued on acquisition, at the earlier of the date the counterparty’s performance is complete or the share issuance date. Exploration expenditures, net of recoveries, are charged to operations as incurred. After a property is determined by management to be commercially feasible, exploration and development expenditures on the property will be capitalized. On transfer to development properties, capitalized exploration and evaluation assets are assessed for impairment. Options are exercisable entirely at the discretion of the optionee and amounts received from optionees in connection with option agreements are credited against the capitalized acquisition costs classified as exploration and evaluation assets on the consolidated statement of financial position, with amounts received in excess credited to gain from mineral property option agreements in profit or loss. Where the Company has entered into option agreements to acquire interests in exploration and evaluation assets that provide for periodic payments or periodic share issuances, amounts unpaid and unissued are not recorded as liabilities since they are payable and issuable entirely at the Company’s option. Option payments are recorded as exploration and evaluation costs when the payments are made or received and the share issuances are recorded as exploration and evaluation costs using the fair market value of the Company’s common shares at the earlier of the date the counterparty’s performance is complete or the share issuance date. The Company is in the process of exploring and developing its exploration and evaluation assets and has not yet determined the amount of reserves available. Management reviews the carrying value of exploration and evaluation assets on a periodic basis and whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable, the Company will test the asset for impairment based upon a variety of factors, including current exploration results, the prospect of further work being carried out by the Company, the assessment of future probability of profitable revenues from the asset or from the sale of the asset. Amounts shown for exploration and evaluation assets represent costs incurred to date, net of write-downs and recoveries, and are not intended to represent present or future values. Environmental expenditures that relate to current operations are expensed or capitalized as appropriate. Expenditures that relate to an existing condition caused by past operations and which do not contribute to current or future revenue generation are expensed. Liabilities are recorded when environmental assessments and/or remedial efforts are probable and the costs can be reasonably estimated. Generally, the timing of these accruals would be when the actual environmental disturbance occurs. 11 RADIUS GOLD INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the years ended December 31, 2022 and 2021 (Expressed in Canadian Dollars) 3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont’d) f) Mineral Property and Royalty Interests (cont’d) Royalties Royalty interests consist of acquired royalties in producing and exploration and evaluation stage properties. They are subsequently measured at cost less accumulated depletion and depreciation and accumulated impairment losses. Producing properties are those that have generated revenue from steady-state operations for the Company. Exploration and evaluation stage properties represent early stage exploration properties that are speculative and are expected to require more than two years to generate revenue, if ever, or are currently not active. Producing royalty interests are recorded at cost and capitalized in accordance with IAS 16, Property, Plant and Equipment. Producing royalty interests are depleted using the units-of-production method over the life of the property to which the interest relates, which is estimated using available estimates of proven and probable reserves specifically associated with the properties. Management relies on information available to it under contracts with the operators and/or public disclosures for information on proven and probable reserves and resources from the operators of the producing royalty interest. Royalty interests for exploration and evaluation assets are recorded at cost and capitalized in accordance with IFRS 6, Exploration for and Evaluation of Mineral Resources. Acquisition costs of exploration and evaluation royalty interests are capitalized and are not depleted until such time as revenue-generating activities begin. g) Property, Equipment and Amortization Recognition and Measurement On initial recognition, property and equipment are valued at cost, being the purchase price and directly attributable costs of acquisition required to bring the asset to the location and condition necessary to be capable of operating in a manner intended by the Company, including appropriate borrowing costs and the estimated present value of any future unavoidable costs of dismantling and removing items. The corresponding liability is recognized within provisions. Property and equipment is subsequently measured at cost less accumulated amortization, less any accumulated impairment losses, with the exception of land, which is not amortized. When parts of an item of property and equipment have different useful lives, they are accounted for as separate items (major components) of property and equipment. Gains and Losses Gains and losses on disposal of an item of property and equipment are determined by comparing the proceeds from disposal with the carrying amount that are recognized net within other income in profit or loss. Amortization Amortization is recognized in profit or loss and property and equipment is amortized over their estimated useful lives using the following methods: Trucks Computer equipment Furniture and equipment Geophysical equipment Field equipment 4 - 8 years straight-line 25% - 50% declining balance 20% declining balance 20% declining balance 30% declining balance 12 RADIUS GOLD INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the years ended December 31, 2022 and 2021 (Expressed in Canadian Dollars) 3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont’d) h) Right-of-Use Assets Right-of-use (“ROU”) assets are initially recorded at cost, which comprises the initial amount of the lease liability and any initial direct costs incurred less any lease payments made at or before the initial recognition date. ROU assets are depreciated on a straight-line basis over the estimated useful life of the asset if the Company expects to take ownership of the asset at the end of the lease term, or over the lease term if the Company does not expect to take ownership of the asset at the end of the lease term. The lease term includes periods covered by an option to extend if the Company’s intention is to exercise that option. ROU assets are periodically reduced by impairment losses, if any, and adjusted for re-measurements of the lease obligation. i) Earnings/Loss per Share Basic earnings/loss per share is calculated by dividing the net earnings loss available to common shareholders by the weighted average number of shares outstanding during the year. Diluted earnings per share reflects the potential dilution of securities that could share in earnings of the Company. For the year ended December 31, 2022, potentially dilutive common shares (relating to options outstanding at year-end) totaling 3,050,000 (2021: 5,870,000) were not included in the computation of earnings/loss per share, because their effect was anti-dilutive. As such, basic and diluted earnings and losses per share were the same for the periods presented. j) Income Taxes Income tax expense comprises current and deferred tax. Current and deferred tax are recognized in net loss/income except to the extent that it relates to a business combination or items recognized directly in equity or in other comprehensive loss/income. Current income taxes are recognized for the estimated income taxes payable or receivable on taxable income or loss for the current year and any adjustment to income taxes payable in respect of previous years. Current income taxes are determined using tax rates and tax laws that have been enacted or substantively enacted by the year-end date. Deferred tax assets and liabilities are recognized where the carrying amount of an asset or liability differs from its tax base, except for those taxable temporary differences arising on the initial recognition of goodwill or on the initial recognition of an asset or liability in a transaction which is not a business combination and at the time of the transaction affects neither accounting nor taxable profit or loss. Recognition of deferred tax assets for unused tax losses, tax credits and deductible temporary differences is restricted to those instances where it is probable that future taxable profit will be available against which the deferred tax asset can be utilized. At the end of each reporting year the Company reassesses unrecognized deferred tax assets. The Company recognizes a previously unrecognized deferred tax asset only to the extent that it has become probable that future taxable profit will allow the deferred tax asset to be recovered. k) Share Capital Equity instruments are contracts that give a residual interest in the net assets of the Company. Financial instruments issued by the Company are classified as equity only to the extent that they do not meet the definition of a financial liability or financial asset. The Company’s common shares, share warrants, and options are classified as equity instruments. Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from proceeds. Warrants issued by the Company typically accompany an issuance of shares in the Company (a “Unit”) and entitle the warrant holder to exercise the warrants for a stated price and a stated number of common shares in the Company. The fair value of the Unit’s components sold is measured using the residual value approach. The proceeds received are first allocated to common shares at the time the Units are priced, and any excess is allocated to warrants. 13 RADIUS GOLD INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the years ended December 31, 2022 and 2021 (Expressed in Canadian Dollars) 3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont’d) l) Share-based Payments Where equity-settled share options are awarded to employees, the fair value of the options at the date of grant is charged to profit or loss over the vesting period. Performance vesting conditions are taken into account by adjusting the number of equity instruments expected to vest at each reporting date so that, ultimately, the cumulative amount recognized over the vesting period is based on the number of options that eventually vest. As long as all other vesting conditions are satisfied, a charge is made irrespective of whether these vesting conditions are satisfied. The cumulative expense is not adjusted for failure to achieve a market vesting condition or where a non-vesting condition is not satisfied. Where terms and conditions of options are modified before they vest, the increase in the fair value of the options, measured immediately before and after the modification, is also charged to profit or loss over the remaining vesting period. Where equity instruments are granted to employees, they are recorded at the fair value of the equity instrument granted at the grant date. The grant date fair value is recognized in profit or loss over the vesting period, described as the period during which all the vesting conditions are to be satisfied. Where equity instruments are granted to non-employees, they are recorded at the fair value of the goods or services received in profit or loss. Options or warrants granted related to the issuance of shares are recorded as a reduction of share capital. When the value of goods or services received in exchange for the share-based payment cannot be reliably estimated, the fair value is measured by use of a valuation model or the fair value of the shares granted. All equity-settled share-based payments are reflected in other equity reserve, until exercised. Upon exercise, shares are issued from treasury and the amount reflected in other equity reserve is credited to share capital, adjusted for any consideration paid. Options that expire or are forfeited after vesting are not reclassified from other equity reserve to deficit. Where a grant of options is cancelled or settled during the vesting period, excluding forfeitures when vesting conditions are not satisfied, the Company immediately accounts for the cancellation as an acceleration of vesting and recognizes the amount that otherwise would have been recognized for services received over the remainder of the vesting period. Any payment made to the employee on the cancellation is accounted for as the repurchase of an equity interest except to the extent the payment exceeds the fair value of the equity instrument granted, measured at the repurchase date. Any such excess is recognized as an expense. m) Provisions Rehabilitation Provision The Company is subject to various government laws and regulations relating to environmental disturbances caused by exploration and evaluation activities. The Company records the present value of the estimated costs of legal and constructive obligations required to restore the exploration sites in the year in which the obligation is incurred. The nature of the rehabilitation activities may include restoration, reclamation and revegetation of the affected exploration sites. The rehabilitation provision generally arises when the environmental disturbance is subject to government laws and regulations. When the liability is recognized, the present value of the estimated costs is capitalized by increasing the carrying amount of the related exploration properties. Over time, the discounted liability is increased for the changes in present value based on current market discount rates and liability specific risks. As at December 31, 2022 and 2021, the Company had no significant asset retirement or rehabilitation obligations. Other Provisions Provisions are recognized where a legal or constructive obligation has been incurred as a result of past events, it is probable that an outflow of resources embodying economic benefit will be required to settle the obligation, and a reliable estimate of the amount of the obligation can be made. If material, provisions are measured at the present value of the expenditures expected to be required to settle the obligation. The increase in any provision due to passage of time is recognized as accretion expense. 14 RADIUS GOLD INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the years ended December 31, 2022 and 2021 (Expressed in Canadian Dollars) 3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont’d) n) Impairment of Non-Financial Assets Impairment tests on non-financial assets, including exploration and evaluation assets, are undertaken whenever events or changes in circumstances indicate that their carrying amount may not be recoverable. Where the carrying value of an asset exceeds its recoverable amount, which is the higher of value in use and fair value less costs of disposal, the asset is written down accordingly. Where it is not possible to estimate the recoverable amount of an individual asset, the impairment test is carried out on the asset’s cash-generating unit, which is the lowest group of assets in which the asset belongs for which there are separately identifiable cash inflows that are largely independent of the cash inflows from other assets. An impairment loss is charged to profit or loss, except to the extent they reverse gains previously recognized in other comprehensive loss/income. o) Financial Instruments Financial Assets The Company recognizes a financial asset when it becomes a party to the contractual provisions of the instrument. The Company classifies financial assets at initial recognition as financial assets: measured at amortized cost, measured at fair value through other comprehensive income, or measured at fair value through profit or loss. Financial assets measured at amortized cost A financial asset that meets both of the following conditions is classified as a financial asset measured at amortized cost. - The Company’s business model for such financial assets, is to hold the assets in order to collect contractual cash flows. - The contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the amount outstanding. A financial asset measured at amortized cost is initially recognized at fair value plus transaction costs directly attributable to the asset. After initial recognition, the carrying amount of the financial asset measured at amortized cost is determined using the effective interest method, net of impairment loss, if necessary. Financial assets measured at fair value through other comprehensive income (“FVTOCI”) A financial asset measured at fair value through other comprehensive income is recognized initially at fair value plus transaction costs directly attributable to the asset. After initial recognition, the asset is measured at fair value with changes in fair value included in other comprehensive income. Financial assets measured at fair value through profit or loss (“FVTPL”) A financial asset measured at fair value through profit or loss is recognized initially at fair value with any associated transaction costs being recognized in profit or loss when incurred. Subsequently, the financial asset is re-measured at fair value, and a gain or loss is recognized in profit or loss in the reporting period in which it arises. The Company derecognizes a financial asset if the contractual rights to the cash flows from the asset expire, or the Company transfers substantially all the risks and rewards of ownership of the financial asset. Any interests in transferred financial assets that are created or retained by the Company are recognized as a separate asset or liability. Gains and losses on derecognition are generally recognized in profit or loss. However, gains and losses on derecognition of financial assets classified as FVTOCI remain within accumulated other comprehensive income (loss). 15 RADIUS GOLD INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the years ended December 31, 2022 and 2021 (Expressed in Canadian Dollars) 3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont’d) o) Financial Instruments (cont’d) Financial Liabilities Financial liabilities are classified as amortized cost, based on the purpose for which the liability was incurred. These liabilities are initially recognized at fair value net of any transaction costs directly attributable to the issuance of the instrument and subsequently carried at amortized cost using the effective interest rate method. This ensures that any interest expense over the period to repayment is at a constant rate on the balance of the liability carried in the statement of financial position. Interest expense in this context includes initial transaction costs and premiums payable on redemptions, as well as any interest or coupon payable while the liability is outstanding. Accounts payables represent liabilities for goods and services provided to the Company prior to the end of the period which are unpaid. Accounts payable amounts are unsecured and are usually paid within forty-five days of recognition. The Company has made the following designations of its financial instruments: Cash and cash equivalents Equity investments Receivables Deposits Accounts payable and accrued liabilities Lease liability FVTPL FVTOCI Amortized cost Amortized cost Amortized cost Amortized cost p) Lease Liabilities The lease liability is measured at the present value of the expected lease payments over the lease term, discounted at the implicit rate in the lease; if the rate cannot be determined, the incremental borrowing rate of the asset or asset grouping is used. The lease liability is increased for the passage of time and payments on the lease are offset against the lease liability. The liability is subsequently re-measured when there is a change in the lease agreement, such as a change in future lease payments or if the Company decides to purchase, extend, or terminate the lease option. When the lease liability is re-measured, an adjustment is applied to the carrying value of the ROU asset. q) Standards, Amendments and Interpretations Not Yet Effective The Company has reviewed upcoming policies and determined that none are expected to have an impact on the Company’s consolidated financial statements. 4. CRITICAL ACCOUNTING ESTIMATES AND JUDGMENTS The Company makes estimates and assumptions about the future that affect the reported amounts of assets and liabilities. Estimates and judgments are continually evaluated based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. In the future, actual experience may differ from these estimates and assumptions. The effect of a change in an accounting estimate is recognized prospectively by including it in profit or loss in the period of the change, if the change affects that period only, or in the period of the change and future periods, if the change affects both. 16 RADIUS GOLD INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the years ended December 31, 2022 and 2021 (Expressed in Canadian Dollars) 4. CRITICAL ACCOUNTING ESTIMATES AND JUDGMENTS (cont’d) The key areas of judgment applied in the preparation of the consolidated financial statements that could result in a material adjustment to the carrying amounts of assets and liabilities are as follows: a) Where the Company holds a material shareholding in an investment and has the power to exercise significant influence through common officers and board members, such an investment is treated as an associate. The Company determined that as of December 22, 2022, it can no longer exercise significant influence over Rackla Metals Inc. (“Rackla”) and as such reclassified its investment in Rackla common shares as an equity investment (Notes 6 and 11). b) The functional currency for each of the Company’s subsidiaries is the currency of the primary economic environment in which the entity operates. Determination of the functional currency may involve certain judgments to determine the primary economic environment and the Company reconsiders functional currency of its entities if there is a change in events and conditions which determined the primary economic environment. c) The application of the Company’s accounting policy for exploration and evaluation assets and royalty interests requires judgment in determining whether it is likely that future economic benefits will flow to the Company. If, after exploration and evaluation assets are capitalized, information becomes available suggesting that the carrying amount of an exploration and evaluation asset may exceed its recoverable amount, the Company carries out an impairment test at the cash-generating unit or group of cash-generating units level in the year the new information becomes available. d) The determination of when receivables are impaired requires significant judgment as to their collectability. e) The Company applies judgment in determining whether a lease contract contains an identified asset, whether they have the right to control the asset, and the lease term. The lease term is based on considering facts and circumstances, both qualitative and quantitative, that can create an economic incentive to exercise renewal options. Management considers all facts and circumstances that create an economic incentive to exercise an extension option, or not to exercise a termination option. f) Although the Company has taken steps to identify any decommissioning liabilities related to mineral properties in which it has an interest, there may be unidentified decommissioning liabilities present. g) The assessment of the Company’s ability to continue as a going concern to pay for its operating expenditures and meet its liabilities for the subsequent year involves significant judgment based on historical experiences and other factors including expectation of future events that are believed to be reasonable under the circumstances. The key estimates applied in the preparation of the consolidated financial statements that could result in a material adjustment to the carrying amounts of assets and liabilities are as follows: a) The Company is subject to income tax in several jurisdictions and significant judgment is required in determining the provision for income taxes. During the ordinary course of business, there are transactions and calculations for which the ultimate tax determination is uncertain. As a result, the Company recognizes tax liabilities based on estimates of whether additional taxes and interest will be due. These tax liabilities are recognized when, despite the Company's belief that its tax return positions are supportable, the Company believes that certain positions are likely to be challenged and may not be fully sustained upon review by tax authorities. The Company believes that its accruals for tax liabilities are adequate for all open audit years based on its assessment of many factors including past experience and interpretations of tax law. This assessment relies on estimates and assumptions and may involve a series of complex judgments about future events. To the extent that the final tax outcome of these matters is different than the amounts recorded, such differences will impact income tax expense in the period in which such determination is made. In estimating the fair value of share-based payments, using the Black-Scholes option pricing model, management is required to make certain assumptions and estimates. Changes in assumptions used to estimate fair value could result in materially different results. b) c) The Company uses estimation in determining the incremental borrowing rate used to measure the lease liability. Where the rate implicit in the lease is not readily determinable, the discount rate of the lease obligations is estimated using a discount rate similar to the Company’s specific borrowing rate. 17 RADIUS GOLD INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the years ended December 31, 2022 and 2021 (Expressed in Canadian Dollars) 5. CASH AND CASH EQUIVALENTS Cash and cash equivalents are held for the purpose of meeting short-term cash commitments rather than for investment or other purposes. The Company does not hold any deposits with maturities of greater than three months from the date of acquisition. Cash at banks and cash equivalents consisting of money market funds earn interest at floating rates based on daily bank deposit rates. As at December 31, 2022 and 2021, cash and cash equivalents is comprised of the following: Cash Cash equivalents 6. EQUITY INVESTMENTS 2022 $ 823,705 596,409 $ 1,420,114 2021 $ 498,043 1,034,655 $ 1,532,698 As of December 31, 2022, and 2021, equity investments consisted of the following: Number of common shares held as at December 31: Coloured Ties Capital Inc. (“Coloured Ties”) Medgold Resources Corp. (“Medgold”) Metallum Resources Inc. (“Metallum”) Rackla (Note 11) Volcanic Gold Mines Inc. (“Volcanic”) Warrior Gold Inc. (“Warrior”) 2022 2021 - 10,126,500 - 3,973,275 830,412 - 107,200 10,126,500 20,000 - 830,412 233,781 Coloured Ties Medgold Metallum Rackla Volcanic Warrior Total Balance, December 31, 2020 Acquisition of shares Disposition of shares Net change in fair value recorded in other comprehensive loss Balance, December 31, 2021 Disposition of shares Reclassification from investment in associate (Note 11) Net change in fair value recorded in other comprehensive income $ 29,900 - (9,828) $ 506,325 $ 3,800 $ - - - (6,300) 17,984 38,056 (253,162) 253,163 (135,140) - - - 4,000 1,500 (267,500) - 1,350,914 - - - - - - $ 338,321 26,065 - $ 21,040 - - $ 899,386 26,065 (16,128) 67,428 (5,844) (169,594) 431,814 15,196 739,729 - - (50,000) (452,640) - 1,350,914 97,084 (202,530) 266,000 317,862 (282,340) 34,804 230,880 Balance, December 31, 2022 $ - $ 50,633 $ - $1,668,776 $ 149,474 $ - $ 1,868,883 Volcanic has one common director and Rackla has three common directors with the Company. All of the Company’s equity investment companies are publicly listed companies as of December 31, 2022 and 2021. During the year ended December 31, 2022, the Company’s holding of 3,973,275 Rackla shares was reclassified from an investment in associate to an equity investment (Note 11). The fair value of the 3,973,275 Rackla shares at the time of reclassification was $1,350,914. 18 RADIUS GOLD INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the years ended December 31, 2022 and 2021 (Expressed in Canadian Dollars) 6. EQUITY INVESTMENTS (cont’d) During the year ended December 31, 2022, the Company completed the following transactions: i) Sold 20,000 common shares of Metallum for net proceeds of $1,575 and recorded a loss of $265,925 on the sale in other comprehensive income. ii) Sold 233,781 common shares of Warrior for net proceeds of $15,936 and recorded a loss of $34,064 on the sale in other comprehensive income. iii) Sold 107,200 common shares of Coloured Ties for net proceeds of $33,664 and recorded a loss of $101,476 on the sale in other comprehensive income. During the year ended December 31, 2021, the Company completed the following transactions: Purchased in the open market 61,500 common shares of Volcanic at a cost of $26,065. i) ii) Sold 18,000 common shares of Metallum for net proceeds of $1,495 and recorded a loss of $4,805 on the sale in other comprehensive income. iii) Sold 7,800 common shares of Coloured Ties for net proceeds of $3,775 and recorded a loss of $6,053 on the sale in other comprehensive income. 7. DERIVATIVE INVESTMENTS As of December 31, 2022, and 2021, derivative investments consisted of the following: Number of share purchase warrants held as at December 31: Metallum Volcanic 2022 - - 2021 68,568 160,714 During the year ended December 31, 2021, Metallum completed a share consolidation so that every ten existing common shares were exchanged for one new common share of Metallum. As a result, a total of 685,675 warrants of Metallum held by the Company at the time of consolidation were converted into 68,568 warrants. Balance, December 31, 2020 Net change in fair value recorded in net loss Metallum Volcanic Total $ 1,365 (1,365) $ 2,224 (2,224) $ 3,589 (3,589) Balance, December 31, 2021 and 2022 $ - $ - $ - During the year ended December 31, 2022, all share purchase warrants held by the Company in Metallum and Volcanic expired unexercised. The share purchase warrants for Metallum and Volcanic were not tradable on an exchange. The fair value of the derivative investments as of December 31, 2021 was determined using the Black-Scholes option pricing model with the following inputs: Metallum Volcanic Volatility factor Risk-free interest rate 84% 113% 0.18% 0.18% Expected life (years) Expected dividend yield 0.22 0.18 0% 0% 19 RADIUS GOLD INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the years ended December 31, 2022 and 2021 (Expressed in Canadian Dollars) 8. RECEIVABLES Royalty receivable Provision for impairment (Note 12 – Guatemala Tambor Project) Royalty revenue receivable, net Sales taxes Other receivables (Note 17) December 31, 2022 December 31, 2021 $ 784,180 (784,180) - 58,495 21,688 $ 784,180 (784,180) - 14,277 17,607 $ 80,183 $ 31,884 The provision for impairment of the royalty receivable was included in profit or loss during the 2016 fiscal year. Uncollectable amounts included in the provision are written off against the provision when there is no expectation of recovery. The royalty revenue receivable remains uncollected as of December 31, 2022 as the Company has allowed Kappes, Cassiday & Associates (“KCA”) to defer payment of the balance while KCA continues a legal strategy to overturn the suspension of operations of its mine-site and seek compensation from the Guatemalan authorities (Note 12). 9. PROPERTY AND EQUIPMENT Trucks Computer equipment Furniture and equipment Geophysical equipment Field equipment Total $ 253,095 - (215,638) 37,457 - - $ 37,457 $ 246,665 6,430 (215,638) 37,457 - - $ 37,457 $ 252,728 4,416 - 257,144 669 (252,068) $ 5,745 $ 62,656 - (7,343) 55,313 - - $ 55,313 $ 249,065 4,055 - 253,120 1,330 (252,068) $ 2,382 $ 58,171 4,485 (7,343) 55,313 - - $ 55,313 $ 84,882 - - 84,882 - (28,278) $ 56,604 $ 79,246 1,127 - 80,373 902 (28,278) $ 52,997 $ 4,665 - - 4,665 - - $ 4,665 $ 3,135 1,530 - 4,665 - - $ 4,665 $ 658,026 4,416 (222,981) 439,461 669 (280,346) $ 159,784 $ 636,282 17,627 (222,981) 430,928 2,232 (280,346) $ 152,814 Cost Balance, December 31, 2020 Additions Disposals Balance, December 31, 2021 Additions Disposals Balance, December 31, 2022 Accumulated amortization Balance, December 31, 2020 Charge for year Disposals Balance, December 31, 2021 Charge for year Disposals Balance, December 31, 2022 Carrying amounts At December 31, 2021 $ - $ 4,024 $ - $ 4,509 $ - $ 8,533 At December 31, 2022 $ - $ 3,363 $ - $ 3,607 $ - $ 6,970 During the year ended December 31, 2022, the Company disposed of a fully amortized vehicle for proceeds of $12,440 and recorded a gain on disposal of $12,440. 20 RADIUS GOLD INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the years ended December 31, 2022 and 2021 (Expressed in Canadian Dollars) 10. RIGHT-OF-USE ASSET AND LEASE LIABILITY The Company has a lease agreement for its headquarter office space in Vancouver, British Columbia. The continuity of the ROU asset and lease liability for the years ended December 31, 2022 and 2021 is as follows: Right-of-use asset Value of right-of-use asset recognized as at December 31, 2020 Depreciation Value of right-of-use asset as at December 31, 2021 Depreciation $ 242,031 (60,467) 181,564 (60,467) Value of right-of-use asset as at December 31, 2022 $ 121,097 Lease liability Lease liability recognized as of December 31, 2020 Lease payments Lease interest Lease liability recognized as of December 31, 2021 Lease payments Lease interest Lease liability recognized as of December 31, 2022 Lease liability Current portion Long-term portion $ 275,487 (80,501) 23,905 218,891 (82,418) 18,158 $ 154,631 $ 72,689 81,942 $ 154,631 11. INVESTMENT IN ASSOCIATE Rackla As at December 31, 2022, the Company held 3,973,275 (2021: 3,973,275) common shares of Rackla, representing 6.8% (2021: 11.4%) of Rackla’s outstanding common shares. Rackla previously met the definition of an associate and was equity accounted for in the consolidated financial statements. During the year ended December 31, 2022, Rackla no longer met the definition of an associate when its interest in Rackla was further diluted to a level significantly below 20% on December 22, 2022 when Rackla issued 12,615,000 common shares by way of private placements to different parties. Therefore, the Company’s investment in Rackla was reclassified as an equity investment. Upon discontinuing the use of the equity method, an investment, if a financial asset, is to be measured at fair value and the difference between the fair value and the carrying value of the investment recognized in profit or loss. The fair value of the investment in Rackla at the time of reclassification was $1,350,914 and its carrying cost was $1. As a result, a gain of $1,350,913 was recognized in the consolidated statement of income for the year ended December 31, 2022. The following table shows the continuity of the Company’s investment in Rackla for the years ended December 31, 2022 and 2021: Balance, December 31, 2020 and 2021 Reclassification as equity investment Balance, December 31, 2022 $ 1 (1) $ - 21 RADIUS GOLD INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the years ended December 31, 2022 and 2021 (Expressed in Canadian Dollars) 11. INVESTMENT IN ASSOCIATE (cont’d) Rackla (cont’d) Prior to the 2015 fiscal year, the Company’s share of losses in Rackla exceeded the carrying value of its interest and therefore the Company discontinued recognizing its share of further losses. The cumulative unrecognized share of losses for the associate as at December 22, 2022 was $859,282 (2021: $715,782). The financial statement balances of Rackla are as follows: Total current assets Total assets Total liabilities Net loss December 31, 2022 December 31, 2021 $ 4,442,533 $ 4,662,131 $ 1,253,257 $ 35,036 $ 1,319,441 $ 294,671 $ 1,678,387 $ 221,818 12. MINERAL PROPERTY AND ROYALTY INTERESTS Acquisition costs Balance, December 31, 2020 Additions – cash Acquisition costs recovered Write-off acquisition costs Balance, December 31, 2021 Additions – cash Acquisition costs recovered Balance, December 31, 2022 Mexico United States $ 117,816 - - (117,816) - - - $ - $ 33,332 249,512 (156,178) - 126,666 940,682 (1,029,947) $ 37,401 Guatemala $ 1 - - - 1 - - $ 1 Total $ 151,149 249,512 (156,178) (117,816) 126,667 940,682 (1,029,947) $ 37,402 Mexico i) Amalia Project (including the Palmillas Property) In 2017, the Company signed a binding agreement with a private individual to option the Amalia Project in the State of Chihuahua, Mexico. The Company earned a 100% interest in the Amalia Project by making staged payments over a period of five years totaling US$850,000 cash (of which the final amount of US$600,000 ($742,929) was paid during the year ended December 31, 2022) and issuing US$15,000 in shares of the Company prior to the 2021 fiscal year. In 2018, the Company entered into an option agreement with Pan American Silver Corp. (“Pan American”) whereby Pan American earned an initial 65% interest in the Amalia Project and the Palmillas Property (described below) by making cash payments to the Company totaling US$1.5 million and expending US$2.0 million on exploration over four years. Pan American may earn an additional 10% by advancing the property to a preliminary feasibility stage. The final option payment of $859,523 (US$700,000) received during the current year was recorded as a gain from mineral property option agreements (2021: $488,705). During the year ended December 31, 2022, the Company received $742,929 (US$600,000) from Pan American to reimburse the Company for an Amalia option payment made to the Amalia property owner. 22 RADIUS GOLD INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the years ended December 31, 2022 and 2021 (Expressed in Canadian Dollars) 12. MINERAL PROPERTY AND ROYALTY INTERESTS (cont’d) Mexico (cont’d) i) Amalia Project (including the Palmillas Property) (cont’d) In November 2019, the Company signed a binding agreement with a private family to option the Palmillas Property that adjoins the Amalia Project in the State of Chihuahua, Mexico. The Company can earn a 100% interest in the Palmillas Property by completing staged payments over a period of five years totaling US$350,000, of which the final payment is US$200,000 at the end of five years. As of December 31, 2022, cash payments totaling $103,772 (US$80,000) have been paid, of which $45,910 (US$35,000) was paid during the year ended December 31, 2022. If the Company exercises the option, the owners will retain a 1% NSR royalty. Pursuant to the Company’s option agreement with Pan American on the Amalia Project, Pan American elected during the 2020 fiscal year to pay the Company’s acquisition costs of the Palmillas Property and add the property to the Amalia Project. During the year ended December 31, 2022, the Company received $45,910 (US$35,000) from Pan American to reimburse the Company for Palmillas option payments made to the Palmillas Property owners. ii) Plata Verde Project During the 2020 fiscal year, the Company entered into option agreements with local concession holders to acquire the Plata Verde Project which consists of the Don Benja and Don Jose concessions located in the State of Chihuahua, Mexico. The Company can earn a 100% interest in the Don Benja concession by making staged payments to the concession owner totaling US$801,000 over four years, of which the final payment is US$400,000 at the end of the fourth year. As of December 31, 2022, the Company has made payments totaling $196,735 (US$151,000), of which $119,596 (US$90,000) was paid during the year ended December 31, 2022. If the Company exercises the option, the concession holder will retain a 1% NSR royalty which the Company can buy back for US$1,000,000. The Company can earn a 100% interest in the Don Jose concession by making staged payments to the concession owner totaling US$500,000 over four years, of which the final payment is US$185,000 at the end of the fourth year. As of December 31, 2022, the Company has made payments totaling $44,373 (US$33,000), of which $32,247 (US$24,000) was paid during the year ended December 31, 2022. If the Company exercises the option, the concession holder will retain a 1% NSR royalty which the Company can buy back for US$600,000. During the year ended December 31, 2022, the Company entered into an exclusivity agreement with Fresnillo plc (“Fresnillo”) whereby Fresnillo had the exclusive right until April 7, 2023 to negotiate with the Company the terms of an option to earn a 70% interest in the Plata Verde Project. Subsequent to December 31, 2022, the exclusivity period was extended to July 7, 2023. Pursuant to this agreement, Fresnillo is to make payments totaling US$332,000 to the Company as follows: i) US$100,000 upon signing the exclusivity agreement; ii) US$65,000 to reimburse underlying property option payments; iii) US$103,600 to clear historic back taxes and return the property to full legal compliance; and iv) US$63,400 for property taxes and investment costs at the project. Of the payments set out above, as of December 31, 2022, the Company received a total of $429,828 (US$324,000), of which $241,108 was recorded as a recovery against accumulated capitalized mineral property costs for the Plata Verde Project, $157,530 was recorded as a cost recovery against exploration expenditures, $34,575 was recorded as a gain from mineral property option agreements, and $3,385 recorded as a foreign exchange loss for the year ended December 31, 2022. The final payment of US$8,000 were received by the Company subsequent to the year end. 23 RADIUS GOLD INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the years ended December 31, 2022 and 2021 (Expressed in Canadian Dollars) 12. MINERAL PROPERTY AND ROYALTY INTERESTS (cont’d) Mexico (cont’d) iii) Tropico Project Subsequent to December 31, 2022, the Company entered into an option agreement with local property owners to acquire the Tropico Project located within the Fresnillo mining district in the State of Zacatecas, Mexico. The Company has the option to earn a 100% interest in the Tropico Project by making a US$200,000 payment upon signing of the agreement (paid subsequent to December 31, 2022), further payments totaling US$200,000 that can be paid in six monthly instalments over a period of 42 months, starting with US$25,000 at month 12 in order to maintain the option, and a payment of US$5,000,000 at month 48. An additional milestone payment of US$5,000,000 is conditional on the Company delivering a compliant feasibility study or at the start of mine construction. A further US$3,000,000 is to be paid if reserves exceed two million gold equivalent (Au + Ag) ounces. If the Company exercises the option but does not complete payment of the US$5,000,000 milestone within eight years of signing of the option agreement, the property will return 100% to the original owners. iv) Maricela Project During the 2021 fiscal year, the Company entered into an option agreement to acquire the Maricela group of properties located in the State of Sonora that covers several mineral concessions. The Company can earn a 100% interest in the Maricela Project by making staged payments to the property owner totaling US$1,250,000 over three years with a final payment of US$1,060,000 due at the end of year three. A total of US$30,000 ($37,401) was paid and recorded as an acquisition cost during the 2021 fiscal year. If the Company exercises the option, the property owner will retain a 1% NSR royalty which the Company can purchase back for US$1,000,000. v) Rambler Project During the 2019 fiscal year, the Company staked a property called the Rambler Project, located in the State of Chihuahua. vi) Lithium Brine Project The Company holds a mineral concession application for a lithium brine project located in the State of Coahuila, Mexico. Guatemala i) Southeast Guatemala Ag-Au Epithermal Fields (formerly called Banderas) The Company’s 100% owned land holdings in southeast Guatemala as at December 31, 2022 consist of 44 concessions (one granted exploration licence, forty exploration applications, two exploitation applications, and one reconnaissance application) filed with the Guatemala Ministry of Energy and Mines. The two exploitation applications were filed in order to convert one previously granted exploration licence to exploitation; until the exploitation licences are granted, the granted exploration licence remains in place. In May 2020, the Company signed an agreement whereby it granted to Volcanic the exclusive option (the “Option”) to acquire a 60% interest in the Company’s granted exploration licence (known as the Holly and Banderas gold- silver properties) (the “Properties”). Volcanic may exercise the Option by raising a minimum $3.0 million financing (completed in 2020) and spending US$7.0 million on exploration of the Properties within 48 months from the date drilling permits for the Properties are granted (granted in March 2021). An initial US$1.0 million had to be spent on exploration within 12 months of receiving the required drill permits (incurred), including a minimum 3,000 metres of drilling (completed). Volcanic was also required to make a cash payment to the Company of $100,000 which was received during the 2020 fiscal year. Upon exercise of the Option, Volcanic will enter into a standard 60/40 joint venture with the Company in order to further develop the Properties. The Company also granted to Volcanic the exclusive right until September 1, 2022 to evaluate the Company’s other land holdings in Guatemala and to enter into an agreement to acquire an interest in any of such other properties on reasonable mutually agreed upon terms. Pursuant to an amending agreement dated November 21, 2022, the Company has agreed to extend this right until September 1, 2023. 24 RADIUS GOLD INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the years ended December 31, 2022 and 2021 (Expressed in Canadian Dollars) 12. MINERAL PROPERTY AND ROYALTY INTERESTS (cont’d) Guatemala (cont’d) ii) Tambor Project Royalty In 2012, the Company sold its interest in its subsidiary, Exploraciones Mineras de Guatemala S.A., which holds the Tambor gold project, to KCA, giving KCA a 100% interest in the project. KCA agreed to make royalty payments to the Company, upon commercial production, based on the then price of gold and the number of ounces produced from the property. Commercial production commenced in December 2014. In May 2016, KCA informed the Company that mining operations were suspended by the Supreme Court of Guatemala due to a lack of consultation by the Guatemalan Ministry of Mines with local indigenous people when the mine was permitted in 2011. To date, the Supreme Court has not made a decision on when the mine may re-open. There was no royalty income recognized for the years ended December 31, 2022 and 2021. As at December 31, 2022, all gold sales subject to the Company’s royalty had been final settled and the balance that remained unpaid to the Company was $784,180. Due to the uncertainty as to when the mine may re-open and when the amount owing by KCA to the Company will be paid, a provision of $784,180 against the receivable amount was charged to operations in 2016. USA Bald Peak Property In 2017, the Company acquired a 100% interest in the Bald Peak gold property from Nevada Select Royalty, Inc. (“Nevada Select”) in consideration of a cash payment to Nevada Select of $46,032 (US$35,115), the granting to Nevada Select and/or a former property owner of a total 3% NSR royalty and making annual advance royalty payments to Nevada Select of US$25,000. The advance royalty payments were to become payable on the date the Company received a drill permit for the property and on each annual anniversary thereof so long as the Company held title to the property. The Company had the right to reduce either royalty by 1% by paying US$1.0 million to Nevada Select, and/or US$500,000 to the former owner. In 2017, the Company staked an additional 113 unpatented mining claims at a cost of $71,784, increasing the land position of the Bald Peak Property to 140 unpatented mining claims in Mineral County, Nevada and eleven unpatented mining claims and one mineral prospecting licence in Mono County, California. During the 2020 fiscal year, the Company allowed a portion of the staked Mineral County claims to lapse, reducing the unpatented mining claims in Nevada from 140 to 50. During the 2021 fiscal year, the Company decided not to renew all claims comprising the Bald Peak Property, and as a result, the Company wrote off acquisition costs totaling $117,816 during the 2021 fiscal year. 13. COMMITMENTS The Company has entered into an operating lease agreement for its office premises. The Company also rents space to other companies related by common directors and officers on a month-to-month basis, the amounts of which are netted against rental expense; however, there are no commitments from these companies and thus the amounts presented below are the gross commitments. The annual commitments under the lease are as follows: 2023 2024 $ 131,952 133,869 $ 265,821 For the year ended December 31, 2022, the Company received a total of $99,875 (2021: $96,255) from those companies which share office space with the Company. 25 RADIUS GOLD INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the years ended December 31, 2022 and 2021 (Expressed in Canadian Dollars) 14. SHARE CAPITAL AND RESERVES Common Shares The Company is authorized to issue an unlimited number of common shares without par value. During the year ended December 31, 2022, a total of 25,000 stock options were exercised for proceeds of $3,750. The Company reallocated the fair value of these options previously recorded in the amount of $1,930 from other equity reserve to share capital. During the year ended December 31, 2021, a total of 125,000 stock options were exercised for proceeds of $18,750. The Company reallocated the fair value of these options previously recorded in the amount of $10,213 from other equity reserve to share capital. 15. SHARE-BASED PAYMENTS a) Option Plan Details The Company has a formal stock option plan in accordance with the policies of the TSX Venture Exchange (“TSX-V”) under which it is authorized to grant options up to 10% of its outstanding shares to officers, directors, employees, and consultants. The exercise price of each option is not less than the closing market price of the Company’s stock on the trading day prior to the date of grant. Options granted to investor relations personnel vest in accordance with TSX-V regulations. The options are for a maximum term of ten years. The following is a summary of changes in options for the year ended December 31, 2022: During the year Grant date Expiry date Dec 13, 2012 Dec 12, 2022 Oct 19, 2016 Oct 18, 2026 May 22, 2018 May 21, 2028 Nov 5, 2018 Nov 4, 2028 Oct 8, 2019 Oct 7, 2029 Mar 16, 2020 Mar 15, 2030 Dec 9, 2020 Dec 8, 2030 Feb 11, 2021 Feb 10, 2031 Mar 4, 2021 Mar 3, 2031 Oct 26, 2021 Oct 25, 2031 Exercise price $0.20 $0.15 $0.15 $0.15 $0.25 $0.15 $0.27 $0.34 $0.24 $0.34 Opening balance 1,495,000 1,230,000 1,490,000 75,000 850,000 280,000 50,000 50,000 50,000 300,000 5,870,000 Weighted average exercise price $0.19 Granted Exercised Expired / forfeited (1,495,000) - - - - - - - - - Closing balance Vested and exercisable - - 1,230,000 1,230,000 1,465,000 1,465,000 75,000 850,000 280,000 50,000 50,000 50,000 75,000 850,000 280,000 50,000 50,000 50,000 300,000 300,000 - - (25,000) - - - - - - - (25,000) (1,495,000) 4,350,000 4,350,000 $0.15 $0.20 $0.19 $0.19 - - - - - - - - - - - - The weighted average stock price on the date of exercise for options exercised during the year ended December 31, 2022 was $0.15 per share (2021: $0.30). 26 RADIUS GOLD INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the years ended December 31, 2022 and 2021 (Expressed in Canadian Dollars) 15. SHARE-BASED PAYMENTS (cont’d) a) Option Plan Details (cont’d) The following is a summary of changes in options for the year ended December 31, 2021: During the year Granted Exercised Cancelled / expired Closing balance Vested and exercisable Grant date Expiry date Dec 13, 2012 Dec 12, 2022 Oct 19, 2016 Oct 18, 2026 May 22, 2018 May 21, 2028 Nov 5, 2018 Nov 4, 2028 Oct 8, 2019 Oct 7, 2029 Mar 16, 2020 Mar 15, 2030 Dec 9, 2020 Dec 8, 2030 Feb 11, 2021 Feb 10, 2031 Mar 4, 2021 Mar 3, 2031 Oct 26, 2021 Oct 25, 2031 Exercise price $0.20 $0.15 $0.15 $0.15 $0.25 $0.15 $0.27 $0.34 $0.24 $0.34 Opening balance 1,495,000 1,230,000 1,490,000 200,000 850,000 280,000 50,000 - - - - - - - - - - (125,000) - - - - - - - - - 50,000 50,000 300,000 Weighted average exercise price $0.18 $0.33 $0.15 5,595,000 400,000 (125,000) b) Fair Value of Options Granted During the Year - - - - - - - - - - - - 1,495,000 1,230,000 1,490,000 1,495,000 1,230,000 1,490,000 75,000 850,000 280,000 50,000 50,000 50,000 75,000 850,000 280,000 50,000 50,000 50,000 300,000 300,000 5,870,000 5,870,000 $0.19 $0.19 There were no options granted during the year ended December 31, 2022. The weighted average fair value at grant date of options granted during the year ended December 31, 2021 was $0.25 per option. The weighted average remaining contractual life of the options outstanding at December 31, 2022 is 5.67 years (2021: 5.21 years). Options Issued to Employees The fair value at grant date is determined using a Black-Scholes option pricing model that takes into account the exercise price, the term of the option, the impact of dilution, the share price at grant date, the expected price volatility of the underlying share, the expected dividend yield, and the risk-free interest rate for the term of the option. Options Issued to Non-Employees Options issued to non-employees are measured based on the fair value of the goods or services received, at the date of receiving those goods or services. If the fair value of the goods or services received cannot be estimated reliably, the options are measured by determining the fair value of the options granted using the Black-Scholes option pricing model. The model inputs for options granted during the year ended December 31, 2021 included: Grant date Expiry date Feb 11, 2021 Feb 10, 2031 Mar 4, 2021 Mar 3, 2031 Oct 26, 2021 Oct 25, 2031 Share price at grant date $0.35 $0.23 $0.33 Exercise price $0.34 $0.24 $0.34 Risk-free interest rate Expected life Volatility factor Dividend yield 1.04% 10 years 1.54% 10 years 1.68% 10 years 81% 81% 78% 0% 0% 0% 27 RADIUS GOLD INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the years ended December 31, 2022 and 2021 (Expressed in Canadian Dollars) 15. SHARE-BASED PAYMENTS (cont’d) b) Fair Value of Options Granted During the Year (cont’d) The expected volatility is based on the historical volatility (based on the remaining contractual life of the options), adjusted for any expected changes to future volatility due to publicly available information. The risk-free rate of return is the yield on a zero-coupon Canadian Treasury Bill of a term consistent with the assumed option life. The expected average option term is the average expected period to exercise, based on the historical activity patterns for each individually vesting tranche. Option pricing models require the input of highly subjective assumptions, including the expected price volatility. Changes in these assumptions can materially affect the fair value estimate and, therefore, the existing models do not necessarily provide a reliable single measure of the fair value of the Company’s stock options. c) Expenses Arising from Share-based Payment Transactions Total expenses arising from the share-based payment transactions recognized during the year ended December 31, 2022 as part of share-based compensation expense were $46,875 (2021: $174,845) (Note 17). 16. INCOME TAXES Taxation in the Company and its subsidiaries’ operational jurisdictions is calculated at the rates prevailing in the respective jurisdictions. The difference between tax expense for the year and the expected income taxes based on the statutory tax rate arises as follows: Loss before income taxes Tax recovery based on the Canadian statutory rate of 27% Items not deductible for tax purposes Different tax rates in other jurisdictions Under provided in prior years Changes in unrecognized deferred tax assets December 31, 2022 December 31, 2021 $ (892,648) $ 1,076,154 291,000 (577,000) 18,000 237,000 92,000 (241,000) 92,000 (16,000) 236,000 (71,000) Total income tax expense (recovery) $ 61,000 $ - The Company incurred income tax expense of $61,254 (2021: $nil) during the year, which is included in exploration expenditures in the consolidated statements of income (loss) and comprehensive income (loss). The tax rates represent the federal statutory rate applicable for the 2022 taxation year, 0% for Cayman Islands, 27% for the United States, 30.0% for Mexico, and 25.0% for Guatemala. No deferred tax asset has been recognized in respect of the following losses and temporary differences as it is not considered probable that sufficient future taxable profit will allow the deferred tax asset to be recovered: Loss carry forwards Property and equipment Lease liability Mineral properties Available-for-sale investments Investment in Associates Other deductible temporary differences Unrecognized tax assets $ $ December 31, 2022 December 31, 2021 2,155,000 34,000 59,000 2,085,000 405,000 492,000 663,000 (5,893,000) 2,526,000 49,000 42,000 2,124,000 873,000 - 663,000 (6,277,000) $ - $ - 28 RADIUS GOLD INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the years ended December 31, 2022 and 2021 (Expressed in Canadian Dollars) 16. INCOME TAXES (cont’d) As at December 31, 2022, the Company has estimated non-capital losses of $8,633,000 (2021: $7,564,000) for Canadian income tax purposes and $650,000 (2021: $376,000) for Mexico income tax purposes that may be carried forward to reduce taxable income derived in future years. Non-capital Canadian tax losses expire in various amounts from 2026 to 2042. Non-capital Mexico tax losses expire in various amounts until 2032. 17. RELATED PARTY TRANSACTIONS The Company had transactions during the years ended December 31, 2022 and 2021 with related parties who consisted of directors, officers, and the following companies with common directors: Related Party Mill Street Services Ltd. (“Mill Street”) Gold Group Management Inc. (“Gold Group”) Volcanic Rackla Nature of Transactions Management fees Shared general and administrative expenses Investment and exploration support Investment and exploration support In addition to related party transactions disclosed elsewhere in the consolidated financial statements, the Company incurred the following expenditures charged by non-key management officers and companies which have common directors with the Company in the years ended December 31, 2022 and 2021: General and administrative expenses: Salaries and benefits Exploration expenditures: Salaries and benefits 2022 2021 $ 12,720 $ 16,400 17,224 - $ 29,944 $ 16,400 The Company reimburses Gold Group, a company controlled by Simon Ridgway, a Director of the Company, for shared administrative costs and other business-related expenses paid by Gold Group on behalf of the Company. During the years ended December 31, 2022 and 2021, the Company reimbursed Gold Group the following: General and administrative expenses: Office and miscellaneous Shareholder communications Salaries and benefits Transfer agent and regulatory fees Travel and accommodation 2022 2021 $ 37,743 14,238 144,496 3,169 11,514 $ 33,311 19,859 98,297 4,402 5,091 $ 211,160 $ 160,960 Exploration expenditures $ 670 $ 868 Gold Group salaries and benefits costs for the year ended December 31, 2022 include those for the Chief Financial Officer, Vice President Corporate Development, and Corporate Secretary (2021: include those for the Chief Financial Officer and the Corporate Secretary). 29 RADIUS GOLD INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the years ended December 31, 2022 and 2021 (Expressed in Canadian Dollars) 17. RELATED PARTY TRANSACTIONS (cont’d) During the year ended December 31, 2022, the Company charged $4,795 (2021: $32,095) to Volcanic, a company which has a common director with the Company, for shared exploration personnel costs. During the 2021 fiscal year, the Company sold its field equipment and supplies located in Guatemala to Volcanic for $50,000 and recorded a gain on disposal of equipment for this amount. During the year ended December 31, 2022, the Company charged $27,832 (2021: $821) to Rackla, a company which has three common directors with the Company, for shared exploration personnel costs. Receivables include an amount of $7,007 (2021: $Nil) owed from Rackla, $Nil (2021: $2,500) owed from Volcanic, and $Nil (2021: $15,106) owed from Gold Group. Prepaid expenses and deposits include an amount of $5,850 (2021: $10,530) paid to Gold Group for shared office and administrative services. Long-term deposits include an amount of $60,000 (2021: $60,000) paid to Gold Group as a deposit on the shared office and administrative services agreement. Accounts payable and accrued liabilities include $17,927 (2021: $Nil) payable to Gold Group for shared administrative costs, $571 (2021: $Nil) to Bruce Smith, the President and Chief Executive Officer of the Company, for expense reimbursement, and $9,556 (2021: $Nil) payable to Volcanic for shared exploration costs. Key management compensation Key management personnel are persons responsible for planning, directing, and controlling the activities of an entity, and include certain directors and officers. Key management compensation comprises: Geological fees included in exploration expenditures Management fees Salaries and benefits* Share-based payments – fair value of shares to be issued *Included in reimbursements to Gold Group 2022 2021 $ 156,000 66,000 32,610 46,875 $ 156,000 66,000 27,409 73,750 $ 301,485 $ 323,159 Key management compensation includes management and geological fees paid to Mill Street, a company controlled by Simon Ridgway, a Director of the Company. As at December 31, 2022, the Company has an obligation to issue 500,000 common shares to the Chief Executive Officer of the Company per the terms of a shares for services agreement dated January 1, 2021. A share-based compensation expense of $46,875 was recorded during the year ended December 31, 2022 for the fair value of the shares to be issued during that period (2021: $73,750). 30 RADIUS GOLD INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the years ended December 31, 2022 and 2021 (Expressed in Canadian Dollars) 18. SEGMENTED INFORMATION Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker, or decision-making group, in deciding how to allocate resources and in assessing performance. All of the Company’s operations are within the mining sector relating to mineral exploration. Due to the geographic and political diversity, the Company’s exploration operations are decentralized whereby exploration managers are responsible for business results and regional corporate offices provide support to the exploration programs in addressing local and regional issues. The Company’s operations are therefore segmented on a district basis. The Company’s assets were located in Canada, Guatemala, Mexico, and Cayman Islands and formerly the USA. Details of identifiable assets by geographic segments are as follows: Year ended December 31, 2022 Exploration expenditures Canada Guatemala Mexico Other Consolidated $ - $ 81,466 $ 545,091 $ 105,583 $ 732,140 Gain on reclassification as equity investment 1,350,913 Gain from mineral property option agreements Investment income Amortization Depreciation on right-of-use asset Interest expense on lease liability Net income (loss) Capital expenditures* - 9,954 2,078 60,467 18,158 - - - - - - - 894,097 - 154 - - - - - - - - 1,350,913 894,097 9,954 2,232 60,467 18,158 929,891 (81,466) - - 342,675 941,351 (114,946) 1,076,154 - 941,351 Year ended December 31, 2021 Canada USA Guatemala Mexico Other Consolidated Exploration expenditures $ - $ 12,099 $ 62,183 $ 581,591 $ 34,385 $ 690,258 Mineral property acquisition costs written off Gain from mineral property option agreements Investment income Amortization Depreciation on right-of-use asset Interest expense on lease liability Net income (loss) Capital expenditures* - - 3,048 11,019 60,467 23,905 117,816 - - - - - - - - - - - - 488,705 - 6,608 - - - - - - - - 117,816 488,705 3,048 17,627 60,467 23,905 (667,843) (19,382) (49,219) (115,686) (40,518) (892,648) 4,416 - - 249,512 - 253,928 *Capital expenditures consist of additions of property and equipment and exploration and evaluation assets As at December 31, 2022 Total current assets Total non-current assets Total assets Total liabilities As at December 31, 2021 Total current assets Total non-current assets Total assets Total liabilities Canada Guatemala Mexico Other Consolidated $ 3,219,772 $ 23,775 $ 170,723 $ 8,377 $ 3,422,647 250,545 1 38,021 - 288,567 $ 3,470,317 $ 23,776 $ 208,744 $ 8,377 $ 3,711,214 $ 251,924 $ 1,376 $ 1,390 $ - $ 254,690 Canada Guatemala Mexico Other Consolidated $ 2,173,862 $ 38,224 $ 143,323 $ 8,281 $ 2,363,690 313,092 - 126,771 - 439,863 $ 2,486,954 $ 38,224 $ 270,094 $ 8,281 $ 2,803,553 $ 300,158 $ 1,623 $ 1,442 $ - $ 303,223 31 RADIUS GOLD INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the years ended December 31, 2022 and 2021 (Expressed in Canadian Dollars) 19. FINANCIAL INSTRUMENTS AND RISK MANAGEMENT The Company is exposed to the following financial risks:  Market Risk Credit Risk  Liquidity Risk  In common with all other businesses, the Company is exposed to risks that arise from its use of financial instruments. This note describes the Company’s objectives, policies, and processes for managing those risks and the methods used to measure them. Further quantitative information in respect of these risks is presented throughout these consolidated financial statements. General Objectives, Policies and Processes The Board of Directors has overall responsibility for the determination of the Company’s risk management objectives and policies and, whilst retaining ultimate responsibility for them, it has delegated the authority for designing and operating processes that ensure the effective implementation of the objectives and policies to the Company’s finance function. The Board of Directors receive periodic reports through which it reviews the effectiveness of the processes put in place and the appropriateness of the objectives and policies it sets. The overall objective of the Board is to set policies that seek to reduce risk as far as possible without unduly affecting the Company’s competitiveness and flexibility. Further details regarding these policies are set out below. a) Market Risk Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices. Market prices are comprised of three types of risk: foreign currency risk, interest rate risk, and equity price risk. Foreign Currency Risk Foreign currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates. The Company is exposed to fluctuations in foreign currencies through its operations in foreign countries. The Company monitors this exposure but has no hedge positions. As at December 31, 2022 and 2021, the Company is exposed to currency risk through the following financial assets and liabilities denominated in currencies other than the Canadian dollar: December 31, 2022 December 31, 2021 US Dollar (CDN equivalent) $ 735,977 14,681 (15,867) Mexican Peso Guatemala Quetzal (CDN equivalent) (CDN equivalent) $ 8,141 51,634 - $ 11,146 - (1,376) US Dollar (CDN equivalent) $ 404,866 - (27,883) Mexican Peso Guatemala Quetzal (CDN equivalent) (CDN equivalent) $ 2,341 6,625 - $ 14,507 - (1,050) $ 734,791 $ 59,775 $ 9,770 $ 376,983 $ 8,966 $ 13,457 Cash Receivables Current liabilities Based on the above net exposures at December 31, 2022, a 10% depreciation or appreciation of the above currencies against the Canadian dollar would result in approximately a $80,400 (2021: $39,900) increase or decrease in profit or loss, respectively. 32 RADIUS GOLD INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the years ended December 31, 2022 and 2021 (Expressed in Canadian Dollars) 19. FINANCIAL INSTRUMENTS AND RISK MANAGEMENT (cont’d) General Objectives, Policies and Processes (cont’d) a) Market Risk (cont’d) Commodity Price Risk The Company’s royalty revenue has been derived from a royalty interest that is based on the extraction and sale of gold. Factors beyond the control of the Company may affect the marketability of gold discovered or extracted. Gold prices have historically fluctuated widely. Consequently, the economic viability of the Company’s royalty interest cannot be accurately predicted and may be adversely affected by fluctuations in gold prices. The Company has not engaged in any hedging activities. The Company is not exposed to commodity price risk as the Company has not earned any royalty revenue during the years ended December 31, 2022 and 2021. Interest Rate Risk Interest rate risk is the risk that future cash flows will fluctuate as a result of changes in market interest rates. The Company does not have any borrowings. Interest rate risk is limited to potential decreases on the interest rate offered on cash held with chartered Canadian financial institutions. The Company considers this risk to be limited as it holds no assets or liabilities subject to variable rates of interest. Equity Price Risk Equity price risk is the uncertainty associated with the valuation of assets arising from changes in equity markets. The Company’s equity investments consisting of common shares are exposed to significant equity price risk due to the potentially volatile and speculative nature of the businesses in which the investments are held. The Company’s equity investments are monitored by the Board with decisions on sale or exercise taken by Management. A 10% (2021: 10%) decrease in fair value of the shares would result in an approximate $187,000 (2021: $74,000) decrease in comprehensive income and shareholders’ equity. b) Credit Risk Credit risk is the risk of an unexpected loss if a customer or third party to a financial instrument fails to meet its contractual obligations. The Company’s credit risk is primarily attributable to its cash and cash equivalents, equity investments, and receivables. The Company limits exposure to credit risk by maintaining its cash and cash equivalents with large financial institutions. The Company does not have cash and cash equivalents or equity investments that are invested in asset-based commercial paper. For other receivables, the Company estimates, on a continuing basis, the probable losses and provides a provision for losses based on the estimated realizable value. c) Liquidity Risk Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they fall due. The Company’s approach to managing liquidity risk is to provide reasonable assurance that it will have sufficient funds to meet liabilities when due. The Company manages its liquidity risk by forecasting cash flows required by operations and anticipated investing and financing activities. At December 31, 2022, the Company had working capital of $3.3 million (2021: $2.2 million) available to apply against short-term business requirements. All of the Company’s financial liabilities have contractual maturities of less than 45 days and are subject to normal trade terms with the exception of the Company’s lease liability which matures based on the lease agreement (Note 13). Determination of Fair Value Fair values have been determined for measurement and/or disclosure purposes based on the following methods. When applicable, further information about the assumptions made in determining fair values is disclosed in the notes specific to that asset or liability. Management considers that due to their short-term nature the carrying amounts of financial assets and financial liabilities, which include cash and cash equivalents, receivables, deposits, and accounts payables and accrued liabilities are assumed to approximate their fair values. 33 RADIUS GOLD INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the years ended December 31, 2022 and 2021 (Expressed in Canadian Dollars) 19. FINANCIAL INSTRUMENTS AND RISK MANAGEMENT (cont’d) Fair Value Hierarchy Financial instruments that are measured subsequent to initial recognition at fair value are grouped in Levels 1 to 3 based on the degree to which the fair value is observable: Level 1 Level 2 Level 3 Unadjusted quoted prices in active markets for identical assets or liabilities; Inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly (i.e., as prices) or indirectly (i.e., derived from prices); and Inputs for the asset or liability that are not based on observable market data (unobservable inputs). The equity investments are based on quoted prices and are therefore considered to be Level 1. The lease liability is based on prices and therefore considered to be Level 2. The formerly held derivative instruments were based on inputs other than quoted prices and therefore considered to be Level 3. As of December 31, 2022, there was no embedded derivative on royalty income receivables derived from gold prices to include as a Level 2 measurement and therefore no fair value measurement was necessary. There were no transfers between Levels 1, 2, or 3 during the years ended December 31, 2022 and 2021. 20. CAPITAL MANAGEMENT The Company’s objectives when managing capital are to safeguard the Company’s ability to continue as a going concern in order to advance its mineral properties. In order to facilitate the management of its capital requirements, the Company prepares periodic budgets that are updated as necessary. The Company manages its capital structure and adjusts it to effectively support the acquisition and exploration of mineral properties. The properties in which the Company currently has a direct or indirect interest are in the exploration or development stage. As such the Company is dependent on external financing to fund its activities. In order to carry out the planned exploration and pay for general administrative costs, the Company will spend its existing working capital and raise additional amounts as needed. The Company will continue to assess new properties and seek to acquire an interest in additional properties if it feels there is sufficient geologic or economic potential and if it has adequate financial resources to do so. Management reviews its capital management approach on an ongoing basis and believes that this approach, given the relative size of the Company, is reasonable. The Company monitors its cash and cash equivalents, equity investments, common shares, and stock options as capital. There were no changes in the Company’s approach to capital management during the year ended December 31, 2022. The Company’s investment policy is to hold cash in interest bearing bank accounts and highly liquid short-term interest-bearing investments with maturities of one year or less and which can be liquidated at any time without penalties. Neither the Company nor any of its subsidiaries is subject to externally imposed capital requirements and does not have exposure to asset-backed commercial paper or similar products. The Company expects its current capital resources to be sufficient to carry out its planned exploration programs and operating costs for the next twelve months. 21. SUPPLEMENTAL CASH FLOW INFORMATION No cash was paid for interest or taxes for the years ended December 31, 2022 and 2021. There were no significant non-cash investing and financing transactions during the years ended December 31, 2022 and 2021. 34 RADIUS GOLD INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the years ended December 31, 2022 and 2021 (Expressed in Canadian Dollars) 22. EVENTS AFTER THE REPORTING DATE Subsequent to December 31, 2022, the following event which has not been disclosed elsewhere in these consolidated financial statements has occurred: The Company granted 75,000 stock options exercisable at $0.20 per share for up to 10 years. 35 (the “Company”) MANAGEMENT’S DISCUSSION AND ANALYSIS Year End Report – December 31, 2022 General This Management’s Discussion and Analysis (“MD&A”) supplements, but does not form part of, the annual audited consolidated financial statements of the Company for the fiscal year ended December 31, 2022. The following information, prepared as of April 24, 2023, should be read in conjunction with the December 31, 2022 consolidated financial statements. The Company reports its financial position, results of operations and cash flows in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”). All amounts are expressed in Canadian dollars unless otherwise indicated. The Company’s public filings, including its most recent unaudited and audited financial statements can be reviewed on the SEDAR website (www.sedar.com). Forward Looking Information This MD&A contains certain statements which constitute forward-looking information within the meaning of applicable Canadian securities legislation (“Forward-looking Statements”). All statements included herein, other than statements of historical fact, are Forward-looking Statements and are subject to a variety of known and unknown risks and uncertainties which could cause actual events or results to differ materially from those reflected in the Forward-looking Statements. The Forward-looking Statements in this MD&A include, without limitation, statements relating to: the Company’s planned exploration activities for its mineral properties; • • The Company’s equity investments; • • • the suspension of receiving royalty payments from the Tambor Project; the intended use of proceeds received from past and possible future financing activities; the sufficiency of the Company’s cash position and its ability to raise, if needed, equity capital or access debt facilities; and • maturities of the Company’s financial liabilities or other contractual commitments. Often, but not always, these Forward-looking Statements can be identified by the use of words such as “anticipates”, “believes”, “plans”, “estimates”, “expects”, “forecasts”, “scheduled”, “targets”, “possible”, “strategy”, “potential”, “intends”, “advance”, “goal”, “objective”, “projects”, “budget”, “calculates” or statements that events, “will”, “may”, “could” or “should” occur or be achieved and similar expressions, including negative variations. Forward-looking Statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance, or achievements of the Company to be materially different from any results, performance or achievements expressed or implied by the Forward-looking Statements. Such uncertainties and factors include, among others: • risks associated with mineral exploration activities, and investing in companies which conduct mineral exploration and development activities; - 2 - • • • • • • • • • • • • • • • due diligence investigations on potential investments not identifying all relevant facts; inability to dispose of illiquid securities; receipt of royalty payments from the Tambor Project; fluctuations in commodity prices; fluctuations in foreign exchange rates and interest rates; credit and liquidity risks; changes in national and local government legislation, taxation, controls, regulations and political or economic developments in countries in which the Company does or may carry on business; reliance on key personnel; property title matters and local community relationships; risks associated with potential legal claims generally or with respect to environmental matters; adequacy of insurance coverage; dilution from further equity financing; competition; uncertainties relating to general economic conditions; and risks relating to a global pandemic, including the coronavirus COVID-19, which could result in government imposed restrictions that could cause a slowdown in global economic growth and impact the Company’s business, operations, financial condition and share price. as well as those factors referred to in the “Risks and Uncertainties” section in this MD&A. Forward-looking Statements contained in this MD&A are based on the assumptions, beliefs, expectations, and opinions of management, including but not limited to: • • • • • • • • all required third party contractual, regulatory and governmental approvals will be obtained for the exploration and development of the Company’s properties; there being no significant disruptions affecting operations, whether relating to labor, supply, power, damage to equipment or other matter; permitting, exploration and/or development activities proceeding on a basis consistent with the Company’s current expectations; ability to sell our equity investments as needed; receipt of royalty payments from the Tambor Project will re-commence; due diligence investigations on potential investments will reveal all relevant facts; expected trends and specific assumptions regarding commodity prices and currency exchange rates; and prices for and availability of fuel, electricity, equipment and other key supplies remaining consistent with current levels. These Forward-looking Statements are made as of the date hereof and the Company disclaims any obligation to update any Forward-looking Statements, whether as a result of new information, future events, or results or otherwise, except as required by law. There can be no assurance that Forward-looking Statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, investors should not place undue reliance on Forward-looking Statements. Business of the Company The Company has been exploring for precious metals in the Americas for two decades which has resulted in the discovery of several gold deposits in Central America. Management is constantly exploring new targets and evaluating opportunities in order to maintain a portfolio of compelling targets and a pipeline of projects in various stages of exploration and drilling. The Company explores projects with the goal of delivering value to the shareholders through exploration discovery, either 100% in the Company or via partnerships where appropriate. In January 2023, the Company announced the appointment of Adam Buchanan as Vice-President, Corporate Development, who is managing the Company’s communications with shareholders and other stakeholders. A summary of the Company’s investments, properties, and royalty interests is provided below: Investments - 3 - For a description of the Company’s equity investments activity during the period from January 1, 2021 to December 31, 2022, please see Note 6 of the Company’s December 31, 2022 consolidated financial statements. The Company’s current cash and cash equivalents on hand is approximately $1,528,000 and its current investments consist of: Medgold Resources Corp. (“Medgold”) 10,126,500 shares Current market value: $51,000 Medgold is a TSX-V listed company whose property holdings include the Tlamino gold-silver project in Serbia which has an Inferred Mineral Resource containing approximately 680,000 oz AuEq. Medgold is in the process of completing, subject to regulatory and other approvals, a transaction whereby it will acquire further property interests in Serbia, to become the largest holder of highly prospective exploration ground in Serbia. Rackla Metals Inc. (“Rackla”) 3,973,275 shares (10+% of issued) Current market value: $795,000 Rackla is a TSXV-listed mineral exploration company with gold projects covering over 46,000 hectares in the Tombstone Gold Belt within the Selwyn Basin of the Yukon and Northwest Territories. Volcanic Gold Mines Inc. (“Volcanic”) 830,412 shares Current market value: $166,000 Volcanic is a TSX-V listed company focused on building multi-million ounce gold and silver resources in underexplored countries. It holds an option to acquire a 60% interest in the Company’s Holly and Banderas gold/silver properties located in eastern Guatemala, and recently published an Inferred Mineral Resource for the Holly property. Property Interests Regional Exploration The Company is constantly prospecting and evaluating new properties. The Company has two geological teams in the field in Mexico evaluating new targets to maintain the Company’s pipeline of projects. Mexico – Amalia Project The Amalia Project comprises 10,250 hectares located in the Sierra Madre gold belt in the State of Chihuahua, Mexico. In June 2017, the Company signed a binding agreement with a private individual to option 380 hectares of the project area which is host to high-grade epithermal silver-gold mineralization. Following the signing of the option agreement, the Company staked an additional 9,081 hectares surrounding the Amalia Project, covering three new regional target areas. The Amalia Project is located approximately 25 kilometres SW of the historic Guadalupe y Calvo mining district in Chihuahua, Mexico. During due diligence evaluation the Company’s geologists sampled bonanza grade outcrop containing 20.4 g/t Au and 5,360 g/t Ag from a 1.2 metre chip. The Company established a camp at Amalia and completed an initial exploration program comprising geological mapping, prospecting, and channel sampling of the three main targets: San Pedro, Guadalupe and Dulces. Epithermal Au-Ag mineralization was sampled by the Company in several veins, vein breccias and disseminated zones over 3.5 kilometres of strike length and a 600 metre vertical interval following the trace of the large regional Amalia fault zone. - 4 - In July 2018, the Company entered into an agreement with Pan American Silver Corp. (“Pan American”) to drill and explore the Amalia Project – see “Pan American Option Terms” below. Addition of Palmillas Property / El Cuervo Target In late 2019, the Company signed a binding agreement with a private family to option the 800-hectare Palmillas Property which hosts high-grade epithermal gold-silver mineralization. The Palmillas concessions are immediately adjoining the Amalia Project and cover the northeastern and southwestern strike extension of the Amalia fault zone. Pan American elected to exercise its right to include the Palmillas Property within the Amalia Project joint venture. Pan American, as the operator is funding and managing the expanded project according to its option agreement with the Company. The Palmillas Property hosts multiple exploration targets, including El Cuervo and Palmillas. Phases 1 to 3 Drill Programs In October and November 2018, the Company conducted an initial 9 hole - 1,909 metre diamond core drill program at Amalia to test the three target zones across a strike length of 1.8 kilometres following the trace of the Amalia regional fault and associated surficial epithermal gold and silver mineralization. Five drill holes (AMDD-001 / 003 / 007 / 008 / 009) were drilled within the San Pedro structural corridor, intercepting gold and silver mineralization in all holes and defining a 650 metre strike length of epithermal banded veining, stockworks and multiphase breccia with significant gold and silver mineralization. A table of drill results is listed below. This initial drill program resulted in discovery hole AMDD-009 which intersected 26 metres at 7.80 g/t Au and 517 g/t Ag, including bonanza interval of 5 metres at 14.71 g/t Au and 1,378 g/t Ag. The Company commenced Stage 2 drilling at the San Pedro target in April 2019 completing six diamond holes, AMDD19-010 to AMDD19-015, totalling 1,743 metres. The Stage 2 drill program expanded multiphase gold and silver mineralization with high-grade mineralized shoots expanded at San Pedro. Geological controls on the mineralization are complex with multiple events of gold and silver mineralization within veins, stockworks and hydrothermal breccias. The Amalia structure trends 320/60E and can be traced for several kilometres. The Amalia fault is a large regional fault zone separating Tertiary rhyolitic ignimbrites from the Late Cretaceous Tarahumara formation with gold and silver mineralization typically occurring within the hanging wall. With Pan American as operator, a Phase 3 drill program at Amalia was conducted in October 2019. The drill program included holes AMDD19-016 to AMDD19-021. The program was successful in proving that the high-grade mineralized shoot continued to depth, up to 300 metres, and its lateral extents were better defined. Drill holes AMD002 / 004 / 005 / 006 targeted mineralization at the Guadalupe and Dulces zones. These drill holes did not intercept significant gold/silver mineralization. The table below summarizes the drill results. - 5 - Phase 4 Drill Program The Phase 4 drilling commenced in November 2020 and was designed to test down dip and lateral expansions of the high-grade gold and silver mineralization of the San Pedro structure that was previously defined by drilling Phases 1 to 3. On April 27, 2021, the Company announced the completion of the Phase 4 drill program with 10 diamond holes, AMDD20- 022 to AMDD21-031, drilled totalling 4,385 metres. Significant results from the Phase 4 drilling include: DRILLHOLEFROM (m)TO (m)INTERVAL (m)EST. TRUE WIDTH (m)Ag (g/t)Au (g/t)AMDD18-00144.3556.3512.009.5440.10AMDD18-002AMDD18-003107.44137.4430.0024650.30AMDD18-004AMDD18-005AMDD18-006AMDD18-007129.10133.104.0032290.29AMDD18-00898.6599.651.000.85212.28And126.65131.655.0045711.14AMDD18-009140.35174.3534.0029.444066.13Including144.35170.3526.00225177.80Including165.35170.355.004137814.71AMDD19-010210.70254.7044.003430912.39AMDD19-011170.50176.506.004241.05Including173.50175.001.501.06312.52AMDD19-012176.90181.905.0046470.09AMDD19-013AMDD19-014235.70263.7028.00241262.30Including256.70259.703.002.67619.85AMDD19-015213.70317.70104.0074.8553.10Including216.70297.7081.0065613.75Including234.70255.7021.0017657.91AMDD19-016251.20371.20120.0078211.53Including252.45318.2565.8043232.36Including293.20316.4023.2015414.61AMDD19-017316.55322.105.554.19-0.88AMDD19-018268.15269.451.300.75232012.50And332.45346.1013.657.83221.39AMDD19-019336.70344.107.406.34220.49DRILLING RESULTS - SAN PEDRO ZONE (PHASE 1 - 3)no significant mineralized interceptsno significant mineralized interceptsno significant mineralized interceptsno significant mineralized interceptsno significant mineralized intercepts - 6 - The drilling completed during stages 1 to 4, focused on the San Pedro target and has identified a coherent shoot of high-grade gold-silver mineralization commencing at surface and continuously defined 350 metres down dip. The first shoot now appears to be closed off at depth and immediately adjacent. Phase 5 Drill Program Phase 5 drilling commenced in August 2021 at California and El Cuervo targets. To date, 3,814 metres of diamond core drilling in 14 drill holes have been completed at California, and 8,656 metres of diamond drilling in 22 drill holes have been completed at El Cuervo. California target drilling intersected multi-phase breccia and stock-work vein systems with significant widths (up to 50 metres) and high-grades up to 4210 g/t Ag and 33.1 g/t Au (AMDD21-038). Drill platforms were located on 6 sections, spaced 200 metres apart. The drill program defined a coherent and robust silver gold mineralized system over 1 kilometre and to a depth of 300 metres. The California structure has been mapped over 2.8 kilometres. Mineralization is open in all directions. California drill testing was limited to pre-existing roads that allowed easy access. Further on strike, other targets are yet to be drill tested – see “Property Outlook” below. DRILLHOLEFROM (m)TO (m)INTERVAL (m)EST. TRUE WIDTH (m)Ag (g/t)Au (g/t)AMDD20-020AMDD20-021AMDD20-022313.05336.1523.1014.503216.80Including319.40325.656.254.1881318.34AMDD21-023520.85530.409.556.501510.59AMDD21-024AMDD21-025150.85151.700.850.604751.48And170.85178.457.605.00701.73And239.75249.409.657.28570.36And274.25277.853.602.72550.32And285.85293.908.055.50990.93AMDD21-026165.50166.651.150.801513.32And239.75243.403.652.37701.81And283.40284.451.050.70534.59And320.70323.703.002.0083.17And347.00347.950.950.62650.57And352.90353.400.500.331150.25AMDD21-027AMDD21-028AMDD21-029AMDD21-030AMDD21-031133.75147.0013.2513.251170.90no significant mineralized interceptsno significant mineralized interceptsno significant mineralized interceptsno significant mineralized interceptsno significant mineralized interceptsno significant mineralized interceptsno significant mineralized interceptsDRILLING RESULTS - SAN PEDRO ZONE (PHASE 4) - 7 - El Cuervo target is a subparallel structure situated southwest between the Amalia and California structures where stockwork veining and brecciation have been mapped up to maximum 40 metres wide and semi-continuously for 1.5 kilometres. DRILLHOLEFROM (m)TO (m)INTERVAL (m)EST. TRUE WIDTHAg (g/t)Au (g/t)AMDD21-03238.1044.306.205.62930.43And62.7090.0027.3024.74900.26Including78.0080.352.352.132200.61Including86.0088.602.602.362631.37AMDD21-033148.60199.0050.4023.66500.05Including178.80194.2515.457.25680.07Including188.20192.404.201.971130.12AMDD21-034145.70149.653.953.584872.15Including146.80149.652.852.586582.96Including148.00148.500.500.45281015.15AMDD21-035212.65229.8017.1510.32350.07And243.10243.500.400.244823.36AMDD21-036108.60110.351.751.595780.27Including109.90110.350.450.4119300.71AMDD21-037177.95180.402.451.30370.18Including177.95178.550.600.32540.53AMDD21-038151.00162.2011.209.063791.26Including156.20157.000.800.65424416.96Including156.20156.550.350.28421033.10AMDD21-039308.20335.1026.9020.303532.59Including308.20331.9023.7017.893942.93Including314.45321.957.505.669767.38Including317.85321.954.103.09152012.61AMDD21-040385.35396.5011.156.55990.64Including385.35393.558.204.821200.78Including388.45391.102.651.562101.12Including389.60391.101.500.882491.28AMDD21-041144.00145.251.251.13360.03AMDD21-042216.95218.501.550.89240.003AMDD21-043102.25115.0012.759.482590.54Including108.05114.056.004.464831.06Including108.05111.253.202.387051.92AMDD21-044273.00312.6539.6529.472040.35Including283.00312.6529.6522.032560.44Including287.50306.5519.0514.163460.63Including301.00306.555.554.127701.69Including304.00305.651.651.2314465.11Including305.00305.650.650.48247011.90AMDD21-045333.75421.0087.2550.04600.05Including339.50350.4510.956.281040.09Including359.50362.603.101.781650.08Including413.90417.203.301.891870.29DRILLING RESULTS - CALIFORNIA ZONE (PHASE 5) FROM (m) 214.35 225.55 239.25 239.25 239.25 292 294.4 245.1 279.9 279.9 290.4 300 309.5 214.85 222.15 227 229.6 265.6 286.9 294.75 304.9 340.85 358.4 365.55 365.55 375 336.75 347.1 394.9 394.9 406.45 348.5 398.65 398.65 408.4 410.5 412 278.2 281.35 285.9 285.9 308.7 327.1 332.85 334.5 DRILLHOLE AMDD21-046 And And Including Including And Including AMDD21-047 Including Including Including Including Including AMDD21-048 And And Including And Including Including AMDD22-049 And And Including Including Including AMDD22-050 And And Including Including AMD22-051 And Including Including Including Including AMDD22-052 Including Including Including And And And Including AMDD22-053 AMDD22-054 - 8 - DRILLING RESULTS - EL CUERVO INTERVAL (m) 0.45 2.8 30.95 3.7 1.7 3.5 1.1 96 61.2 45.2 7.35 17.35 7.85 1.6 1.35 6.3 2.2 37.85 10.5 1.65 1.45 10.8 17.8 10.65 1 1.2 0.8 1.9 14.6 0.9 3.05 1.05 17.35 0.6 7.6 2.65 1.15 11.8 6.65 2.1 1.4 1.3 1.25 3.15 1.5 EST. TRUE WIDTH 0.43 2.7 29.9 3.57 1.64 3.38 1.06 83.14 53 39.14 6.37 15.03 6.8 1.55 1.3 6.09 2.13 36.56 10.14 1.59 1.24 9.26 15.26 9.13 0.86 1.03 0.61 1.46 11.18 0.69 2.34 0.83 13.67 0.47 5.99 2.09 0.91 10.61 5.98 1.89 1.26 1.17 1.12 2.83 1.35 Abandoned No Significant Intercepts TO (m) 214.8 228.35 270.2 242.95 240.95 295.5 295.5 341.1 341.1 325.1 297.75 317.35 317.35 216.45 223.5 233.3 231.8 303.45 297.4 296.4 306.35 351.65 376.2 376.2 366.55 376.2 337.55 349 409.5 395.8 409.5 349.55 416 399.25 416 413.15 413.15 290 288 288 287.3 310 328.35 336 336 Ag (g/t) 214 122 44 158 233 203 381 167 232 290 592 302 438 116 302 77 125 54 84 139 62 63 144 190 469 483 107 53 117 1185 104 125 253 1510 414 555 637 450 695 1577 1800 37 55 84 91 Au (g/t) 0.52 0.13 0.13 0.49 0.31 0.53 1.31 0.54 0.65 0.8 0.69 1.13 1.12 1.39 0.56 0.61 0.68 0.34 0.75 4.02 0.81 0.8 0.92 1.01 0.97 3.94 2.6 0.27 0.92 6.93 1.32 2.1 1.11 2.52 2.1 4.94 10.7 1.31 1.44 2.27 0.5 1.22 0.68 0.87 1.48 AMDD22-055 Including AMDD22-056 Including AMDD22-057 And AMDD22-058 Including And And And AMDD22-059 And And AMDD22-060 Including And And Including AMDD22-061 Including Including AMDD22-062 And Including And And Including And And AMDD22-063 Including Including And Including Including And Including Including AMDD22-064 And Including And AMDD22-065 Including AMDD22-066 Including 320.15 320.15 298.8 298.8 287.95 358.3 323 323 384.25 391.5 396.5 154.2 166.7 193.8 211.1 211.1 230 256.85 259.4 304.95 306.3 306.3 348 354.1 354.1 369.3 384.95 385.9 394.7 400.9 369.15 370.75 370.75 380 382.55 383.45 402.4 405.55 407.55 413.35 418.1 418.1 468.55 286.40 294.00 319.40 327.30 325.9 320.8 302.05 300.25 289.5 359.35 326 324 385.5 393 398.7 155.7 168.3 195.6 213.8 212.5 231 263.6 260.35 309.3 308.1 306.9 350.2 360 354.6 371.05 386.85 386.85 395.65 401.45 373.1 373.1 371.85 385.2 383.95 383.95 408.3 408.3 408.3 414.2 433.85 419.6 470 303.40 296.00 332.95 332.95 5.75 0.65 3.25 1.45 1.55 1.05 3 1 1.25 1.5 2.2 1.5 1.6 1.8 2.7 1.4 1 6.75 0.95 4.35 1.8 0.6 2.2 5.9 0.5 1.75 1.9 0.95 0.95 0.55 3.95 2.35 1.1 5.2 1.4 0.5 5.9 2.75 0.75 0.85 15.75 1.5 1.45 17.00 2.00 13.55 5.65 - 9 - 5.17 0.58 2.97 1.32 1.31 0.89 2.26 0.75 0.94 1.13 1.66 1.36 1.45 1.63 1.74 0.9 0.64 4.34 0.61 3.77 1.56 0.52 1.61 4.31 0.37 1.28 1.39 0.69 0.69 0.4 2.69 1.6 0.75 3.55 0.95 0.34 4.02 1.88 0.51 0.52 9.7 0.92 0.89 15.15 1.78 10.82 4.51 101 508 3 3 58 95 3 7 4 3 42 115 102 102 61 80 90 29 57 401 866 1090 52 44 244 24 69 98 14 38 78 107 126 100 250 491 197 310 585 29 27 53 81 438 3,182 841 1,560 0.73 3.23 2.55 4.19 1.2 0.84 1.34 2.64 1.26 1.26 0.9 0.3 0.26 0.48 0.57 0.91 0.9 0.31 1.36 0.79 1.61 4.76 0.43 0.46 3.03 1.41 0.9 1.23 1.46 23 0.91 1.36 2.28 0.48 0.96 1.34 1.03 1.3 2.05 0.71 0.17 0.67 0.4 0.80 4.49 10.25 19.16 Surface rock chip samples at Cuervo range from below detection to 637 g/t Ag and 2.24 g/t Au. Drilling at El Cuervo has defined mineralization similar to the Amalia structure, consisting of epithermal quartz veins, breccias and veinlets stockworks hosted within rhyolite volcanics along a major fault system. El Cuervo remains open to expansion along strike and to depth. - 10 - Cross-sections, (http://www.radiusgold.com/s/amalia.asp). long-section, plan map and core photos are available on the Company’s website Quality Assurance / Quality Control Reported drilling was carried out using NQ and HQ size tooling. Drill core was cut in half using a rock saw with one half of the core then taken as a sample for analysis. Sample intervals are generally 1 metre intervals, producing samples of between 2 to 9 kilograms. Half-core samples are delivered to the ALS Geochemistry laboratory facilities in Chihuahua, Mexico. The samples are fire assayed for Au and are analysed for Ag and multi-elements using method code ME-ICP61 following a four- acid digestion. Over-limits are analysed using an appropriate method. Multi-element geochemical standards and blanks are routinely entered into the drill core sample stream to monitor laboratory performance. Quality control samples submitted to ALS were returned within acceptable limits. Pan American Option Terms Pursuant to an agreement signed in June 2018, Pan American has exercised its option to earn an initial 65% interest in the Company’s Amalia Project and Palmillas Properties, having made cash payments to the Company totaling US$1.5 million and expending a minimum of US$2 million on exploration and reimbursement of the Company’s costs to maintain its option agreements with the owners of Amalia and Palmillas. Pan American may earn an additional 10% by advancing the property to preliminary feasibility. Property Outlook With Amalia Central, California and El Cuervo targets all demonstrating resource potential, the growing scale of the Amalia Project is apparent. With an excess of 10 kilometres of vein systems, mineralization extending over 1,000 vertical metres and multiple targets yet untested, the Amalia Project has great potential but still requires significant drilling to define the overall extents. Since completion of drilling at El Cuervo, geological mapping and surface sampling has further defined and extended drill targets across the property and in particular at the California structure. At California, the main California-Oro Viejo system has been mapped and sampled and extended 750 metres northwest, defining 1.5 kilometres of undrilled strike extension from the last drill section at California which returned one of the best drill holes with AMDD21-39 intersecting 26.9m @ 2.59 g/t Au and 353 g/t Ag. Recent mapping has also discovered new parallel vein systems. Oro Viejo West, located 130 metres to the west of California, has a discontinuous length of 950 metres and width between 2 to 15 metres. Oro Viejo West is hosted in rhyolites and is composed of crystalline quartz veinlets, and silicification with brecciated sectors. Two kilometres to the northeast of central California, three structures called El Cancel, El Cancel SE and Nopalera have been identified. El Cancel is 650 metres long by 4 to-10 metres wide, with weak silicification and quartz veining. El Cancel SE is a hydrothermal breccia 200 metres long by 3.5 to 80 metres wide, containing fragments of silicified rhyolite in silica matrix. The Amalia project is a large gold-silver epithermal system. Significant mineralization has been defined at the three main targets drilled to date (Amalia, California & El Cuervo). The targets are open at depth and along strike and many other targets remain to be drill tested. The Company’s management is in discussion with Pan American to chart the best way forward for both companies. Mexico – Plata Verde Project - 11 - In 2020, the Company entered into option agreements with local concession holders to acquire a 100% interest in the Plata Verde Project which consists of the 300 hectare Don Benja concession covering an historic silver mining camp located in Chihuahua, Mexico, and the 500 hectare Don Jose concession which surrounds Don Benja. The Plata Verde Project is located north of the Company’s Amalia Gold-Silver project and east of the historic Batopilas silver mining district (1708 to 1920) which reputedly produced over 300 million ounces of silver from high-grade veins and structures. The property is accessible by road, with a one hour hike required to access the historic mines. The Don Jose concession has no exploration history and covers the same prospective rocks that host the Don Benja silver mineralization. The Company has conducted limited prospecting and stream sediment geochemistry at Don Jose. When the Company’s geologists discovered Plata Verde Project, the property was accessed by a strenuous 6 hour hike and all supplies and samples for subsequent exploration programs were transported by mules. A local landowner has since constructed 4x4 road access to the property and has signed an agreement providing the Company with legal right of way and use of the road to access the property. At Plata Verde, the Company’s geologists re-discovered a large scale underground bulk mining operation where in the late 1800’s, historic miners hand excavated an extensive series of anastomosing caverns, producing silver bars at an associated smelter operation. The project was un-explored since the historic miners ceased their operations. Initial phases of rock chip sampling by the Company returned widespread silver mineralization between 5 and 1,070 g/t Ag over a large area within the historic mines. In July 2022, the Company signed an exclusivity agreement with Minera San Julian, S.A. de C.V. ("Minera San Julian"), a wholly owned subsidiary of Fresnillo plc, whereby Minera San Julian has the exclusive right for nine months to negotiate with the Company the terms of an option to earn a 70% interest in the Plata Verde Project. See “Exclusivity Agreement with Fresnillo” below for a description of the agreement terms. Geological Model and Silver Mineralization At Plata Verde, the Company’s geological team completed several months of detailed underground mapping and sampling of the historic Mina Real and Mina Mojonera. Three distinct mineralization styles have been defined within the basaltic andesite volcanic host rock: 1. Multiple large scale volcanic breccia zones up to 75 metre diameter and sampled on multiple mine levels. The breccias are cemented by massive to crustiform banded barite calcite with silver chlorides, sulphosalt minerals and native silver. 2. Fracture fill and stockwork silver mineralization occurs as massive to crustiform banded barite calcite with silver chlorides, sulphosalt minerals and native silver. 3. Disseminated style mineralization with fine silver sulphosalts disseminated within the volcanic host with little to no brecciation, veining or fracture fill. All three mineralization styles host significant silver grades, although the highest grades are related to intense brecciation and fracturing. Geological maps and sampling data are available at http://www.radiusgold.com/s/plata-verde.asp. In total, 255 2 x 2 metre panel samples were collected from the historic Mina Real and Mina Mojonera. Each mine covers a shallow dipping anastomosing sequence of mining areas on at least 3 levels with Mina Real covering approximately 200 x 200 metres and Mina Mojonera 150 x 150 metres. Results reported between 2 and 815 g/t Ag and averaging 185 g/t Ag. Samples were collected to represent all rock types and mineralization styles. - 12 - Summary of underground rock chip sampling. Majority are 2 x 2 m rock panel samples: Historic Mine Rock chip samples Average all rocks (Silver g/t) Breccia samples (number) Average breccia (Silver g/t) Mojonera Real Total 133 122 255 168 143 156 57 17 74 262 244 258 The sampling completed within the historic mines shows that the mineralization is open to expansion in all directions. In 2021, the Company completed geophysical programs at Plata Verde, consisting of 7.5 line kilometre magnetic survey and 4.5 line kilometre IP/Resistivity survey conducted by consultants, Geofisica TMC. The program was designed to locate potential feeder systems below the historic silver mines and successfully identified compelling drill targets below the known mines. All relevant data and sections from the geophysical surveys are available on the Company’s website. Regional Geology and Stream Sediments In general, the silver mineralization is covered by the overlying rhyolitic volcanics and is only exposed within the historic mines and at surface in a few areas along the length of a small creek. The Company conducted a geological mapping and stream sediment sampling program within the district which indicates that a north south orientated regional structural zone likely controls development of the mineralization at Plata Verde. Stream sediment sampling at Plata Verde clearly identifies the creek where the historic mines are exposed. There are also strong silver stream sediment anomalies (several times higher than background) that indicate potential for further mineralization 300 metres to the east and 1,000 metres south of the known mines. Discussion and Exploration Targets The Company has defined two priority targets: 1) Extensions and repetitions of the shallow dipping large scale silver rich breccias, stockworks and disseminated silver mineralization exposed within the historic mines. 2) Sub-vertical feeder zones below the historic silver mines. The barite/silver chloride mineralization appears to be a late-stage low temperature mineralizing event with the source and feeder systems an attractive exploration target. Barite and silver chloride are often part of the upper levels or supergene zone around large silver deposits. The solubility of barite and silver chlorides is low, and hence the source zone is likely to be close by. Extensions of the known mineralization below the ignimbrite cover to the north, east and west are open. Potential feeder structures have been clearly defined by the geophysics. The Company has completed an environmental study in support of drill permits which have been granted. Metallurgical Tests In late January 2023, the Company announced preliminary results from initial metallurgical testing conducted by Minera San Julian on samples from Plata Verde. Bulk samples (approximately 100 kg) were collected from the Mina Mojonera and Mina Real underground workings and sent to Fresnillo plc’s Technical Services Group, Mineral Processing Department, in Torreon, Mexico for initial investigation into metallurgical characterization and recoveries of metals (silver lead and copper) by cyanide leaching and flotation. Highlights of the results are: • Work index for grinding (Wi) averaged 8.67 kWh/t, classifying the samples as “soft” for ball milling. • Cyanide leach test work reported average recoveries of 93% for silver. • Flotation studies generate Pb/Cu concentrates with a high grade of silver and good values of lead and copper with recovery of around 85% for silver, 52% for lead and 64% for copper. - 13 - • Combining flotation + tailings cyanidation results in average overall silver recovery of 97%. • Future work should consider separation of Pb and Cu concentrates to generate commercial concentrates. Exclusivity Agreement with Fresnillo In July 2022, the Company signed an exclusivity agreement with Fresnillo plc’s subsidiary, Minera San Julian, whereby Fresnillo was granted the exclusive right for nine months to negotiate with the Company the terms of an option to earn a 70% interest in the Plata Verde Project. Fresnillo is the world’s leading silver producer and Mexico’s largest gold producer, and holds one of the largest precious metals reserves in Mexico. In April 2023, the exclusivity period was extended to July 7, 2023 which is also the proposed deadline for commencement of drilling on the property. As well, the extension requires Minera San Julian to cover anticipated US$157,000 in project costs to underlying concession owners, landowners, and continuation of field work at Plata Verde. In accordance with the exclusivity agreement, Minera San Julian has to date funded the following property costs: US$100,000 paid to the Company on signing the Agreement. US$65,000 paid to reimburse the Company’s underlying property option payments. US$103,600 paid to clear historic back taxes and return the property to full legal compliance. US$63,400 paid for property taxes and investment costs at the project. Fresnillo has made significant advances at Plata Verde in the last nine months, completing: • Upgrading and rehabilitation of road access in preparation for drill access. • Initial metallurgical test work which demonstrated exceptional cyanide leach recoveries averaging 93% for silver and in combination with flotation achieving 97% silver recovery. • Geological mapping and rock chip sampling of the property with 470 samples collected. Results are pending for the last batch. • Negotiations with landowners for drill access. Option terms discussed between the Company and Fresnillo include: • Fresnillo would have the right to acquire a 70% interest in the Plata Verde Project by spending over a four year period a minimum cumulative amount of US$5 million on exploration work at Plata Verde. • Fresnillo would make option payments to the Company totaling US$3.117 million, which would include US$1.117 • million to cover the Company’s underlying property agreement obligations. If the option is exercised, a new company (“NewCo”) would be set up to own the Project, which would be owned 70% by Fresnillo and 30% by the Company. • Any additional funding required by NewCo would be provided by Fresnillo and the Company in proportion to their respective ownership interests in NewCo. • Should either party’s interest in NewCo fall below 10% interest, that party’s interest would convert to a 2% NSR royalty. The Company’s Earn-In Agreements The Company may earn a 100% interest in the 300 hectare Don Benja concession by making staged payments totalling US$801,000 over four years with the final payment equal to US$400,000 at the end of year four. A total of US$151,000 has been paid to date. The owner retains a 1% NSR which the Company may buy back for US$1,000,000. The Company may earn a 100% interest in the 500 hectare Don Jose concession by making staged payments totalling US$500,000 over four years with a final payment of US$185,000 due at the end of year four. A total of US$33,000 has been paid to date. The owner retains a 1% NSR which the Company can buy back for US$600,000. Quality Assurance and Quality Control - 14 - Reported assays are rock chip and channels samples taken by Company geologists and trained sampling teams. Sample intervals are generally 2 metre chip channels or 2x2 metre panels producing samples of between 2 to 9 kilograms. Reported samples were delivered to SGN Laboratories in Paral, Chihuahua. The samples were crushed and pulverized. Two 100 gram splits were taken. The Company’s geologists removed and stored the excess and a 100 gram split at the Company’s offices. SGN performed initial Ag and Au analysis. The second split was subsequently sent to the ALS Geochemistry laboratory facilities in Chihuahua, Mexico and was analyzed for Ag and multi-elements using method code ME-ICP61 following a four-acid digestion. Overlimits are analyzed using an appropriate method. All assays reported above 30 g/t Ag have been analyzed by ALS Geochemistry. The Company routinely inserts multi-element geochemical standards and blanks into the sample stream to monitor laboratories performance. Quality control samples submitted were returned within acceptable limits. Comparisons between sample splits demonstrate acceptable accuracy and precision. Mexico - Tropico Project In March 2023, the Company announced the discovery of a new gold mineralized “hot spring type” sinter and breccia pipe target within the Fresnillo district, Zacatecas, Mexico, and the entering into of an option agreement with local property owners to acquire the Project. The Tropico Project is located 30 kilometres northwest of Fresnillo city, Zacatecas, Mexico. The Fresnillo mining district is one of the world’s greatest epithermal systems and hosts the world’s oldest continuously operating mines producing silver, gold, copper, lead, and zinc for approximately five centuries, since 1554. The district has over 150 veins, mantos and chimney deposits including +30 large scale ore producers and it continues to deliver new discoveries. In 2005, the Juanicipio project was discovered by MAG Silver Corp and Fresnillo Plc, located 8 km from Fresnillo city. This recent discovery is one of the world’s highest grade and largest primary silver (plus gold) development projects [MAG Silver PEA November 7, 2017]. The Tropico property is located 1 kilometre off the paved national highway route 45 between Fresnillo and Durango. The ground is flat and has easy access to all areas via farm tracks. The property is a mixture of rocky pasture and bean fields. A pre-existing lease agreement that allows for exploration has been signed with the local community. The Company intends to move quickly to acquire drill permits and conduct deep penetrating resistivity surveys to define the subsurface pipe shape and commence drilling. Target Model Chimney bodies in the Fresnillo district are often cylindrical shaped brecciated pipes that crosscut the cretaceous volcano sedimentary host units and predate or are contemporaneous with silver, gold and base metal veins. The vein systems at Fresnillo are most frequently “blind”, meaning they do not outcrop, and the tops of the orebodies are concealed to a depth of approximately 150 to 300 metres. Surface expressions can include geochemical path finder halos, thin discontinuous quartz carbonate veinlets, and critically low temperature chalcedonic silica and sinter. Sinter is a formation of opaline silica deposited in a hot spring environment at surface. Sinter typically has very low grade or barren precious metal content but can be the surface indication of a mineralized system at depth. There are many famous examples of epithermal gold and silver mines located below sinter deposits, both within the Fresnillo district and globally (e.g. Waihi – New Zealand, Lihir – PNG, McLaughlin – USA). Geology and Geochemistry Outcrop within the Tropico property is sparse. From limited outcrop and float the Company’s geologists have identified an elliptical zone of intensely silicified hydrothermal breccias approximately 450 metres x 250 metres. Several of the outcrops and float blocks are composed of chalcedonic and opaline sinter. The Tropico breccia is hosted within finely bedded siltstones and dirty limestones, interpreted to be part of the Proaño group which hosts the major Fresnillo deposits. There are known active hot spring and mercury occurrences nearby. - 15 - The Company collected and assayed 28 rock chip samples from the area of the silica breccia and sinter. Gold values ranged from 0.02 ppm to 0.88 ppm Au, with an average of 0.28 ppm Au which is considered significant for a sinter system. In actual sinter material the highest grade was 0.39 ppm Au. Mercury values are very high, with several samples exceeding >100 ppm Hg (the upper limit of detection). Typical epithermal path finder elements were also highly anomalous with Sb between 64 and 1135 ppm, As between 8 to 854 ppm, and Ag between 0.6 to 5.6 ppm. The Company’s Earn-In Agreement The Company has the option to earn a 100% interest in the Tropico Project by making a US$200,000 payment upon signing of the agreement (paid), with further payments totalling US$200,000 that can be paid in six monthly instalments over a period of 42 months, starting with US$25,000 at month 12 in order to maintain the option, and a payment of US$5,000,000 at month 48. An additional milestone payment of US$5,000,000 is conditional on the Company delivering a compliant feasibility study or at the start of mine construction. A further US$3,000,000 is to be paid if reserves exceed 2 million gold equivalent (Au + Ag) ounces. If the Company exercises the option but does not complete payment of the US$5,000,000 milestone within 8 years of signing of the option agreement, the property would return 100% to the original owners. Mexico – Maricela Project In March 2021, the Company optioned the Maricela group of mineral concessions covering 155 hectares in the State of Sonora, Mexico. The project is within a prolifically mineralized Arizona – Sonora porphyry belt, one of the most important centres of copper mineralization world-wide. Spatially and genetically related to this giant porphyry trend are numerous epithermal gold and silver deposits. The project has excellent infrastructure, with good road access and internal roads, nearby power, water, and low rolling terrain. The Maricela property shows no evidence of previous drilling or systematic exploration. The property has a number of small open pits and shafts where limited high-grade material was mined in the 1950’s and 1960’s and shipped to a processing plant in Cananea. Prior to the Company acquiring an interest in the Project, the most recent work conducted was a small sampling program (24 samples) conducted by the Mexican Geological Survey in 2000. In June 2021, the Company announced that its rock sampling programs identified both high-grade gold-silver vein targets and wide (up to 25 metres) stockwork and breccia zones. The combination of multiple intersecting vein systems, with mineralized stockworks on the vein margins, result in large breccia and stockwork zones at the vein intersections and compelling drill targets. Highlights from recent rock chip continuous sampling include: • • • 3 metres at 4.46 g/t Au and 1335 g/t Ag - Baby Gloria Vein 6 metres at 1.03 g/t Au and 418 g/t - Ag Central Vein 25.3 metres at 0.31 g/t Au and 62 g/t Ag - (intersecting veins) The project hosts an epithermal silver & gold mineralized vein system extending approximately 1.5 kilometres long by 300 metres wide, within which occurs multiple veins, stockworks and breccias which at intersections have exposed widths +25 metres. Recent mapping and sampling (273 rock chips) identified 6 major veins with combined strike approximately of 5 kilometres. The main vein Virgin de Plata strikes NW-SE and has been defined for approximately 1 kilometre. Virgin de Plata is intersected by at least 5 veins (striking NE-SW) forming a horse tail structure of intersecting veins. The veins are generally 1 to 3 metres of massive quartz with mineralized stockworks and brecciated veins selvages, extending commonly +10 metres across the vein zones. At intersections, larger stockwork zones are observed. The mineralization type is silver plus gold epithermal vein system hosted within an andesite volcanic sequence, with felsic dykes emplaced sub-parallel to mineralized structures. Continuous rock chip sampling was used to estimate the average grade and thickness of the outcropping veins. Significant mineralized intervals are reported in Table 1: - 16 - Table 1. Significant continuous rock chip gold silver intervals. Vein zone Width (m) Au (g/t) Ag (g/t) Baby Gloria Virgin de Plata & Baby Gloria Baby Gloria Baby Gloria Baby Gloria Virgin de Plata Virgin de Plata El Arco (9.7m with 3m missing in middle) El Arco Central SE North Amarilla 3 25.3 22 5 4 6.9 10 4 2.7 10.5 6 62 1 1.5 4.46 0.31 0.15 0.33 1.23 0.34 0.62 0.45 0.34 0.50 1.03 0.03 0.53 0.54 1335 62 39 127 111 110 142 98 81 105 417 6 349 494 Geological Model and Exploration Targets The Company’s geological team believes the recent geochemical results demonstrate potential for both high-grade silver gold veins and bulk tonnage lower grade mineralization that could be amenable to open pit mining. Most of the known veins and associated stockworks occur within a tightly spaced area approximately 1 kilometre x 600 metres, defining an obvious open pit target. The district around Marcela is well known for high-grade low sulphidation epithermal vein systems that extend to significant depth with nearby examples: Silvercrest’s Las Chispas deposit (55 kilometres south) and Equinox Gold’s Mercedes mine (55 kilometres southwest). The multiple intersecting mineralized veins at Maricela make for compelling drill targets that have never been tested. The Company has received drill permits for the property and is currently awaiting final registration of the Company’s option agreement with federal mining authority. Maricela Drone Videos The Company has flown drone videos over the property during the recent geological mapping program. The drone videos highlight some of the property geology and potential and a short presentation clip is available on the Company’s website and at the following link: https://youtu.be/s9SDtTRt0SM The Company’s Earn-In Agreement The Company can earn a 100% interest in the Maricela Project by making staged payments to the private property owner totalling US$1,250,000 over three years with a final payment of US$1,060,000 due at the end of year three. A total of US$30,000 has been paid to date. The owner retains a 1% NSR which the Company can buy back for US$1,000,000. Quality Assurance and Quality Control Reported assays are rock chip and channels samples taken by Company geologists and trained sampling teams. Sample intervals are generally 3 metre chip channels producing samples of between 2 to 9 kilograms. Reported samples were delivered to ALS in Chihuahua. The samples were crushed and pulverized and two 100 gram splits were taken. Company geologists transported a 100 gram split to SGN laboratory in Parral for rapid initial Ag and Au analysis. The second split was analyzed by ALS - 17 - Geochemistry for Au and Ag and multi-elements using method code ME-ICP61 following a four-acid digestion. Overlimits are analyzed using an appropriate method. In effect duplicate analysis was done on all samples, ALS geochemistry an internationally certified laboratory, and by SGN Laboratories in Parral, a reliable mining laboratory that is not internationally certified. This was completed to prevent delays which have become common during the COVID pandemic. The Company routinely inserts multi-element geochemical standards and blanks into the sample stream to monitor both laboratories performance. Quality control samples submitted were returned within acceptable limits. Comparisons between sample splits demonstrate acceptable accuracy and precision. Mexico – Rambler Project In January 2019, the Company staked the 10,379 hectare Rambler Project located in the Sierra Madre Mountains of the State of Chihuahua, Mexico, approximately 20 kilometres northwest of the Company’s Amalia Project. The project area is previously unexplored with only minor historic artisanal-scale pitting of surface outcrops known. The Company’s geologists discovered the project during regional prospecting surveys. Epithermal silver/gold (plus significant copper, zinc and lead) mineralization has been sampled by the Company in several veins, vein breccias and disseminated zones over a 9 kilometre north-west trend. The property will be further evaluated once the license application has been granted. Guatemala - Southeast Guatemala Ag-Au Epithermal Fields The Company signed an agreement in May 2020 whereby it has granted to Volcanic the exclusive option (the “Option”) to acquire a 60% interest in the Company’s Holly and Banderas gold-silver properties in Guatemala. Volcanic may exercise the Option by spending US$7.0 million on exploration of the properties within 48 months from the date drilling permits are granted. First year requirements of incurring at least US$1.0 million on exploration, including carrying out a minimum 3,000 metres of drilling, have been completed by Volcanic. Volcanic was also granted the exclusive right until September 1, 2022 to evaluate the Company’s other property interests in Guatemala and to enter into an agreement to acquire an interest in any of such other properties on reasonable mutually agreed upon terms. Pursuant to an amending agreement dated November 21, 2022, the Company has agreed to extend this right until September 1, 2023. Recent exploration activities conducted by Volcanic on the Holly and Banderas Properties are summarized below. Holly Property In April 2021, Volcanic commenced a diamond core drilling program at Holly, with the emphasis on exploring the high-grade shoots associated with the intersection of the Jocotan Fault Zone and the NW-SE trending high-grade vein systems, La Peña, El Pino and Alpha. A total of 32 drill holes for 5,259 metres of drill core were completed, with the following highlights: • Drilling successfully tested three distinct vein sets cutting the Jocotan fault zone. • High-grade gold and silver intercepts confirmed and extended the La Peña vein system to at least 200 metres below surface. • Exploratory drilling on the El Pino and Alpha systems confirmed mineralization. Drilling at Holly focused on extending the La Peña high-grade system at depth and along strike with a goal of establishing a significant high-grade resource and improving understanding of the controls on high-grade mineralization. The La Peña vein remains open in all directions. Several holes also cut high-grade gold in the Amber vein and Pino target at a shallow depth. The Amber vein, Pino veins, Alpha vein and the untested Jocotan splay targets all have significant potential and will be tested in future drill programs. Figure 1: Holly Project: La Peña target long section with assay results table. - 18 - On June 9, 2022, the Company and joint venture partner, Volcanic, announced a maiden Inferred Mineral Resource Estimate for the Holly property. The mineral resource estimate is reported in accordance with the Canadian Institute of Mining, Metallurgy and Petroleum Definition Standards (2014) incorporated by reference in National Instrument 43-101 - Standards of Disclosure for Mineral Projects. Highlights • A maiden Inferred Mineral Resource has been estimated for the first target, La Peña vein at the Holly project, Guatemala. • The high-grade La Peña vein remains open to expansion along strike and importantly at depth, where exceptionally high-grade results have been returned. • Multiple other drill targets remain un-tested at Holly with potential for new discoveries. Table 1: Holly, Peña Vein Resource Estimate (Effective date 7th June, 2022) Cut-off grade AuEq (2) (g/t) 3.00 Tonnes above cutoff (millions) 1.32 Category Inferred Gold (g/t) Silver (g/t) Gold (oz) Silver (oz) Gold Equivalent(2) (g/t) Gold Equivalent(2) (oz) 6.46 256 272,110 10,913,360 9.57 406,316 Notes: - 19 - 1. Resources estimated using a 3.0 g/t Gold equivalent cut-off grade and a top cap grade of 100 g/t Gold and 2,000 g/t Silver and presented on a 100%-basis 2. Gold Equivalent Au(eq) values based on Au US$1800 and Ag US$22 using formula (Au g/t + (Ag g/t*0.01222)) 3. Mineral Resources which are not Mineral Reserves have not demonstrated economic viability. The estimate of Mineral Resources may be materially affected by environmental, permitting, legal, marketing, or other relevant issues. The mineral resources in this report were estimated using the Canadian Institute of Mining, Metallurgy and Petroleum standards on mineral resources and reserves, definitions, and guidelines prepared by the CIM standing committee on reserve definitions and adopted by the CIM council. Notwithstanding, to meet the requirement that the reported Mineral Resources show “reasonable prospects for eventual economic extraction”. 4. The quantity and grade of reported Inferred resources in this estimation are uncertain in nature and there has been insufficient exploration to define these Inferred Resources as an Indicated or Measured Mineral Resource. It is uncertain if further exploration will result in upgrading them to an Indicated or Measured Mineral Resource category. 5. Contained metal and tonnes figures in totals may differ due to rounding. The Mineral Resource Estimate is underpinned by data from 21 diamond drillholes totalling 3,707 metres of drilling. Drill spacing ranges between 20 and 100 metres. All sample data was composited to a 2D dataset (linear grade and true thickness values) prior to analysis and estimation. The sample database and the topographic survey were reviewed and validated by Bruce Smith, Ludving Monroy and Shawn Rastad prior to being supplied to John Arthur, an independent UK based Resource Consultant. Geological domain modelling was completed by Bruce Smith and Dr John Arthur. Mineral Resource domain modelling, grade interpolation, Mineral Resource classification and reporting of the Mineral Resource statement, was performed by Dr John Arthur. Dr Arthur, Mr Smith, Mr Monroy and Mr Rastad are “qualified persons” within the meaning of National Instrument 43-101 Standards of Disclosure for Mineral Projects (“NI 43-101”). Block modelling was carried out using cell dimensions of 32mE by 32mN by 8 mRL and was coded to reflect the surface topography and mineralised zones. Density values were globally assigned into two zones, an upper zone between 50 to 100 metres from surface had an average density of 2.33t/m³ and below this an average density of 2.52t/m³ was applied. The Mineral Resource Estimate has been classified based on data density, data quality, confidence in the geological interpretation and confidence in the robustness of the grade interpolation. The technical report for the Mineral Resource Estimate was filed on July 27, 2022 and is available on SEDAR. Community Relations In the latter part of 2021 and the first months of 2022, a small group of individuals had been spreading misinformation about our activities and the effects they say mining can have in the region and on February 24, 2022, the Company reported that an incident had occurred at the Holly project, with a fire damaging the drill rig and equipment. Despite significant effort, the anti-mining group has been unable to gain wide community support or halt the project. The main communities covering the Holly project expressed their support of the project and the Company has access agreements with community development councils and private landowners. During the last 12 months approximately 70% of local residents (approximately 1,000 people) have attended Company informative tours of the project site and core shed, keeping people educated about mining and informed of the Company’s activities which employ many people, gaining general support for the project. The Presidential Commission for Peace and Human Rights held coordination meetings with institutions and authorities at the national, departmental, and municipal levels regarding the February incident at Holly and to address concerns of the small minority. From these meetings it is clear that the Central government and Departmental government of Chiquimula support the Holly project. The Radius / Volcanic project team held meetings with the local communities during July and August and the community has requested that we continue with exploration work. Volcanic continues to work closely with the local communities whose primary areas of interest are employment and positive projects. Volcanic is diligently working with the various community participants and is encouraged by steps taken by the Community Councils for Urban and Rural Development (COCODE) of Guatemala to look for further discussion. The - 20 - COCODE is configured as the coordinating entity for participation at the community level and is made up of residents of the corresponding communities. The gold and silver discovery made at Holly is significant. It is a high-grade vein deposit that could be mined from underground, causing very little surface disruption. It will not require a processing plant as in the near future there will likely be two mills in operation within trucking distance; Pan American Silver Corporation’s Escobal and Bluestone Resource Inc.’s Cerro Blanco mines. Further, the Holly deposit is open in all directions. The Company and Volcanic will continue to move forward at a pace that will protect the investment we have made and the value we have created. Volcanic is currently advancing various studies and reports for the Holly property including a hydrogeological study, an environmental monitoring report and a mine design and facility report. Volcanic intends to resume drilling at Holly once Bluestone Resources has been granted a permit to build a mine nearby at Cerro Blanco. Bluestone has issued an update on Cerro Blanco (see Bluestone news release October 3, 2022). Bluestone has made significant progress in advancing its Cerro Blanco Project and as a result has drawn attention from certain anti-mining groups known in the region for spreading misinformation. According to Volcanic’s research, the lead anti-mining organization brought together opposition groups from El Salvador and other parts of Guatemala to unfairly portray public opinion on future mining activities within the municipal limits of Asuncion Mita where the Cerro Blanco deposit is located. However, according to local news reports (Prensa Libre/26 September), the constitutional court of Guatemala has annulled the illegitimate community consultation carried out by the anti-development groups, thereby establishing legal certainty that only the Guatemala mining ministry is competent to perform such consultations. Current Work Program In February 2023, Volcanic announced that it has commenced technical studies to support an upgrade of the Holly exploration licence to an exploitation licence. Volcanic continues to monitor and build environmental, hydrogeological, and social baseline studies for the Holly property. Guatemalan and Mexican-based engineering companies have been commissioned to compile the technical studies and civil engineering design for an underground mining project, with assumed processing off-site. The mine design will be an early-stage concept for permitting purposes and will not meet the requirements of a preliminary economic assessment. Motagua Norte Project Volcanic conducted widespread exploration of the Company’s large regional land position under the option agreement signed in May 2020. Motagua Norte is an area that has been identified with significant promise. The legal, environmental and community studies required to support the applications for the exploration licences have been submitted to the competent authorities. The Company is working with local community representatives, and local and national government authorities to have the exploration licences granted in the coming months. Motagua Norte is interpreted as an orogenic vein and stockwork system with extensive areas of bonanza-grade quartz float, subcrop and outcrop. On the main Mila prospect quartz vein outcrop and locally displaced quartz boulders cover an area of 550 x 270 metres. In the last two years a total of 383 rock chip samples have been collected across this area of which 100 returned assays of over 10 g/t gold including 20 in excess of 100 g/t gold with a best of 692 g/t. With these extremely high gold grades already defined at surface it is intended to move quickly to drilling as soon as the exploration licenses are granted. The Company is currently considering terms for a possible option of the Project to Volcanic. Banderas Property The Banderas project, located some 7 kilometres south of the Holly project, contains two styles of gold-silver mineralisation: the extensive Banderas gold-silver vein systems and the Zapote breccias. The Banderas vein system is an approximately 500 metre wide corridor of gold-silver quartz veins and stockwork recognized along a 3.5 kilometre strike length. Shallow, wide-spaced drilling along the two principal veins returned best intercepts of 1.5 metres at 70 g/t gold and 516 g/t silver, and 6.7 metres at 4 g/t gold and 70 g/t silver. - 21 - The Zapote Zone is a less advanced exploration target located some 1.5 kilometres to the west of the Banderas veins. Numerous quartz veins and extensive alteration occurs at the contact between a large dacitic dome and the andesite and rhyolite country rock. Historic rock chip sampling over a 150 metre-wide belt along an 800 metre length of this contact has returned strongly anomalous gold-silver mineralization. To the southeast, the mineralization disappears under an extensive area of thick colluvium. Recent sampling has identified the continuation of the Zapote system 850 metres along strike to the southeast with rock chip values up to 2.7 g/t gold and 14.7 g/t silver. No drilling has been conducted at Zapote target. A planned drill program at Banderas has been suspended while Volcanic works on access agreements with an adjoining community. Access agreements are in place with the community covering the drill project at Banderas, but further consultation and work is required with the adjoining community to ensure the benefits of the project are spread out and all affected communities in the area consent. Volcanic is maintaining its application for an exploitation licence for the property which will be advanced when exploration is resumed. Royalty Interests Guatemala – Tambor Project Royalty The Company holds a royalty interest in the Tambor gold project in Guatemala which is owned by Kappes, Cassiday & Associates (“KCA”) The initial royalty payments due to the Company are to be based on the price of gold at the time and the number of ounces of gold produced, ranging from US$100 per ounce when the gold price is below $1,200 up to $250 per ounce when the gold price is $1,500 or greater, up to a maximum of US$10.0 million. After the US$10.0 million has been paid and cumulative gold production from the Tambor Project has exceeded 100,000 ounces, the cash payments will be based on the then price of gold and the number of ounces of gold produced, ranging from US$25 per ounce when the gold price is below $1,500 up to $50 per ounce when gold price is $1,500 or greater. Commercial production commenced at the Tambor project in December 2014 and receipt of royalty payments by the Company commenced during the third quarter of 2015. To date, the Company has recognized net royalty income of $1,530,555 of which $746,375 has been received. In May 2016, KCA informed the Company that mining operations were suspended by the Supreme Court of Guatemala due to a lack of consultation by the Guatemalan Ministry of Mines with local indigenous people when the mine was permitted in 2011. The Supreme Court has not yet made a decision on when the mine may re-open, and as a result, KCA initiated a Central America Free Trade Agreement Arbitration action against the Guatemalan government to overturn the suspension of operations and seek compensation from the Guatemalan authorities, from which the Company would benefit as well. KCA is currently in the valuation stage of the Arbitration and the determinative hearing is yet to occur. Until these proceedings are concluded, the Company is allowing KCA to defer payment of the remaining balance owing to the Company. Due to these circumstances, for accounting purposes, a provision was recorded against the KCA receivable in the 2016 fiscal year. Mexico - Tlacolula Property Royalty In 2017, the Company completed the sale of its Tlacolula silver property, Mexico to Fortuna Silver Mines Inc. in consideration for 239,385 common shares of Fortuna, a cash payment of US$150,000, and a 2% NSR royalty on the property. Fortuna retains the right to purchase one-half of the royalty by paying the Company US$1.5 million. Outlook Management of the Company is enthusiastic about the current exploration programs at multiple targets. The Company plans to continue its strategy of conducting property evaluations and grassroots exploration on properties in various jurisdictions with a focus on gold and silver in Mexico. Qualified Person: Bruce A Smith, M.Sc., MAIG., a member of the Australian Institute of Geoscientists, is the Company’s Qualified Person as defined by National Instrument 43-101, and has approved the disclosure of the technical information in this MD&A. Selected Annual Information - 22 - The following table sets forth selected annual financial information of the Company for, and as at, the end of each of the last three financial years ended December 31, 2022, 2021, and 2020: Investment and other income Exploration expenditures Net income (loss) for the year Total Basic & fully diluted per share Total assets Total long-term liabilities Cash dividends 2022 ($) 9,954 732,140 1,076,154 0.01 3,711,214 81,942 - 2021 ($) 3,048 690,258 (892,648) (0.01) 2,803,553 154,631 - 2020 ($) 6,186 731,021 (893,037) (0.01) 3,753,243 218,891 - Investment and other income were higher for the 2022 fiscal year due to the periodic rise of interest rates throughout 2022. The 2022 fiscal year resulted in a net income compared to net losses for the 2021 and 2020 fiscal years due to a $1,350,913 gain on reclassification as an equity investment. The gain relates to the Company’s holding of Rackla shares that was previously treated as an investment in associate with a carrying cost of $1 and their fair value being $1,350,914 at the time of reclassification. Total assets trended lower for the 2020 and 2021 fiscal years as a result of the Company liquidating a portion of its equity investments over the course of that time to help fund operations and only the minimum carrying cost of Rackla shares held contributed to the total asset amount. With the Rackla reclassification, total assets increased in the current fiscal year. Long- term liabilities presented for all three fiscal years are related to a lease liability associated with an office lease, a right-to-use asset, which expires at the end of 2024. The lease liability decreases each year as the remaining term of the office lease decreases. Quarterly Information The following table provides information for the eight fiscal quarters ended December 31, 2022: Quarter ended Investment and other income Dec. 31, 2022 ($) 4,674 Sep. 30, 2022 ($) 3,433 June 30, 2022 ($) 1,348 Mar. 31, 2022 ($) 499 Dec. 31, 2021 ($) 583 Sep. 30, 2021 ($) 669 June 30, 2021 ($) Mar. 31, 2021 ($) 839 957 Exploration expenditures 177,248 172,255 201,132 181,505 165,417 242,398 156,033 126,410 Net income (loss) 1,028,546 (231,529) 567,114 (287,977) (476,632) (330,655) 287,608 (372,969) Basic and diluted income (loss) per share 0.01 0.00 0.00 (0.00) (0.01) (0.00) 0.00 (0.00) The most recently completed quarter resulted in a net income of $1,028,546 due to a gain of $1,350,913 from reclassifying the Company’s holdings of Rackla’s shares from an investment in associate to an equity investment. The quarters ended June 30, 2022 and 2021 resulted in a net income position due to gains of $859,523 and $488,705, respectively, from the Amalia Project option agreement with Pan American. Results of Operations Quarter ended December 31, 2022 The quarter ended December 31, 2022 had a net income of $1,028,546 compared to a net loss of $476,632 for the quarter ended December 31, 2021, a difference of $1,505,178. As noted above, the current quarter recorded a net income due to the gain on reclassification of shares held in Rackla. Exploration expenditures for the current quarter totaled $177,248 compared to $165,417 for the comparative quarter, an increase of $11,831. - 23 - General and administrative expenses for the current quarter were $185,846, compared to $296,632for the comparative quarter, a decrease of $110,786. This decrease is primarily due to a share-based compensation expense of $23,750 in the current quarter compared to $151,310 for the comparative quarter, a decrease of $127,560. Stock-based compensation expense for the current quarter relates to the value of shares to be issued as part of a compensation package for the Chief Executive Officer of the Company whereas the comparative quarter expense relates to this and also the fair value of stock options granted during the quarter to various employees. Another notable cost decrease in the current quarter was in shareholder communications costs, which were $17,882 less than those for the comparative quarter due to less promotional activities. Notable cost increases for the current quarter were in salaries and benefits, travel and accommodation, and legal and audit fees. Salaries and benefits costs were higher due to the addition of more personnel and the allocation of costs that are shared amongst a group of companies increasing since the comparative quarter. Travel costs were higher due to increased travel activities in the current quarter than in the comparative quarter. Audit and legal fees were higher due to more costs associated with subsidiaries and a slight increase in estimated audit fees for the current year. Year ended December 31, 2022 The year ended December 31, 2022 had a net income of $1,076,154 compared to a net loss of $892,648 for the year ended December 31, 2021, a difference of $1,968,802. As with the quarterly comparison, the current year resulted in a net income position due to the gain on reclassification of Rackla shares. The current year also recorded a gain of $894,097 on mineral property option agreements compared to a gain of $488,705 in the comparative year, an increase of $405,392. Both the current and comparative years recorded a gain on the disposal of equipment located in Guatemala with the gains being $12,440 and $62,964, respectively. Exploration expenditures, net of cost recoveries, for the current year totaled $732,140 compared to $690,258 for the comparative year, an increase of $41,882. The comparative year also recorded a mineral property write-off of $117,816 relating to a formerly held property in the United States. There were no such write-offs for the current year. General and administrative expenses for the current year were $522,680, compared to $629,033 for the comparative year, a decrease of $106,353. As with the quarterly comparison, this decrease is primarily due to a share-based compensation expense of $46,875 in the current year compared to $174,845 for the comparative year, a decrease of $127,970. Other notable cost decreases for the current year were in shareholder communications due to less promotional activity, and reduced office and administration costs associated with maintaining foreign subsidiaries. Also similar to the quarterly comparison, notable cost increases for the current year were in salaries and benefits, travel and accommodation, and audit and legal fees and for the same reasons. There was no change in management fees, and the current and comparative years recorded similar costs for transfer agent and regulatory fees. Mineral Properties Expenditures A summary of the Company’s expenditures on its mineral properties during the year ended December 31, 2022 is as follows: Mexico – A total of $716,599, excluding cost recoveries, was incurred on exploration, property investigation, and miscellaneous administrative costs, of which $127,493 was on the Amalia property, $209,590 was on the Plata Verde property, $25,583was on the Maricela property, and $353,933 was on general exploration. Cost recoveries relating to funding from Pan American on the Amalia property totaled $788,839 for option payments and $13,978 for exploration costs. Cost recoveries relating to funding from Fresnillo on the Plata Verde property totaled $241,108 for the Company’s underlying option payments and $157,530 for exploration costs. Guatemala – A total of $81,466 was incurred on investigation of new opportunities and maintenance of its Southeast Guatemala properties. Other – A total of $105,583 was incurred on property investigation costs in regions other than Mexico and Guatemala. Further details regarding exploration expenditures for the years ended December 31, 2022 and 2021 are provided in the schedules at the end of this MD&A. Liquidity and Capital Resources - 24 - The Company’s cash and cash equivalents were $1.42 million at December 31, 2022 compared to $1.53 million at December 31, 2021. As at December 31, 2022, working capital was $3.25 million compared to $2.22 million at December 31, 2021. Included in working capital is the fair value of the Company’s equity investments which as of December 31, 2022 was $1.87 million compared to $0.74 million as of December 31, 2021. During the year ended December 31, 2022, the Company received an option payment of $859,523 (US$700,000) and in the 2021 fiscal year, received an option payment of $488,705 (US$400,000), both relating to the Amalia Project option agreement with Pan American. Included in working capital for the current year are 3,973,275 common shares in Rackla that were previously accounted for as an investment in associate and thereby excluded from working capital in prior reporting periods. The change in accounting treatment for the investment in Rackla was due to Rackla issuing a significant amount of shares during the 2022 fiscal year and the Company no longer considered to be able to exercise significant influence on Rackla. The Company did not earn any royalty revenue from the Tambor Project during the current year as the operations at Tambor continue to be suspended. The Company intends to use the proceeds from any sales of its equity investments, option payments received, and royalty income payments received to fund its exploration programs, investment opportunities, and general working capital requirements. The Company expects its current capital resources to be sufficient to cover its corporate operating costs but not significant exploration activity for the next twelve months and as such will seek to raise additional capital as needed to carry out planned exploration programs. Commitment The Company is party to an operating lease agreement for its office premises. The Company shares its office space with other companies related by common directors and officers on a month-to-month basis, and the portion of the rent paid by these companies is netted against the Company’s rental expense. However, as there are no commitments from these companies, the amounts presented below are the gross commitments of the Company. The annual commitments under the lease are as follows: 2023 2024 $ 131,952 133,869 $ 265,821 For the year ended December 31, 2022, the Company received a total of $99,875 (2021: $96,255) from those companies which share office space with the Company. Financial Instruments and Risk Management The Company is exposed to the following financial risks: • Market Risk • Credit Risk • Liquidity Risk In common with all other businesses, the Company is exposed to risks that arise from its use of financial instruments. This section describes the Company’s objectives, policies and processes for managing those risks and the methods used to measure them. Further quantitative information in respect of these risks is presented throughout the accompanying consolidated financial statements. General Objectives, Policies and Processes The Board of Directors has overall responsibility for the determination of the Company’s risk management objectives and policies and, whilst retaining ultimate responsibility for them, it has delegated the authority for designing and operating processes that ensure the effective implementation of the objectives and policies to the Company’s finance function. The Board - 25 - of Directors receive periodic reports through which it reviews the effectiveness of the processes put in place and the appropriateness of the objectives and policies it sets. The overall objective of the Board is to set policies that seek to reduce risk as far as possible without unduly affecting the Company’s competitiveness and flexibility. Further details regarding these policies are set out below. a) Market Risk Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices. Market prices are comprised of three types of risk: foreign currency risk, interest rate risk, and equity price risk. Foreign Currency Risk Foreign currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates. The Company is exposed to fluctuations in foreign currencies through its operations in foreign countries. The Company monitors this exposure but has no hedge positions. As at December 31, 2022, the Company is exposed to currency risk through the following financial assets and liabilities denominated in currencies other than the Canadian dollar: December 31, 2022 December 31, 2021 US Dollar Mexican Peso Guatemala Quetzal US Dollar Mexican Peso Guatemala Quetzal (CDN equivalent) (CDN equivalent) (CDN equivalent) (CDN equivalent) (CDN equivalent) (CDN equivalent) Cash Receivables Current liabilities $ 735,977 14,681 (15,867) $ 8,141 51,634 - $ 11,146 - (1,376) $ 404,866 - (27,883) $ 2,341 6,625 - $ 14,507 - (1,050) $ 734,791 $ 59,775 $ 9,770 $ 376,983 $ 8,966 $ 13,457 Based on the above net exposures at December 31, 2022, a 10% depreciation or appreciation of the above currencies against the Canadian dollar would result in approximately a $80,400 (2021: $39,900) increase or decrease in profit or loss, respectively. Commodity Price Risk The Company’s royalty revenue is derived from a royalty interest that is based on the extraction and sale of gold. Factors beyond the control of the Company may affect the marketability of gold discovered. Gold prices have historically fluctuated widely. Consequently, the economic viability of the Company’s royalty interest cannot be accurately predicted and may be adversely affected by fluctuations in gold prices. The Company has not engaged in any hedging activities. The Company is not exposed to commodity price risk as the Company has not earned any royalties during the years ended December 31, 2022 and 2021. Interest Rate Risk Interest rate risk is the risk that future cash flows will fluctuate as a result of changes in market interest rates. The Company does not have any borrowings. Interest rate risk is limited to potential decreases on the interest rate offered on cash held with chartered Canadian financial institutions. The Company considers this risk to be limited as it holds no assets or liabilities subject to variable rates of interest. Equity Price Risk Equity price risk is the uncertainty associated with the valuation of assets arising from changes in equity markets. The Company’s equity investments consisting of common shares and derivative investments consisting of share purchase warrants are exposed to significant equity price risk due to the potentially volatile and speculative nature of the businesses in which the investments are held. The Company’s equity investments are monitored by the Board with decisions on sale or exercise taken by Management. A 10% decrease in fair value of the shares and warrants would result in an approximate $187,000 (2021: $74,000) decrease in comprehensive income and shareholders’ equity. - 26 - b) Credit Risk Credit risk is the risk of an unexpected loss if a customer or third party to a financial instrument fails to meet its contractual obligations. The Company’s credit risk is primarily attributable to its cash and cash equivalents, equity investments, and receivables. The Company limits exposure to credit risk by maintaining its cash and cash equivalents with large financial institutions. The Company does not have cash and cash equivalents or equity investments that are invested in asset based commercial paper. For advances and other receivables, the Company estimates, on a continuing basis, the probable losses and provides a provision for losses based on the estimated realizable value. c) Liquidity Risk Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they fall due. The Company’s approach to managing liquidity risk is to provide reasonable assurance that it will have sufficient funds to meet liabilities when due. The Company manages its liquidity risk by forecasting cash flows required by operations and anticipated investing and financing activities. Related Party Transactions The Company had transactions during the years ended December 31, 2022 and 2021 with related parties who consisted of directors, officers and the following companies with common directors: Related Party Mill Street Services Ltd. (“Mill Street”) Gold Group Management Inc. (“Gold Group”) Volcanic Rackla Nature of Transactions Management fees Shared general and administrative expenses Investment and exploration support Investment and shared personnel expenses The Company incurred the following expenditures charged by non-key management officers and companies which have common directors with the Company during the years ended December 31, 2022 and 2021: General and administrative expenses: Salaries and benefits Exploration expenditures: Salaries and benefits Three months ended December 31, 2021 2022 Year ended December 31, 2021 2022 $ 3,600 $ 4,800 $ 12,720 $ 16,400 4,492 - 17,224 - $ 8,092 $ 4,800 $ 29,944 $ 16,400 The Company reimburses Gold Group, a company controlled by Simon Ridgway, a Director of the Company, for shared administrative costs and other business-related expenses paid by Gold Group on behalf of the Company. During the years ended December 31, 2022 and 2021, the Company reimbursed Gold Group the following: - 27 - Three months ended December 31, 2021 2022 Year ended December 31, 2021 2022 $ 11,089 3,768 44,807 525 3,154 $ 9,506 5,559 25,304 92 1,609 $ 37,743 14,238 144,496 3,169 11,514 $ 33,311 19,859 98,297 4,402 5,091 $ 63,343 $ 42,070 $ 211,160 $ 160,960 General and administrative expenses: Office and miscellaneous Shareholder communications Salaries and benefits Transfer agent and regulatory fees Travel and accommodation Exploration expenditures $ 670 $ 261 $ 670 $ 868 Gold Group salaries and benefits costs for the years ended December 31, 2022 include those for the Chief Financial Officer, Vice President Corporate Development, and Corporate Secretary (2021: includes those for the Chief Financial Officer and the Corporate Secretary). During the year ended December 31, 2022, the Company charged $4,795 (2021: $32,095) to Volcanic, a company which has a common director with the Company, for shared exploration personnel costs. During the 2021 fiscal year, the Company sold its field equipment and supplies located in Guatemala to Volcanic for $50,000 and recorded a gain on disposal of equipment for this amount. During the year ended December 31, 2022, the Company charged $27,832 (2021: $821) to Rackla, a company which has three common directors with the Company, for shared exploration personnel costs. Receivables include an amount of $7,007 (2021: $ Nil) owed from Rackla, $Nil (2021: $2,500) owed from Volcanic, and $Nil (2021: $15,106) owed from Gold Group. Prepaid expenses and deposits include an amount of $5,850 (2021: $10,530) paid to Gold Group for shared office and administrative services. Long-term deposits include an amount of $60,000 (2021: $60,000) paid to Gold Group as a deposit on the shared office and administrative services agreement. Accounts payable and accrued liabilities include $17,927 (2021: $Nil) payable to Gold Group for shared administrative costs, $571 (2021: $Nil) to Bruce Smith, the President and Chief Executive Officer of the Company, for expense reimbursement, and $9,556 (2021: $Nil) payable to Volcanic for shared exploration costs. Key management compensation Key management personnel are persons responsible for planning, directing and controlling the activities of an entity, and include certain directors and officers. Key management compensation comprises: Geological fees included in exploration expenditures Management fees Salaries, benefits and fees* Share-based payments – fair value of shares to be issued - 28 - Three months ended December 31, 2021 2022 Year ended December 31, 2021 2022 $ 39,000 16,500 10,726 $ 39,000 16,500 7,367 $ 156,000 66,000 32,610 $ 156,000 66,000 27,409 23,750 73,750 46,875 73,750 $ 89,976 $ 136,617 $ 301,485 $ 323,159 *Included in reimbursements to Gold Group As at December 31, 2022, the Company has an obligation to issue 500,000 common shares to the Chief Executive Officer of the Company per the terms of a shares for services agreement dated January 1, 2021. A share-based compensation expense of $46,875 was recorded during the year ended December 31, 2022 for the fair value of the shares to be issued during that period (2021: $73,750). Key management compensation includes management and geological fees paid to Mill Street, a company controlled by Simon Ridgway, a Director of the Company. Other Data Additional information related to the Company is available for viewing at www.sedar.com. Share Position and Outstanding Options As at the date of this MD&A, the Company’s outstanding share position is 87,268,550 common shares and the following incentive stock options are outstanding: Number of options 1,230,000 1,465,000 75,000 850,000 280,000 50,000 50,000 50,000 300,000 75,000 4,425,000 STOCK OPTIONS Exercise price $0.15 $0.15 $0.15 $0.25 $0.15 $0.27 $0.34 $0.24 $0.34 $0.20 Expiry date October 18, 2026 May 21, 2028 November 4, 2028 October 7, 2029 March 15, 2030 December 8, 2030 February 10, 2031 March 3, 2031 October 25, 2031 January 9, 2033 Investment in Associate Rackla As at December 31, 2022, the Company held 3,973,275 (2021: 3,973,275) common shares of Rackla, representing 6.8% (2021: 11.4%) of Rackla’s outstanding common shares. Rackla previously met the definition of an associate and was equity accounted for in the consolidated financial statements. During the year ended December 31, 2022, Rackla no longer met the definition of an associate when its interest in Rackla was - 29 - diluted to a level significantly below 20% on December 22, 2022 when Rackla issued 12,615,000 common shares by way of private placements to different parties. Therefore, the Company’s investment in Rackla was reclassified as an equity investment. Upon discontinuing the use of the equity method, an investment, if a financial asset, is to be measured at fair value and the difference between the fair value and the carrying value of the investment recognized in profit or loss. The fair value of the investment in Rackla at the time of reclassification was $1,350,914 and its carrying cost was $1. As a result, a gain of $1,350,913 was recognized in the consolidated statement of income and comprehensive income for the year ended December 31, 2022. The following table shows the continuity of the Company’s investment in Rackla for the years ended December 31, 2022 and 2021: Balance, December 31, 2020 and 2021 Reclassification as equity investment Balance, December 31, 2022 $ 1 (1) $ - Prior to the 2015 fiscal year the Company’s share of losses in Rackla exceeded the carrying value of its interest and therefore the Company has not recognized any of its share of losses for the year ended December 31, 2022 and 2021. The cumulative unrecognized share of losses for the associate as at December 22, 2022 is $859,282 (2021: $715,782). The financial statement balances of Rackla are as follows: Total current assets Total assets Total liabilities Net loss December 31, 2022 December 31, 2021 $ 4,442,533 $ 4,662,131 $ 1,253,257 $ 1,678,387 $ 35,036 $ 1,319,441 $ 294,671 $ 221,818 Accounting Policies and Basis of Presentation The Company’s significant accounting policies and future changes in accounting policies are presented in the audited consolidated financial statements for the year ended December 31, 2022. Future Changes in Accounting Policies The Company has reviewed upcoming policies and amendments and determined that none are expected to have an impact on the Company’s consolidated financial statements. Risks and Uncertainties Royalty revenue The Company cannot predict future revenues from or operating results of mining activity. Management expects any future royalty revenues from the Tambor Project to fluctuate depending on the level of future production and the price of gold. The owner of the Tambor Project is not obligated to re-start or continue production from the Tambor Project and the Company will not be entitled to any compensation if this mining operation does not meet its forecasted gold production targets or if the mine operations are discontinued on a temporary or permanent basis. Risks that could negatively affect a mine’s operations include, but are not limited to economics, lack of financial capital, floods, fire, mechanical malfunctions, social unrest, expropriation, environmental regulations, and legal and/or political changes. The Tambor Project is currently subject to a suspension of operations imposed by the Supreme Court of Guatemala. Competition - 30 - The Company faces competition from other capital providers, all of which compete with it for investment opportunities. These competitors may limit the Company’s opportunities to acquire interests in investments that are attractive to the Company. The Company may be required to invest otherwise than in accordance with its Investment Policy and strategy in order to meet its investment objectives. If the Company is required to invest other than in accordance with its Investment Policy and strategy, its ability to achieve its desired rates of return on its investments may be adversely affected. Inability to dispose of illiquid securities There is a possibility that the Company will be unable to dispose of illiquid securities held in its portfolio and if the Company is unable to dispose of some or all of its investments at the appropriate time, a positive return on such investment may not be realized. Due diligence The due diligence process undertaken by the Company in connection with investments that it makes or wishes to make may not reveal all relevant facts in connection with an investment. Before making investments, the Company will conduct due diligence investigations that it deems reasonable and appropriate based on the facts and circumstances applicable to each investment. The due diligence investigations that are carried out with respect to any investment opportunity may not reveal or highlight all relevant facts that may be necessary or helpful in evaluating such investment opportunity. Moreover, such an investigation will not necessarily result in the investment being successful. Mineral property exploration and mining The business of mineral deposit exploration and extraction involves a high degree of risk. Few properties that are explored ultimately become producing mines. At present, none of the Company’s properties has a known commercial ore deposit. The main operating risks include securing adequate funding to maintain and advance exploration properties; ensuring ownership of and access to mineral properties by confirmation that option agreements, claims and leases are in good standing; and obtaining permits for drilling and other exploration activities. If the Company does not satisfactorily complete its contribution requirements to any joint ventures it may be a party to, the Company’s interest in a joint venture can be diluted to a point where all interest in the joint venture is forfeited. Joint venture funding The Company’s strategy includes seeking partners through joint ventures to fund exploration and project development. The main risk of this strategy is that funding partners may not be able to raise sufficient capital in order to satisfy exploration and other expenditure terms in a particular joint venture agreement. As a result, exploration and development of one or more of the Company’s property interests may be delayed depending on whether the Company can find another partner or has enough capital resources to fund the exploration and development on its own. Commodity price The Company is exposed to commodity price risk. Declines in the market price of gold, silver, base metals and other minerals may adversely affect the Company’s ability to raise capital or attract joint venture partners in order to fund its ongoing operations. Commodity price declines could also reduce the amount the Company would receive on the disposition of one of its mineral properties to a third party. The Company’s past royalty revenue was derived from a royalty interest that is based on the extraction and sale of gold. Factors beyond the control of the Company may affect the marketability of precious and base metals discovered or extracted. Metal prices have historically fluctuated widely. Consequently, the economic viability of the Company’s property and royalty interests cannot be accurately predicted and may be adversely affected by fluctuations in metal prices. Financing and share price fluctuation - 31 - The Company had a limited source of operating cash flow in the form of royalty revenue from the Tambor property; however, that property is currently subject to suspension of operations. There is no assurance that additional funding from this or other sources will be available to the Company when needed for further exploration and development of its projects. Further exploration and development of one or more of the Company’s projects may be dependent upon the Company’s ability to obtain financing through equity or debt financing or other means. Failure to obtain this financing could result in delay or indefinite postponement of further exploration and development of its projects which could result in the loss of one or more of its properties. Securities markets have at times in the past experienced a high degree of price and volume volatility, and the market price of securities of many companies, particularly those considered to be exploration stage companies such as the Company, have experienced wide fluctuations in share prices which have not necessarily been related to their operating performance, underlying asset values or prospects. There can be no assurance that these kinds of share price fluctuations will not occur in the future, and if they do occur, how severe the impact may be on the Company’s ability to raise additional funds through equity issues or the value of the Company’s equity and derivative investments and corresponding effect on the Company’s financial position. Political, regulatory and currency Some of the Company’s mineral property interests are located in emerging nations. Properties in emerging nations may be subject to a higher level of risk compared to developed countries. Operations, the status of mineral property rights, title to the properties and the recoverability of amounts shown for mineral properties in emerging nations can be affected by changing economic, regulatory and political situations. The Company’s equity financings are sourced in Canadian dollars but for the most part it incurs its exploration and property maintenance expenditures in US dollars, Guatemalan quetzals, and Mexican pesos. At this time there are no currency hedges in place. Therefore a weakening of the Canadian dollar against the US dollar, Guatemalan quetzal, or Mexican peso could have an adverse impact on the amount of exploration conducted. Insurance In the course of exploration, development and production of mineral properties, the Company is subject to a number of hazards and risks in general, including adverse environmental conditions, operational accidents, labor disputes, unusual or unexpected geological conditions, changes in the regulatory environment and natural phenomena such as inclement weather conditions, floods, earthquakes, and pandemics. Such occurrences could result in damage to the Company’s properties or facilities and equipment, personal injury or death, environmental damage to properties of the Company or others, delays, monetary losses and possible legal liability. Although the Company may maintain insurance to protect against certain risks in such amounts as it considers reasonable, its insurance may not cover all the potential risks associated with its operations. The Company may also be unable to maintain insurance to cover these risks at economically feasible premiums or for other reasons. Should such liabilities arise, they could reduce or eliminate future profitability and result in increased costs, have a material adverse effect on the Company’s results and a decline in the value of the securities of the Company. Environmental and social The activities of the Company are subject to environmental regulations issued and enforced by government agencies. Environmental legislation is evolving in a manner that will require stricter standards and enforcement and involve increased fines and penalties for non-compliance, more stringent environmental assessments of proposed projects, and a heightened degree of responsibility for companies and their officers, directors and employees. There can be no assurance that future changes in environmental regulation, if any, will not adversely affect the Company’s operations. Environmental hazards may exist on properties in which the Company holds interests which are unknown to the Company at present. Social risks are fairly significant in some of the Company’s areas of operations. Violence, kidnapping, theft and other criminal activities could disrupt supply chains and discourage qualified individuals from being involved with the Company's operations. Global Pandemic - 32 - The Company faces risks related to health epidemics and other outbreaks of communicable diseases, which could significantly disrupt its operations and may materially and adversely affect its business and financial conditions. The Company’s business could be adversely impacted by the effects of the COVID-19 coronavirus which was declared a global pandemic by the World Health Organization in March 2020 and continues to be to the present time. The COVID-19 pandemic did not have a significant impact on the Company’s operations during the current period. The extent to which COVID-19 may impact the Company’s business, including its operations and the market for its securities, will continue to depend on future developments which cannot be predicted, and include the duration, severity and scope of the outbreak and the actions taken to contain or treat the outbreak. The continued spread of COVID-19 globally could materially and adversely impact the Company’s business, financial condition and results of operations including without limitation, employee health, workforce productivity, increased insurance premiums, limitations on travel, the availability of industry experts and personnel, restrictions to any drill programs and/or the timing to process drill and other metallurgical testing, and other factors that will depend on future developments beyond the Company’s control. The international response to the spread of COVID-19 has led to periods of significant restrictions on travel, temporary business closures, quarantines, global stock market volatility and a general reduction in consumer activity. Such public health crises can result in operating and supply chain delays and disruptions, global stock market and financial market volatility, declining trade and market sentiment, reduced movement of people and labour shortages, and travel and shipping disruption and shutdowns, including as a result of government regulation and prevention measures, or a fear of any of the foregoing, all of which could affect commodity prices, interest rates, credit ratings, credit risk and inflation. Mineral Properties Expenditure Detail (see following page) Mineral Properties Expenditure Detail - 33 - CONSOLIDATED SCHEDULE OF EXPLORATION EXPENDITURES For the year ended December 31, 2022 Exploration administration Geochemistry Geological services Legal and accounting Licenses, rights and taxes Salaries and wages Travel and accommodation Expenditures recovered Guatemala Mexico Other General Exploration Mineral Properties General Exploration Mineral Properties General Exploration $ 1,015 - 10,127 1,655 - - - $ 5,438 - 37,812 - - 24,253 1,166 $ 5,699 72,963 136,350 21,625 367 43,502 73,427 $ 932 - 88,372 30,701 151,122 61,327 30,212 $ - 8,592 70,205 - - 12,767 14,019 Total $ 13,084 81,555 342,866 53,981 151,489 141,849 118,824 12,797 - 68,669 - 353,933 - 362,666 (171,508) 105,583 - 903,648 (171,508) $ 12,797 $ 68,669 $ 353,933 $ 191,158 $ 105,583 $ 732,140 CONSOLIDATED SCHEDULE OF EXPLORATION EXPENDITURES For the year ended December 31, 2021 Exploration administration Geochemistry Geological services Legal and accounting Licenses, rights and taxes Salaries and wages Travel and accommodation Value-added taxes USA Guatemala Mexico Other General Exploration Mineral Properties General Exploration Mineral Properties General Exploration Mineral Properties General Exploration $ 1,241 1,526 - - 1,527 4,973 1,786 - $ - - - - - 1,046 - - $ 126 - 21,024 - - 474 1,463 - $ 137 - 28,350 - - - 10,609 - $ 4,193 38,387 201,700 24,814 1,868 23,420 44,715 5,450 $ 6,785 15,193 183,557 15,753 43,253 187,119 54,211 - $ 1,427 - 30,000 - - - 2,958 - Total $ 13,909 55,106 464,631 40,567 46,648 217,032 115,742 5,450 11,053 1,046 23,087 39,096 344,547 505,871 34,385 959,085 Expenditures recovered - - - - - (268,827) - (268,827) $ 11,053 $ 1,046 $ 23,087 $ 39,096 $ 344,547 $ 237,044 $ 34,385 $ 690,258 

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