Opportunity Served on a Silver Platter

0:11 Hi, everyone. Welcome to Menarche Minerals Live Investment Summit hosted by 6, an opportunity served on a silver platter. I'm pleased to introduce our speakers for today. We have Carlos Espinoza, President, CEO, and Director. And we have Michael R. Smith, Executive Vice President, Exploration, and QP. Carlos and Michaels will walk us through a company presentation, and then we'll be taking questions live. Remember, you can submit your questions at any time on the Q&A panel on the right-hand side of your screen. And as always, This presentation is being recorded and will be available for you to watch afterwards on SIX.com. If you'd like to download the presentation, you'll be able to in the handouts tab on the right hand side of your screen.

0:58 So now without further ado, I will hand it over to you, Carlos. Excellent. Thank you very much, Dasha. Good afternoon,

1:04 everyone. Thank you for taking the time to share with us and give us the opportunity to present to you Monarcha Minerals. Some of you already have some information about us. Some of you already invest in the company, and I'm sure some of you are learning about our story. So this is a great opportunity to share this information with you. We have this disclaimer we need to share with everyone. You know, it's mandatory, but we want to jump into real presentation. First of all, I want to make a quick introduction about the company. And they're gonna pass the microphone to Michael Smith, our executive VP of exploration and QP, who really gonna talk to you in more detail about the technical aspects of our assets.

2:01 But we are a joint operation company listed on TSX-V with 3 assets in Mexico, silver and gold assets located in the states of Durango and Chihuahua in northern Mexico, both of them very friendly mining jurisdictions. So we are happy to be there. And we have 2 parks in Durango, Tejamen and San Lucas, which are the original parks that we have. And recently, last year, we acquired San Jose in Chihuahua. We are now preparing for a drilling program in Chihuahua for about 5 to 10,000 meters drilling. And Mike is gonna talk to you a little bit more about this. But I think this is a great opportunity to give you, for those who already know about Monarca, to give you an update, and for the new people to learn about our plans in the near future.

2:58 I just want to highlight also the importance of having Mike with us. Michael is a very experienced geologist based in Arizona, but he's been working all the way from the US to Latin America. He run one of the operations in Arizona. He was in Continental Gold in Colombia and he'd been working with us for the last, I believe 9 years now. So he knows very well the properties. He knows very well Mexico, he's bilingual. So he's a great asset for Monarca. Just quickly, I want to mention for those of you who don't already know, we went to a private placement on last summer, very successful private placement. We raised $3 million And the share has been performing really well.

3:49 We jumped from 5 cents, the share to around 15 cents. So we are very happy with the results. Investors have been very, very supportive with us. And we are convinced that this is going to be just the beginning of a great story. So I want to just very briefly mention that we have a good management, a great management and a well-balanced board of directors with different expertise that together we are putting a good team in place. And I want to also mention, we have our country manager, Carlos Pacheco, who is a Mexican fellow, been working on mining for probably the last 25, 30 years. So he knows very well the country, he knows very well, our properties, regulation and so on. So we have been very able, we haven't been able to really work easily in Mexico in part thanks to our local team in Mexico.

4:55 I'm going to stop here my comments for now. I'm going to pass the microphone to Mike who's going to start talking in more detail about our projects. Over to you, Mike. Thank you, Carlos. So, the slide we're on is number 6, and we're looking at a map of Mexico that shows the location of our assets. The first one I'll just briefly get into, and then a little bit more detail a little further on in the presentation, is the San Jose project, which is located about 150 kilometers west of Juarez, Mexico. It's a pretty large land package, approaching 6,000 hectares. We see mineralization at the surface with polymetallic scarn and carbonate replacement potential. We have intrusive rocks that are in limestones, so we see significant scarn mineralization at the surface.

5:46 Importantly, it's fairly close to the operating Bismarck mine, about 50 kilometers to the southeast of the San Jose project, and we see lots of parallels with that operating mine and what we've discovered at San Jose. So based on work we've done in the field, we're planning on an RC drilling program. There might be core at the end of the drill holes, depending on the depth we can achieve with the RC drilling and water flows and the like. But we're planning on drilling up to 10,000 meters. And we expect to initiate that with about 5,000 meters of drilling, take a look at the results and then follow up with additional drilling. We also have 2 assets down in the state of Durango, Mexico, very close to the capital of the state of Durango.

6:33 And we have the Tahaman Project. It's 100% owned as is as are all of our assets. And the Tahaman Project was drilled in the early 2000s. It's about 1700 hectare size property. It's the only asset we have with 43-101 resources, with about 29 million ounces at 45 grams per tonne silver. And I'll get into a bit more detail on that project a little further into the presentation. One of the things we've realized there in the last couple of years, re-logging all of the prehistoric drilling that has been done, is that we have very high-grade feeder veins underneath the Monto style mineralization, which is in volcanic rocks, And so we expect to be able to get in there and do additional confirmation of the existing resource and extend the drilling deeper to encounter those high-grade feeder veins.

7:26 The San Lucas project is fairly close to the Tahamu project. It's only about 50 miles to the east. And it's a small property we're looking at right now, increasing the size of the land package and in discussions to increase dramatically up to over 1,000 hectares, the land package that we can get there. Very importantly, it's only 4 kilometers away from Argonaut Gold's San Agustin complex, from the ridgeline where mineralization is observable at the San Lucas project. We can see the pit and the work that's being done there for kilometers to the north of us. And we have 2 parallel highly mineralized structures at the surface. Now we'll go to the next slide. This is just a little bit more detail about the location. You can see that the San Jose project, which is very close to the border with New Mexico. It's only about 35 kilometers south of the border with New Mexico.

8:23 And you can see that there's a whole belt of polymetallic and silver deposits extending along the northeastern side of the state of Chihuahua. We're at the northwestern extent of that. And so it's an area with lots of potential, lots of discoveries, operating mines that's been discovered in the past. So we have that eastern belt, and the western belt is in the Sierra Madre, where there are also a significant number of properties. The access to the San Jose project is very easy. It's only about an hour and a half drive from Juarez, or you can fly into El Paso across the border, and it's a very easy access. It's located about 15 kilometers to the west of a small agricultural settlement called Guadalupe de Victoria. We have a very good relationship with the community there. We have actually rented 2 houses that we use to house the field people, the geologists when they're at the site. And so we have a good relationship and kind of a neighborhood relationship in the settlement. So that's a very critical thing is to have a good relationship with the community.

9:29 As I mentioned, We're only about 50 kilometers to the northwest of the Bismarck mine. And the next slide will give you a little bit more detail on why that's so important to us. The option agreement that we have was put together in 2019 to acquire 100% interest for total cash payments of $150,000. The owners retain a 2% NSR, of which we can buy half of that back for a single payment of $100,000. Because we have a solid presence and good knowledge of mineralization and properties in Mexico, we were able to get this property at a very low price. The potential there is polymetallic mineralization associated with scarred, gossam, altered intrusive rocks based on previous field mapping, and we do have some very high-grade silver assays and gold assays from the surface.

10:21 The previous work that's been done on the property, a few companies have looked at it, but they didn't really recognize what it was they were seeing. There was some very limited historic production in the 1970s with reported grades of between 50 and 1,000 gram per ton silver, 1 to 5 gram per ton gold, and 5 to 8 percent lead. There's been no drilling that's ever been done on the property, so it's really ripe for us to get in there and do a drilling program. We saw the very strong mineralization at the surface, and over about almost a 3 kilometer strike length, the mineralization indicated to us that there was likely a buried, much larger scar and carbonate replacement style mineralization based on what we see at the Los Alapas service.

11:09 And so we did a geophysical survey and discovered very strong IP anomalies along the entire length of the area of the geophysical survey. Our program now is to follow up and basically target the IP anomalies, which we expect to be indicating sulfide mineralization. Next slide, please. We are on page 8 now. The significance of This slide is just showing how it's an analogy to the Bismarck property. The Bismarck property is a scarn and carbonate replacement deposit that was discovered by Penolas in the early 90s. They did geophysics, IP, and magnetic work and discovered that there were significant, significant sulfide mineralization at depth. Their initial resource is 13 million tons and 52 gram per ton silver and 11% zinc with a little lead and copper.

12:15 That's roughly a silver equivalent of 350 to 400 ppm silver. And so the potential that we saw is very analogous to the Bismarck. You can see in this cross section through the Bismarck deposit, there is very minimal surface expression, which is what we see also at the San Jose project. And so one of the things that we're seeing that's distinct from Bismarck is we have very high grade silver and gold values at the surface and that's because our mineralization is sitting above mineralizing intrusives rather than at the margin as you see in the cross-section. And so we have very strong magnetic anomalies associated intimately with the IP anomalies and we see we have 3 different phases of intrusive activity, 3 different intrusives manifesting as early granodiorite, intermediate monzonite, and late diorite dikes associated with the IP and the MAG anomalies.

13:09 We see a variety of different kinds of alteration, broad spread propolytic and dolomitization in the limestones, which is a good indicator of a much larger mineral system than strictly what we see at the surface. And we have areas of jasperoid solidification, endoscarin, exoscarin, disseminated specularite, magnetite in the intrusives we do see at the surface. And the scar mineralization manifests principally as veins at the south side

13:38 of the property, and in that particular location we have gold grades up to almost 10 grams per ton, and silver grades up to about 250 parts per million silver. So we see some pretty intense mineralization, but again, we're above the main mineralization. And we'll get into a bit more of that. And so broadly, what we see, it's very similar to the Bismarck mine, except we have much higher precious metal values. Next slide, please. So now I'm on slide 9. Hold on a second. And so we did an initial surface mapping and sampling program over about 800 hectares in the north middle portion of the large concession block. You can see the large concession block on the right-hand map. We've only looked at a small portion of the area of the concessions, and we see alteration and mineralization extending primarily to the southeast, so it's wide open for additional mineralization.

14:41 We initially did 167 chip channel samples across the mineralization that we see as service, which dominantly manifests as veins, scarred veins and silica clay veins cross-cutting the mineralization. And we had values between a trace up to 9.5 gram per ton of gold, a trace to 257 ppm silver, and then combined base metal grades ranging between 0.1% copper, about 10% lead, and about 2% on the zinc. So based on all this, we did the geophysics, and this is a very important slide to take a look at, is that in the lower left-hand corner you see 2 images with colors. The right-hand image indicates the magnetic signature, so we see a very strong mag anomaly in the southwestern portion of the survey that we did, and a smaller anomaly to the north.

15:36 And so we see then on the left-hand slide, we see the very strong I-P response. It's associated peripherally and above those, the magnetic anomalies. And so we've developed a drilling program to focus on targeting the IP anomalies and an example of that is in the next slide if you'll move to that Carlos that's page 10. We can see a strip map at the top where we're looking at the geology at the surface, very simplified geology. And then we have the topography in the middle portion, where you can see a drill hole that we've indicated, SJ09, drilling vertically downward to target the IP anomalies that we see in cross-section. So you can see that the drill hole that's proposed

16:20 is targeting a very large IP anomaly. The nominal apparent depth of penetration for the geophysics was 450 meters. We're planning 500 meter holes, And every one of the drill holes that we planned, that we have planned at this point, are directly associated with drilling the very strong IP anomalies at depth, which manifests as narrow veins and basically leakage from a large system down below. So the original idea was we saw the regional mineralization, we saw that there was broad spread dolomitization in the limestone host rocks, alteration in the intrusives, and the initial idea was that we thought that there was a large system at depth and the small thinner veins that we see at the surface are leakage from something significant at depth. So the point of the drilling program is to drill over approximately a 3 kilometer strike length, the IP anomalies and targeting in cross-section the IP anomalies as you see in this example.

17:18 Now we'll go to the next slide, which should be page 11. We'll get into the Tahaman Project a little bit. The Tahaman Project is located pretty much in the center of the state of Durango. It's easy access on paved road from the city of Durango. It's about an hour and a half drive northwest of Durango City. It's 100 percent owned property, about 1,700 hectares, and it's located about 10 kilometers southwest of the town of Goeboidiao via a maintained gravel road. There's good infrastructure in the area. It's a big agricultural community in the valley to the east, and there's good access to power and water resources as well as skilled labor. The Los Mantos deposits are pretty much wide open to the on-strike as well as at depth.

18:05 And very importantly, the high-grade feeder veins are important. As I mentioned, there is an excellent resource at the Los Mantos project, where we have combined between the Los Montos and Cerro Prieto portion of the projects about 20 million tons at an average rate of 45 parts per million silver for a total silver resource of almost 29 million ounces. And so if you'll go to the next slide then, that would be page 12. This is a brief summary on some of the work that's been done. You can see the map in the upper right-hand corner. All the dots you see are the drilling that was done, the blue dots are RC drilling and the core holes were done later on in the drilling program that was done there, which was done between 2004 and 2007.

18:56 That drilling was all done very shallow. They were looking for surface open pittable mineralization. The mineralization does outcrop and so they were looking at lower grade mineralization and the key here was something that was open pitable which we're not so much focused on now as we are the high-grade feeder veins and importantly because all of the silver is in a can fight, it's heat bleachable. It's very much like Coors Rochester mine in central Nevada, where they have a very large heat bleach open pit mine. The mineralization is very similar to that to Amin, And so what they see there is their mining and their average ore grade they put to the surface for heat bleaching is about 20 to 25 grams per ton. Our average resource is about 45 grams per ton, so we're significantly higher grade. You can see in the table in the lower left-hand side for both the Cerro Prieto portion of the project and the Los Montos portion of the project, some of the intercepts that we have.

19:54 Some of the very high-grade intercepts you see,

19:57 like the third one down in Los Montos of 90 meters, approximately 90 meters of 620 grams per ton. That's crossing one of these high-grade feeder veins. And when you hit a high-grade feeder veins, you see more base metal mineralization, lead and zinc associated with it. And the test work was done on the surface mineralization where decent recoveries were recovered in bottle roll and column leach testing. Next slide, please. The San Lucas project is fairly close to the Tahaman project. It's 100% owned property. The land position is small. We're in the process of a discussion with the owners of the surrounding concessions. It looks like we have a reasonably good chance of doing a deal to significantly expand the land package. Again, it's very close to Argonaut Gold's Del Castillo project, where they have open-pit gold mining going on. The access is excellent.

20:57 The highway actually goes right through the project area. We see northeast and northwesterly trending shear zones and volcanic and sedimentary rocks. The work that's been done historically in the past, Luis Muin did some underground sampling and they had channel sample results up to 0.5 meter of thickness at 256 gram per tonne gold and 390 gram per tonne silver. The outcropping mineralization that we see at the surface, we did some exploration several years ago in the area we call the El Doctor vein. We had 1 chip channel sample that

21:58 was 3.22 grams per ton gold. So there's significant mineralization at the surface. It certainly warrants additional follow-up drilling. In particular, the drilling needs to go to greater depth because we see carbonates immediately about a kilometer to the south, and we believe underneath the volcanic rocks which are hosting the surface mineralization, that where those mineralized shear zones cut through it at the limestones, that we have significant potential for scar mineralization and carbonate replacement mineralization, basically mineralizing fluids ponding underneath the volcanic section. And of the historical drill holes that have been done there, we have one that was 2 meters of 147 gram per ton silver, along with almost 2 percent zinc and 0.4 percent lead.

22:48 So right now the real focus in Santa Lucas is to expand the land package and move forward with a drilling program. We have an excellent relationship with the community there. They very much want us in the area. The community is knowledgeable and now has experience about operating in an area where mining is taking place. So we have good precedent to be able to move that project forward also. The next slide is 14 and I'll hand it back to Carlos Espinoza. Thank you very much, Mike. We are presenting a comparable analysis because quite often people are asking why should I invest in Monarca? And you can see on this slide that Monarca is still undervalued company compared to some of our peers, silver company exploration focusing in Latin America.

23:43 We are trading around 61 cents per ounce of silver compared to an average of $1.26

23:54 per ounce. So we still have a lot of room to grow. And the reason why we are undervaluated or some of the reasons probably is because we didn't spend much time talking to investors and the market, generally speaking, in the past because we spend most of the time organizing the company, putting everything together, getting the acquisition of San Jose, doing the geophysics and so on. So when we really start actively talking to the market, which was during the summer last year, We have a great response from the market, new investors, increasing liquidity and so on. So we are very happy to see a lot of support from the market and we believe there is still a lot of room to grow.

24:46 We are totally convinced that San Jose is going to be a great story for the following years. This is really just the beginning. And also, it's important to mention about social management. We invite Monica Ospina to join our board of directors. In summer last year, around June, she joined us. Monica is an expert in CSR. And she has been working with us and helping us and guiding us how to do the best practice in the different places we have the assets.

25:29 San Jose and San Lucas, we have a great relationship with the community, but still Monica and her team are helping us to create the right channel and the right procedures to continue having this good relationship. We really want to have a good relationship in the long term. Tehamin, which is a more challenging project in terms of community relation, because they had a bad experience with the previous owners of the project, Altamonic is helping us to structure the right way to approach the community and to rebuild the relationship with them. So different approach to different assets, but at the end, it's all under the same umbrella of Monarka.

26:18 So in summary, why invest in Monarka? We are totally confident the drilling program is going to be a very successful program. We are about to start, we're closing to get the permits and everything in place to start drilling, probably in a month or 2 max for the 5 to 10,000 meters drilling. We have a very good assets in addition to San Jose, which is San Lucas and Tehamin, and still undevaluated. So we are totally convinced that we're going to be growing in the near future. So I'm going to stop here. You can download the presentation. You have our email there. And I would like to open the floor for any questions that you may have.

27:10 Great. Thank you so much, Carlos and Michael. We're going to move on to the live Q&A portion of the summit. We're going to start with questions that have been emailed into us before the summit started. So, Carlos and Michael, when you start drilling in San Jose, how long is it going to take? Yeah. Should I take a mic? Yeah. Yeah, so really we are currently in the process of getting all the permits from the Mexican authorities. We have been some delay because of the COVID. Some of the government offices have been partially closed or totally closed. So the plan that we have now on the current conditions, we believe we're going to get the full permits late February, early March.

28:00 And we have been working in all the other steps you need to do in order to get ready for drilling in advance. So as soon as we get those permits, we're going to be ready for drilling. And probably the full drilling program is going to take something between 1 to 2 months max. So we are expecting, let's say by May, probably to finish this drilling program. But part of the plan we have is to, as soon as we start drilling and getting some results of drill drilling, we want to come back to the market to inform investors about the results. Great. Well, the next question is, do you have enough cash for your drilling program? We do. We do. And we're happy with that. As I mentioned during the presentation, we had a private placement on the summer. We initially came to the market looking for something between 1.5 to 2 million dollars. We had a great response from investors. So we upside the private placement to 3 million And we stopped there. People continue asking for investing.

29:09 And probably if we decided to going up to 5, we could do it at that time, but we decided it wasn't enough. And we have been very, very careful on spending the money, so we have enough cash for the full program. Got it. And so in addition to the current projects, is Menorca looking for any new acquisitions? We do. And well, I'm gonna start with probably Mike can share more experience because having Mike in Arizona and spend a lot of time in Mexico and our country manager, Carlos, with a lot of experience in Mexico, they together on a regular basis spend time reviewing some projects. So that is how they found San Jose.

29:58 As Mike mentioned before, That's a property that never been drilled before, that some companies did some very little exploration programs. And really not many people look at the potential of this property. And Carlos and I came to the property probably 2, 3 years ago, and they started searching more and more until we decided to make an offer and then go for the geophysics that confirmed the thesis that it's a great property, and we moved from there. So it's something we do on a regular basis. And I don't know, Mike, if you want to add something, but it's something that we are always hoping to explore. Yeah, I mean, it's a project that, in the initial view, it was a project that had never been drilled. It was a project that wasn't really well known.

30:48 Carlos Pacheco is a key guy working in Mexico. And one of the things we really focus on is not as much looking at already drilled-out deposits, but finding something new. That way you get in at a very undervalued price, but you have to have the expertise and the experience, which Carlos and I both have in scarn systems and epithermal systems, a very broad array of different styles of mineralization, that we go to a property and look at it. And most of the time, it doesn't look like anything we'd follow up on. But San Jose is a classic example of 1 that looks like it's going to come through very strongly for us. Certainly, it's a strong geophysical discovery. So we focus on places and styles of mineralization that are basically overlooked by many companies that are operating in Mexico.

31:40 Yeah, we have a question from the audience asking, Tejano project, please elaborate on the problem with indigenous people. Do you see any resolution to the problem? Short answer is yes. And I'm gonna tell you a little bit more about it. The previous owners, a foreign company, not a Canadian company, but a foreign company, did everything that you could possibly do wrong. They didn't do any consultation. They didn't get the environmental permits. They just came and start drilling and invading basically the land or the surface of the community. So it was a really, really bad story and really bad experience for the local people.

32:26 So when we came, you see that people totally worry and against the mining company. So we have been working together. We had a great relationship with the state and municipal government. And we started, we did initial contact and conversation with the Ejido and the local community authorities. A little by little, we have been opening the door. What we want to do is really to show them that we are a responsible company and we are doing the work on the right way. So part of this strategy is to continue working on San Jose project and show the people from Tehamen the way Monarca is doing the job.

33:15 And we want to have people from Tehamin talking to the community of San Jose so they can share their experience and ideas and see how different we are from the previous company. So Tehamin is gonna take more time for us. And that is one of the reasons we are more focused on the short term developing San Jose. But definitely it's a project that is worth it to continue working on. So Gabriel has a question. Are there any back end rights or NSRs to the San Jose project? Yes. Yes, we have. The original owners are 4 families. They are not even minors. It's local people from the community.

34:06 And when we present an offer, they ask for a 2% LSR. And it's included as a part of the contract. But we have the right to buy back 1% for $100,000. And they say they don't want to sell the other 1% because probably it's going to be some kind of heritage for the family. But that's the only one that we have. The other properties, we don't have any NSR. And in fact, we sold late last year a small property called El Sol to a broker. And we keep 1.5 percent on royalties on that asset.

34:53 I see. So are you planning to raise more money in the near future? We are. We are planning to raise more money, probably late Q1 or early Q2 this year to continue developing San Jose and probably for future acquisitions. As I mentioned before, we have enough cash for the full expiration program, the drilling program. But we have been talking with some of the current investors and they really offer the full support for the next phase of financing. So it's going to be based on the results that we have in the drilling program. And that's why we don't want to do it before. We want to come back to the market and say, okay, this is the results that we have. This is the plan for the next phase. And this is more like how much it's going to cost. Yeah, and I think that's an important thing, Carlos, is that, you know, we're so optimistic and confident about very positive drilling results at San Jose, that we think it's going to be a very strong supporting platform for additional funding down the road. But we want to have that in hand, good results with the drilling.

36:08 Right, of course. And so are you considering to invest in other countries as well? We talk about it. And because we are a small company, we initially are focused on Mexico, but recently we have been talking, especially having Mike in Bates in Arizona, to explore some opportunities in Arizona and Nevada. That could be probably a good opportunity for us to participate and working with it, using pretty much the same team for Mexico, moving to the US in some cases. So that's the only place we are not thinking going for the north or Latin America.

36:55 But yes, could be something in Arizona or Nevada. All right. Well, I think that's all the questions we have for today. So I want to thank you, Carlos and Michael, so much for talking us through your presentation and the Q&A session. I also want to thank everyone who submitted questions. And if you didn't get a chance to get your questions answered or if you just thought of 1 now, please stick around after we close the webinar. You will have to fill out a short survey where you get the opportunity to leave your contact details and the Menarca Minerals team will be happy to follow up with you directly. You can also find more information on the website at monarchaminerals.com. And as I mentioned, the presentation is available for you to download directly in the handout tab. So make sure you do so before We end the webinar. And so without further ado, I'll pass it back to you, Carlos and Michael, for the final word.

37:53 Thank you very much, Lesha. Thank you again for organizing this summit. It's great to work together with you guys. And a special thanks to the audience for taking the time to learn a little bit more about Monarcha. Great. Thank you. Thank you, everybody, for the opportunity. And if you have any questions, just get in touch with us. Absolutely. Thank you so much. Have a very good afternoon, everyone. Thank you.