Plomosas Silver Project: Transforming Exploration Into Resource Growth With GR Silver

0:07 Hi, everyone, and welcome to GR Silver's Live Summit today, hosted by 6. I'm pleased to introduce their chairman and CEO, Eric Zonscher, who's going to be taking us through a corporate presentation before we start today's Q&A session. As a reminder, if you'd like to participate, please submit your questions in the Q&A panel found on the right-hand side of your screen at any time. And if you'd like to get in touch with the GR Silver team, feel free to fill out the survey linked at the top of the chat. The summit is always being recorded and it's going to be available on 6.com in the coming days. So look out for that if you want a refresher. But otherwise, Eric, I want to pass things over to you so we can get

0:38 started. Great. Well, thanks very much, Cam. Really appreciate the opportunity to be here. Welcome, everybody. I'll just do a quick run through the presentation and we can have some Q&A as we go along. And at the end of it, I'll be looking for Q&A on the right-hand side there. So you've all seen the cautionary statements. I don't need to go through that too often. Investment highlights. I think we hit all those key points. If you're familiar with the company, you know we have a project that has got a lot of potential in a place that is well regarded. Mexico has of course its questions, its uncertainty now related to mining taxation or mining legislation. We can talk further about that. We have a great team, in particular in Mexico. We've put together a wonderful team of young geologists and drillers and driller assistants and all those people in our camp that keep the whole thing going.

1:33 The price is an extremely attractive one, I will let you know about that at the end. And then of course the potential, we have a lot of potential in this. I'll get right to the map, just to remind people, we are located just in the... There's Mazatlan is on the map, just off the map there, and then from there 1 drives by Toll Road from Mazatlan to Rosario, and then from Rosario, that's about an hour and a half dirt road into the project. Inside the project we've got 432 square kilometers in the core of the project. These are mostly mining concessions, so they have time on the clock, they were established under the previous mining regime, and as I say, there's time on the clock, you've got fantastic infrastructure in that there are 2 former producers.

2:27 In the northeast there is the Plumosis mine, that was a polymetallic mine that operated from 1986 to 2001. And then in the southwest you've got La Trinidad, the Taunus open pit, so it was an open pit heap leach gold mine that was started by Eldorado Gold. You've got 3 major structures that run through and I do want to point out that we're located here on the western margin of the Sierra Madre Occidental, the mountain range that runs along

3:00 from southeast to the northwest. We're located here as you can see, and then you have Vizsla at the top of the picture, and then further off the map is the well-known San Dimas mine, which has delivered over 600 million ounces of silver in its time. Rosario itself is a well-known mining district that operated for over 250 years and was a significant producer of gold and silver. We have excellent infrastructure, as I mentioned, with road access, but also with power directly to site to those 2 former mine areas.

3:42 The main focus has been on the one structure that hosts Plumosa's mine as well as the San Marcial area. Those 2 areas have been the focus of our attention over the last few years, where we've conducted most of our drilling and we've provided an updated resource that came out March 20th and we filed our 43-101 on May 4th. The story at Plumosis is all about infill drilling to catch low-hanging fruit and increasing the grade, whereas at the Saint-Marcial area, it's all about developing a geological model that is now proving to be very, very effective in finding mineralization. And so, San Marcial, we ended up making a new discovery last summer, the Southeast Discovery. That is a very important contributor to the growth in our resource as we've gone along.

4:32 This is another view now you can see it's roughly 5 and a half to 6 kilometers from the Palmosas Mine area in the north to down the south is San Marcial. You can see off to the west is San Juan La Colorado. San Juan La Colorado is on a parallel structure and you can see that each one of these areas has contributed to our resource update. The key distinction here is that we're not talking about 123 meter width narrow vein mining. We're talking about the potential for larger bulk mining and in fact if you look at the at the area here at Plumosus mine, the average width of the mineralized domain in the resource block model is 20 meters.

5:22 If you look at Sun at, let's not look at that one, let's look at this one there. That's the the Sun Marsial area, the average width there is 22 meters, and in fact in the New Southeast Discovery the average width is 52 meters. And when you're talking about widths of that scale, that means you can use potentially bulk mining methods, obviously open pit, but also underground using room and pillar rather than using very selective underground mining that takes a lot of time and money. Moving on, this is the resource statement that we published quite recently and you can see that we have put together 85 million ounces silver equivalent at an average of 179 grams per tonne silver equivalent, 49 million ounces silver equivalent at 171 grams per tonne and that's in the inferred category.

6:17 If you're talking straight silver you're looking at at 55 indicated and 22 million ounces inferred which are very very decent numbers. Again when we're talking about mining over very very large widths that has the potential to be very, very low cost. So now looking at, this is a view to the southwest, you can see the Trinidad located in the background. There is, for example, right here is the 2019 resource that was at San Marcial and we realized geologically that is located at the contact between the upper volcanics and the lower volcanics and that contact is relatively impermeable. So when fluids percolate up carrying metals and hit that contact, they tend to pool at that contact. And what we've seen is a hydrothermal breccia that's developed at the contact.

7:17 And so very interesting to us is that we followed that contact further along another 300 meters and we noticed that in a lot of sampling that was done that that we did 14,000 samples in that area around that contact, that we had silver anomalies more or less located along that linear, along that contact that is the target right in here, running off to the further to the east. And in that area with those silver anomalies that makes for an excellent drill target. So we threw our first drill hole down there in that first silver anomaly and we encountered in hole 2210 101.6 meters grading 308 grams per tonne silver. That's silver, not silver equivalent.

8:11 So that's characteristic of this area is that we're seeing a higher proportion of silver in the mineralization there, silver predominant mineralization. So the first 300 meters of that contact are running to the southeast, has given us the southeast discovery. We have at least another 600 meters to go and in fact we have 1 drill of one of our 5 rigs is actually turning at this moment as we speak and we have a number of holes in the bag that we're looking forward to getting out there and I have to admit it's a bit like Christmas waiting to unwrap these presents So stay tuned over the next couple of weeks as we put out a release updating how that exploration is going to the southeast. In addition, you can see that this is an area where we have a structural corridor that runs off to the southwest towards Le Trinidad, and that structural corridor, a couple of faults, parallel faults, have not just deflected the contact there, but also you see these white dots extending off into the distance. These are new exploration targets. These are areas where we've seen artisanal mining, where there's historical mine openings.

9:21 That whole area off to the southwest is being detail mapped at this point in time as well as lithogeochemical sampling to see what sort of metal contents we're getting, what sort of alteration patterns. And again, a bit like Christmas, we'll see what sort of drill targets get generated as we go further to the south there. This is another view. You can see a slice through northwest to southeast through Saint-Marcien, the original crosshatched area at the top, which is the original 2019 resource. We were successful in extending mineralization down here towards southeast. In addition, we made the new discovery, the Southeast Zone, again, with 101.6 meters of 308 grams, but also at the bottom, you can see there's an intersection there that's actually the highest grade intersection that we've had, 30 centimeters of 26 kilos of silver, 30% lead and 19% zinc. So you get some quite exciting narrow intersections there. And then finally, I'd also point out some of these gold intersections, things like a meter of 31 grams gold, 0.6 of 14.3 grams, and then here 1 meter of 205 grams of gold.

10:39 So these later cross-cutting structures are definitely delivering some very high-grade precious metal content. It's quite exciting for us. Another view through the mineralization at San Marcial, that olive body, that is the epithermal, hydrothermal breccia rather. There's a light green that is a second parallel hydrothermal breccia. And then underneath that, you can see these higher grade stock works that are giving us precious metals. So we're quite pleased with how that resource came about that we published. We had made a big promise that we would deliver a resource by the end of March and we did, definitely exceeding the expectations of the published analysts.

11:27 So I do want to point out to you the height of this particular stope. You remember I was talking about these greater widths and potential lower cost mining. This is in the Plumosis mine on the 775 level and you can see a stope here that is over 25 meters tall. You can see the people at the bottom there for scale. So this is a very large stope that was in the past mined using Ruman pillar. So this is a very inexpensive and efficient way of mining. We consider this to be a tremendous project, again with the infrastructure and the power to site 7.4 kilometers of underground development of the Plymoses mine area, you have some potential for shortening timelines and de-risking. We've got mining licenses, we've got 20-year exploitation and exploration agreements with the local Hidatsa, an extremely strong relationship with the local people.

12:22 That's essential. So here you can see the resource growth through drilling that's occurred from 2019 to 2022. We've added almost 50,000 meters of drilling, over 500 drill holes, and that's corresponded to additional ounces. It's all about resource growth, and that's what it's been for us. What I like to see as a former analyst is the spread between the grade in indicated versus inferred. In other words, as you tighten the drill spacing going from inferred to indicated, the grade increases. So that's a very important feature to look for when you're looking at companies, exploration companies. ESG is important. We do flag that we do have some very strong environmental programs, teaching environmental programs and all about the mining industry in the local schools.

13:15 As I mentioned, we've developed a fantastic team of local people that are working with us in this area and we've become a very important part of the economy in that area. In terms of our capital structure, 262 million shares outstanding. None of the options and warrants are in the money. At this point in time, it's been a tough, tough, tough market as you all know. We do have some analyst coverage, 3 great analysts, Mike Curran, Gabriel Gonzalez, and Taylor Combelluzzi. We have institutional exposure. First Majestic is a shareholder at 8.2%. They vended one of their properties in the Plumosis project to help build that. And then management has some skin in the game as well. In terms of price, I do like to point out that we are trading at a significant discount. This is on an enterprise value per ounce in the ground silver basis, measured and indicated.

14:13 And at this point in time, we're trading at 67 cents US per ounce in the ground measured and indicated silver. It's my view personally that we should be moving to the right here as we deliver more ounces, higher quality at a higher grade than we have in the past. And this is something that the market will recognize over time. As I mentioned, we've got a great team. Forget about me, but talking about Marcio, President and Chief Operating Officer and Founder of the company, He's done a superb job with the geology here and training up the folks in Mexico. That's been great. Trevor Wolf, our VP Exploration and Corporate Development. And recently, Blaine Bailey, our CFO, retired. Samantha was recruited. Samantha's got a lot of great experience as an auditor and as a CFO, and so we welcome Samantha to the team.

15:07 On the board, I do like to point out, we've got Laura Diaz. Laura is the former Director General of Mines in Mexico, so she knows intimately how the system works. She's a highly regarded mining lawyer based in Mexico City and I'd also point out Larry Taddy. Larry was the CFO of MagSilver for 12 years and brings a huge amount of experience in a very short time, has become very influential on the board.

15:31 So bottom line I think we've got a lot going on. We have an active drill program with new stuff coming. We have peeled the geological onion and have a good handle on where to find high-grade mineralization. And we have a very large scalable property that in a time when it with the new mining concession or the modified mining legislation in Mexico having existing concessions is an opportunity that not many companies have. As I mentioned, the core project is 432 square kilometers with another 300 square kilometers that are available for auction and vending. So we have some really great assets. So on that note, I leave it to you folks to see if you have any questions. I'd be very, very happy to answer those questions.

16:21 Absolutely, Eric. And yeah, just as a reminder to everyone, if you'd like to participate in the Q&A, please feel free to submit your questions in the Q&A chat on the right hand side of your screen. Eric, first of all, we have this question that's come in. It's in regards to your, I believe, May 8th press release. There's a statement in it that says, the company has had several inquiries from independent parties interested in facilitating small-scale mining at the former Plumosis mine at no cost to the company, with the processing of mine material at third-party mills in the region. Could you elaborate further? Sure. The Plumosus is a former mine that's sitting there with 7.4 kilometers of development already so there's direct access to stores that have more in them. I shouldn't say or because we don't have a feasibility study and these are not reserves, these are resources.

17:12 And so there are parties out there who are interested in getting offtake, getting concentrate for

17:21 their systems. There are third-party miners available and there are third-party mills in the area. So we haven't decided yet what we're going to do about that. But the reality is we have a market that's giving us a huge discount, a market that is not supportive of exploration at this point in time, and so we have to consider what the options are going forward. So we are exploring. We have not decided, but we are exploring the idea of what has been proposed to us. These are not binding agreements by any means. These are purely exploratory discussions, the potential to have local miners processing ore through local mills. And again, that's not ore, that's resources. So, you know, if at the end of the day, at no risk to us, we have the ability at the end of the month, so be it. It's worth exploring.

18:15 That's not to say that's what we will do. So everything is pending any director's approval. Fair enough. Nathan's got a bit of a double-barreled question here. What is the per meter cost for drilling and do you own your own rigs? Yes, we own 5 rigs and they vary in size. It allows us to do detailed underground drilling as we did at Plumosis last year. At Plumosis we drilled from the previous resource to this one. It would be around 10,500 metres for an average width or thickness of around 50 meters. And the cost of drilling is quite attractive. So well below 150 Canadian per meter all in.

19:06 As I mentioned, we have 1 rig at this point in time turning on that Southeast extension. Absolutely. I have another question here, and just as a note to everyone in the audience that now's a good time, if you do have your questions, submit them while Eric is giving the answer here. But essentially, Eric, it boils down to just if you wouldn't mind going into further detail on the news from Mexico just regarding their wide-ranging reform of laws governing the mining industry and any impact that that might have on GRF silver and your strategy going forward? I know you touched on that, but if you wouldn't mind just reiterating or diving in. Of course, no, I mean that's caused quite some consternation and quite frankly We've had some institutional investors have told us as a result they would not be investing in Mexico.

19:51 I salute the government for having taken initiatives to ensure that the environment is protected, that the water availability is protected, and extremely important in making sure that communities are protected. So those are sort of the main thrusts of the reform of the mining legislation. The proof will be in the pudding. In other words, As we see the government advance this initiative, it will be expressed in the form of policies and regulations, and as these come out, we'll look at those. But individually, we don't know all of them yet. We don't know what the impacts are, so that uncertainty is what's causing consternation. The reality is that we have existing mining concessions that have time on the clock, that are renewal provisions in the reformed legislation.

20:49 We are located in an area that is not necessarily environmentally sensitive, and it's a brownfields area. In other words, we're in an area where there's a long history of mining, as I've been in Rosario district, mined for over 250 years. And so mining is in the DNA of the people. We have a great relationship with the people around us. We have long-term exploration and exploitation arrangements with the leaders with whom we work. We are their neighbors, they look after us and we look after them. And furthermore, we have a strong established relationship in the state. So as part of the state's mining industry, we're well regarded with respect to our behavior from a health and safety perspective, as well as environmental perspective.

21:43 So bottom line, at this point, We don't see a lot of impact on us specifically, but it certainly has created a headwind for the investment climate in Mexico. OK, Eric, thank you for that. That looks like all the questions that we received for today. So I want to thank you for coming on, going through your presentation, going through those questions. And of course, I want to thank everyone in the audience, especially those who participated. As I mentioned, today's recording is going to be available online in the coming days, so look out for that. But Eric, if you wanted to leave the audience with any parting remarks, I think now's the time. Well, once again, thank you all for tuning in as Cam said. We really appreciate you doing that. We believe we have a very strong project. It's been a tough, tough market with a lot of headwinds, whether you're talking about Mexico or the price of silver or just general risk off sentiment in the market. But in this kind of a market, 1 treads water, 1 moves forward. We will continue to drill.

22:40 We will continue to deliver resource growth in GR Silver on the Plumosis project and it's certainly large enough and we have the people that we need to make this happen. Again, thank you for attending.