Honey Badger Silver (TSXV:TUF) announced on June 10, 2022, that it had entered into a non-binding term sheet to acquire a 100% interest in the Cachinal De La Sierra Silver-Gold Project from Aftermath Silver Ltd. The Cachinal Project is located in the Cachinal de la Sierra areas in the Antofagasta region of Chile. The proposed transaction includes an exclusivity period that ends on August 15, 2022, and the companies are working to finalize a definitive agreement on or before this date.

Chad Williams, Director and Non-Executive Chair of Honey Badger Silver, commented in a press release: “We are very pleased to announce a further accretive addition to our growing portfolio of silver assets. Cachinal is a significant known silver resource located in a favorable jurisdiction. Moreover, its proximity to Austral’s Guanaco mine and mill complex may offer substantial synergies to advancing Cachinal to production in a timely manner. We believe Cachinal will be transformational for Honey Badger. We were also greatly encouraged and inspired by a recent speech delivered by H.E. Gabriel Boric, President of the Republic of Chile, at an event hosted by the Canadian Council for the Americas. During this event, Mr. Boric strongly signalled his commitment to property rights, and the rule of law in addition to welcoming direct foreign investment. Chile’s long-standing partnership with Canada to generate economic growth and jobs for all was reiterated in meetings with Prime Minister Trudeau during his visit.”

Cachinal Project Highlights

• Open-pit Indicated Resource of 15.03 Moz of silver grading 97 g/t of silver and 20.05Koz of gold grading 0.13 g/t gold;
• Open-pit Inferred Resource of 0.41 Moz of silver grading 73 g/t of silver and 0.43Koz of gold grading 0.07 g/t gold;
• Underground Indicated Resource of 1.29 Moz of silver grading 182 g/t of silver and 1.65Koz of gold grading 0.22 g/t gold;
• Underground Inferred Resource of 2.07 Moz of silver grading 180 g/t of silver and 2.18Koz of gold grading 0.19 g/t gold;
• Proximity to Austral Gold Limited’s (“Austral Gold”) operating Guanaco Mine and Mill complex, located just 16 km to the south;
• Good potential to confirm and incrementally expand existing resources and discover additional mineralization on the property and in the region.

The mineral resource was independently prepared by SRK Consulting (Canada) Inc. in a technical report filed on Aftermath’s SEDAR profile at www.sedar.com, with an effective date of August 10, 2020 and prepared in accordance with National Instrument 43-101 – Standards of Disclosure for Mineral Projects of the Canadian Securities Administrators (“NI 43-101”).

Transaction Summary

The Term Sheet contemplates that Honey Badger or an affiliate will acquire all of the issued and outstanding shares of Minera Cachinal S.A., a wholly-owned subsidiary of Aftermath, according to the following terms:

• Share Payment: C$1,000,000 in shares of Honey Badger payable at closing and priced at the greater of: (i) the volume weighted average share price of the Honey Badger common shares on the TSXV for a period of thirty (30) trading days immediately preceding the date of announcement of the transaction and (ii) the maximum discounted price allowed under the policies of the TSXV.
• Cash Payments: a) C$400,000 payable at closing, b) C$452,000 six months after closing, c) C$400,000 on May 21, 2023 and d) C$400,000 eighteen months after closing.
• Royalty: Honey Badger shall grant a 1% Net Smelter Return Royalty with a complete buyback option at Honey Badger’s sole discretion for a purchase price of C$8,500,000;
• Production Payments: Upon commencement of commercial production, Honey Badger shall pay in cash or shares at Aftermath’s option, C$0.50 per payable silver ounce produced at the Cachinal Project, capped at C$2,000,000 in payments.

The detailed terms and conditions of the proposed transaction will be set out in definitive documentation to be negotiated between the parties, which will contain customary representations, warranties and covenants of the parties as well as customary indemnities and closing conditions. There can be no assurance that the proposed transaction will be completed on the terms contemplated, or at all. Readers are referred to the section below entitled: “Cautionary Note Regarding Forward-Looking Information”.

While the Term Sheet is non-binding, the parties have agreed to a mutual break fee of C$250,000 in the event a definitive agreement is not entered into prior to the expiry of the exclusivity period due to a party’s action or inaction, subject to certain exceptions outside the control of the parties. The proposed transaction will be subject to regulatory approval, including the approval of the TSX Venture Exchange (the “TSXV”).

Cachinal Asset Overview

Cachinal is a low-sulphidation epithermal deposit located in the Paleocene Gold Belt of northern Chile, which hosts several significant gold and silver deposits, including Yamana Gold’s El Penon Low Sulfidation Epithermal gold–silver mine and Austral Gold’s Guanaco gold-silver mine-complex, just 16 kilometers to the south. Shallow drilling at Cachinal has defined the current mineral resources principally to a depth of 150 metres below surface and provides sufficient evidence to interpret the presence of high-grade shoots within the vein system extending below the base of a potential open pit.

Cachinal Location

The Cachinal silver-gold project is located in Chile’s Antofagasta region (Region II). The project is located about 40 km east of the Pan American Highway, in a nearly flat plain at an elevation of around 2,700 metres above sea level, 16 km north of Austral Gold’s Guanaco gold-silver mine and mill complex.

Cachinal NI 43-101 Resource Estimate

The Cachinal Mineral Resource was documented in a technical report prepared following the guidelines of NI 43-101 and Form 43-101F1, and in conformity with the generally accepted CIM “Estimation of Mineral Resources and Mineral Reserves Best Practice Guidelines” (2019) by SRK Consulting (Canada) Inc., authored by independent qualified persons Glen Cole, P.Geo of SRK Consulting, and Sergio Alvarado Casas, CMC of Geoinvest SAC E.I.R.L. (Chile), on behalf of Aftermath Silver Ltd., with an effective date of August 10, 2020.

Notes on the Cachinal Mineral Resource Estimate:

• For complete details on the Cachinal Mineral Resource estimate, please refer to the NI 43-101 technical report titled “Independent Technical Report for the Cachinal Silver-Gold Project, Region II, Chile”, by Qualified Persons G. Cole, (P.Geo) of SRK Consulting (Canada) Inc. and S. Alvarado Casas, of Geoinvest SAC E.I.R.L. (Chile), dated September 11, 2020 with an effective date of August 10, 2020, filed on the Aftermath Silver SEDAR profile.
• Cachinal mineral resources were classified according to the CIM Definition Standards for Mineral Resources and Mineral Reserves (May 2014).
• Mineral Resources that are not Mineral Reserves do not have demonstrated economic viability.
• All figures have been rounded to reflect the relative accuracy of the estimates.
• Cut-off grades are based on metal price assumptions of US$22.00 / ounce of silver and US$1,550 / ounce of gold, and metallurgical recoveries of 85% for both silver and gold using milling and cyanide leaching.
• The portion of the Mineral Resources that has been determined to be amenable to extraction through open-pit methods was reported to a cut-off of 30 g/t silver equivalent.
• The open-pit Mineral Resource is constrained within Lerchs-Grossman optimised pit shells that assume mining dilution & losses of 2.5%, 50-degree overall slope angles, mining costs of $2/t rock, general and administrative costs of $2/t rock, processing costs of US$15/t for processing using milling and cyanide leaching.
• The portion of the Mineral Resources deemed to be amenable to extraction through underground methods are reported at a cut-off of 150 g/t silver equivalent. This assumes a mining cost of US$90/t, general and administrative costs of $2/t and a processing costs of US$15/t.

Past Work at Cachinal

The Cachinal deposit was mined from underground workings during the 20th century. Drilling by previous owners of the project since 2005 has delineated near-surface silver mineralization associated with a network of steeply dipping, north-to-northwest trending low-sulphide quartz veins.

The epithermal veins and breccias have been recognized by trenching and drilling over a strike length of at least 2 kilometers and are known to have been mined to a depth of at least 300 meters. They range in thickness from a few centimetres to 2 meters, reaching up to 20 meters locally at the intersection of two structures. The main veins trend north-northwest and northwest with a secondary set trending east-northeast to east-west, best developed at the southern end of the deposit.

Technical information in this news release has been approved by Glen Cole, P.Geo., a Principal Consultant (Resource Geology) with SRK Consulting (Canada) Inc. and qualified person for the purposes of National Instrument 43-101.