Mogotes Metals: Update on the Latest and Upcoming Drill Results and the New Projects

Key Concepts

• Porphyry Mineralization: A type of large-scale, low-to-medium grade mineral deposit often containing copper and gold, typically found in igneous rocks.
• Breccia: A rock composed of broken fragments of minerals or rock cemented together; in this context, it refers to a near-surface gold-zinc mineralized zone.
• Geophysical Anomaly: A deviation from the expected physical properties of the earth (e.g., conductivity, magnetism) that suggests the presence of mineral deposits.
• Option Agreement: A contract allowing a company to earn an ownership stake in a project by meeting specific exploration or spending milestones over time.
• Clawback Provision: A contractual right allowing a partner (e.g., Rio Tinto) to regain control of a project by paying a premium on the capital spent by the operator.
• Counter-cyclical Exploration: The strategy of operating in different geographic regions to ensure year-round drilling momentum, bypassing seasonal weather constraints (e.g., winter in the Southern Hemisphere).

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1. Flagship Project: Filo Sur (Argentina/Chile)

• Status: The company recently completed a significant drill campaign using four rigs. The season is concluding due to the onset of winter in the Southern Hemisphere.
• Key Findings:
  • Southern Cluster: Identified a large mineralizing system under 40m of gravel cover.
  • Gold-Zinc Breccia: Intersected 24m at 1.0 g/t gold within a broader 120m interval at 0.5 g/t gold.
  • Gold-Copper Porphyry: Intersected 62m at 0.62 g/t gold and 800 ppm copper within a 258m interval at 0.36 g/t gold and 744 ppm copper.
• Future Outlook: Results from the northern cluster (straddling Argentina and Chile) are pending lab analysis, with expected reporting in June.

2. Strategic Partnership: CD Capital

• Strategic Value: CD Capital invested $15 million CAD. Their principal, Carmel Daniele, has a proven track record, including early-stage investments in Fruta del Norte (Lundin Gold) and Filo del Sol (Filo Mining).
• Governance: Daniele has joined the Board of Directors to assist with strategic decision-making.

3. New Project Acquisitions (Option Agreements)

Modus Metals has expanded its portfolio with two strategic assets designed to provide year-round news flow:

• Biskoga Project (Kazakhstan):
  • Nature: Advanced copper-gold-silver resource under shallow cover (40m).
  • Deal Structure: $25 million USD total consideration over three years, with low upfront cash payments ($1.5M in Year 1).
  • Strategy: Budgeted $4 million USD for 15,000 meters of diamond drilling to validate and expand historic resource estimates.
• Montana Project (USA):
  • Nature: Copper porphyry discovery previously explored by Newmont and Rio Tinto.
  • Deal Structure: Joint Venture with Rio Tinto. Modus can earn up to 51%–60% interest through exploration spending.
  • Clawback Clause: If Rio Tinto exercises a clawback, they must pay Modus $32 million USD for a 2% stake, effectively doubling Modus's investment while leaving them with a 49% interest in a "Tier 1" potential asset.

4. Financial Position and Operational Strategy

• Treasury: As of May 1st, the company holds approximately $45 million CAD.
• Budget Allocation:
  • Filo Sur: ~$23–24 million CAD (Flagship priority).
  • Biskoga & Montana: ~$10 million CAD combined.
• Synthesis: The company maintains a clear hierarchy where Filo Sur remains the primary focus for funding and technical resources. The secondary projects serve as "counter-cyclical" assets, ensuring the company continues to generate drill results and maintain market momentum during the Southern Hemisphere winter when Filo Sur is inaccessible.

Notable Quotes

• CEO Alan Sabat on the Montana deal: "We’ve managed to work with one of the best mining companies in the world to acquire an option to take control potentially of this discovery without spending any money on it [initially]... it’s a win-win for both us and for Rio Tinto."
• On the Biskoga acquisition: "This is a highly accretive deal for shareholders where we spend very little money in order to get quite a lot of upside."

Conclusion

Modus Metals is transitioning from a single-project explorer to a multi-jurisdictional company. By leveraging strategic partnerships (CD Capital, Rio Tinto) and utilizing option-based deal structures, the company has secured a robust pipeline of assets. The core focus remains on the high-potential Filo Sur project, while the Biskoga and Montana projects provide a hedge against seasonal downtime, ensuring consistent operational progress and news flow for shareholders throughout the year.