By: Kevin Brewer, P. Geo. President, CEO and Director, CMC Metals Ltd

Update on Exploration Activities

Well the end of another exploration season is closing in on us so lets update on what has happened this summer.

At the start of the summer we established a new industrial camp. It is a five-trailer unit designed to accommodate approximately 20 persons and is very well suited to the typical size of our operations. This sounds like an easy undertaking but it was quite a challenge moving it up to Yukon from Nisku. Alberta and then installing it with all of the necessary supports such as a sewer system, modern updates to safety, electrical and kitchen systems, water supply etc,. But the units were bought at an extremely reasonable price. They are further supported with Weatherhaven units which we use for a field support office, drill logging and cutting and equipment storage. This investment in infrastructure will serve us well as we plan to conduct exploration in the Rancheria Silver District for several more years.

We started drilling on schedule in early July and at the same time commenced a gravity geophysical survey over the Silverknife Prospect.

The gravity survey served to identify anomalous areas over the Silverknife Prospect and also in the northeasternmost corner of the property. This data also helped us refine the previous gravity survey to better define the gravity anomaly located in the north-central portion of the property. I discovered that the additional survey provided a regional context on the original data that enabled the geophysical team to better define the original anomaly. This resulted in the peak of the anomaly shifting slightly northwards to peak on the north side of the Tootsee River the significance of that which I will now further explain.

Early field investigations by geological mapping and drilling in the north central anomalous area have served to identify:

• Several outcrops of McDame limestone (the primary host rock to Coeur’s Silvertip Mine) occurring in this part of the property over a significant area. We did not expect to find outcrops as we thought the area was all covered with overburden as it is immediately south of the Tootsee River so we can now plan and permit for trenching of these areas and learn from that prior to proposed drilling in this area. Trenching is a very cost effective and timely method of acquiring a greater understanding of the geology and also often serves to expose surface mineralization;
• Mineralized occurrences of the McDame limestone occur just north of our property boundary and have a high probability of being geologically linked to the McDame outcrops we have identified. This suggests that the unit is mineralized in this part of the Rancheria District and has the potential to host a significant CRD deposit;
• Two drill holes placed just south of the Tootsee River on what we now know to be on the southern edge of the gravity anomaly identified the existence of the Cassiar granite. This granite is a potential heat source and could be the key driver for mineralized fluids into host units such as the adjacent McDame limestone unit.

From this work we have identified all of the key ingredients of the setting for CRD mineralization in the north-central portion of the Silverknife property by identifying that (i) there area is proximal to a heat source – i.e the Cassiar granite which is in itself a large enough intrusion to have a significant impact on the units it intruded; (ii) a suitable host rock (i.e., the McDame limestone) for mineralization and also over a good spatial area; (iii) evidence that the McDame limestone in this area is mineralized and is capped by mudstones …the exact setting of the Silvertip Deposit; (iv) coincident and spatially significant conductivity and gravity anomalies.

Unfortunately, when we examined the existing horse trail that would provide access into this region we identified that it would take a couple of months to prepare a road suitable for drill access into the northern side of the Tootsee River into target areas of the McDame limestone. And we also wanted to take a responsible approach to drill road construction as we share those trails with a wilderness operator. So we decided to hire a trail cutting crew to clear the trail for this year and defer final construction of the drill road into 2024.

We therefore had to switch gears and continue drilling in the area of the Silverknife Prospect which was a contingency plan we had previously established and is a bonafide drill target in itself.

The north-central portion of the Silverknife Property remains our priority target that is yet to be explored through drill investigations. We remain highly optimistic and the work the early stage exploration work has further expanded our level of interest in this area and we are very excited about our plans for 2024 which we propose will include:

• Secure a permit for trenching in the area and trench wherever possible – Q1-2024;
• Conduct VLF-EM ground surveys over the entire conductivity/gravity anomalies to define fault structures to further define drill targets (June, 2024);
• Conduct detailed grid mapping (early July, 2024)
• Complete construction of the drill road (early July, 2024)
• Construct drill pads (mid July, 2024); and
• Commence drilling (mid to late July, 2024).

The amount of drilling to be conducted will be dependent upon market conditions and subject to financing.

Silverknife Prospect

We drilled a total of 2,000 meters with approximately 500 meters in the two holes in the northern area and 1,500 meters in 9 holes in the area of the Silverknife Prospect.

The Silverknife Prospect is interesting as drilling in the early to mid-80’s that covered an area that now extends from Coeur’s Silvertip property westwards onto CMC’s Silverknife Prospect.  The historical drilling was conducted in three distinct campaigns: 1985 (30 holes – 2,344.70 m), 1986 (3 holes – unknown metreage) and 1987 (17 holes -1,822.44 m) for a total of 50 holes totalling 4,167.14 m served to identify an historic and non 43-101 compliant resource of 362,880 tonnes with an undetermined grade but with weighted assay average values of 511 g/t Ag, 3.7 g/t Au, 12.5% Pb and 4.8% Zn. There were some interesting drill intercepts on the Silverknife property side during this drilling including:

• 87-35: 18.02 meters of 4.17 oz/t (146.2 g/t) silver, 1.67% lead and 3.02% zinc
• 87-38: 9.99 meters of 5.36 oz/t (166.7 g/t) silver, 1.73% lead and 3.15% zinc
• 87-40: 5.94 meters of 6.20 oz/t (192.8 g/t) silver, 3.47% lead and 3.65% zinc
• 87-44: 3.66 meters of 7.52 oz/t (233.87 g/t) silver, 6.21% lead and 4.78% zinc

The 2023 drilling by CMC in this area focused on:

• Determining the possible significance of the gravity anomaly peaks as a guide for locating areas of possible mineralization;
• Extending the known mineralization located in fault structures; and
• Verifying the depth and extent of the Kechika limestones and the proximity to the heat source (Cassiar Batholith).

The campaign served to identify an extension of the mineralization that appears to be related to fault structures which are good channels for the mineralizing fluids within the Kechika Group. The heat source for these fluids (Cassiar granite) is in direct contact with the Kechika Group at depth. Several intercepts of mineralization were encountered wherever the fault structures were targeted with the exception of one hole that was lost due to poor drilling conditions. Approximately 527 samples have been selected from the core and recently sent for assaying. The assaying will test for elements of potential economic interest such as silver, gold, lead, zinc, critical elements such as indium, germanium and gallium. In particular, within this belt indium has been found to be associated with zinc.

Silver Hart

We are near the completion of a comprehensive review of over 15 years of exploration data at Silver Hart. Early perspectives on that there are new areas of exploration interest that warrant further examination.

We also relogged some of the 2022 holes that resulted in additional sampling of those holes and holes that were not previously sampled. Approximately 113 core samples have were selected and have been submitted recently for assaying.

We expect to receive a report soon and then hope to provide more details as to the exploration prospects at Silver Hart/Blue Heaven and potential future drill targets.

Amy

We did not complete any work on Amy this year. However, the start of trail development to access the northern side of the Tootsee River for Silverknife presents the possibility to extend that trail westwards on a new northern route to the property bypassing the challenge of having to cross the Tootsee River on the current access route. This new routing would then support exploration operations that otherwise would have to be fly-based or require a camp to be established that would be helicopter supported. Amy is clearly a very good CRD target with limestones that have attractive grades of mineralization that are yet to be explored with modern exploration techniques. Amy is considered to be a very important property in our portfolio and one that we wish to advance in the near to medium term. Proposed activities include contracting a study to design a new northern routing and then pursue permitting for it and various advanced exploration activities.

Other Projects

Our efforts this year focused on Silverknife so there has been no work completed on our prospects in Newfoundland. A small program is currently being planned for Bridal Veil to determine the potential source of the gold-in-soil anomalies in the northeastern portion of the property and to further evaluate the silicified breccia alteration zones identified in 2022.

Comments on Market Conditions

A lot of people are noting conditions are tough in the market. Silver and gold prices are down from their peaks in the last couple but looking at the past medium-term performance silver at $23.12 USD/oz is actually quite a good price considering it has increased by $5.12 USD/oz from exactly one year ago. I remain optimistic that markets will improve in this next quarter and with it share prices for junior explorationists as many would say we have been oversold.

The predictions of future prices are wildly variable amongst analysts but the overall sentiment appears to be positive. Some comments include:

“Silver is on the cusp of reversing all the past month’s losses” and the recent bearishness in the overall market is also quickly coming to an end”… “More institutional investors are allocating to silver this year, but from a very low base last year…”

Source: Nitesh Shah, Head of Commodities and Macroeconomic Research for Europe at WisdomTree.

“Gold’s upside momentum could be limited in the near-term. Comments from Powell have not put traders’ minds at ease and the traders are increasingly being forced to come to terms with rates remaining higher for even longer, strengthening the dollar and weighing on gold again today. It remains above $1,900 currently, but only just. The Fed is clearly far from convinced that the job is done… growing economic uncertainty in China and the threat of stagflation in Europe is helping to support safe-haven demand in gold. The Chinese government is going to have to throw a lot of good money at bad investments. This uncertainty is helping to raise the floor price for gold and silver…I think the worst days for gold and silver are over.”

Source: Craig Erlam, senior market analyst at OANDA

“The U.S. economy is set to enter a period of very low growth combined with persistent inflation, and this means precious metals like gold and silver are likely to see significant prices increases… This combination of low growth and moderately high inflation is indicative of stagflation, and if materialized it will confirm a view that the Federal Reserve and central banks around the world in general are fighting a losing battle against stubbornly high inflation and that further action will damage economic growth while doing nothing to tame the sticky nature of prices pressure,” he said. “It leads us to believe that the US Federal Reserve will cut rates before the 2% average inflation target has been reached, leading the FOMC to upgrade its target to 3%, a development that will force a repricing of future inflation expectations, and with that a commodity supportive lowering of real yields.”

Source: Ole Hansen, Head of Commodity Strategy at Saxo Bank

If one believes these statements to be true it is certainly possible that market sentiment will improve as we see commodity prices improve in the latter quarter of 2023.

Lets all hope for that and for positive assay results which we should receive in approximately 6-8 weeks or less.

As usual please feel free to contact me at anytime either by email at kbrewer80@hotmail.com or by phone – driect line (709) 327 8013 until about mid to late October and then Mexico +52 669 198 8503.

Thanks for your continued support.

Kevin