Golden Tag Resources Ltd. (TSX-V: GOG) (OTCQB: GTAGF) is pleased to announce that the Company has entered into a definitive Asset Purchase Agreement dated December 7, 2022  with First Majestic Silver Corp to acquire a 100% interest in the 69,478 hectares La Parrilla Silver Mine Complex in the locality of San Jose de la Parrilla, Durango, Mexico.

Highlights:

• La Parrilla is a fully permitted former producing mine complex consisting of five underground high-grade silver mines, and an open pit
• Demonstrated history of replacing resources – operated continuously from 2004 until September 2019 when it was placed on care and maintenance due to low silver prices
• Under FMS ownership the mill produced 34.3 million ounces¹ of silver equivalent, with average annual production of approximately 3.1 M oz of Ag.Eq^{1, 2}
• Excellent infrastructure inclusive of a 2,000 tonne per day processing facility (1,000 tpd flotation and 1,000 tpd cyanidation circuits), dry stack filter plant with approximately 9 years³ of tailings capacity available, numerous buildings including a doré refinery, and a partial underground mining fleet⁴
• New labour and Ejido agreements in place
• Historical Measured and Indicated Mineral Resources of approximately 9.95 M oz Ag.Eq and Inferred Mineral Resources of approximately 12.51 M oz Ag.Eq^{5, 6} (see Table 2)
• Located only 45 minutes from Durango City, paved highway to site
• Large underexplored land package totaling 69,478 ha
• Debt-free transaction with upfront consideration of US$20M in equity, and deferred payments totaling US$13.5M for a total acquisition price of US$33.5M
• Requirement to raise a minimum of CAD$9M in equity concurrent with the acquisition, with participation of US$2.7M from First Majestic
• Support received from key existing shareholders representing 54 million shares
• First Majestic to become strategic and largest shareholder of Golden Tag, inclusive of standard support agreements in place until May 2024

Greg McKenzie, President & CEO commented “We are honoured to partner with First Majestic in the acquisition of La Parrilla, their first producing silver mine, which has produced 34.3 million oz of Ag.Eq under their ownership. Over the past two years we have evaluated several opportunities for growth in the silver space and La Parrilla is a great opportunity. The mine complex is fully permitted, located only 45 minutes on paved roads from Durango and, only a few hours from our existing San Diego project.

This is a transformative acquisition for Golden Tag and we strongly believe in the upside resource growth potential of this long-life prolific asset. Our short-term objective is to commence exploration within and near mine workings in order to expand the resource base, to support our ultimate goal & vision of placing the asset back into production.

We would like to thank our key shareholders for their support on this transaction and look forward to working with First Majestic to complete the acquisition.”

Figure 1 – Clockwise from top-left 1. Rosarios Portal; 2. Ag-Pb-Zn vein mineralization, Quebradillas Cuerpo 460 (1700 elevation); 3. Quebradillas Open Pit

Overview of the La Parrilla Complex

The property is located in Durango State, Mexico, approximately 76 kilometres southeast of the capital city of Durango and is comprised of 41 contiguous mining concessions, in good standing, covering 69,478 hectares. The property was acquired by First Majestic in 2004 and became their first silver mine in 2005. When placed on care and maintenance in September 2019, the complex hosted five underground mines surrounding the mill including Rosarios, La Rosa, San Jose, Quebradillas and San Marcos, as well as the Quebradillas open pit (See Figure 1). From 2010-2019 La Parrilla produced approximately 29.6 million oz Ag.Eq as outlined in Table 1 below.

Table 1 – Historical Production at La Parrilla from 2010 – 2019¹

The metallurgical processing plant at La Parrilla (see Figure 2) consists of parallel 1,000 tpd flotation and 1,000 tpd cyanidation leach circuits to treat both oxide and sulfide ores, for a total capacity of 2,000 tpd, using a conventional flowsheet. Both ore types are polymetallic containing silver as their principal economic component as well as significant amounts of lead and zinc, and minor amounts of gold. Oxide ore is processed by cyanide leaching to produce doré bars while sulphide ore is processed by differential flotation to produce a silver-rich lead concentrate and a zinc concentrate.

Figure 2 – View of the La Parrilla Mill Complex

During 2018, the last year of open pit operations, metallurgical recoveries in the cyanidation circuit were 74% for silver and 81% for gold, and metallurgical recoveries in the flotation circuit were 76% for silver, 73% for lead and 55% for zinc. Tailings from both circuits are filtered separately before being dry‐stacked in the tailings storage facility, which currently holds approximately 6.5 million tonnes of capacity, sufficient for nine years of operations at a throughput rate of 2,000 tpd.

Table 2 – La Parrilla Historic Mineral Resources^{5, 6}

Cautionary Statement: Mineral Resources that are not Mineral Reserves do not have demonstrated economic viability. The resource estimate stated in Table 2 is as reported by First Majestic with an effective date of December 31, 2020. Golden Tag is not treating these estimates as current Mineral Resources because a Qualified Person on behalf of Golden Tag has not performed sufficient work⁵ to classify these estimates as current resources^{5, 6}.

Notes for Historic Mineral Resources Estimates:

5. These figures are historic in nature, have not been verified by Golden Tag and while relevant as the most recent mineral resource estimates for La Parrilla, should not be relied upon. A thorough review by Golden Tag’s “Qualified Person” of all historic data, along with additional exploration and validation work to confirm results and estimation parameters, would be required in order to produce a current mineral resource estimate for the La Parrilla Mine Complex. No more recent estimates or data are available to Golden Tag.
6. First Majestic reported that its La Parrilla mineral resource estimates were:

1. classified in accordance with the 2014 Canadian Institute of Mining, Metallurgy and Petroleum Definition Standards on Mineral Resources and Mineral Reserves
2. The Historic Mineral Resource estimates were updated to December 31, 2020 and were compliant with NI 43-101 at that time. The estimates were prepared by FMS Internal QP’s, who have appropriate relevant qualifications, and experience in geology and resource estimation, The information provided was compiled by David Rowe, CPG and reviewed by Ramon Mendoza Reyes, P.Eng., both Internal QP’s for FMS.
3. Sample data was collected through a cut-off date of December 31, 2020
4. cut-off grades and cut-off values used to report Historic Mineral Resources are different for all FMS mines. The cut-off grades, values and economic parameters are listed in the applicable section describing each mine section of the FMS AIF
5. Metal prices considered for Historic Mineral Resources estimates on December 31, 2020 were $22.50/oz Ag, $1,850/oz Au, $0.90/lb Pb and $1.05/lb Zn
6. Silver-equivalent grade is estimated considering: metal price assumptions, metallurgical recovery for the corresponding mineral type/mineral process and the metal payable of the corresponding contract of each mine
7. Tonnage is expressed in thousands of tonnes, metal content is expressed in thousands of ounces. The totals may not add up due to rounding

Please refer to the FMS Annual Information Form for The Year Ended December 31, 2021 dated March 31, 2022 available on at www.SEDAR.com.

Transaction Summary

The Company will acquire 100% of the assets of the La Parrilla Silver Mine Complex from First Majestic and the remaining employees associated directly with the Complex. In consideration, Golden Tag will pay to First Majestic the following:

• 143,673,684 common shares of Golden Tag, or US$20M at a deemed price of C$0.19 per Golden Tag share;
• Deferred payments totaling US$13.5M, comprised of the following:
  1. US$2.7M on the earlier of 18 months post-closing, or upon receipt of certain approvals from the Mexican government;
  2. US$5.75M when either (a) 5 million ounces of Ag.Eq reserves are declared from the La Parrilla claims, or (b) 22 million ounces of Ag.Eq of measured and indicated resources are declared, from the La Parrilla claims;
  3. US$5.05M when a new zone is discovered on the La Parrilla claims inclusive of a NI 43-101 resource of 12.5 million ounces of Ag.Eq;

Both II and III are payable in cash or common shares, at the election of Golden Tag.

• FMS may distribute shares held in excess of a 19.9% issued and outstanding Golden Tag holding (on a non-diluted basis) pro-rata to its shareholders.
• After closing, FMS will have a participation right to maintain its pro-rata interest in Golden Tag (to a maximum of 19.9%) in any future Golden Tag share issuances, subject to customary exceptions.
• The Consideration Shares held by FMS will be subject to the following contractual resale restrictions, in addition to any securities laws resale restrictions:
  1. 25% subject to a 6-month resale restriction;
  2. 25% subject to a 12-month resale restriction;
  3. 25% subject to a 18-month resale restriction;
  4. 25% subject to a 24-month resale restriction.

• The resale restrictions above will not apply to the Excess Shares and will be subject to customary carve-outs in the event of a takeover bid or merger or acquisition transaction involving the common shares of Golden Tag.
• Shareholders, along with certain directors and officers of Golden Tag holding a total of 54M shares (representing approximately 25% of the Golden Tag’s issued and outstanding shares), have entered into voting and support agreements with Golden Tag pursuant to which they have agreed, among other things, to support the Transaction (which creates a new control person of Golden Tag) and to vote their Golden Tag shares in favour of the Transaction.
• FMS has also entered into a standard and customary voting support agreement with Golden Tag for a period that is the longer of (i) May 24, 2024, or (ii) First Majestic’s ownership percentage of Golden Tag is greater than or equal to 19.9%.

Closing of the Transaction is expected to occur in H1 2023, and is subject to certain conditions including, but not limited to: (i) the approval of Golden Tag shareholders as a result of the Transaction creating a new control person; (ii) the completion by the Company of a Private Placement for minimum gross proceeds of C$9,000,000, as described below; (iii) the receipt of all necessary consents, approvals and authorizations (including the TSX Venture Exchange  and the Mexican Antitrust Commission) for the Transaction; and (iv) other conditions which are customary for a transaction of this type.

The Company has engaged SRK Consulting (Canada) Inc. to prepare an independent National Instrument 43-101 resource report on La Parrilla.

There are no finder’s fee payable in connection with the Transaction; First Majestic and the Company are arm’s length parties from each other and the Transaction is an Arm’s Length Transaction (as such term is defined under the corporate finance manual of the TSXV).

Financing for the Acquisition

Concurrent with or prior to the closing of the Transaction, Golden Tag will complete a private placement to raise gross aggregate proceeds of C$9 million, inclusive of US$2.7M subscribed for by First Majestic. Further details regarding the Private Placement will be announced once final terms of the Private Placement have been determined.

Change of Name

On the closing of the Transaction, subject to regulatory approval, the Company will undertake a rebranding initiative. Further details will follow.

Financial Advisors and Legal Counsel

Golden Tag is represented by McMillan LLP as legal counsel. First Majestic is being advised by National Bank as financial advisor and Bennett Jones LLP as legal counsel.

Qualified Person

The scientific and technical information in this document has been reviewed and approved by Bruce Robbins, P.Geo., a Qualified Person as defined by National Instrument 43-101.

About Golden Tag Resources

Golden Tag Resources Ltd. is a Toronto based mineral resource exploration company. The Company holds a 100% interest, subject to a 2% NSR, in the San Diego Project, in Durango, Mexico. The San Diego property is among the largest undeveloped silver assets in Mexico and is located within the prolific Velardeña Mining District. Velardeña hosts several mines having produced silver, zinc, lead and gold for over 100 years.