Defiance Silver Corp. — Capital/Financing Update 2024

Jul 22, 2024

FORM 51-102F3

MATERIAL CHANGE REPORT

Item 1 Name and address of the Company Defiance Silver Corp. (“Defiance” or the “Company”) Suite 2900-550 Burrard Street Vancouver, BC V6C 0A3

Item 2 Date of material change July 12, 2024

Item 3 News release The news release was issued on July 12, 2024 through Newsfile Corp.

Item 4 Summary of material change Defiance closed on July 12, 2024 the first tranche of a non-brokered private placement of units of the Company at a price of C$0.20 per unit, for aggregate gross proceeds of C$2,613,900.

Item 5 Full description of material change Marketed Offering On July 12, 2024 (the “Closing Date”), Defiance completed the first tranche of a non-brokered private placement (the “Offering”) of units of the Company (the “Units”) at a price of C$0.20 per Unit (the “Offering Price”), for aggregate gross proceeds of C$2,613,900.

Each Unit is comprised of one common share of the Company (each a “Common Share”) and one-half of one common share purchase warrant (each whole common share purchase warrant, a “Warrant”). Each Warrant will be exercisable by the holder thereof to acquire one common share of the Company (each a “Warrant Share”) at a price of C$0.35 at any time on or before the date which is 24 months after the Closing Date.

The net proceeds of the Offering will be used by the Company for exploration and general working capital purposes. Under applicable securities legislation and the policies of the TSX Venture Exchange, the securities issued in this Offering are subject to a four-month hold period, expiring on November 13, 2024.

In connection with the closing of the Offering, the Company paid finder’s fees comprised of an aggregate cash commission $146,809.00 and an aggregate of 633,870 non-transferable warrants (each a “Finder Warrant”) to arm-length finders. Each Finder Warrant entitles the holder thereof to purchase common shares of the Company at a price of C$0.20 per common share for a period of two (2) years following the Closing Date, the whole in accordance with the rules and policies of the TSX Venture Exchange.

Related Party Transaction

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Ron Sowerby, Director of the Company, purchased 100,000 Units for a total consideration of $20,000. Immediately after the closing of the private placement, Ron Sowerby owns directly or indirectly, or exercises control or direction over a total of 2,714,973 Common Shares and 200,000 Warrants of the Company. Ron Sowerby is hereinafter referred to as the "Insider".

The Insider is considered "related parties" and "insiders" of the Company for the purposes of applicable securities laws and stock exchange rules. The subscription and issuance of Units by the Insider constitutes related party transactions but is exempt from the formal valuation and minority approval requirements of Regulation 61-101 - Protection of Minority Security Holders in Special Transactions as neither the fair market value of the common shares and common share purchase warrants issued to each of the Insiders, nor the consideration paid by such Insiders, exceeds 25% of the Company's market capitalization. The Insider abstained from voting on all matters relating to the Offering.

Other Corporate Matters

The Company announces that it has previously engaged an arm's length party, AXINO Media GmbH, ("Axino") to perform services for the Company, including investor relations activities, as defined in accordance with the policies of the TSXV and applicable securities laws.

Pursuant to a corporate communication service agreement (the "Service Agreement") entered into with Axino on July 1st, 2024, Axino will receive an annual payment of €50,000, paid quarterly. In addition, fees for any translation services provided by Axino will result in an additional fee of €500 per item. Pursuant to the Service Agreement, Axino will provide services for a period of one year. At the discretion of the board of directors of the Company, Axino may also receive stock options, pursuant to TSXV policies. The Agreement is subject to acceptance by the TSXV and Axino has agreed to comply with all applicable securities laws and the policies of the Exchange in providing the services to the Company.

The Company previously entered into an arm's length administrative services agreement dated May 1, 2023 (the "Agreement"), for services provided by an officer of the Company. As part of the consideration payable by the Company under the Agreement, the Company has agreed to issue that number of Common Shares equal to $1,330 per month (the "Service Shares"), to be issued on a semi-annual basis and pursuant to the policies of the TSXV. The Agreement was for a term of three months and has automatically renewed in accordance with its terms, terminable by either party providing 30 days' notice of such termination.

The deemed value of the Service Shares to be issued for a particular month, is to be the closing price of the Company's shares on the last trading day of the month. For services rendered under the Agreement between the period of January 1, 2024 and June 30, 2024, the Company intends to issue 52,375 Shares at a weighted average price of $0.179 per share, subject to the approval of the TSXV.

The Service Shares issued are subject to a four month hold period, which will expire on a date that is four months and one day from the date of issuance. The Issuance of the Shares pursuant to the Service Shares remains subject to the approval of the TSXV. No new insiders will be created, nor will any change of control occur, as a result of the issuance of the Service Shares.

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As certain insiders are party to the Agreement, it may be considered a “related party transaction” under Multilateral Instrument 61-101 Protection of Minority Security Holders In Special Transactions (“MI 61-101”) and the TSXV. The Company is relying on the exemptions from the formal valuation and the minority shareholder approval requirements of MI-61-101 contained in section 5.5 (a) and Section 5.7 (1)(a) as the fair market value of the common shares being issued to insiders in connection with the Service Shares does not exceed 25% of the market capitalization of the Company, as determined in accordance with MI 61-101.

Item 6 Reliance on subsection 7.1(2) of National Instrument 51-102 N/A

Item 7 Omitted Information None.

Item 8 Executive Officer Oleg Shcherbyna, Chief Financial Officer +1 (604) 306-3153

Item 9 Date of Report July 22, 2024

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