Discovery Silver Corp.

A copy of this preliminary short form base shelf prospectus has been filed with the securities regulatory authorities in each of the provinces and territories of Canada except for Quebec, but has not yet become final for the purpose of the sale of securities. Information contained in this preliminary short form base shelf prospectus may not be complete and may have to be amended. The securities may not be sold until a receipt for the short form base shelf prospectus is obtained from the securities regulatory authorities.

This short form prospectus is referred to as a short form base shelf prospectus and has been filed under legislation in each of the provinces and territories of Canada except for Quebec, that permits certain information about these securities to be determined after this prospectus has become final and that permits the omission from this prospectus of that information. The legislation requires the delivery to purchasers of a prospectus supplement containing the omitted information within a specified period of time after agreeing to purchase any of these securities.

No securities regulatory authority has expressed an opinion about these securities and it is an offence to claim otherwise. This preliminary short form base shelf prospectus constitutes a public offering of these securities only in those jurisdictions where they may be lawfully offered for sale and therein only by persons permitted to sell such securities. Information has been incorporated by reference in this preliminary short form base shelf prospectus from documents filed with certain securities commissions or similar authorities in Canada . Copies of the documents incorporated herein by reference may be obtained on request without charge from the Chief Financial Officer of Discovery Silver Corp. at 701-55 University Avenue, Toronto, Ontario, M5J 2H7, telephone 416.613.9410, and are also available electronically at www.sedar.com.

PRELIMINARY SHORT FORM BASE SHELF PROSPECTUS

New Issue

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April 27 , 2022

C$250,000,000 Common Shares Warrants Subscription Receipts Units

This preliminary short form base shelf prospectus (the “ Prospectus ”) relates to the offering for sale from time to time (each, an “ Offering ”), during the 25-month period that this Prospectus, including any amendments hereto, remains effective, of the securities of Discovery Silver Corp. (“ Discovery ” or the “ Corporation ”) listed above (the “ Securities ”) in one or more series or issuances, with a total offering price of such Securities, in the aggregate, of up to C$250,000,000 (or the equivalent thereof in U.S. dollars or other currencies). The Securities may be offered separately or together, in amounts, at prices, and on terms to be determined based on market conditions at the time of the sale and set forth in an accompanying prospectus supplement (a “ Prospectus Supplement ”).

The specific terms of the Securities with respect to a particular offering will be set out in the applicable Prospectus Supplement and may include, where applicable: (i) in the case of Common Shares, the number of Common Shares offered; the offering price; whether the Common Shares are being offered for cash or on exercise of Special Warrants; and any other material terms or conditions of the Common Shares; (ii) in the case of Warrants, the designation and aggregate number of Warrants offered; the price at which the Warrants will be offered; the date on which the right to exercise the Warrants will commence and the date on which the right will expire; the number of Common Shares that may be purchased upon exercise of each Warrant and the price at which and currency or currencies in which the Common Shares may be purchased upon exercise of each Warrant; and any other material terms or conditions of the Warrants; (iii) in the case of Subscription Receipts, the designation and aggregate number of Subscription Receipts offered; the price at which the Subscription Receipts will be offered; the designation, number and terms of the Common Shares, Warrants, Units, or any combination thereof to be received by holders of Subscription Receipts upon satisfaction of the release conditions, and the procedures that will result in the adjustment of those numbers; and any other material terms or conditions of the Subscription Receipts; and (iv) in the case of Units, the designation and aggregate number of Units being offered; the price at which the Units will be offered; the designation and terms of the Units and the applicable Securities included in the Units; the description of the terms of any agreement governing the Units; any provision for the issuance, payment, settlement, transfer, or exchange of the Units; and any other material terms or conditions of the Units. See “Description of Securities Being Distributed”.

The issued and outstanding common shares of the Corporation (the “ Common Shares ”) are listed and posted for trading on the TSX Venture Exchange (the “ TSXV ”) under the symbol “DSV”, on the OTCQX under the symbol “DSVSF”, and on the Frankfurt Stock Exchange under the symbol “1CU”. On April 26, 2022, the last full trading day prior to the date of this Prospectus, the closing price per Common Share on the TSXV was $1.53. Unless otherwise specified in the applicable Prospectus Supplement, there is no existing trading market through which the warrants (the “Warrants”), the special warrants (the “Special Warrants”) the subscription receipts (the “Subscription Receipts”), or the units (the “Units”) may be sold and purchasers may not be able to resell such Securities purchased under this Prospectus. This may affect the pricing of such Securities in the secondary market, the transparency and availability of trading prices, the liquidity of such Securities and the extent of issuer regulation. No assurances can be given that a market for trading in Securities of any series or issue will develop or as to the liquidity of any such market, whether or not the Securities are listed on a securities exchange. See “Risk Factors”.

All information permitted under applicable law to be omitted from this Prospectus will be contained in one or more Prospectus Supplements that will be delivered to purchasers together with this Prospectus. Each Prospectus Supplement will be incorporated by reference into this Prospectus for the purposes of securities legislation as of the date of the Prospectus Supplement and only for the purposes of the distribution of the Securities to which the Prospectus Supplement pertains. You should read this Prospectus and any applicable Prospectus Supplement carefully before you invest in any Securities. The Corporation may qualify an “at-the-market distribution” as defined in National Instrument 44-102 – Shelf Distributions (“ NI 44-102 ”) of the Canadian Securities Administrators. The Corporation may offer and sell Securities through underwriters or dealers, directly or through agents designated by the Corporation from time to time at amounts and prices and other terms determined by the Corporation. A Prospectus Supplement will set forth the names of any underwriters, dealers, or agents involved in the Offering and will set forth the terms of the Offering, the method of distribution of such Securities including, to the extent applicable, the proceeds to the Corporation and any fees, discounts or any other compensation payable to underwriters, dealers, or agents and any other material terms of the distribution. In connection with any Offering (unless otherwise specified in a Prospectus Supplement), the underwriters or agents may, subject to applicable law, over-allot or effect transactions that stabilize or maintain the market price of the Securities offered at levels other than that which might otherwise exist in the open market. Such transactions, if commenced, may be interrupted or discontinued at any time. See “Plan of Distribution”. No underwriter has been involved in the preparation of this Prospectus or performed any review of the contents of this Prospectus.

Investing in the Securities is speculative and involves certain risks. The risks outlined in this Prospectus and in the documents incorporated by reference herein and in the applicable Prospectus Supplement should be carefully reviewed and considered by prospective investors. See “Risk Factors”.

Dan Vickerman and Moira Smith, directors of the Corporation, and Jim Cremeens and Keith Viles, two of the qualified persons responsible for the PEA Report (as defined herein) reside outside of Canada. Such persons have appointed Cassels Brock & Blackwell LLP, Suite 2200, 885 West Georgia Street, Vancouver, British Columbia, V6C 3E8 as agent for service of process in Canada. Purchasers are advised that it may not be possible for investors to enforce judgments obtained in Canada against any person that resides outside of Canada, even if the party has appointed an agent for service of process.

Owning the Corporation’s securities may subject you to tax consequences both in Canada and the United States. Such tax consequences are not fully described in this Prospectus and may not be fully described in any applicable Prospectus Supplement. Each purchaser should read the tax discussion in any Prospectus Supplement with respect to a particular offering and consult the purchaser’s own tax advisor with respect to the purchaser’s own particular circumstances.

Unless otherwise indicated, all references to “$”, “C$”, or “dollars” in this Prospectus refer to Canadian dollars.

The Corporation’s registered office is located at Suite 2200, 885 West Georgia Street, Vancouver, British Columbia, V6C 3E8. The Corporation’s corporate head office is located at Suite 701, 55 University Avenue, Toronto, Ontario, M5J 2H7.

DESCRIPTION PAGE NO.
ABOUT THIS PROSPECTUS...................................................................................................................................... 4
FINANCIAL INFORMATION AND CURRENCY .................................................................................................... 4
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENT ........................................................ 4
CAUTIONARY NOTE REGARDING FUTURE-ORIENTED FINANCIAL INFORMATION ................................ 5
DOCUMENTS INCORPORATED BY REFERENCE ................................................................................................ 5
MARKETING MATERIALS ....................................................................................................................................... 7
THE CORPORATION .................................................................................................................................................. 7
RISK FACTORS ........................................................................................................................................................... 9
CONSOLIDATED CAPITALIZATION .................................................................................................................... 11
USE OF PROCEEDS .................................................................................................................................................. 11
PLAN OF DISTRIBUTION ....................................................................................................................................... 12
DESCRIPTION OF SECURITIES BEING DISTRIBUTED ..................................................................................... 13
CERTAIN CANADIAN FEDERAL INCOME TAX CONSIDERATIONS ............................................................. 16
PRIOR SALES ............................................................................................................................................................ 17
TRADING PRICE AND VOLUME ........................................................................................................................... 17
LEGAL MATTERS .................................................................................................................................................... 17
INTEREST OF EXPERTS .......................................................................................................................................... 17
AUDITORS ................................................................................................................................................................. 17
STATUTORY AND CONTRACTUAL RIGHTS OF WITHDRAWAL AND RESCISSION.................................. 17
ENFORCEMENT OF JUDGMENTS AGAINST FOREIGN PERSONS .................................................................. 18
CERTIFICATE OF THE CORPORATION ................................................................................................................. 1

ABOUT THIS PROSPECTUS

Unless otherwise noted or the context indicates otherwise, the “ Corporation ” and “ Discovery ” refer to Discovery Silver Corp. and its subsidiaries. You should rely only on the information contained or incorporated by reference in this Prospectus. We have not authorized anyone to provide you with different or additional information. If anyone provides you with any different, additional, inconsistent, or other information, you should not rely on it. The Corporation is not making an offer to sell or seeking an offer to buy the Securities in any jurisdiction where the offer or sale is not permitted. The information contained in this Prospectus and the documents incorporated by reference herein are accurate as of the date of this Prospectus. The Corporation’s business, financial condition, results of operations, and prospects may have changed since those dates. Information contained on the Corporation’s website should not be deemed to be a part of this Prospectus, any applicable Prospectus Supplement, or incorporated by reference herein or therein and should not be relied upon by prospective investors for the purpose of determining whether to invest in the Securities.

FINANCIAL INFORMATION AND CURRENCY

Discovery has prepared its consolidated financial statements, incorporated herein by reference, in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board. As a result, they may not be comparable to financial statements prepared in accordance with other financial reporting frameworks, including generally acceptable accounting principles used in the US (“US GAAP”).

All currency amounts in this Prospectus are expressed in Canadian dollars, unless otherwise indicated. References to “C$” are to Canadian dollars. References to “US$” are to United States dollars.

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENT

This Prospectus and documents incorporated by reference herein contain “forward-looking statements” or “forward-looking information” within the meaning of applicable securities legislation (collectively referred to herein as “ forward-looking information ” or “ forward-looking statements ”). Forward-looking statements are included to provide information about management’s current expectations and plans that allows investors and others to get a better understanding of the Corporation’s operating environment, the business operations, and financial performance and condition.

Forward-looking statements include, but are not limited to, statements regarding anticipated burn rate and operations; planned exploration and development programs and expenditures; timelines and milestones with respect to the Cordero Project; anticipated expenditures and programs at the Cordero Project; impact of COVID-19 (including variants) on the Corporation and its operations; the estimation of mineral resources; the magnitude or quality of mineral deposits; anticipated advancement of mineral properties and programs; future exploration prospects; proposed exploration plans and expected results of exploration; Discovery’s ability to obtain licenses, permits, and regulatory approvals required to implement expected future exploration plans; changes in commodity prices and exchange rates; future growth potential of Discovery; future development plans; currency and interest rate fluctuations; and the economic and operational analyses and conclusions from the Cordero Technical Report and the PEA Report (as defined below). All mineral resource estimates and certain other technical and scientific information are based on the assumptions and parameters set out herein, in the Cordero Technical Report, the PEA Report, and on the opinion of “qualified persons” (as defined in National Instrument 43-101 – Standards of Disclosure for Mineral Projects (“ NI 43-101 ”). Any statements that express or involve discussions with respect to predictions, expectations, beliefs, plans, projections, objectives, assumptions, or future events or performance (often, but not always, identified by words or phrases such as “expects”, “is expected”, “anticipates”, “believes”, “plans”, “projects”, “estimates”, “assumes”, “intends”, “strategy”, “goals”, “objectives”, “potential”, “possible”, or variations thereof or stating that certain actions, events, conditions or results “may”, “could”, “would”, “should”, “might”, or “will” be taken, occur or be achieved, or the negative of any of these terms and similar expressions) are not statements of fact and may be forward-looking statements.

Forward-looking statements are necessarily based upon a number of factors and assumptions that, if untrue, could cause actual results, performance or achievements to be materially different from future results, performance, or achievements expressed or implied by such statements. Forward-looking statements are based upon a number of estimates and assumptions that, while considered reasonable by the Corporation at this time, are inherently subject to significant business, economic and competitive uncertainties and contingencies that may cause the Corporation’s actual financial results, performance, or achievements to be materially different from those expressed or implied herein. Some of the material factors or assumptions used to develop forward-looking statements include, without limitation, and general expectations with respect to the development of the Cordero Project; the future prices of minerals; anticipated costs and the Corporation’s ability to fund its programs; the Corporation’s ability to carry on exploration and development activities; the timing and results of drilling

programs; the discovery of additional mineral resources on the Corporation’s mineral properties; the timely receipt of required approvals and permits, including those approvals and permits required for successful project permitting, construction, and operation of projects; the costs of operating and exploration expenditures; the Corporation’s ability to operate in a safe, efficient, and effective manner; the potential impact of natural disasters, the impact of COVID-19 (including variants); and the Corporation’s ability to obtain financing as and when required and on reasonable terms.

Forward-looking statements are subject to a variety of known and unknown risks, uncertainties, and other factors that could cause actual events or results to differ from those expressed or implied. There can be no assurance that such statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Certain important factors that could cause actual results, performance or achievements to differ materially from those in the forward-looking statements include, among others: the Cordero Project and general expectations with respect to the development thereof; general economic conditions in Canada, the United States and globally; industry conditions; governmental regulation of the mining industry, including environmental regulation; geological, technical, and drilling problems; unanticipated operating events; competition for and/or inability to retain drilling rigs and other services; the availability of capital on acceptable terms; the need to obtain required approvals from regulatory authorities; stock market volatility; volatility in market prices for commodities; liabilities inherent in the mining industry; changes in tax laws and incentive programs relating to the mining industry; the development of the COVID-19 global pandemic, and the other factors described herein under “Risk Factors”, as well as in the Corporation’s public filings available at www.sedar.com.

This list is not exhaustive of the factors that may affect any of the Corporation’s forward-looking statements. Although the Corporation believes its expectations are based upon reasonable assumptions and have attempted to identify important factors that could cause actual actions, events, or results to differ materially from those described in forward-looking statements, there may be other factors that cause actions, events, or results not to be as anticipated, estimated, or intended. See the section entitled “Risk Factors” below, and in the section entitled “Risk Factors” in the Corporation’s annual information form for the year ended December 31, 2021 (the “ Annual Information Form ”), and incorporated by reference herein, for additional risk factors that could cause results to differ materially from forward-looking statements.

Investors are cautioned not to put undue reliance on forward-looking statements. The forward-looking statements contained herein are made as of the date of this Prospectus and, accordingly, are subject to change after such date. The Corporation disclaims any intent or obligation to update publicly or otherwise revise any forward-looking statements or the foregoing list of assumptions or factors, whether as a result of new information, future events or otherwise, except in accordance with applicable securities laws. Investors are urged to read the Corporation’s filings with Canadian securities regulatory agencies, which can be viewed online under the Corporation’s profile on the System for Electronic Document Analysis and Retrieval (“ SEDAR ”) at www.sedar.com.

CAUTIONARY NOTE REGARDING FUTURE-ORIENTED FINANCIAL INFORMATION

This Prospectus also contains future-oriented financial information and outlook information (collectively, “ FOFI ”) about the Cordero Project. This information is subject to the same assumptions, risk factors, limitations and qualifications as set forth below in the below paragraphs. FOFI contained in this Prospectus is made as of the date of this Prospectus and is being provided for the purpose of providing further information with respect to the Cordero Project. The Corporation disclaims any intention or obligation to update or revise any FOFI contained in this Prospectus, whether as a result of new information, future events, or otherwise, unless required pursuant to applicable law. Readers are cautioned that FOFI contained in this Prospectus should not be used for purposes other than for which it is disclosed herein.

DOCUMENTS INCORPORATED BY REFERENCE

Information has been incorporated by reference into this Prospectus from documents filed with the securities commissions or similar authorities in Canada. Copies of the documents incorporated herein by reference may be obtained on request without charge from the Chief Financial Officer of Discovery Silver Corp. at Suite 701-55 University Avenue, Toronto, Ontario, M5J 2H7, telephone +1(416)-613-9410, and are also available electronically under the Corporation’s profile at www.sedar.com. The filings of the Corporation through SEDAR are not incorporated by reference in this Prospectus except as specifically set out herein.

The following documents, filed by the Corporation with the securities commissions or similar authorities in certain of the provinces and territories of Canada are specifically incorporated by reference into, and form an integral part of, this Prospectus:

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(a) the annual information form for the fiscal year ended December 31, 2021, dated April 27, 2022 (the “ AIF ”);
(b) the Corporation’s audited consolidated financial statements for the years ended December 31, 2021 and 2020, and related notes thereto, together with the independent auditor’s report thereon (the “ Financial Statements ”);
(c) the management’s discussion and analysis for the years ended December 31, 2021 and 2020; and
(d) the management information circular of the Corporation dated May 11, 2021 in connection with the annual general meeting of shareholders of the Corporation held on June 25, 2021.

Any document of the type referred to in item 11.1 of Form 44-101F1 – Short Form Prospectus of National Instrument 44101 – Short Form Prospectus Distributions (“ NI 44-101 ”) of the Canadian Securities Administrators (other than confidential material change reports, if any) filed by the Corporation with any securities commissions or similar regulatory authorities in Canada after the date of this Prospectus and all Prospectus Supplements disclosing additional or updated information filed pursuant to the requirements of applicable securities legislation in Canada during the period that this Prospectus is effective shall be deemed to be incorporated by reference in this Prospectus. These documents are available on the Corporation’s issuer profile on SEDAR, which can be accessed at www.sedar.com.

The documents incorporated or deemed to be incorporated herein by reference contain meaningful and material information relating to the Corporation and readers should review all information contained in this Prospectus and the documents incorporated or deemed to be incorporated herein by reference.

Any statement contained in this Prospectus or in a document incorporated or deemed to be incorporated by reference herein shall be deemed to be modified or superseded, for purposes of this Prospectus, to the extent that a statement contained herein, or in any other subsequently filed document that also is, or is deemed to be, incorporated by reference herein, modifies or supersedes such statement. Any statement so modified or superseded shall not be deemed, except as so modified or superseded, to constitute a part of this Prospectus. The modifying or superseding statement need not state that it has modified or superseded a prior statement or include any other information set forth in the document that it modifies or supersedes. The making of a modifying or superseding statement shall not be deemed an admission for any purposes that the modified or superseded statement, when made, constituted a misrepresentation, an untrue statement of a material fact or an omission to state a material fact that is required to be stated or that is necessary to make a statement not misleading in light of the circumstances in which it was made. Any statement so modified or superseded shall thereafter neither constitute, nor be deemed to constitute, a part of this Prospectus, except as so modified or superseded.

When the Corporation files a new annual information form, audited consolidated financial statements and related management’s discussion and analysis and, where required, they are accepted by the applicable securities regulatory authorities during the time that this Prospectus is valid, the previous annual information form, the previous audited consolidated financial statements and related management’s discussion and analysis and all unaudited interim condensed consolidated financial statements and related management’s discussion and analysis for such periods, all material change reports, and any business acquisition report filed prior to the commencement of the Corporation’s financial year in which the new annual information form is filed will be deemed no longer to be incorporated by reference in this Prospectus for purposes of future offers and sales of Securities under this Prospectus. Upon new unaudited interim condensed consolidated financial statements and related management’s discussion and analysis being filed by the Corporation with the applicable securities regulatory authorities during the term of this Prospectus, all unaudited interim condensed consolidated financial statements and related management’s discussion and analysis filed prior to the filing of the new unaudited interim condensed consolidated financial statements shall be deemed no longer to be incorporated by reference into this Prospectus for purposes of future offers and sales of Securities hereunder. Upon a management information circular in connection with an annual general meeting of shareholders being filed by the Corporation with the appropriate securities regulatory authorities during the currency of this Prospectus, the management information circular filed in connection with the previous annual general meeting of shareholders (unless such management information circular also related to a special meeting of shareholders) will be deemed no longer to be incorporated by reference in this Prospectus for purposes of future offers and sales of Securities hereunder.

A Prospectus Supplement containing the specific terms of any offering of Securities will be delivered to purchasers of Securities together with this Prospectus and will be deemed to be incorporated by reference in this Prospectus as of

the date of the Prospectus Supplement and only for the purposes of the offering to which that Prospectus Supplement pertains.

MARKETING MATERIALS

Any “template version” of any “marketing materials” (as defined in National Instrument 41-101 – General Prospectus Requirements of the Canadian Securities Administrators) filed by the Corporation after the date of a Prospectus Supplement and before the termination of the distribution of Securities offered pursuant to such Prospectus Supplement (together with this Prospectus) is deemed incorporated by reference in such Prospectus Supplement.

THE CORPORATION

Discovery is principally engaged in the acquisition and exploration of mineral properties, or interests in companies controlling mineral properties, which feature robust grades, meaningful size, and access to existing infrastructure in mining-friendly jurisdictions, primarily Mexico. The Corporation’s Common Shares are listed on the TSXV under the symbol “DSV”, on the OTCQX under the symbol “DSVSF”, and on the Frankfurt Stock Exchange under the symbol “1CU”.

The Corporation’s objective is to identify and successfully define and develop mineral deposits, primarily in Mexico. The Corporation’s material property is the Cordero project located in Chihuahua, Mexico (the “ Cordero Project ”).

The Cordero Project

The Cordero Project is considered one of the world’s largest undeveloped silver resources. The Cordero Project has all the attributes of a quality project: grade, scale, significant organic growth opportunities and well located in mining-friendly Chihuahua state on a prolific silver belt. Since acquiring the Cordero Project in August 2019, Discovery’s focus has been on leveraging the under-explored higher-grade zones within the larger mineralized system with the objective of defining a highmargin project with scale. Aggressive drilling to date has outlined a higher-grade bulk tonnage core flanked by high-grade veins with more than 5 km of strike extent. Our ongoing drilling is focused on defining and expanding both of these types of mineralization. A new Resource, incorporating geology and structure for the first time as well as data from more than 500 drill holes was filed on December 6, 2021 (effective October 20, 2021). This was followed by a new PEA Report, focused on Cordero's high-grade resource and integrating new metallurgical testwork and engineering studies, that was filed on January 13, 2022 (effective November 30, 2021).

The Cordero Project was acquired by the Corporation through the Corporation’s acquisition of Levon Resources Ltd. on August 2, 2019. Since acquiring the Cordero Project, the Corporation’s focus has been on understanding the nature of the higher-grade zones within the larger mineralized system with the objective of upgrading the economic potential of the Cordero Project. Based on the Corporation’s review of previous work and the re-logging of core from historic drilling, higher-grade mineralization is currently understood to be predominantly associated with two styles of mineralization: (1) sulphide mineralization within a breccia host; and (2) discrete sulphide veins.

The most recent NI 43-101 technical reports on the Cordero Project are the NI 43-101 technical report entitled “ Mineral Resource Update of the Cordero Silver Project (Chihuahua State, Mexico) ” with an effective date of October 20, 2021, published on December 6, 2021 (the “ Cordero Technical Report ”), and the NI 43-101 technical report entitled “ Preliminary Economic Assessment of The Cordero Silver Project (Chihuahua State, Mexico) ” with an effective date of November 30, 2021, published on January 13, 2022 (the “ PEA Report ”). The Cordero Technical Report and the PEA Report are available on the Corporation’s issuer profile on SEDAR at www.sedar.com or on the Corporation’s website at www.discoverysilver.com.

For further information regarding Discovery and the Cordero Project, see the Annual Information Form, the Cordero Technical Report, and the PEA Report, and other documents incorporated by reference in this Prospectus available at www.sedar.com under the Corporation’s profile.

Recent Developments

On March 12, 2021, the Corporation announced the addition of Jennifer Wagner to its board of directors. Ms. Wagner is a corporate securities lawyer with 15 years of experience in the mining sector. Ms. Wagner has extensive experience advising companies on a variety of corporate commercial transactions, governance, and compliance matters.

On April 13, 2021, the Corporation changed its name from “Discovery Metals Corp.” to “Discovery Silver Corp.” to reflect the results reported to date at the Cordero Project.

On December 6, 2021, the Corporation filed the Cordero Technical Report, which concluded the Cordero Project is one of the largest undeveloped silver resources, both within Mexico and globally, and warranted advancement to the next milestone study, a Preliminary Economic Assessment. Various recommendations where also provided by the Cordero Technical Report’s authors regarding exploration and drilling, metallurgical characterization, and mineral resources.

On January 13, 2022, the Corporation filed the PEA Report, which concluded that the Cordero Project is technically and economically viable.

On March 14, 2022, the Corporation announced the appointment of Tony Esplin as Chief Operating Officer. Mr. Esplin has more than 30 years of experience in the mining industry, including over two decades of executive and senior management roles at Tier 1 operations with Newmont Corporation and Barrick Gold Corporation.

On April 12, 2022, the Corporation announced the addition of Tony Makuch to its board of directors. Mr. Makuch has over 35 years of mining industry experience and was most recently President, CEO and Director of Kirkland Lake.

For further details, refer to the Cordero Technical Report and the PEA Report, available on the Corporation’s issuer profile on SEDAR at www.sedar.com or on the Corporation’s website at www.discoverysilver.com.

Financings

On February 22, 2021, the Corporation announced the completion of exercises of warrants issued in 2017 for total cash proceeds of approximately $31 million during the exercise period and prior to expiry.

Exploration

During 2021, the Corporation advanced the Cordero Project through the completion of approximately 86,155m of drilling bringing the total to approximately 131,544m since its acquisition in August 2019. The majority of this drilling was used to provide an updated Mineral Resource Estimate, announced on October 20, 2021, and published in the Cordero Technical Report on December 6, 2021, which formed the basis of the Preliminary Economic Assessment announced on November 30, 2021, and published in the PEA Report on January 13, 2022.

For details of drill results, the Cordero Technical Report, and the PEA Report, refer to the Corporation’s press releases issued during 2021, the Cordero Technical Report filed December 6, 2021, and the PEA Report filed on January 13, 2022, available on SEDAR at www.sedar.com or on the Corporation’s website at www.discoverysilver.com.

Update Regarding Impact of COVID-19 on Operations

The Corporation’s business and the anticipated timing and cost of development work and applicable milestones have not been significantly impacted by COVID-19 to date.

The Corporation’s operations, financial condition, cash flows, and financial performance have also not been significantly impacted by COVID-19 to date. As the Corporation is not yet operating any mine or facility, the Corporation has not yet had any production or operating cash flow.

The Corporation does not yet operate a mine or facility, as such COVID-19 has not had an impact on productivity and the timing or cost of work. The Corporation has proceeded with commercial discussions during the COVID-19 pandemic and facilitated site visits while following various COVID-19-related protocols.

The Corporation continues to be proactive in mitigating health and safety risks regarding COVID-19 and continually monitors employees and contractors. The Corporation remains committed to being engaged with our local stakeholders during this uncertain time and will continue to closely monitor the directives of all levels of government in both Mexico and Canada as well as the relevant health authorities. Despite the increased risk that the Delta and Omicron variants pose to future exploration at the Cordero Project, all of the drilling required to complete the updated resource and Preliminary Economic Assessment

were completed during Q4 2021. To-date, health and safety protocols and the efforts of employees and contractors to manage COVID-19 have been effective and the Corporation continues drilling with four diamond core rigs.

Working Capital

As of April 27, 2022, the Corporation had approximately $58.0 million in cash and approximately $58.9 million in working capital. Other than as disclosed in the Financial Statements, the Corporation does not have any current non-contingent resources with which to fund operations.

The Corporation anticipates being able to continue operations to advance its projects using its currently available financial resources for the next twelve months.

RISK FACTORS

Before deciding to invest in the Securities, investors should carefully consider all of the information contained in, and incorporated or deemed to be incorporated by reference in, this Prospectus and any applicable Prospectus Supplement. An investment in the Securities is subject to certain risks, including risks related to the business of the Corporation, risks related to mining operations and risks related to the Corporation’s securities described in the documents incorporated or deemed to be incorporated by reference in this Prospectus. See the risk factors below and the “Risk Factors” section of any applicable Prospectus Supplement and the documents incorporated or deemed to be incorporated by reference herein and therein. Each of the risks described in these sections and documents could materially and adversely affect the Corporation’s business, financial condition, results of operations, and prospects, and could result in a loss of the purchaser’s investment. Additional risks and uncertainties not known to the Corporation or that the Corporation currently deems immaterial may also impair the Corporation’s business, financial condition, results of operations, and prospects.

These risk factors, together with all other information included or incorporated by reference in this Prospectus, including, without limitation, information contained in the section “Cautionary Note Regarding Forward-Looking Statements” as well as the risk factors set out below, should be carefully reviewed and considered by investors.

Some of the factors described herein, in the documents incorporated or deemed incorporated by reference herein are interrelated and, consequently, investors should treat such risk factors as a whole. If any of the adverse effects set out in the risk factors described herein, or in another document incorporated or deemed incorporated by reference herein occur, it could have a material adverse effect on the business, financial condition, and results of operations of the Corporation. Additional risks and uncertainties of which the Corporation currently is unaware of or that are unknown or that it currently deems to be immaterial could have a material adverse effect on the Corporation’s business, financial condition and results of operations. The Corporation cannot provide assurance that it will successfully address any or all of these risks. There is no assurance that any risk management steps taken will avoid future loss due to the occurrence of the adverse effects set out in the risk factors herein, or in the other documents incorporated or deemed incorporated by reference herein or other unforeseen risks.

Financing Risks

The Cordero Project will require additional external financing. There can be no assurance that additional capital or other types of financing will be available when needed or that, if available, the terms of such financing will be acceptable to the Corporation. Furthermore, if the Corporation raises additional capital by offering equity securities or securities convertible into equity securities, any additional financing may involve substantial dilution to existing shareholders. Failure to obtain sufficient financing when needed could result in the Corporation being unable to meet specified timelines for the advancement of the development of the Cordero Project and may lead to the indefinite postponement of the advancement thereof. The cost and terms of such financing may also significantly reduce the expected benefits from the Cordero Project or render such projects uneconomic.

COVID-19 and global health crisis

The COVID-19 global outbreak (including the evolving variants) and efforts to contain it may have an impact on the Corporation’s business. The Corporation has implemented various safety measures onsite to ensure the safety of its employees and contractors. The Corporation continues to monitor the situation and the impact the virus may have on its projects. Should the virus spread, travel bans remain in place or should one of the Corporation’s team members or consultants become infected, the Corporation’s ability to advance its projects may be impacted. Similarly, the Corporation’s ability to obtain financing and

the ability of the Corporation’s vendors, suppliers, consultants, and partners to meet obligations may be impacted as a result of COVID-19 and efforts to contain the virus.

Exploration and development

Resource exploration and development is a speculative business and involves a high degree of risk. There is no known body of commercial ore on any of the Corporation’s mineral properties. There is no certainty that the expenditures to be made by Discovery in the exploration of its mineral properties otherwise will result in discoveries of commercial quantities of minerals. The marketability of natural resources which may be acquired or discovered by Discovery will be affected by numerous factors beyond the control of Discovery including, but not limited to, the COVID-19 pandemic. These factors include market fluctuations, the proximity and capacity of natural resource markets and processing equipment, government regulations, including regulations relating to prices, taxes, royalties, land tenure, land use, importing and exporting of minerals and environmental protection. The exact effect of these factors cannot be accurately predicted, but the combination of these factors may result in Discovery not receiving an adequate return on invested capital.

Negative operating cash flow

The Corporation is an exploration stage company and has not generated cash flow from operations. The Corporation is devoting significant resources to the development and acquisition of its properties, however there can be no assurance that it will generate positive cash flow from operations in the future. The Corporation expects to continue to incur negative consolidated operating cash flow and losses until such time as it achieves commercial production at a particular project. The Corporation currently has negative cash flow from operating activities.

Capital resources

Historically, capital requirements have been primarily funded through the sale of Common Shares or other securities of the Corporation. Factors that could affect the availability of financing include the progress and results of ongoing exploration at the Corporation’s mineral properties, the state of international debt and equity markets, and investor perceptions and expectations of the global minerals markets. There can be no assurance that such financing will be available in the amount required at any time or for any period or, if available, that it can be obtained on terms satisfactory to the Corporation. Based on the amount of funding raised, the Corporation’s planned exploration or other work programs may be postponed, or otherwise revised, as necessary.

Discretion in the Use of Proceeds

While detailed information regarding the use of proceeds from the sale of the Corporation’s securities will be described in the applicable Prospectus Supplement, the Corporation will have broad discretion over the use of net proceeds from an offering by the Corporation of its securities. There may be circumstances where, for sound business reasons, a reallocation of funds may be deemed prudent or necessary. In such circumstances, the net proceeds will be reallocated at the Corporation’s sole discretion.

Management will have discretion concerning the use of proceeds scribed in the applicable Prospectus Supplement as well as the timing of their expenditures. As a result, an investor will be relying on the judgment of management for the application of the proceeds. Management may use the net proceeds described in a Prospectus Supplement in ways that an investor may not consider desirable. The results and the effectiveness of the application of the proceeds are uncertain. If the proceeds are not applied effectively, the Corporation’s results of operations may suffer.

Securities of Discovery are subject to price volatility

Capital and securities markets have a high level of price and volume volatility, and the market price of securities of many companies have experienced wide fluctuations in price which have not necessarily been related to the operating performance, underlying asset values or prospects of such companies. Factors unrelated to the financial performance or prospects of Discovery include macroeconomic developments in North America and globally, and market perceptions of the attractiveness of particular industries or asset classes. There can be no assurance that continued fluctuations in mineral or commodity prices will not occur. As a result of any of these factors, the market price of the Common Shares of Discovery at any given time may not accurately reflect the long-term value of Discovery.

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In the past, following periods of volatility in the market price of a company’s securities, shareholders have instituted class action securities litigation against them. Such litigation, if instituted, could result in substantial cost and diversion of management attention and resources, which could significantly harm profitability and the reputation of Discovery.

Sales of a significant number of Common Shares in the public markets, or the perception of such sales, could depress the market price of the Common Shares

Sales of a substantial number of Common Shares or other equity-related securities in the public markets by the Corporation or its significant shareholders could depress the market price of the Common Shares and impair the Corporation’s ability to raise capital through the sale of additional equity securities. The Corporation cannot predict the effect that future sales of Common Shares or other equity-related securities would have on the market price of the Common Shares. The price of the Common Shares could be affected by possible sales of the Common Shares by hedging or arbitrage trading activity. If the Corporation raises additional funding by issuing additional equity securities, such financing may substantially dilute the interests of shareholders of the Corporation and reduce the value of their investment.

Holders of Common Shares will be diluted

The Corporation may issue additional securities in the future, which may dilute a shareholder’s holdings in the Corporation. The Corporation’s notice of articles permits the issuance of an unlimited number of Common Shares, and shareholders will have no pre-emptive rights in connection with such further issuance. The directors of the Corporation have discretion to determine the price and the terms of further issuances. Moreover, additional Common Shares will be issued by the Corporation on the exercise of options under the Corporation’s stock option plan, and may be issued on the exercise of equity incentives under the Corporation’s restricted share unit plan or deferred share unit plan, and upon the exercise of outstanding warrants.

Market for Securities

There is currently no market through which the Corporation’s securities, other than Common Shares, may be sold and, unless otherwise specified in the applicable Prospectus Supplement, Warrants, Subscription Receipts, or Units not be listed on any securities or stock exchange or any automated dealer quotation system. As a consequence, purchasers may not be able to resell Warrants, Subscription Receipts, or Units purchased under this Prospectus. This may affect the pricing of the Corporation’s securities, other than its Common Shares, in the secondary market, the transparency and availability of trading prices, the liquidity of these securities, and the extent of issuer regulation. There can be no assurance that an active trading market for the Corporation’s securities, other than Common Shares, will develop or, if developed, that any such market, including for Common Shares, will be sustained.

CONSOLIDATED CAPITALIZATION

There have been no material changes in the share capital of the Corporation, on a consolidated basis since the date of the Consolidated Financial Statements.

USE OF PROCEEDS

Unless otherwise indicated in a Prospectus Supplement, we currently expect to use the net proceeds from the sale of Securities offered hereby primarily to fund the development of the Cordero Project or future construction of the mine, including bringing it to commercial production, to pursue other exploration and development opportunities, whether through direct or indirect acquisitions of properties, applications for mineral title rights, or otherwise, and for working capital and general corporate purposes. Any specific allocation of the net proceeds of an Offering to a specific purpose will be determined at the time of the Offering and will be described in the relevant Prospectus Supplement. The Corporation generates no operating revenue from the exploration activities on its property interests and has negative cash flow from operating activities. The Corporation anticipates that it will continue to have negative cash flow until such time that the Cordero Project reaches commercial production and begins generating revenues from the sale of concentrates and silver doré. To the extent that the Corporation has negative cash flows in future periods in excess of net proceeds from the sale of Securities, it may need to deploy a portion of net proceeds from the sale of Securities to fund such negative cash flow.

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PLAN OF DISTRIBUTION

The Corporation may from time to time, during the 25-month period that this Prospectus remains valid, offer for sale and issue Securities. The Corporation may issue and sell up to $ 250,000,000 , in the aggregate, of Securities.

The Corporation may offer and sell the Securities through underwriters or dealers, directly to one or more purchasers or through agents. The Corporation may offer Securities in the same offering, or we may offer Securities in separate offerings. Each Prospectus Supplement, to the extent applicable, will describe the number and terms of the Securities to which such Prospectus Supplement relates, the name or names of any underwriters or agents with whom the Corporation has entered into arrangements with respect to the sale of such Securities, the public offering or purchase price of such Securities and the Corporation’s net proceeds. The Prospectus Supplement will also include any underwriting discounts or commissions and other items constituting underwriters’ compensation and will identify any securities exchanges on which the Securities may be listed.

The Securities may be sold, from time to time, in one or more transactions at a fixed price or prices, which may be changed, at market prices prevailing at the time of sale, at prices related to such prevailing market price, at varied prices determined at the time of sale, or at negotiated prices, including sales in transactions that are deemed to be “at-the-market distributions” as defined in NI 44-102, including sales made directly on the TSXV or other existing trading markets for the Securities. The prices at which the Securities may be offered may vary as between purchasers and during the period of distribution. If, in connection with the offering of the Securities at a fixed price or prices, the underwriters have made a bona fide effort to sell all of the Securities at the initial offering price fixed in the applicable Prospectus Supplement, the public offering price may be decreased and thereafter further changed, from time to time, to an amount not greater than the initial offering price fixed in such Prospectus Supplement, in which case the compensation realized by the underwriters will be decreased by the amount that the aggregate price paid by purchasers for the Securities is less than the gross proceeds paid by the underwriters to the Corporation. The Corporation will obtain any requisite exemptive relief, should it be required, prior to conducting “at-themarket distributions”.

Only underwriters named in the Prospectus Supplement are deemed to be underwriters in connection with such Securities offered by that Prospectus Supplement.

Under agreements which may be entered into by the Corporation, underwriters, dealers, and agents who participate in the distribution of Securities may be entitled to indemnification by the Corporation against certain liabilities, including liabilities under applicable Canadian securities legislation, or to contribution with respect to payments which such underwriters, dealers, or agents may be required to make in respect thereof. The underwriters, dealers, and agents with whom the Corporation enters into agreements may be customers of, engage in transactions with, or perform services for, the Corporation in the ordinary course of business.

Agents, underwriters or dealers may make sales of Securities in privately negotiated transactions and/or any other method permitted by law, including sales deemed to be an “at-the-market distribution” as defined in NI 44-102 and subject to limitations imposed by and the terms of any regulatory approvals required and obtained under, applicable Canadian securities laws which includes sales made directly on an existing trading market for the Common Shares, or sales made to or through a market maker other than on a securities exchange. In connection with any offering of Securities, other than an “at-the-market distribution”, the underwriters may over-allot or effect transactions which stabilize or maintain the market price of the Securities offered at a level above that which might otherwise prevail in the open market. Such transactions, if commenced, may be discontinued at any time.

No underwriter of the “at-the-market distribution”, and no person or company acting jointly or in concert with an underwriter, may, in connection with the distribution, enter into any transaction that is intended to stabilize or maintain the market price of the Securities or securities of the same class as the Securities distributed under the Prospectus Supplement, including selling an aggregate number or principal amount of Securities that would result in the underwriter creating an over-allocation position in the Securities.

The Corporation may authorize agents or underwriters to solicit offers by eligible institutions to purchase Securities from the Corporation at the public offering price set forth in the applicable Prospectus Supplement under delayed delivery contracts providing for payment and delivery on a specified date in the future. The conditions to these contracts and the commissions payable for solicitation of these contracts will be set forth in the applicable Prospectus Supplement.

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Each class or series of Securities, other than the Common Shares, will be a new issue of Securities with no established trading market. Subject to applicable laws, any underwriter may make a market in such Securities, but will not be obligated to do so and may discontinue any market making at any time without notice. There may be limited liquidity in the trading market for any such Securities. Unless otherwise specified in the applicable Prospectus Supplement, the Corporation does not intend to list any of the Securities other than the Common Shares on any securities exchange. Consequently, unless otherwise specified in the applicable Prospectus Supplement, there is no trading market through which the Warrants, Subscription Receipts, or Units may be sold and purchasers may not be able to resell any such Securities purchased under this Prospectus. This may affect the pricing of such Securities in the secondary market, the transparency and availability of trading prices, the liquidity of such Securities and the extent of issuer regulation. See “Risk Factors”. No assurances can be given that a market for trading in Securities of any series or issue will develop or as to the liquidity of any such market, whether or not the Securities are listed on a securities exchange.

DESCRIPTION OF SECURITIES BEING DISTRIBUTED

Common Shares

The Corporation is authorized to issue an unlimited number of the Common Shares. The Corporation may issue Common Shares on exercise of Warrants (as defined below).

Holders of Common Shares are entitled to receive notice of any meeting of shareholders of the Corporation, to attend and to cast one vote per share at such meetings. Holders of Common Shares are also entitled to receive on a pro-rata basis such dividends, if any, as and when declared by the Board of Directors at its discretion from funds legally available therefor and upon the liquidation, dissolution, or winding up of the Corporation are entitled to receive on a pro-rata basis, the net assets of the Corporation after payment of debts and other liabilities, in each case subject to the rights, privileges, restrictions, and conditions attaching to any other series or class of shares ranking senior in priority. The Common Shares do not carry any pre-emptive, subscription, redemption, or conversion rights.

Warrants

The Corporation may issue Warrants to purchase Common Shares. Warrants may be issued independently or together with other Securities and may be attached to or separate from those Securities. Warrants will be issued under one or more warrant indentures, including supplemental indentures to one of the Corporation’s existing warrant indentures, to be entered into between the Corporation and one or more banks or trust companies acting as warrant agent, to be named in the relevant Prospectus Supplement, which will establish the terms and conditions of the Warrants. A copy of any warrant indenture or supplemental warrant indenture relating to an offering of Warrants will be filed by the Corporation with the securities regulatory authorities in applicable Canadian offering jurisdictions.

The following description sets forth certain general terms and provisions of the Warrants and is not intended to be complete. Particular terms of the Warrants offered by the Corporation should be read carefully and will be described in more detail in any applicable Prospectus Supplement. The statements made in this Prospectus relating to any warrant indenture and Warrants to be issued thereunder are summaries of certain anticipated provisions thereof and are subject to, and are qualified in their entirety by reference to, all provisions of the applicable warrant indenture and the Prospectus Supplement describing such warrant indenture. The Prospectus Supplement will also state whether any of the general provisions summarized below do not apply to the Warrants being offered.

Any Prospectus Supplement relating to any Warrants the Corporation offers will describe the terms of the Warrants and include specific terms relating to their offering. All such terms will comply with the requirements of the TSXV relating to Warrants. This description will include, where applicable:

the designation and aggregate number of Warrants offered;
the price at which the Warrants will be offered;
the currency or currencies in which the Warrants will be offered;
the date on which the right to exercise the Warrants will commence and the date on which the right will expire;
• the number of Common Shares that may be purchased upon exercise of each Warrant and the price at which and currency or currencies in which the Common Shares may be purchased upon exercise of each Warrant;
the terms of any provisions allowing or providing for adjustments in (i) the number and/or class of shares that may be purchased, (ii) the exercise price per share, and/or (iii) the expiry of the Warrants;
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whether the Corporation will issue fractional Common Shares on exercise of Warrants;
whether the Corporation has applied to list the Warrants on a securities exchange;
the designation and terms of any Securities with which the Warrants will be offered, if any, and the number of the Warrants that will be offered with or as part of Securities;
the date or dates, if any, on or after which the Warrants and the related Securities will be transferable separately;
whether the Warrants will be subject to redemption and, if so, the terms of such redemption provisions;
material Canadian federal income tax consequences of owning the Warrants; and
any other material terms or conditions of the Warrants.

The holders of Warrants will not be shareholders of the Corporation. Holders of Warrants are entitled only to receive the Common Shares subject to the Warrants on satisfaction of the conditions provided in the warrant indenture or supplemental warrant indenture.

Subscription Receipts

The Corporation may issue Subscription Receipts that will entitle holders to receive, upon satisfaction of certain release conditions and for no additional consideration, Common Shares, Warrants, Units, or any combination thereof. Subscription Receipts will be issued pursuant to one or more subscription receipt agreements (each, a “ Subscription Receipt Agreement ”), each to be entered into between the Corporation and an escrow agent (the “ Escrow Agent ”), to be named in the relevant Prospectus Supplement, which will establish the terms and conditions of the Subscription Receipts. Each Escrow Agent will be a financial institution, law firm, or transfer agent organized under the laws of Canada or a province thereof and authorized to carry on business as a trustee. If underwriters or agents are used in the sale of any Subscription Receipts, one or more of such underwriters or agents may also be a party to the Subscription Receipt Agreement governing the Subscription Receipts sold to or through such underwriter or agent. A copy of any Subscription Receipt Agreement will be filed by the Corporation with the securities regulatory authorities in applicable Canadian offering jurisdictions and the United States after the Corporation has entered into it.

The following description sets forth certain general terms and provisions of Subscription Receipts and is not intended to be complete. Particular terms of the Subscription Receipts that are offered by the Corporation should be read carefully and will be described in more detail in any applicable Prospectus Supplement. The statements made in this Prospectus relating to any Subscription Receipt Agreement and Subscription Receipts to be issued thereunder are summaries of certain anticipated provisions thereof and are subject to, and are qualified in their entirety by reference to, all provisions of the applicable Subscription Receipt Agreement and the Prospectus Supplement describing such Subscription Receipt Agreement. The Prospectus Supplement will also state whether any of the general provisions summarized below do not apply to the Subscription Receipts being offered.

Any Prospectus Supplement relating to any Subscription Receipts the Corporation offers will describe the terms of the Subscription Receipts and include specific terms relating to their offering. All such terms will comply with the requirements of the TSXV relating to Subscription Receipts. This description will include, where applicable:

the designation and aggregate number of Subscription Receipts offered;
the price at which the Subscription Receipts will be offered;
the currency or currencies in which the Subscription Receipts will be offered;
the designation, number, and terms of the Common Shares, Warrants, Units, or any combination thereof to be received by holders of Subscription Receipts upon satisfaction of the release conditions, and the procedures that will result in the adjustment of those numbers;
the conditions (the “ Release Conditions ”) that must be met in order for holders of Subscription Receipts to receive for no additional consideration Common Shares, Warrants, Units, or any combination thereof;
the procedures for the issuance and delivery of the Common Shares, Warrants, Units, or any combination thereof to holders of Subscription Receipts upon satisfaction of the Release Conditions;
whether any payments will be made to holders of Subscription Receipts upon delivery of the Common Shares, Warrants, Units, or any combination thereof upon satisfaction of the Release Conditions;
the identity of the Escrow Agent;
the terms and conditions under which the Escrow Agent will hold all or a portion of the gross proceeds from the sale of Subscription Receipts, together with interest and income earned thereon (collectively, the “ Escrowed Funds ”), pending satisfaction of the Release Conditions;
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the terms and conditions pursuant to which the Escrow Agent will hold the Common Shares, Warrants, Units, or any combination thereof pending satisfaction of the Release Conditions;
the terms and conditions under which the Escrow Agent will release all or a portion of the Escrowed Funds to the Corporation upon satisfaction of the Release Conditions;
if the Subscription Receipts are sold to or through underwriters or agents, the terms and conditions under which the Escrow Agent will release a portion of the Escrowed Funds to such underwriters or agents in payment of all or a portion of their fees or commission in connection with the sale of the Subscription Receipts;
procedures for the refund by the Escrow Agent to holders of Subscription Receipts of all or a portion of the subscription price for their Subscription Receipts, plus any pro rata entitlement to interest earned or income generated on such amount, if the Release Conditions are not satisfied;
any entitlement of the Corporation to purchase the Subscription Receipts in the open market by private agreement or otherwise;
whether the Corporation will issue the Subscription Receipts as global securities and, if so, the identity of the depositary for the global securities;
whether the Corporation will issue the Subscription Receipts as bearer securities, registered securities or both;
• provisions as to modification, amendment, or variation of the Subscription Receipt Agreement or any rights or terms attaching to the Subscription Receipts, including upon any subdivision, consolidation, reclassification, or other material change of the Common Shares, Warrants, or other securities of the Corporation, any other reorganization, amalgamation, merger, or sale of all or substantially all of the Corporation’s assets or any distribution of property or rights to all or substantially all of the holders of Common Shares;
whether the Corporation has applied to list the Subscription Receipts on a securities exchange;
material Canadian federal tax consequences of owning the Subscription Receipts; and
any other material terms or conditions of the Subscription Receipts.

The holders of Subscription Receipts will not be shareholders of the Corporation. Holders of Subscription Receipts are entitled only to receive Common Shares, Warrants, Units, or any combination thereof on satisfaction of the conditions provided in the Subscription Receipt Agreement, including the satisfaction of any cash payment provided in the Subscription Receipt Agreement, if the Release Conditions are satisfied. If the Release Conditions are not satisfied, holders of Subscription Receipts shall be entitled to a refund of all or a portion of the subscription price therefor and all or a portion of the pro rata share of interest earned or income generated thereon, as provided in the Subscription Receipt Agreement.

Escrow

The Subscription Receipt Agreement will provide that the Escrowed Funds will be held in escrow by the Escrow Agent, and such Escrowed Funds will be released to the Corporation (and, if the Subscription Receipts are sold to or through underwriters or agents, a portion of the Escrowed Funds may be released to such underwriters or agents in payment of all or a portion of their fees in connection with the sale of the Subscription Receipts) at the time and under the terms specified by the Subscription Receipt Agreement. If the Release Conditions are not satisfied, holders of Subscription Receipts will receive a refund of all or a portion of the subscription price for their Subscription Receipts plus their pro rata entitlement to interest earned or income generated on such amount, in accordance with the terms of the Subscription Receipt Agreement. The Common Shares, Warrants, Units, or any combination thereof may be held in escrow by the Escrow Agent, and will be released to the holders of Subscription Receipts following satisfaction of the Release Conditions at the time and under the terms specified in the Subscription Receipt Agreement.

Rescission

The Subscription Receipt Agreement will also provide that any material misrepresentation in this Prospectus, the Prospectus Supplement under which the Subscription Receipts are offered, or any amendment hereto or thereto, will entitle each initial purchaser of Subscription Receipts to a contractual right of rescission following the issuance of the Common Shares or Warrants to such purchaser entitling such purchaser to receive the amount paid for the Subscription Receipts upon surrender of the Common Shares or Warrants, provided that such remedy for rescission is exercised in the time stipulated in the Subscription Receipt Agreement. This right of rescission does not extend to holders of Subscription Receipts who acquire such Subscription Receipts from an initial purchaser, on the open market or otherwise, or to initial purchasers who acquire Subscription Receipts in the United States.

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Global Securities

The Corporation may issue Subscription Receipts in whole or in part in the form of one or more global securities, which will be registered in the name of and be deposited with a depositary, or its nominee, each of which will be identified in the applicable Prospectus Supplement. The global securities may be in temporary or permanent form. The applicable Prospectus Supplement will describe the terms of any depositary arrangement and the rights and limitations of owners of beneficial interests in any global security. The applicable Prospectus Supplement will also describe the exchange, registration, and transfer rights relating to any global security.

Modifications

The Subscription Receipt Agreement will provide for modifications and alterations to the Subscription Receipts issued thereunder by way of a resolution of holders of Subscription Receipts at a meeting of such holders or by a consent in writing from such holders. The number of holders of Subscription Receipts required to pass such a resolution or execute such a written consent will be specified in the Subscription Receipt Agreement. The Subscription Receipt Agreement will also specify that the Corporation may amend any Subscription Receipt Agreement and the Subscription Receipts, without the consent of the holders of the Subscription Receipts, to cure any ambiguity, to cure, correct, or supplement any defective or inconsistent provision, or in any other manner that will not materially and adversely affect the interests of the holders of outstanding Subscription Receipts or as otherwise specified in the Subscription Receipt Agreement.

Units

The Corporation may issue Units consisting of one or more Common Shares, Warrants, Subscription Receipts, or any combination of such Securities. Particular terms of the Units that are offered by the Corporation should be read carefully and will be described in more detail in any applicable Prospectus Supplement.

Any Prospectus Supplement relating to any Units the Corporation offers will describe the terms of the Units and include specific terms relating to their offering. All such terms will comply with the requirements of the TSXV relating to Units. This description will include, where applicable:

the designation and aggregate number of Units being offered;
the price at which the Units will be offered;
the designation and terms of the Units and the applicable Securities included in the Units;
the description of the terms of any agreement governing the Units;
any provision for the issuance, payment, settlement, transfer, or exchange of the Units;
the date, if any, on and after which the Units may be transferable separately;
whether we have applied to list the Units on a securities exchange;
material Canadian federal tax consequences of owning the Units;
how, for federal income tax purposes, the purchase price paid for the Units is to be allocated among the component Securities; and
any other material terms or conditions of the Units.

The foregoing summary of certain of the principal provisions of the Securities is a summary of anticipated terms and conditions only and is qualified in its entirety by the description in the applicable Prospectus Supplement under which any Securities are being offered.

CERTAIN CANADIAN FEDERAL INCOME TAX CONSIDERATIONS

The applicable Prospectus Supplement will include a general summary of certain Canadian federal income tax consequences which may be applicable to a purchaser of Securities hereunder. Investors should read the tax discussion in any Prospectus Supplement with respect to a particular offering and consult their own tax advisors with respect to their own particular circumstances.

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PRIOR SALES

Information in respect of Common Shares that we issued within the previous 12-month period, and in respect of securities that are convertible or exchangeable into Common shares, will be provided as required in a Prospectus Supplement with respect to the issuance of Securities pursuant to such Prospectus Supplement.

TRADING PRICE AND VOLUME

The Common Shares are listed and posted for trading on the TSXV under the symbol “DSV”, on the OTCQX under the symbol “DSVSF”, and on the Frankfurt Stock Exchange under the symbol “1CU”. Information in respect of trading price and volume of the Common Shares during the previous 12-month period will be provided as required in a Prospectus Supplement with respect to the issuance of Securities pursuant to such Prospectus Supplement.

LEGAL MATTERS

Certain legal matters in connection with the Securities offered hereby will be passed upon on behalf of the Corporation by Cassels Brock & Blackwell LLP, with respect to Canadian legal matters. As of the date hereof, partners and associates of Cassels Brock & Blackwell LLP as a group, own, directly or indirectly, in the aggregate, less than 1% or no securities of the Corporation.

INTEREST OF EXPERTS

Information relating to the Cordero Project in this Prospectus and the documents incorporated by reference herein and therein has been derived from reports, statements, or opinions prepared or certified by the following individuals (collectively, the “ Experts ”): (i) in respect of the Cordero Technical Report: Nadia M. Caira, P. Geo. (World Metals Inc.); Tommaso Roberto Raponi, P. Eng. (Ausenco Engineering Canada Inc.); and R. Mohan Srivastava, P. Geo. (RedDot3D Inc.); and (ii) in respect of the PEA Report: Tommaso Roberto Raponi, P. Eng. (Ausenco Engineering Canada Inc.); Scott Elfen, P.E. (Ausenco Engineering Canada Inc.); Gordon Zurowski, P. Eng. (AGP Mining Consultants Inc.); James Cremeens, P.E., P.G. (Knight Piésold and Co. (USA)); Keith Viles, P. Eng. (Knight Piésold and Co. (USA)); Nadia M. Caira, P. Geo. (World Metals Inc.); R. Mohan Srivastava, P. Geo. (RedDot3D Inc.); Scott Weston, P. Geo. (Hemmera Envirochem Inc.); and Davood Hasanloo, P. Eng. (Hemmera Envirochem Inc.). This information has been included in reliance on the Cordero Experts’ expertise. Each of the foregoing persons are a qualified person as such term is defined in National Instrument 43-101 – Standards of Disclosure for Mineral Projects (“ NI 43-101 ”).

None of the Experts, or any director, officer, employee, or partner thereof, as applicable, received, or has received a direct or indirect interest in the Corporation’s property or the property of any of the Corporation’s associates or affiliates. The Experts held an interest in either less than 1% or none of the Corporation’s securities or the securities of any associate or affiliate of the Corporation when they prepared the Cordero Technical Report or the PEA Report, and after the preparation of such reports and estimates, and they did not receive any direct or indirect interest in any of the Corporation’s securities or the securities of any associate or affiliate of the Corporation in connection with the preparation of the Cordero Technical Report or the PEA Report. Neither the Experts nor any director, officer, employee, or partner, as applicable, of the aforementioned companies or partnerships is currently expected to be elected, appointed, or employed as a director, officer, or employee of the Corporation or of any associate or affiliate of the Corporation.

All scientific and technical information in this Prospectus has been reviewed and approved by Gernot Wober, Vice President, Exploration at Discovery, who is a qualified person under NI 43-101. As of the date hereof, Mr. Wober holds 979,783 Common Shares and 2,372,100 stock options of the Corporation.

AUDITORS

PricewaterhouseCoopers LLP, Chartered Professional Accountants, are the independent auditors of the Corporation and are independent of the Corporation within the meaning of the Chartered Professional Accountants of Ontario CPA Code of Professional Conduct.

STATUTORY AND CONTRACTUAL RIGHTS OF WITHDRAWAL AND RESCISSION

Unless provided otherwise in a Prospectus Supplement, the following is a description of a purchaser’s statutory rights. Securities legislation in certain of the provinces and territories of Canada provides purchasers with the right to withdraw from an agreement to purchase securities. This right may be exercised within two business days after receipt or deemed receipt of

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a prospectus and any amendment. In several of the provinces and territories, the securities legislation further provides a purchaser with remedies for rescission or, in some jurisdictions, revisions of the price or damages if the prospectus and any amendment contains a misrepresentation or is not delivered to the purchaser, provided that the remedies for rescission, revision of the price or damages are exercised by the purchaser within the time limit prescribed by the securities legislation of the purchaser’s province or territory. The purchaser should refer to any applicable provisions of the securities legislation of the purchaser’s province or territory for the particulars of these rights or consult with a legal advisor.

Original purchasers of Securities which are convertible, exchangeable, or exercisable for other securities of the Corporation will have a contractual right of rescission against the Corporation in respect of the conversion, exchange, or exercise of such Securities. The contractual right of rescission will entitle such original purchasers to receive, upon surrender of the underlying securities, the amount paid for the applicable convertible, exchangeable or exercisable Securities, and any additional amount paid upon conversion, exchange or exercised of such Securities, in the event that this Prospectus, the relevant Prospectus Supplement or an amendment thereto contains a misrepresentation, provided that: (i) the conversion, exchange, or exercise takes place within 180 days of the date of the purchase of such Securities under this Prospectus and the applicable Prospectus Supplement; and (ii) the right of rescission is exercised within 180 days of the date of the purchase of such Securities under this Prospectus and the applicable Prospectus Supplement. This contractual right of rescission will be consistent with the statutory right of rescission described under Section 131 of the Securities Act (British Columbia), and is in addition to any other right or remedy available to original purchasers under Section 131 of the Securities Act (British Columbia) or otherwise at law.

Original purchasers are further advised that in certain provinces and territories the statutory right of action for damages in connection with a prospectus misrepresentation is limited to the amount paid for the convertible, exchangeable or exercisable securities that were purchased under a prospectus and, therefore, a further payment at the time of conversion, exchange or exercise may not be recoverable in a statutory action for damages. The purchaser should refer to any applicable provisions of the securities legislation of the province or territory in which the purchaser resides for the particulars of these rights, or consult with a legal adviser.

ENFORCEMENT OF JUDGMENTS AGAINST FOREIGN PERSONS

Dan Vickerman and Moira Smith, directors of the Corporation, and Jim Cremeens and Keith Viles, two of the qualified persons responsible for the PEA Report reside outside of Canada. Such persons have appointed Cassels Brock & Blackwell LLP, Suite 2200, 885 West Georgia Street, Vancouver, British Columbia, V6C 3E8 as agent for service of process in Canada. Prospective investors of Securities are advised that it may not be possible for investors to enforce judgments obtained in Canada against any person or company that resides outside of Canada or is incorporated, continued, or otherwise organized under the laws of a foreign jurisdiction, even if the party has appointed an agent for service of process.

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CERTIFICATE OF THE CORPORATION

Dated: April 27, 2022

This short form prospectus, together with the documents incorporated in the prospectus by reference, will, as of the date of the date of a particular distribution of securities under the prospectus, constitute full, true, and plain disclosure of all material facts relating to the securities offered by this prospectus and the supplement as required by the securities legislation of each of the provinces and territories of Canada except Quebec.

“Taj Singh” Taj Singh President, Chief Executive Officer, and Director	“Andreas L’Abbé”
	Andreas L’Abbé Chief Financial Officer

On behalf of the Board of Directors

“Murray John” Murray John Director	“Jeff Parr”
	Jeff Parr Director

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Discovery Silver Corp. — Capital/Financing Update 2022

44004_rns_2022-04-27_1885c529-979b-416b-8d4b-a57e0d07fef2.pdf

PRELIMINARY SHORT FORM BASE SHELF PROSPECTUS

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