Discovery Silver Corp. — Capital/Financing Update 2023

Mar 23, 2023

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, 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. Unless an exemption from the prospectus delivery requirement has been granted or is otherwise available, 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 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 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.

SHORT FORM BASE SHELF PROSPECTUS

DISCOVERY SILVER CORP.

C\$300,000,000 Common Shares Warrants Subscription Receipts Units

This 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\$300,000,000 (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 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 Toronto Stock Exchange (the "TSX") under the symbol "DSV", on the OTCQX under the symbol "DSVSF", and on the Frankfurt Stock Exchange under the symbol "1CU0". On March 22, 2023, the last full trading day prior to the date of this Prospectus, the closing price per Common Share on the TSX was \$1.15. Unless otherwise specified in the applicable Prospectus Supplement, there is no existing trading market through which the warrants (the "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 Prospectus 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, 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 Richard Schwering, Jennifer Brown, and Manuel Jessen, three of the qualified persons responsible for the PFS 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.

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 ("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.

The Company has included certain non-GAAP performance measures as detailed below. In the mining industry, these are common performance measures but may not be comparable to similar measures presented by other issuers and the non-GAAP measures do not have any standardized meaning. Accordingly, it is intended to provide additional information and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS.

The Company calculated total cash costs per ounce by dividing the sum of operating costs, royalty costs, production taxes, refining and shipping costs, net of by-product silver credits, by payable ounces. While there is no standardized meaning of the measure across the industry, the Company believes that this measure is useful to external users in assessing operating performance.

The Company has provided an all-in sustaining costs performance measure that reflects all the expenditures that are required to produce an ounce of silver from operations. While there is no standardized meaning of the measure across the industry, the Company's definition conforms to the all-in sustaining cost definition as set out by the World Gold Council in its guidance dated June 27, 2013. The Company believes that this measure is useful to external users in assessing operating performance and the Company's ability to generate free cash flow from current operations. Subsequent amendments to the guidance have not materially affected the figures presented.

Free Cash Flow is a non-GAAP performance measure that is calculated as cash flows from operations net of cash flows invested in mineral property, plant, and equipment and exploration and evaluation assets. The Company believes that this measure is useful to the external users in assessing the Company's ability to generate cash flows from its mineral projects.

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 PFS Report (as defined below). Statements regarding the results of the PFS Report and the anticipated capital and operating costs, sustaining costs, net present value, internal rate of return, payback period, process capacity, average annual metal production, average process recoveries, concession renewal, permitting of the Cordero Project, anticipated mining and processing methods, proposed pre-feasibility study production schedule and metal production profile, anticipated construction period, anticipated mine life, expected recoveries and grades, anticipated production rates, infrastructure, social and environmental impact studies, availability of labour, tax rates, and commodity prices that would support development of the Cordero Project. Information concerning mineral resource/reserve estimates and the economic analysis thereof contained in the results of the pre-feasibility study are also forward-looking statements in that they reflect a prediction of the mineralization that would be encountered, and the results of mining, if a mineral deposit were developed and mined. Forward-looking statements are statements that are not historical facts which address events, results, outcomes or developments that the Company expects to occur. Forward-looking statements are based on the beliefs, estimates and opinions of the Company's management on the date the statements are made and they involve a number of risks and uncertainties. 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 PFS 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 metals; 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:

• (a) the (revised) annual information form for the fiscal year ended December 31, 2021, dated July 29, 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 "Annual Financial Statements");
• (c) the management's discussion and analysis for the years ended December 31, 2021 and 2020;
• (d) the Corporation's unaudited interim consolidated financial statements for the three and nine months ended September 30, 2022 and 2021, and related notes thereto (together with the Annual Financial Statements, the "Financial Statements");
• (e) the management's discussion and analysis for the three and nine months ended September 30, 2022 and 2021;
• (f) the management information circular of the Corporation dated May 9, 2022, in connection with the annual general meeting of shareholders of the Corporation held on June 24, 2022; and
• (g) the material change report of the Corporation dated July 13, 2022, in respect of the resignation of Taj Singh as President, Chief Executive Officer, and director of the Corporation, and the appointment of Tony Makuch as Interim Chief Executive Officer of the Corporation.

Any document of the type referred to in item 11.1 of Form 44-101F1 – Short Form Prospectus of National Instrument 44- 101 – 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 TSX under the symbol "DSV", on the OTCQX under the symbol "DSVSF", and on the Frankfurt Stock Exchange under the symbol "1CU0".

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 defining the economic potential of the Cordero Project primarily through two extensive drill programs and two detailed metallurgical testwork programs.

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 "Preliminary Economic Assessment of the Cordero Silver Project" (the "PEA Report"), focused on Cordero's high-grade resource and integrating new metallurgical testwork and engineering studies, that was filed on January 13, 2022, and amended and restated on July 27, 2022 (with an effective date of November 30, 2021), and by the "Cordero Silver Project: NI 43-101 Technical Report & Prefeasibility Study (Chihuahua State, Mexico)" (the "PFS") with an effective date of January 20, 2023, published on February 10, 2023 (the "PFS Report"). For a summary of information from the PFS Report, see "The Cordero Project" below.

The most recent NI 43-101 technical report on the Cordero Project is the PFS Report. This Prospectus also references 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 Mineral Resources Update"). The PFS Report includes all material information about the Cordero Project. The PFS Report, the PEA Report, and the Cordero Mineral Resources Update are available on the Corporation's issuer profile on SEDAR at www.sedar.com or on the Corporation's website at www.discoverysilver.com.

Recent Developments

On March 12, 2021, the Corporation appointed Jennifer Wagner to its board of directors (the "Board"). 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 Mineral Resources Update, 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 Mineral Resources Update's authors regarding exploration and drilling, metallurgical characterization, and mineral resources.

On January 13, 2022, the Corporation filed the PEA Report. An amended and restated version of the PEA Report was filed on July 29, 2022.

On March 14, 2022, the Corporation appointed Tony Esplin as Chief Operating Officer of the Corporation. 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 appointed Tony Makuch to the Board. Mr. Makuch has over 35 years of mining industry experience and was most recently President, CEO and Director of Kirkland Lake Ltd.

On June 6, 2022, Taj Singh resigned as Chief Executive Officer, President, and director of the Corporation, and Tony Makuch was appointed as Interim Chief Executive Officer of the Corporation. On January 23, 2023, Tony Makuch was appointed Chief Executive Officer of the Corporation.

On January 24, 2023, the Corporation announced results from the PFS. On February 10, 2023, the Corporation filed the PFS Report.

For further details, refer to the PFS Report available on the Corporation's issuer profile on SEDAR at www.sedar.com or on the Corporation's website at www.discoverysilver.com. The PFS Report is the most recent technical report on the Cordero Project and includes all material information about the Cordero Project.

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.

On June 9, 2022, the Corporation announced the completion of exercises of warrants issued in May and June 2020 for total cash proceeds of approximately \$18 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 Mineral Resources Update 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 (an amended and restated version was published on July 29, 2022).

The Corporation announced results from its Pre-Feasibility Study Metallurgical Test Program on August 29, 2022.

For details, refer to the PFS Report filed on February 10, 2023, available on SEDAR at www.sedar.com or on the Corporation's website at www.discoverysilver.com.

Foreign Operations and Emerging Market Issuer Disclosure

Operations in an Emerging Market Jurisdiction

The Corporation's mineral properties and principal business operations are located in a foreign jurisdiction, namely Mexico. Operating in Mexico exposes the Corporation to various degrees of political, economic, and other risks and uncertainties.

Legal Framework

The Mexican legal framework is based in a civil law system, and therefore the majority of legal principles are set out in written codes and laws. Written codes and laws are the main source for law, leaving case law and customs as a limited and secondary source of interpretation. This, as opposed to common law systems, provides a fairly stable legal environment, allowing citizens and corporations to have a clear understanding of their rights and obligations.

Notwithstanding the foregoing, certain matters may be subject to case law interpretations, which usually relate to a mining title owner´s ability to perform activities under the rights granted under its properties and assets, than to the good standing of its properties and assets. The following matters are the most common issues subject to judicial and administrative interpretation: (i) the presence of ethnic minorities in the territory covering a mining right, and the need for public hearings prior to the commencement of certain mining activities; and (ii) the presence of environmental areas of special interest, or those restricted from mining and the possibility to perform mining activities in overlapping areas. These matters have been widely considered under Mexican constitutional case law, setting a clear understanding of its scope and framework.

Board and Management Experience

Key members of the Corporation's management team and Board have extensive experience running foreign business operations, including operations in Mexico and other Latin American countries.

Tony Makuch, the Chief Executive Officer of the Corporation, was previously Executive Vice President and President of Canadian Operations of Tahoe Resources Inc. (since acquired by Pan American Silver) which had multiple mineral operations in Latin America.

Andreas L'Abbé, the Chief Financial Officer of the Corporation, was previously the Director of Finance for Tahoe Resources Inc., which has multiple mineral operations in Latin America (since acquired by Pan American Silver), and the Vice-President Finance for Timmins Gold Corp., which operated on multiple mineral properties in Mexico.

Tony Esplin, the Chief Operating Officer of the Corporation, has over a decade of experience in Latin America throughout his career.

Forbes Gemmell, the Vice President of Corporate Development of the Corporation, was previously the Chief Executive Officer of Lago Dourado Minerals Ltd., a gold exploration company focused on Brazil, and Vice President of Corporate Development of Guyana Goldfields Inc, a gold company with an operating gold mine in Guyana.

Roman Solis, the Vice President, Mexico, is Mexican and his career of more than 20 years has focused on exploration, strategy, and planning in Mexico. He was previously Chief Geologist at Alio Gold Inc. based in Sonora, Mexico.

Gernot Wober, the Vice President of Exploration of the Corporation has more than 35 years' experience in the mining industry including substantial focus in Latin America in senior management positions.

Daniel Vickerman, a director of the Corporation, was previously the Chairman of Levon Resources Ltd. ("Levon") prior to its acquisition by the Corporation in 2019. Levon has owned the rights to the Cordero Project in Chihuahua, Mexico since 2011 (and continues to hold those rights as a subsidiary of the Corporation), including during the tenure of Mr. Vickerman's leadership at Levon.

Murray John and Jeff Parr have been directors of the Corporation since 2017, and through the Corporation have experience with multiple mineral resource properties in Mexico.

The Corporation's executive and corporate senior management team is either fluent in both written and spoken Spanish, or has a working understanding of the language. In addition, the Corporation's senior management in Mexico all speak fluent English or have working understanding of English. Language is not considered a barrier to operations.

Permits and Approvals

The Corporation has experienced senior management in Mexico who have dealt with permitting, licensing, and other regulatory approvals on a consistent basis and are in continuous contact with government authorities to ensure all are in place in order to operate under the Mexican NORMA-120 laws. There are currently no restrictions or conditions imposed by the government on the Corporation, nor does the Corporation anticipate and restrictions or conditions to be imposed.

Board Oversight and Control

The Corporation has implemented a system of corporate governance, internal controls over financial matters, and disclosure controls and procedures that apply to the Corporation and its subsidiaries, which are overseen by the Board and implemented by senior management.

While the exploration operations of each of the Corporation's Mexican subsidiaries are managed locally, the Board is responsible for the overall stewardship of the Corporation and, as such, supervises the management of the business and affairs of the Corporation and each of its subsidiaries. More specifically, the Board is responsible for reviewing the strategic business plans and corporate objectives, and approving acquisitions, dispositions, investments, capital expenditures, and other transactions and matters that are material to the Corporation including those of its subsidiaries.

The Board, through its subcommittees, including the Audit Committee, the Nominating and Corporate Governance Committee, and the Sustainability Committee, have effective oversight of the Corporation's assets, including the Corporation's bank accounts (bank account reviews are completed annually through audit confirmations). The Corporation has put in place senior management in Mexico, and members of the Corporation's executive management are directors of the subsidiaries. Budget-to-actual reports and status updates are provided to the Board on a monthly basis.

Executive management of the Corporation meets with the Board at least on a quarterly basis and generally more frequently on an informal basis, any relevant or key topics in Mexico as they relate to operations. Key topics include social and environmental licenses, and government influence at the federal, state, and municipal levels. The Corporation holds minimal cash in Mexican bank accounts (banking with the Bank of Nova Scotia in Mexico) and funds the Mexican operations from Canada on a monthly basis.

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 its 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 March 22, 2023, the Corporation had approximately \$39.6 million in cash and approximately \$47.1 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.

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 will 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.

Difficulty in Enforcement of Judgements

The majority of the Corporation's subsidiaries and assets are located outside of Canada. Accordingly, it may be difficult for investors to enforce within Canada any judgments obtained against the Corporation, including judgments predicated upon the civil liability provisions of applicable Canadian securities laws. Consequently, investors may be effectively prevented from pursuing remedies against the Corporation under Canadian securities laws.

The Corporation has subsidiaries existing in Mexico and the British Virgin Islands. Certain directors of the Corporation reside outside of Canada and substantially all of the assets of these persons are located outside of Canada. It may not be possible for shareholders to effect service of process against the Corporation's directors and officers who are not resident in Canada. In the event a judgment is obtained in a Canadian court against one or more of those directors for violations of Canadian securities laws, it may not be possible to enforce such judgment against those directors not resident in Canada. Additionally, it may be difficult for an investor, or any other person or entity, to assert Canadian securities law claims in original actions instituted in Mexico or the British Virgin Islands. Courts in that jurisdiction may refuse to hear a claim based on a violation of Canadian securities laws on the grounds that such jurisdiction is not the most appropriate forum to bring such a claim. Even if a foreign court agrees to hear a claim, it may determine that the local law, and not Canadian law, is applicable to the claim. If Canadian law is found to be applicable, the content of applicable Canadian law must be proven as a fact, which can be a time-consuming and costly process. Certain matters of procedure will also be governed by foreign law.

CONSOLIDATED CAPITALIZATION

Other than the exercise of common share purchase warrants for aggregate proceeds to the Corporation of approximately \$18 million, as announced on June 9, 2022, there have been no material changes in the share capital of the Corporation, on a consolidated basis, since the date of the Financial Statements. See "Documents Incorporated by Reference" and "The Corporation – Recent Developments".

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. 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. See "Risk Factors", notably the "Negative operating cash flow" risk factor.

The following table sets out key milestones to advance the Cordero Project to the Feasibility Study stage. The proposed budget costs of US\$21.1 set out in the PFS Report correspond to the total costs in the table below or approximately C\$27.4, and an exchange rate of approximately US\$1.00 to C\$1.30).

Milestone	Anticipated Start Date	Anticipated Timing for Completion	Costs Incurred to Date (\$US millions)	Costs Remaining to Complete the Milestone (\$US millions)
Exploration and Drilling	Q1 2023 (Jan)	Q1-Q4 2023	\$0.2	\$9.0
Metallurgical Characterization	Q1 2023 (Mar)	Oct 2023	nil	\$0.7
Mineral Resources	Q2 2023 (Apr)	Feb 2024	Nil	\$5.5
Geotechnical Studies	Q2 2023 (Jun)	Oct 2023	Nil	\$0.5
Mine Engineering	Q3 2023 (Aug)	Dec 2023	Nil	\$0.2
Tailings Storage Facility Studies	Q2 2023 (May)	Dec 2023	Nil	\$2.9
Site Wide Water Balance	Q3 2023 (Sep)	Dec 2023	Nil	\$0.6
Environmental Studies, Permitting and Social or Community Impact	Q1 2023 (Apr)	Dec 2023	Nil	\$0.5
Hydrogeology	Q2 2023 (Apr)	Nov 2023	Nil	\$1.0
TOTAL			\$0.2	\$20.9

The next significant milestone for the Cordero Project is to advance the Cordero Project through the Feasibility Study stage, by completing the subset of milestones listed in the above table. The Feasibility Study is expected to be completed in the first half of 2024.

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 \$300,000,000, 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 TSX 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.

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 or dealer involved in an "at-the-market distribution" under this Prospectus, no affiliate of such an underwriter or dealer, and no person or company acting jointly or in concert with such an underwriter or dealer, 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.

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 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 TSX 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;
• 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 TSX 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;
• 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.

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 TSX relating to Units. This description will include, where applicable:

• the designation and aggregate number of Units being offered;
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• 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;
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• 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.

THE CORDERO PROJECT

Property Description, Location, and Ownership

Cordero is a silver deposit owned by Discovery in northern Mexico, in the south of the state of Chihuahua, approximately 600 km from the border with the United States (see Figure 1-1). The project is accessed by vehicle 200 km southwest from Chihuahua City along State Highway 16 to the Parral turn-off to State Highway 24, then 150 km south on Highway 24 where an access road heads east for 10 km to the project site. The Cordero property consists of the 26 titled Mining Concessions totalling 34,909 contiguous hectares owned by Minera Titán S.V. de C.V. Mexico ("Titán"), a wholly-owned Mexican subsidiary of Discovery. Mining concessions are granted for 50 years and may be renewed for an additional 50 years. Concessions are granted on a mining lot that may comprise the area requested by the interested party. There are no limitations to the number of hectares for each mining lot.

The main obligations of the concessionaires are:

• to carry out exploration and exploitation works
• pay mining duties
• comply with safety and environmental protection regulations
• submit reports to the authorities and fulfill other obligations of lesser importance.

For the San Pedro concession, there is an agreement (the "Cordilleras Contract" in Figure 4-5) between Cordilleras and Titán that requires Titán to pay Cordilleras a 2% NSR royalty. Titán can assign the obligation of payment of the royalty to a third party by written notice sent to Cordilleras. If Cordilleras decides to sell its right to receive the royalty, Titán will have the right of first refusal on the same terms and conditions that Cordilleras offered to a third party.

Figure 1-1: Location of the Cordero Project in Southern Chihuahua State, Mexico

Source: RedDot3D, 2021.

For the Josefina, Berta, La Unidad II, and La Unidad mineral concessions there is an agreement (the "Eloy Contract" in Figure 4-5) between Titán and two concessionaires: Mr. Eloy Herrera Martínez and Cleotilde de la Rosa Ríos which requires Titán to pay a 1% NSR royalty to the concessionaires. If the concessionaires decide to sell their right to receive the royalty, Titán will have the right of first refusal on the same terms and conditions that the concessionaires offered to a third party.

The deposit lies in a region that has a long history of silver mining dating back to the 1600s. In the hills where the Cordero deposit lies, there are several small mines with rich silver veins that reach the surface. In the past two decades, the possibility of a large bulk mining target at depth at Cordero was explored and tested through drilling carried out by Levon. Since 2019, when Discovery acquired the project in a merger with Levon, drilling has continued, with a focus on high-grade zones at depth, well below the reach of the small-scale historical mines, but within reach for a modern industrial open pit operation.

History

Historical records and anecdotal information indicate that the region around Cordero has supported mining activity since the early 17th century when the Spanish established Real de San José at what is now the town of Hidalgo de Parral (or simply, "Parral"). At Cordero, 35 shallow vertical shafts can still be found along with associated small prospect pits on outcrops of high-grade silver-lead-zinc veins. In shafts that remain accessible, small open stopes can be found at the bottom. The lack of commentary on production at Cordero by the The Parral Silver Company, suggests that mining on the higher ground of Cordero remained small in scale and unorganized into the late 19th century. By the start of the 20th century, the American Smelting and Refining Company ("Asarco") operated small mines on what is now the Cordero property, including La Luz, La Ceniza, and Josefina where they worked veins and breccias with high-grade sulphide mineralization. The lack of tailings around the old mill at La Luz, the largest of Asarco's mines at Cordero, indicates that it was not operational for any significant length of time. In 2013, Titán consolidated claim ownership in the district, bringing unorganized artisanal mining at Cordero to an end. From the very earliest artisanal mining at Cordero, through to the past decade, a shallow water table has created difficulties with dewatering, making all the historical mines at Cordero necessarily shallow. Although three centuries of mining confirm that Cordero hosts abundant silver, lead, zinc, and gold, historical mines have drawn their production only from some of the near-surface resources. Deeper mineralization remains untouched by past production.

In 2000, Industrias Peñoles completed a review of the region for copper, molybdenum, and gold potential, and drilled a few short holes on the Sansón stock, and on the Valle Intrusive Complex. From 2006 to 2009, Valley High Ventures Ltd. ("Valley High") owned the mineral concessions through their wholly owned subsidiary, Coro Minera. Valley High carried out surface exploration work, compiled the project's first comprehensive database, and organized drill core that had been stored in several different secure locations. By 2009, Valley High had dropped half of its claim holdings and entered into a joint venture agreement with Levon. Beginning in 2009, Levon re-staked mineral concessions that had been dropped by Valley High and added adjoining mineral concessions. By 2011, Levon had met their vesting requirements for 100% of the property and bought out Valley High. In 2013, Levon added a significant addition to the package of mineral concessions with purchase of the Aida claim. In 2019, Levon merged with Discovery Metals Corp. In April 2021, Discovery Metals Corp., which changed its name to Discovery Silver Corp., held 100% ownership of the mineral rights that cover all the land needed for a large open pit that targets Cordero's bulk of mineralization at depth.

Exploration work completed by Valley High included geological mapping, rock sampling, gridded soil sampling, and trenching at the Sansón, La Ceniza, and the Cordero Main target areas. Historic drill core was re-logged and re-sampled, and the results recognized the potential for bulk tonnage targets on the property. Levon carried out reconnaissance mapping which confirmed the importance of three magmatic hydrothermal belts on the property. In 2009, 2010, and 2011, several different geophysical survey companies completed ground-based and airborne-based geophysical surveys over the Cordero Magmatic-Hydrothermal Belt including ground-based gravity and 3D induced polarization (IP) surveys over the Dos Mil Diez, Pozo de Plata, and Molino de Viento targets. The Cordero main intrusive complex, and La Ceniza Stock defined areas where the chargeability shows a strong multi-km long anomaly both within, and well outside the 2022 resource area to the northeast. In 2010, Aeroquest flew an airborne electromagnetic, magnetic, and radiometric survey over the main Cordero Magmatic-Hydrothermal belt. The aeromagnetic results defined a sizeable inferred buried intrusive center, north-northeast of the current resource area with an estimated depth of 3.0 km. The radiometric survey defined a high potassium anomaly centered over the 2022 resource pit as well as along the Cordero Magmatic-Hydrothermal Belt coincident with known exploration targets. In 2013, Levon completed a 3D IP survey over the La Perla target as well as a magnetotelluric (MT) survey over the Molino de Viento target.

Levon initiated the first significant drilling on the project starting in 2010 and continuing through 2017. Drilling by Levon totaled 133,620 m from 292 core drill holes. The drilling by Levon resulted in the initial definition of the bulk tonnage mineral resource at Cordero.

Evidence of past production at Cordero consists of 35 vertical shafts and approximately 104 mined-out stopes that reach to surface. The stopes vary between 1 and 2 meters in width and are characterized by oxides and sulphides of high-grade Ag-Pg-Zn ± Au veins and vein breccias, some of which outcrop on surface. Local workers and former small-scale underground miners that used to work in these stopes reported that most of the production involved directly shipping mineralized material that was hand sorted, shipped, and processed in Parral. The historical mines of La Luz, La Ceniza and Josefina show evidence of water pumping efforts and support the anecdotal knowledge that the Cordero project area has abundant groundwater. Local workers have reported that most of the vertical workings are excavated to the water table located at an approximate depth of 50 to 80 m. No reliable records of historical mining have been encountered to date.

Levon filed a technical report on SEDAR that described a mineral resource estimate based on all data available through April 2014. The mineral resource estimate was prepared in accordance with the requirements of NI 43-101. The mineral resource was estimated using an inverse distance ID6 model constrained by an open pit shell. A silver equivalent grade was calculated for each block based on the metal grades, estimate of mill recovery for each metal, and the metal prices. Although the 2017 resource estimate was prepared in accordance with NI 43-101, no qualified person has done sufficient work to classify the historical estimate as current mineral resources and it has since been superseded by the Corporation's own mineral resource estimate provided in section 14 of the PFS. Discovery is not treating the historical estimate as current.

In 2018, Levon produced a PEA report with an effective date of March 1, 2018, that was prepared in accordance with NI 43- 101. The 2018 mineral resource estimate was based on 263 drill holes (126,235 m of drilling) completed by the end of 2017. The mineral resource was estimated utilizing an inverse distance methodology and contemplated an open pit geometry based on a standard flotation mill with separate zinc and lead circuits, mill recoveries, operating costs for processing, G&A and mining. A silver equivalent grade was calculated for each block based on metal grades, estimate of mill recovery for each metal, and the metal prices. No qualified person has done sufficient work to classify the historical estimate as current mineral resources and Discovery is not treating the historical estimate as current mineral resources. The 2018 historical mineral resource estimate has been superseded by the Corporation's own mineral resource estimate provided in section 14 of the PFS Report.

Geology and Mineralization

Regionally, Cordero lies in an area where sedimentary rocks of the Eastern Basin and Range geological province meet the volcanic rocks of the Sierra Madre Occidental province. The tectonic and magmatic history of the Sierra Madre Occidental (Tertiary Volcanic Province) is thought to extend into parts of eastern and southern Chihuahua as far south as Cordero where the landscape is dominated by Oligocene-Miocene basaltic-andesites, Oligocene ignimbrites, and Eocene volcanic and intrusive rocks (Ferrari et al., 2007). There are three major southwest to northeast magmatic-hydrothermal belts that crosscut the Cordero property subparallel to major transcurrent faults in the area. Other faults in the area include reverse, extensional and normal faults.

The focus of drilling in the current resource area in the past decade has been along the central Cordero magmatic-hydrothermal belt comprised of high-K felsic to intermediate igneous rocks and related breccias, locally forming resistant silicified structural domes bisected by a series of sub-parallel transcurrent structural corridors (e.g., Cordero, Parcionera, Josefina and Todos Santos). The Cordero fault corridor has uniquely been exploited by a unique sheeted dyke complex that can be followed for 3 km from Pozo de Plata in the southwest to La Boquilla in the northeast. Several NNW-trending reverse faults have severely deformed the sediments and at least two NW-trending normal faults (e.g., Mega and Southwest faults) have offset the sedimentary and igneous rock package down to the southwest in a stair-step fashion. Mineralization style and associated alteration changes from La Ceniza in the northeast where replacement skarn mineralization is prevalent to a breccia complex in the southwest at the Pozo de Plata breccia complex where gold grades are higher.

Metal tenor, alteration, mineralization-style and sedimentary facies change from the northeast at La Ceniza where the eastern contact of a large rhyodacite intrusion has formed a 0.5 km long contact metamorphic skarn/hornfels aureole hosting replacement-style Zn-Cu skarn mineralization locally cut by quartz-molybdenite-chalcopyrite-pyrite stockwork increasing to a depth of 1,174.1 m. Historical small-scale mining was focused on NE-trending Ag-Pb-Zn mineralized structural corridors comprised of vein, vein breccia, stockwork, and mill breccias that bisect the earlier intrusions and replacement skarn mineralization. At the Pozo de Plata breccia complex higher gold grades are associated with the interface between galenapyrite in electrum. Favoured mineralization sites include a variety of breccias derived from differing mechanisms including contact breccia, intrusive breccia, mill breccia, mud breccia, fault breccia and sedimentary collapse breccia.

The precious and base metal mineralization is spatially associated with sulphide minerals such as pyrite, galena, sphalerite, and chalcopyrite. Weathering has created a near-surface oxide layer comprised of primarily jarosite and hematite, locally up to 40 m in thickness, where sulphide minerals are generally absent and precious metals including silver and gold are elevated in grade.

Cordero has characteristics of superimposed deposit types with likely differing emplacement ages. Much of it is similar to some extensional (E-type) intermediate sulphidation epithermal systems on the shoulder of a buried porphyry molybdenum system forming in extension rift-type settings. Parts of Cordero resembles some intrusion-related carbonate-hosted Pb-Zn (Ag, Cu, Au) deposits further north in Chihuahua State. In the northeast of the resource area Cordero is dominated by replacement-style Zn-Cu (sphalerite-chalcopyrite) ± veinlets of Pb-Ag mineralization coincident with the contact metamorphic aureole at the La Ceniza Intrusive Complex in favourable protoliths like calcareous sandstone and fossiliferous limestone.

Exploration

Since it acquired the project through its acquisition of Levon in 2019, Discovery extended surface reconnaissance to cover other known exploration targets identified by geophysics along the same central trend of hydrothermally altered igneous rocks.

In 2019, Discovery commissioned Geotech to acquire VTEM airborne electromagnetics (AEM) over the entire Cordero property to map lithologies under cover. In 2022, Discovery commissioned Arrow Geosciences Pty Ltd. to reprocess all historical geophysical survey data collected by Levon. In 2022, Discovery commissioned Zonge International to collect induced polarization (IP) survey data over select target areas including Molino de Viento, Dos Mils Diez, Sansón and north La Perla across a major NW-trending extension fault. The reprocessed geophysics in conjunction with the geophysical data acquired by Discovery has indicate targets for continued exploration beyond the current mineral resource extents at Cordero.

In 2022, Discovery completed detailed geological mapping over high priority targets identified during historical and 2021 exploration campaigns. New geological mapping covers an area measuring 10,181.25 hectares (101.18125 km² ), which brings the total geological mapping and sampling coverage to 11,691.25 hectares (116.9125 km² ). These mapped targets formed along two mineralized sinistral releasing bends along the 15 km long, Cordero Magmatic-Hydrothermal belt from Molino de Viento in the southwest to Sansón in the northeast. A total of 2,902 rock samples were collected in support of the geologic mapping effort in 2022. Results from the geologic mapping and sampling on several exploration targets including Dos Mil Diez and Molino do Viento to the southwest, La Perla to the immediate south, and La Ceniza and Sansón to the northeast of the main Cordero target that warrant follow-up exploration and drilling in 2023.

Drilling

Extensive drilling has been completed on the Cordero property totaling 305,302 m in 7438 drill holes. These drilling campaigns took place over several years by Levon from 2009 to 2014 and in 2017, and core drilling continued between 2019 to 2022 by Discovery. The most recent core hole drilled on the project was C22-735 ending in December 2022. Table 1-1 summarizes the year, number, total meters and intent of the drilling completed by Discovery from 2019 through 2022 ending with drillhole C22-735.

Company	Year	Drill Holes	Meters	Notes
Discovery	2019	17	5,904.85	Resource area core holes
Discovery	2020	99	39,484.30	Resource area core holes
Discovery	2021	178	85,347.05	Resource area core holes
Discovery	2021	2	807.90	Geotech oriented core (pit-wall stability piezometer holes)
Discovery	2022	149	59,620.60	Resource core holes and exploration core holes
Discovery	2022	17	1,918.75	Geotechnical oriented core (pit-wall stability)
Discovery	2022	89	4,546.45	Oxide resource definition in core holes
Discovery	2022	6	2,190.00	Reverse circulation – hydrology holes
Totals		295	1,99,820

Table 1-1: Summary of Drilling by Discovery to December 2022

Notes: 1. Includes holes drilled on other exploration targets outside of the 2022 resource pit. 2. Drill holes counted in the year in which they were completed. 3. Reverse-circulation holes were drilled for engineering and environmental purposes. 4. Some numbers may not sum exactly due to rounding.

Additional drilling by Discovery has allowed updated interpretations of the structural controls, lithological controls, and definition of dominant fluid flow corridors of high-grade mineralization. These controls and domains have been used to accurately update the estimate of resources. The average estimated recovery factor for holes drilled by Discovery is approximately 98%. The applicable qualified person from the PFS Report is unaware of any recovery or sampling factors that could materially impact the accuracy and reliability of the assay results. The current mineral resource estimate is based on a drill dataset consisting of 275,904 m of drilling (690 drill holes); of which 153,715 m of drilling (423 drill holes) was completed by Discovery.

Sample Preparation, Analysis, and Security

Approximately half of the samples included in the current mineral resource estimate are from drilling programs conducted by Levon ending in 2017. The other half were generated by the Discovery drill programs in 2019, 2020, 2021, and 2022.

All samples for the drill programs by Levon and Discovery were prepared using the same ALS method (Code Prep-31) by crushing to 85% to minus 10 mesh then a split was pulverized to 95% minus 150 mesh (Levon) or 85% passing through 75 µm (Discovery). Assays from 2009 to 2012 and 2017 for Levon were performed by ALS Geochemistry (Vancouver). Assays in 2013 and 2014 were carried out by Activation Laboratories Ltd. in Mexico. In 2019, 2020, 2021 and 2022, Discovery used the ALS preparation laboratory in Chihuahua, Mexico and ALS (Vancouver, Canada). All of the laboratories named above are independent of Discovery and are accredited with the Standards Counsel of Canada to the ISO/IEC 17025 standard.

Drill core is logged and sampled in a secure core storage facility located at the project. Drill core is placed into corrugated plastic core boxes at the drill site by the drillers. Tied core boxes are organized within the drill pad area and remain under the driller's supervision until it is collected by Discovery personnel. The core is collected twice a day and transported to the Discovery core logging facility within 1.5 km of the drill site. After the drill core is sawn in half and placed in plastic bags, groups of four to give sample bags are placed into large, poly-weave rice bags with their content marked on each bag. The bags are securely sealed and moved to a storage facility controlled by the company geologists. Twice per week, an ALS truck picks up the sample bags from site and delivers them directly to the ALS laboratory in Chihuahua for sample preparation. The drilling area and camp site facilities are on a private property with restricted access to the public. The access gate remains locked at all times, and only the landowners, drillers, and Discovery personnel have a key to open the gate.

Levon submitted all pulverized splits for multi-element aqua-regia digestion with inductively coupled argon plasma (ICP) mass spectrometry (MS) detection (ALS Method Code ME-ICP41) with overlimit results re-analyzed using ICP-atomic emission spectroscopy (AES) and a four-acid digest. Discovery submitted all pulverized splits for multi-element aqua-regia (ALS Method Code ME-ICP61) with overlimit results reanalyzed using ICP-AES and a four-acid digest. Gold analyses were conducted on a 30-gram sub-sample for fire assay with an AA-finish (Levon) and on a 50-gram sub-sample for fire assay (Discovery). For the 2019 to 2022 drilling program, Discovery analyzed sample over-limits > 10 g/t Au and > 1500 g/t Ag using fire assay on a 50-gram sub-sample (for gold) and 30-gram sub-sample (for silver) with a gravimetric finish. In addition, samples that assayed >100 g/t Ag the detection limit for ICP-MS, between 100 to 500 g/t Ag and >1.0% Zn and/or > 1.0% Pb were re-assayed using the ALS Method Code ME-OG62.

The quality assurance/quality control (QA/QC) program consisted of inserting certified reference material (CRM) every 15th sample, blank samples every 18th sample, and core pulp duplicates every 100th sample. The sample preparation analysis and security program implemented by Discovery was designed to support a large volume of data. Sample collection and handling procedures are documented and reviewed frequently. The laboratory analytical methods, detection limits, and grade assay limits are well-suited to the style and grade of the Cordero mineralization. The QA/QC methods implemented by Discovery enabled an ongoing assessment of sample security, assay accuracy, and possible contamination. The applicable QP for the PFS Report reviewed sample collection and handling procedures, laboratory analytical methods, QA/QC protocols, and the QA/QC program results and believes these methods are adequate to support the current mineral resource estimate.

Data Verification

Discovery has developed an extensive dataset that is saved and managed using GeoInfo Solutions' management software. The PFS Report's Qualified Persons from Hard Rock Consulting, LLC, conducted a brief site visit in January 2023. They affirmed the accuracy of drilling and sample handling procedures documented in Sections 10 and 11 of the PFS Report.

Assays in the drill hole database were compared to their original certified values for part of the 2021 drilling and all 2022 drilling included in the updated mineral resource estimate. The database was also checked for incorrect entries, interval lengths, blank or zero-value assay results, out-of-sequence or missing intervals, and value fields.

Mineral Processing and Metallurgical Testwork

Extensive metallurgical testwork has been completed on the Cordero Project by Discovery, and previously by Levon Resources dating back to 2011.

QEMSCAN analysis of multiple composites and variability samples confirmed the predominant sulphide mineral contained across the volcanic, sedimentary, and breccia samples was pyrite. Sphalerite and galena were present to a lesser extent in the volcanic, sedimentary, and breccia samples. The oxide composites did not contain significant amounts of sulphide minerals.

The gangue mineralogy was dominated by quartz, plagioclase, K-feldspar, Si/Al clays, and calcite. The sedimentary samples contained the largest concentration of calcite, while the oxide samples contained the least. The oxide samples contained the most Si/Al clays compared to the other lithologies.

At a primary grind size of 80% passing (k80) 200 μm averaged across the 30 variability composites, galena averaged approximately 65% liberation and sphalerite averaged approximately 78% liberation. Where unliberated, galena and sphalerite were in binary association with pyrite or ternary association with non-sulphide gangue.

Various phases of testwork have culminated in the selection of a robust, differential lead-zinc flotation flowsheet after relatively coarse (k80 = 200 µm) primary grinding via a combination of conventional SAG and ball milling. This flowsheet has been proven to be effective across upwards of 50 variability, master and blended (oxide and sulphide) composites with average locked cycle test performance from the 2022 PFS program returning the following results:

• lead/silver concentrate grading 56% Pb and 3217g/t Ag at lead and silver recoveries of 87% and 75%, respectively
• zinc concentrate grading 52% Zn and 346 g/t Ag at zinc and silver recoveries of 85% and 10%, respectively
• global silver recovery (to lead and zinc concentrates) of 85%.

Due to the relatively coarse primary grind and moderate concentrate regrind size, the concentrates and tails generated via the flotation circuit dewater readily. The majority of the final tails products from locked cycle testing have been shown to be non-acid-generating, with a relatively minor number of samples being classified as potentially acid-generating.

Concentrate quality scans were conducted on the PEA and PFS locked cycle test. The main deleterious elements were as follows:

• Mercury (Hg) content of the lead and zinc concentrates averaged 13, g/t and 11 g/t, respectively.
• Organic carbon content of all concentrates was below 1.6% CORG.
• Arsenic (As) content of the lead and zinc concentrates averaged 0.31% and 0.31%, respectively.
• Cadmium (Cd) content of the lead and zinc concentrates averaged 0.05% and 0.45%, respectively.
• Chlorine (Cl) content was consistently low (0.07% Cl) and often below detection limit.

Comminution testwork conducted on variability samples and composite blends indicate that Cordero ore is hard to very hard, with an average Bond ball work index of approximately 19 kWh/t and an average A x b value of 54.

Heap leaching of the oxide zone was considered for additional silver recovery, but column leach and bottle roll testwork was suspended in 2022 in favour of blending the oxide material in with the sulphides at low blend ratios via the flotation circuit.

Testwork has shown that the oxides can be blended with the sulphide ore and processed via the flotation circuit at blend proportions up to 10% with little to no negative impact on sulphide ore recovery.

Robust metallurgical projection models have been derived for the sulphides from locked cycle and batch cleaner variability testwork and are appropriate for this level of study.

Mineral Resource Estimate

Mineral resource estimates are inclusive of mineral reserves. The new resource estimate for Cordero incorporates geological and structural domains based on lithological and structural controls that are better understood through recent infill drilling. The mineral resource estimate is divided into eleven estimation domains based on structure, weathering state, indicator grade shell models, and a mostly barren glomerophyric dyke.

Drill hole intervals were composited to 2 m by domain. The presence of high-grade outlier values were investigated for each metal by domain. Appropriate cutting limits were selected by studying coefficient of variation plots, probability plots and decile analyses plots.

Ordinary kriging was used to interpolate silver, lead, zinc and gold grades into blocks and sub-blocks. Anisotropic search radii with variable orientations along mineralization trends were used to select data informing block estimates. Search distances and directions were based on the directional anisotropy of the silver variogram models. Grades were estimated into the model in three passes whereby each successive pass utilized a less restrictive sample search strategy to estimate any remaining unestimated blocks. The search radii for the first estimation pass were set to half of the variogram range in each direction. The second pass doubles the search radii, so that they are all equal to the variogram model ranges. In the third pass the search radii are tripled again.

Resource classification was based on block-by-block metrics that relate to the proximity of nearby data. An optimized pit shell further constrains the reported mineral resource to fulfil the requirement for "reasonable prospects for eventual economic extraction".

The mineral resource is split into sulphide and oxide portions. Since silver, lead, zinc, and gold all contribute to revenue, a net smelter return (NSR) is calculated as the net revenue from metal sales (taking into account metallurgical recoveries and payabilities) minus treatment costs and refining charges. Discovery is not aware of any environmental, permitting, legal, title, taxation, socio-economic, marketing, or political factors that might materially affect the development of these mineral resource estimates.

Sulphide mineralization is categorized as all mineralization that is located beneath the oxide/transition boundary; it extends to depths of more than 800 m below surface. The \$7.25/t NSR reporting cut-off used for sulphide mineralization is based on the estimated processing and G&A cost for standard flotation processing of this material.

Table 1-2 presents the mineral resource estimate for the sulphide material at Cordero. The tabulated grades and metal contents are in-situ estimates and do not include factors such as external dilution, mining losses, and process recovery losses. As such, these are mineral resources, not mineral reserves, and do not have demonstrated economic and technical viability.

Table 1-2: Sulphide Mineral Resources for the Cordero Project, with an Effective Date of January 18, 2023, above an NSR Cut-off of \$7.25/t and within a Reporting Pit Shell

		Grade				Contained Metal
Class	Tonnage	Ag	Au	Pb	Zn	AgEq	Ag	Au	Pb	Zn	AgEq
	Mt	g/t	g/t	%	%	g/t	Moz	Koz	Mlb	Mlb	Moz
Measured	250	23	0.08	0.33	0.57	55	185	604	1,824	3,132	439
Indicated	403	18	0.04	0.27	0.56	46	228	524	2,387	4,947	598
M&I	653	20	0.05	0.29	0.56	49	413	1128	4,211	8,079	1037
Inferred	109	13	0.02	0.21	0.38	33	46	82	510	923	118

Notes: 1. AgEq for sulphide mineral resources is calculated as Ag + (Au x 15.52) + (Pb x 32.15) + (Zn x 34.68); these factors are based on commodity prices of Ag – \$24.00/oz, Au – \$1,800/oz, Pb – \$1.10/lb, Zn – \$1.20/lb and assumed recoveries of Ag – 87%, Au – 18%, Pb – 89% and Zn – 88%. 2. Discovery is not aware of any environmental, permitting, legal, title, taxation,socio-economic, marketing, or political factors that might materially affect the development of these mineral resource estimates. 3. The tabulated numbers have been rounded to reflect the level of precision appropriate for the estimates and may appear to sum incorrectly due to rounding. Source: RedDot3D Inc., 2022.

Oxide/transition mineralization lies above the oxide/transition boundary, where the material is weathered (oxide) or partially weathered (transition). The depth of the oxide/transition zone varies across the deposit from approximately 20 m in the Pozo de Plata zone to depths of up to 100 m in certain areas in the South Corridor and in the far northeast of the deposit. The \$7.25/t NSR reporting cut-off used for oxide mineralization is based on the estimated processing and G&A cost for blending of oxide material into the standard flotation process.

Table 1-3 presents the mineral resource estimate for the oxide/transition material at Cordero. The tabulated grades and metal contents are in-situ estimates and do not include factors such as external dilution, mining losses, and process recovery losses. As such, these are mineral resources, not mineral reserves, and do not have demonstrated economic and technical viability.

Table 1-3: Oxide Mineral Resources for the Cordero Project, with an Effective Date of January 18, 2023, above an NSR Cut
off of \$7.25/t and within a Reporting Pit Shell

	Grade					Contained Metal
Class	Tonnage	Ag	Au	Pb	Zn	AgEq	Ag	Au	Pb	Zn	AgEq
	Mt	g/t	g/t	%	%	g/t	Moz	Koz	Mlb	Mlb	Moz
Measured	21	30	0.08	0.23	0.25	49	21	51	109	117	33
Indicated	42	24	0.06	0.24	0.31	46	33	85	224	288	62
M&I	63	26	0.07	0.24	0.29	47	54	136	333	405	95
Inferred	36	18	0.04	0.28	0.37	43	21	40	216	292	49

Notes: 1. AgEq for oxide mineral resources is calculated as Ag + (Au x 22.88) + (Pb x 19.71) + (Zn x 49.39); this factor is based on commodity prices of Ag - \$24.00/oz, Au - \$1,800/oz, Pb - \$1.10/lb, Zn - \$1.20/lb and assumed recoveries of Ag – 59%, Au – 18%, Pb - 37% and Zn - 85%. 2. Discovery is not aware of any environmental, permitting, legal, title, taxation, socio-economic, marketing, or political factors that might materially affect the development of these mineral resource estimates. 3. The tabulated numbers have been rounded to reflect the level of precision appropriate for the estimates and may appear to sum incorrectly due to rounding. Source: RedDot3D Inc., 2022.

Mineral Reserve Statement

The mineral reserves for the Cordero Project are based on the conversion of the measured and indicated mineral resources in the study mine plan within the ultimate open pit limits. The level of information from drill holes and degree of certainty on assumptions used the mine plan estimates provides reasonable support to classify measured mineral resources as proven reserves. Indicated mineral resources are converted directly to probable reserves. Inferred mineral resources were treated as waste. The estimates assume conventional open pit mining and equipment.

Mineral reserves estimates are based on metal prices of US\$20/oz silver, US\$0.95/lb lead, US\$1.20/lb zinc, and US\$1600/oz gold and are approximately 302 Mt of ore containing 0.70% Zn, 0.44% Pb, 27.4 g/t Ag, and 0.08 g/t Au. Mineral Reserves for the Cordero Project are shown in metric units in Table 1-3. This estimate has an effective date of December 31, 2022.

	Process Feed		Grade			Contained Metal
Reserve Class	(Mt)	Ag (g/t)	Au (g/t)	Pb (%)	Zn (%)	Ag (Moz)	Au (Moz)	Pb (Blb)	Zn (Blb)
Proven	164.0	28.93	0.10	0.45	0.67	152.52	0.52	1.63	2.42
Probable	138.4	25.61	0.06	0.43	0.73	113.95	0.27	1.30	2.22
Total Reserves	302.4	27.41	0.08	0.44	0.70	266.47	0.79	2.94	4.65

Table 1-3: Proven and Probable Mineral Reserves

Note: This mineral reserve estimate has an effective date of December 31, 2022, and is based on the mineral resource estimate dated December 31, 2022, for Discovery by AGP Mining Consultants Inc. The mineral reserve estimate was completed under the supervision of Manuel Jessen, P.Eng. of AGP, who is a QP as defined under NI 43-101. Mineral reserves are stated within the final pit designs based on a US\$20.00/oz silver price, US\$1,600/oz gold price, US\$0.95/lb lead price and US\$1.20/lb zinc price. An NSR cut-off of US\$10.0/t was used to define sulphide reserves. The life-of-mine mining cost averaged US\$1.60/t mined, preliminary processing costs were US\$5.22/t ore and G&A was US\$0.89/t ore placed. The metallurgical recoveries were varied according to head grade and concentrate grades. Lead concentrate recoveries were approximately 82.5%, 12.6% and 91.8% for silver, gold, and lead, respectively. Zinc concentrate recoveries were approximately 10.0%, 9.5% and 77.8% for silver, gold, and zinc, respectively.

The applicable PFS Report Qualified Person has not identified any known legal, political, environmental, or other risks that would materially affect the potential development of the mineral reserves.

Mining Methods

The Cordero Project will use open pit mining methods with truck and shovel equipment that has been proven in similar operations. The major production unit operations will include drilling, blasting, loading, hauling, and dumping. These activities are planned to be completed with an owner/operator fleet. There is currently no plan to extend the mine operation using underground mining methods.

Mining will occur on 10-meter lifts with safety benches every 20 meters using the provided geotechnical parameters by sector. Haul roads are designed at 33.2 m wide to accommodate 190-tonne class haul trucks. The mine fleet will be diesel powered.

The mine plan is based on proven and probable mineral reserves only. The mill facility will produce both zinc and lead concentrates with contained payables for silver, gold, lead and zinc. The plant will primarily process sulphide minerals, but the processing of high-grade oxides is included up to a maximum of 10% of the feed. The current mining limits contain approximately 1% of additional tonnes in the inferred resource category which could be converted to reserves with future drilling.

Dilution was applied on a block-by-block basis taking into consideration the diluted material grade. This resulted in an increase in mill feed tonnage by 2.4%, and a 3.5% lower silver grade than the in-situ feed summary.

Mining activity commences in advance of the sulphide process plant achieving commercial production and includes the placement of material on the stockpile. The mine schedule plans to deliver 284 Mt of sulphide mill feed grading 27.2 g/t Ag, 0.08 g/t Au, 0.72% Zn and 0.45% Pb over a mine life of 18 years. Processed rock also includes 19 Mt of oxides material grading 30.5 g/t Ag, 0.07 g/t Au, 0.33% Zn and 0.28% Pb. Waste tonnage totalling 640 M t will be delivered to either the tailings storage facility located east of the pit or the rock storage facilities adjacent to the pit. The overall strip ratio is 2.1:1 delivered. Oxides were included in the mill feed when they could displace lower value sulphides up to a maximum of 10% of the mill feed on a period basis. Of the life-of-mine mill feed ore tonnes, 6.2% were high-grade oxides and 31 Mt of oxide material remained in stockpiles at the end of processing due to the 10% blending limit.

Mine operating costs have been estimated from base principals using quotations from local mine equipment vendors plus local supply consumables.

Recovery Methods

The process plant design incorporates a staged expansion approach allowing the throughput to be increased and to accommodate higher feed grades over the life of mine. The selected flowsheet includes a single stage crushing circuit with crushed product reporting to the crushed ore stockpile. Ore is reclaimed to the SAB grinding circuit, which consists of a SAG mill and a ball mill operating in closed circuit with a cyclone cluster. Cyclone overflow material reports to sequential stages of rougher flotation, where lead and zinc concentrates are separated from the gangue material. Lead and zinc rougher concentrates report to dedicated regrind mills for further size reduction prior to cleaner flotation.

Concentrate grades are upgraded in the cleaning circuits to produce concentrates of requisite quality. The concentrates then report to dewatering circuits that include high-rate thickeners and vertical plate-and-frame filter presses. The resulting filter cakes are handled by a front-end loader for stockpiling and loadout activities. Tailings from the process are thickened in a high-rate thickener and pumped overland to the tailings management facility.

The staged expansion of the process plant over the mine life is presented below:

• Phase 1 (Years 1 to 3) The process plant is operated at a throughput of 25.5 kt/d.
• Phase 2 (Years 4 to 6) The plant is expanded to process material at a throughput of 51 kt/d.
• Phase 3 (Year 7+) The zinc cleaning and concentrate dewatering circuits are expanded to process higher zinc grades in the feed material.

The unit operations and staged expansion approach were selected to accommodate the variable nature of the deposit in terms of lead and zinc feed grade, and to deploy capital efficiently throughout the life of mine.

A summary of the expected process performance is as follows:

• primary crushing availability of 75%
• grinding and flotation availability of 91.3%
• concentrate filtration availability of 82.2%
• Phase 1 throughput of 25.5 kt/d (average basis)
• Phase 2 and 3 throughput of 51 kt/d (average basis).

The process flowsheet is depicted in Figure 1-2, with Phase 1 equipment shown in black, and Phases 2 and 3 equipment shown in greyscale or indicated by comments.

Figure 1-2: Process Flowsheet

Source: Ausenco, 2022.

Project Infrastructure

Infrastructure to support the Cordero Project will consist of site civil work, site facilities/buildings, on-site roads, a water management system, and site electrical power. Site facilities will include both mine facilities and process facilities, as follows:

• mine administration offices, truckshop, explosives storage, fuel storage and distribution, ore stockpiles, waste stockpiles, and truck wash
• process facilities including the process plant, crushing facilities, process plant workshop, assay laboratory, freshwater infrastructure, and tailings pipelines
• tailings storage facility (TSF)
• general facilities include a gatehouse, administration building, communications, switchyard, and weigh scale
• catchments, ponds, and other site water management infrastructure.

An overall site layout is provided in Figure 1-3.

The site can be accessed by a series of unpaved roads from federal Highway 24, approximately 11 km to the west-southwest. The existing access road will be upgraded including widening, installation of culverts as well as grading of corners to ensure suitability for daily operational traffic.

The roads within the process plant area will be generally 6 m wide, integrated with process plant pad earthworks, and designed with adequate drainage. The roads will allow access between the administration building, warehouses, mill building, crushing buildings, stockpile, mining truck shop, and the top of the mill feed stockpile.

The typical method of clearing, topsoil removal, and excavation will be employed, incorporating drains, safety bunds and backfilling with granular material and aggregates for road structure. The entrance to the process and mine site will be via the gatehouse. Additionally, an existing secondary unpaved public road that follows the existing power transmission corridor crossing the southeast corner of the claim block can be used as an alternative access/exit road.

Material from the pit will be diverted to four main destinations depending on the grade and material type. The barren stripping material will be sent to either the waste rock storage facilities or the TSF dam for construction, while the mineralized oxides and sulphides will be sent to either the mill or two main stockpiles areas, primarily for low-grade sulphides and oxides. Each stockpile will have a capacity of approximately 42 Mt. All mill feed is currently envisioned to be hauled from the pit rim by 190-tonne trucks.

Waste rock storage facilities are planned for waste material from the open pit. Two locations were selected for waste rock storage: one south of the ultimate pit limits (WRF01) and one on the northwest side of the pit (WRF02). In general, design considerations assumed an overall reclaimed slope of 18.4 degrees and a swell density of 2.0 t/m³ . Total waste rock capacity is approximately 530 Mt.

The mining infrastructure includes haul roads from the pit to the different areas on site, explosive facility, truckshop and truck washbay, mine warehouse, office and workshop.

Figure 1-3: Overall Site Layout

Source: Ausenco, 2022.

The plant site consists of the necessary infrastructure to support the processing operations. All infrastructure buildings and structures will be built and constructed to all applicable codes and regulations. Due to the warm weather conditions, no closed buildings will be required to cover the process plant. The project site will include administration building, plant maintenance shop and warehouse, and other buildings.

The site currently does not have access to power. A study conducted by Comisión Federal de Electricidad identified the power demand at Cordero during peak production can be met with construction of a 75 km long, 230 kV transmission line from Camargo II power plant to the project site.

The outdoor substation is phased into two stages based on power demand. In Phase 1, two 40/53.3 MVA, 230 kV / 13.8 kV oil-filled power transformers will be installed, each capable of supplying the plant's maximum demand. The transformers will be connected to a 13.8 kV switchgear with a normally open bus tie. When one transformer is out of service, the power system configuration will allow the other to support the total process load, thus enhancing system reliability.

The plant will be expanded in Phase 2 with the installation of two 37.5/50 MVA transformers and another 13.8 kV switchgear in a similar arrangement to supply the additional loads. The substation will also include four banks of power factor correction equipment, each rated at 4 MVAR.

The project lies within the Valle de Zaragoza aquifer, as designated by the National Water Commission (CONAGUA). This aquifer system is in an unrestricted zone and not subject to a ban on groundwater extraction. The mine site is located approximately 2 km north of the Arroyo San Juan, an intermittent stream flowing through alluvial materials which will be the potential source of water.

Waste disposal for the Cordero Project includes waste rock storage facilities (WRF) and the TSF. The TSF is designed to handle 25,500 t/d in Years 1 through 4 before throughput expansion for Phase 2 at 51,000 t/d for the balance of mine operations. The TSF was sized to store approximately 300 Mt of tailings along with the IDF and additional freeboard. The selected TSF location is southeast of the open pit in an area of gently rolling hills at natural elevations between 1,500 and 1,600 meters above sea level (masl). The TSF site is underlain by thin to sparse alluvium and residual soils over a bedrock foundation of Cretaceous Mezcalera Formation marine limestone. Water from the TSF is reclaimed and used in the process plant.

The excavation quantities for diversion ditches, diversion channels, collection ditches and ponds, and the site-wide water balance model is further discussed in the PFS Report.

Market Studies and Contracts

Discovery retained an external consultant for a review of the treatment costs (TC), refining costs (RC) and transport costs and metal payables (including penalty scales). The market terms for this study are based on the terms proposed by the consultant as well as recently published terms from other similar studies.

The metal payables as stated in Table 1-4 are used in this study. A summary of the treatment and refining costs is shown in Table 1-5.

The estimated transportation costs (trucking, port handling and ocean freight) are \$140/wmt for Pb concentrate and \$125/wmt for Zn concentrate. Transportation costs assume trucking of the concentrate via bulk trucks or containers to the international port at Guaymas, Sonora, or Manzanillo, Colima, and then shipping via ocean freight to Asia.

Metal	Unit	Zn Concentrate	Pb Concentrate
Zinc	%	85	-
less Deductible	units	8.0	-
Lead	%	-	95
less Deductible	units	-	3.0
Silver	%	70	95
less Deductible	g/dmt	93.3	50.0
Gold	%	70	95
less Deductible	g/dmt	1.0	1.0

Table 1-4: Metal Payables

Source: Discovery, 2023.

Table 1-5: Summary of Treatment Charges and Refining Costs

		Treatment	Refining	Concentrate Loading Port		Ocean Shipment Mode
Metal	Concentrate Grade	Charges (US\$/wmt)	Charges (US\$/payable lb or oz)	Zn Concentrate	Pb Concentrate	Zn Concentrate	Pb Concentrate
Zinc	51%	\$210.00	\$0.00	Guaymas		Bulk
Lead	52%	\$130.00	\$0.00		Manzanillo		Container/Bulk
Silver			\$1.20
Gold			\$10.00

Source: Discovery, 2023.

The metal prices presented in Table 1-6 were used for financial modelling for the PFS Report.

Table 1-6: Metal Prices for Economic Analysis

Metal	Price
Silver	\$22.00/oz
Gold	\$1,600/oz
Lead	\$1.00/lb
Zinc	\$1.20/lb

Source: Discovery, 2023.

Environmental Studies, Permitting, and Social or Community Impact

Environmental Studies

Topography in the project area is generally flat with slope gradients ranging mostly between 1% and 3%. The ground surface elevations within the pit extent are approximately 1,560 to 1,600 masl.

Among the three weather stations (the Parral, the La Boquilla, and the Valle de Zaragoza) existing in the area, the Zaragoza Valley station was considered to be representative of the site conditions, with precipitation and evaporation data from 1968 to 2021 available. The average annual precipitation (as rainfall) has been estimated at 428.8 mm. Only 2% to 3% of rainfall may infiltrate as recharge into the groundwater system. Except for some small creeks, no large naturally occurring surface waterbodies exist within the surface water catchments surrounding the pit. Flows in the creeks are anticipated to be small and seasonal, due to the relatively dry climate.

Six monitoring wells (RC22-001 to RC22-006) and two vibrating wire piezometers (VWPs; KP21-SB001, KP21-SB002) have been installed in the open pit area. Geophysical surveys were conducted to map the geological materials and structures in the area. Hydraulic parameters (including transmissivity and hydraulic conductivity) have been estimated based on the results of flow rates measured in the air-lift testing in these drillholes. Static groundwater elevations representing pre-mining conditions have been measured in the installed RC22 wells and the VWPs. The measured groundwater elevations appear stable with small variations over time, indicating groundwater flow in the aquifer system is in a steady state. The average groundwater level across the pit is approximately 1,497 masl. The RC22 wells have not been sampled for groundwater quality characterization.

The lithological units in the pit area consist of volcanic rocks (predominated by rhyodacite) and sedimentary rocks (predominated by siltstone), together with some interpreted faults. The hydrostratigraphic units in the pit area are interpreted to include shallow alluvium, conglomerate, and bedrock. The surficial sediments are mostly above the static groundwater level in the pre-mining conditions.

Shallow groundwater is influenced by topography and surface runoff and recharge processes, and deeper groundwater flow patterns are interpreted to be confined and influenced by more district-scale geological characteristics. Groundwater flow direction in the shallow groundwater system is interpreted to be from the northwest to southeast across the project area, generally following topography. Deeper groundwater flow is also interpreted to be also towards the southeast but controlled by geologic fault features and the bedrock fracture network.

The Cordero region has long, hot, and humid summers with convective showers and a peak seasonal rainfall in the hottest months. In winter, the air is generally mild during the day, but at night the temperature can drop rapidly to a few degrees below freezing. Two climate types are present in the Cordero Project area. In general, both climate types represent semi-arid weather. BS1kw (x') climate is semi-arid and temperate with hot summers. The average annual temperature ranges between 12°C and 18°C. BS1hw (w) represents semiarid and temperate weather with an average annual temperature higher than 18°C.

The local biodiversity includes a wide variety of plants and animals that sustain the different ecosystem equilibrium. The vegetation in the Cordero Project includes secondary succession of natural grassland shrub representing 70% of the site's surface, followed by natural grassland covering 9% of the land. Annual rainfed agriculture, microphyllus desert scrub, secondary succession of microphyllus desert scrub, secondary succession of rosetophyllous desert scrub, and secondary succession of herbaceous natural grassland cover the remaining 21% of the project area. The fauna in the area includes 69 species of mammals (i.e., desert cottontail, gray fox, American desert hare and racoon), birds (i.e., turkey vulture, scale quail, common raven and red-tailed hawk) and reptiles (Texas horned lizard, tortuga island rattlesnake and black-tailed rattlesnake). There are no declared natural protected areas within or bordering the project site. The project site lies within Hydrological Region 24 (RH24), Bravo-Conchos.

An Environmental Protection Plan will be developed to outline the reclamation activities that will be executed following the project exploration stage. The Environmental Protection Plan will be aligned with current permits and resolution 4.1.18 of the Mexican Official Standard NOM 120 SEMARNAT 2020. No formal Closure and Reclamation Plan has been prepared for the Cordero Project to date; a plan will be developed as the project advances through subsequent project stages.

Pit Dewatering

Based on the available information, the potential pit inflow rate into the proposed pit shell through the mine life was estimated using the analytical Jacob-Copper solution. The results show that the pit intersects groundwater in mine Year 1, and the inflow rates increase progressively as the pit deepens year by year.

Using the estimated base case pit inflow rates, a pit dewatering strategy was developed to meet the pit dewatering requirements. The pit dewatering strategy consists of vertical wells along the pit perimeter and in-pit wells (targeting permeable hydrogeologic units and features), in addition to the supplemental measures (including precipitation runoff collection sump, and sub-horizontal drains) when necessary.

Permitting Considerations

A variety of permits and authorizations will have to be obtained prior to construction and operations. In particular, authorization by SEMARNAT (Secretaria de Medio Ambiente y Recursos Naturales) following the Environmental Impact Assessment (EIA) will be required. The environmental permitting requirements and status for the Cordero Project is summarized in Table 20-7. The Cordero site currently holds three permits: NOM 120 SEMARNAT 2020, Corporation Registration in Social Security (IMSS) and Community Protection. Registration of Hazardous Waste Management has been presented to SEMARNAT and Waste Management Plans (Hazardous and Mining) are being developed.

Social Considerations

The project is located in a socioeconomic region known as the Parral Region, which includes four municipalities: Hidalgo del Parral, with a population of 116,662 inhabitants; Santa Bárbara, with 11,582 inhabitants; Valle de Zaragoza, with 4,775 inhabitants; and San Francisco del Oro, with 5,004 inhabitants. Approximately 76.5% of the population are dedicated to agricultural field work. More than 50% of the population do not have access to official healthcare. More than 80% of the population own a house and the rest live in rental accommodations or in a house owned by relatives. More than 51% of the population do not have access to clean drinking water.

Capital and Operating Costs

Capital Cost Estimate

The capital cost estimate conforms to Class 4 guidelines for a pre-feasibility- level estimate with a ±25% accuracy according to the Association for the Advancement of Cost Engineering International (AACE International). The capital cost estimate was developed in Q4 2022 dollars based on budgetary quotations for equipment and construction contracts, as well as Ausenco's in-house database of projects and studies including experience from similar operations.

The total initial capital cost for the Cordero Project is US\$455 million; the Year 3 expansion capital cost is US\$289 million; the Year 9 expansion capital cost is US\$31 million; and LOM sustaining costs are US\$228 million. Closure costs are estimated at US\$73 million, with salvage credits of \$US49 million. The capital cost summary is presented in Table 1-7.

WBS Description	WBS	Initial Capital Cost (US\$M)		Expansion Capital Cost (US\$M)		Total Cost (US\$M)
		Y0	Y3 Y9		LOM
Mining	1000	69.9	2.7	--	66.5	139.1
On-Site Infrastructure	2000	30.8	11.9	--	8.9	51.6
Crushing	3000	25.5	6.4	--	--	31.9
Process Plant	4000	130.9	108.0	14.5	--	253.4
Tailings Management	5000	45.4	39.6	--	106.0	190.9
Off-Site Infrastructure	6000	20.2	35.4	--	13.5	69.1
Total Directs		322.6	204.0	14.5	194.9	736.0
Project Indirects	7000	59.0	39.3	10.8	--	109.1
Owner's Costs	8000	12.6	2.0	1.0	23.6*	39.3
Provisions	9000	60.7	43.2	4.4	9.7	118.1
Total Indirects		132.3	84.6	16.3	33.3	266.5
Project Total		454.9	288.6	30.8	228.2	1002.5

Table 1-7: Summary of Capital Costs

Note: *The LOM sustaining Owner's cost is the net difference between reclamation costs and salvage value. Source: Ausenco, 2022.

Operating Cost Estimate

The average yearly operating cost for the project varies as the project undergoes numerous phases with different production rates and mineralized material types. Table 1-8 provides a summary of the operating costs considering the various operational phases, expressed on a \$/t milled basis.

Table 1-8: Summary of Operating Costs

Year	LOM	1-3	4-10, 12+	11	LOM	1-3	4-10, 12+	11
Operating Costs	US\$M	US\$M/a	US\$M/a	US\$M/a	US\$/t	US\$/t	US\$/t	US\$/t
Mining	2,286	124	118	153	7.6	13.9	6.4	8.2
Processing	1,929	59	112	115	6.4	6.6	6.1	6.2
Site G&A	188	10	11	11	0.6	1.1	0.6	0.6
Total	4,402	192	241	279	14.6	21.6	13.1	15.0

Source: AGP and Ausenco, 2022.

Economic Analysis

The economic analysis was performed assuming a 5% discount rate. Cash flows have been discounted to the start of construction, assuming that the project execution decision will be taken, and major project financing will be carried out at this time.

The pre-tax NPV discounted at 5% is \$1,902 million; the IRR is 38.9%, and payback period is 3.1 years. On a post-tax basis, the NPV discounted at 5% is \$1,153 million; the IRR is 28.0%; and the payback period is 4.2 years.

A summary of the post-tax project economics is shown graphically in Figure 1-4 and listed in Table 1-9.

Figure 1-4: Post-Tax Project Economics

Note: *Left axis is for free cash flow, and right axis for cumulative free cash flow. Source: Ausenco, 2023.

Table 1-9: Economic Analysis Summary

Description	Unit	Life-of-Mine Total / Average
General Assumptions
Silver Price	US\$/oz	\$22
Gold Price	US\$/oz	\$1,600
Lead Price	US\$/lb	\$1.00
Zinc Price	US\$/lb	\$1.20
Discount Rate	%	5.0%
Production
Total Payable Silver	koz	199,418
Total Payable Gold	koz	54
Total Payable Lead	Mlb	2,368
Total Payable Zinc	Mlb	3,360
Total Payable Silver Equivalent	koz	494,253
Operating Costs
Mining Cost (incl. Rehandling)	US\$/t mined	\$2.45
Mining Cost (incl. Rehandling)	US\$/t milled	\$7.56
Processing Cost (Phase 1)	US\$/t milled	\$6.46
Processing Cost (Phase 2)	US\$/t milled	\$6.36
Site G&A Costs	US\$/t milled	\$0.62

Description	Unit	Life-of-Mine Total / Average
Cash Costs and All-in Sustaining Costs (Co-Product Basis)
Operating Cash Costs1	US\$/oz AgEq	\$8.91
Total Cash Costs2	US\$/oz AgEq	\$13.23
All-in Sustaining Cost 3	US\$/oz AgEq	\$13.62
Capital Expenditures
Initial Capital	US\$M	\$455
Expansion Capital	US\$M	\$319
Sustaining Capital (incl. Net Closure)	US\$M	\$228
Economics
Pre-tax NPV @ 5%	US\$M	\$1,902
Pre-tax IRR	%	38.9%
Pre-tax Payback	years	3.1
Post-tax NPV @ 5%	US\$M	\$1,153
Post-tax IRR	%	28.0%
Post-tax Payback	years	4.2

Notes: 1. Operating cash cost consist of mining costs, processing costs, and site-level G&A. 2. Total cash costs consist of operating cash costs plus transportation cost, royalties, treatment and refining charges. 3. AISC consist of total cash costs plus sustaining capital. Source: Ausenco, 2023.

A sensitivity analysis was conducted on the base case post-tax NPV and IRR of the project using the following variables: discount rate, head grade, total operating cost, total capital cost, silver, gold, zinc, and lead prices, which were encompassed in a single variable, metal prices. Table 1-10 summarizes the post-tax sensitivity analysis results.

Metal Prices	Post-Tax NPV (5%)	Total Capital Cost		Total Operating Cost		Head Grade
	Base Case	(-10%)	(+10%)	(-10%)	(+10%)	(-10%)	(+10%)
-20.0%	\$293	\$355	\$231	\$465	\$119	-\$3	\$586
-10.0%	\$723	\$785	\$661	\$895	\$552	\$389	\$1,062
--	\$1,153	\$1,215	\$1,091	\$1,324	\$981	\$773	\$1,538
10.0%	\$1,582	\$1,644	\$1,520	\$1,754	\$1,411	\$1,157	\$2,013
20.0%	\$2,012	\$2,074	\$1,950	\$2,183	\$1,840	\$1,541	\$2,489
Metal Prices	Post-Tax IRR	Total Capital Cost		Total Operating Cost		Head Grade
	Base Case	(-10%)	(+10%)	(-10%)	(+10%)	(-10%)	(+10%)
-20.0%	12.5%	14.8%	10.5%	16.0%	8.4%	4.9%	18.4%
-10.0%	20.9%	23.6%	18.5%	23.7%	17.8%	14.5%	26.6%
--	28.0%	31.2%	25.2%	30.5%	25.3%	21.7%	33.9%
10.0%	34.4%	38.2%	31.3%	36.8%	32.0%	28.0%	40.6%
20.0%	40.5%	44.8%	37.0%	42.8%	38.3%	33.8%	47.0%

Table 1-10: Post-Tax Sensitivity Summary

Source: Ausenco, 2023.

Adjacent Properties

Mr. Schwering, QP of the PFS Report, has reviewed the claim status on adjacent properties and can find no active mineral concessions adjacent to the Cordero property. As noted in Section 6 of the PFS Report, a review of adjacent mineral concessions conducted by Levon in 2009 led to reclaiming mineral concessions that had been dropped earlier by Valley High. In 2013, Levon acquired the last remaining inlying mineral concession.

The Cordero Project lies in a region that has been a major producer of silver for centuries and continues to host several producing mines. The region is also a hub for exploration on new mineral deposits, including three early-stage exploration projects belonging to Discovery (i.e., Puerto Rico, Minerva, and Monclova).

Exploration, Development, and Production

To support ongoing studies in 2023, drilling is recommended as follows:

• Drilling in Q1 to Q2 2023 relates to condemnation drilling targeting proposed infrastructure locations for evidence of mineralization in an estimated 20 holes totalling 5,700 m.
• Drilling in Q1 to Q3 2023 relates to hydrogeology drilling targeting viable water sources in an estimated 18 holes totalling 8,000 m.
• Drilling in Q1 and Q3 2023 relates to pump-test well drilling to test water levels and conductivity near the PFS pit boundary in an estimated 3 holes for 1,350 m.
• Drilling in Q1 and Q3 2023 relates to geotechnical drilling testing in an estimated seven holes totalling 2,460 m to support ongoing feasibility studies.
• Drilling in Q3 and Q4 2023 relates to regional drilling in an ongoing property wide regional target assessment in an estimated 8900 m in a series of holes.

Several of the above stages can be completed in conjunction with other work programs. Contingent on the success of the drilling, the drill programs should be expanded as needed.

Ongoing studies should include continued Leapfrog 3D modelling of clay content, sulphide content, assessment of intrusive phases, structural corridors, alteration zonation, mineralization styles, carbonate species zonation and further definition of late mineral intrusive phases. Continued petrographic and SEM-EDS analysis in support of a metal deportment study is recommended.

Targeted studies should include lithogeochemical sampling of outlying regional igneous rocks, further definition of the late mineral intrusive phases, and ongoing Ar-Ar (Argon-Argon) age dating of alteration envelopes to precious and base metal mineralization.

To identify exploration targets under the 85% recent cover (includes overburden and post mineral volcanics) of Cordero, a targeted GIS knowledge-driven spatial analysis should be completed to define areas with the likelihood of finding Corderostyle mineralization in covered areas. To better inform the alteration and mineralization modelling, further insight through exploratory data analysis should be completed.

Bulk Density Program

A bulk density estimation program to measure the density of every 2 m sample interval using whole core was continued in Q4 2022. This program should continue through 2023 since it will provide additional useful information to supplement the existing pulp density and whole core density measurements as the project advances. The cost of this activity is included in exploration program cost.

Metallurgical Characterization

The metallurgical work outlined below is recommended for the next project phase:

• Additional comminution tests to further expand the comminution database is recommended to develop a robust comminution model and grinding circuit design. This will improve the future analysis of power requirements and equipment selection.
• Optimization of concentrate regrind size is required. Only limited testwork has been conducted to date and specific energy consumption testwork was not included.

• Further investigation between the impact of depressant dosages and silver recovery to the lead-silver concentrate is recommended. Operating at lower depressant dosages would likely lead to higher silver recovery to the lead-silver concentrate where payment terms are more favourable.

• Alternate depressants to sodium cyanide should be evaluated to determine if it can be replaced entirely without adversely affecting metallurgical performance.

• Sensor-based sorting and/or dense media separation testwork should be undertaken to determine the response of the low-grade stockpile material to preconcentration.
• Further expansion of the variability flotation database is recommended and testwork on higher grade production composites is required to allow models of robust head grade vs. recovery to be developed.
• No dewatering testwork (dynamic thickener tests and concentrate filtration) has been conducted to date—this is recommended as part of the work in the next project phase.
• The use of 4 kg testwork charges for flotation testwork should be considered as standard going forward, especially for the low head grade samples.

Mineral Resource Estimation

The following work related to mineral resource estimation is recommended for the next project phase:

• Future mineral resource updates should continue to explore the use of geological logging information to optimize the separation of structural domains into high-grade and low-grade subdomains.
• A small cross of closely spaced drill holes at approximately 10 m spacing should be drilled in a high-grade zone and low-grade zone to improve the understanding of short-scale continuity. This will assist the analysis and interpretation of spatial continuity for future resource estimation studies and provide useful information for planning a grade control system.
• Infill drilling should continue, both in inferred resource areas where confidence could move the mineral resources into the indicated category, and similarly in indicated resource areas where confidence could move the mineral resources into the measured category. By the time the project reaches the feasibility study phase, it is prudent to have the majority of the mineral resources in the payback period drilled to the level of measured confidence.

The vast majority of the proposed resource drilling is to expand mineral resources in the Cordero main area, where resources are currently estimated, and to increase the confidence of resource estimates from the inferred to indicated category, and from the indicated to measured category.

Geotechnical Studies for Pit Slopes and Sectors

The geotechnical data collected from the 2021 and 2022 site investigation programs is considered sufficient for a PFS-level pit slope design. However, there are uncertainties and data gaps relating to large-scale structural features, rock mass strength, rock defect strength, rock mass permeability and porewater pressure distribution. Additional geotechnical investigations and slope stability assessments are required should the project advance to the feasibility study and/or detailed engineering stages. The recommended future work includes the following and has an estimated budget of US\$0.5 million:

• A supplementary geotechnical drilling program in the proposed west wall area where the siltstone package is encountered for further bedding orientation and rock mass characterization.
• Additional laboratory rock strength testing to refine the intact rock and defect strength estimates of the siltstone unit.
• Further detailed slope stability analyses for refinement of pit slope designs.

Mine Engineering

The following mining-related studies and analyses should be completed as the project advances to the next study phase:

• The current assumption for grade control needs to be reviewed and sampling protocols need to be established.
• Additional information from further geotechnical drilling is required to develop a more detailed mass rock characterization and update pit slope criteria.
• Additional work needs to be completed to verify the cost benefit of using an Owner fleet. This includes detailed discussions with local contractors and vendors to determine whether a hybrid approach of early-stage contract mining and later-stage owner-operated mining is an economical option.

• Further study is required to better understand the nature of the waste rock and to classify it as potentially acid generating (PAG) or non-acid generating (NAG) or if particular lithologies are susceptible to metal leaching. The results may require a change to the waste rock management strategy.

• Optimization studies should be performed to refine the selected business case. This would likely include a cut-off optimization study to improve the blending strategy for the mill feed material and to determine the optimum size of the proposed marginal sulphides and oxides stockpiles.

• A detailed sensitivity analysis of pit optimization parameters is recommended to define the ultimate pit limits.
• The detailed mine design and schedule should be finalized with reference to more defined surface infrastructure/facilities for services, water management and other relevant components.

Tailings Storage Facility Studies

Recommendations for the next phase of project development related to the tailings storage facility are as follows:

• Field Programs:
• o Complete additional site investigation programs and laboratory testing to support the level of detail required for future studies.
• Additional Studies and Evaluations such as:
• o Complete detailed consolidation modelling and updated seepage and stability modelling for the for the TSF.
• o Advance the site-specific seismic hazard analysis (SHA) considering in-situ testing to estimate ground motion parameters representative of the geotechnical foundation conditions. In addition, complete a fault study, an updated probabilistic seismic hazard analysis, and a deterministic seismic hazard analysis to define a maximum credible earthquake (MCE) for the TSF.
• o Complete a dam breach and inundation assessment to evaluate the impacts of failure of the TSF on the receiving environment and to inform a dam classification.
• o Complete additional geochemistry testing and studies to confirm the metal leaching and acid generating potential of the materials that will be stored and/or used for construction.
• o Complete testing on embankment construction materials and tailings materials to confirm suitability for proposed management strategies, and confirm material parameters for design (dry density, consolidation characteristics, strength parameters, etc.).
• o Complete additional studies to understand the potential for water recovery from the TSF.

Water Management

It is recommended that the following be carried out to continue developing the site-wide water balance and supporting studies:

• Evaluate measures to reduce the reliance on external make-up water.
• Complete water quality modelling to support collection, possible treatment, and distribution planning of the contact water from the mine site area and non-contact water from the upstream natural catchments.
• Continue to collect and monitor site-specific climate data; consider collecting hydrological data at the project site and installing an additional climate station in the project area at a different location and aspect; consider installing at least one hydrometric station with an automatic data logger on the most consistently flowing stream in vicinity of the project area.
• Complete a detailed and comprehensive hydrometeorological study to adequately characterize the climatic and hydrological characteristics of the project area to support subsequent levels of design.
• Refine the logic in the overall site-wide water balance model to a feasibility level; optimize water and waste management.

Environmental Studies, Permitting, and Social and Community Impact

Current regulations in Mexico require that a preliminary closure program be included in the MIA and a definite program be developed and submitted to the authorities during mine operation (generally accepted as three years into the operation). These closure plans tend to be conceptual and typically lack much of the detail necessary to develop an accurate closure cost estimate.

New tailing dams are subject to the requirements of NOM-141-SEMARNAT-2003 (Standard that Establishes the Requirements for the Design, Construction and Operation of Mine Tailings Dams). Under this regulation, studies of hydrogeology, hydrology, geology and climate must be completed for sites considering new tailings impoundments. If tailings are classified as hazardous under NOMCRP-001-ECOL/93, the amount of seepage from the impoundment must be controlled if the facility has the potential to affect groundwater. Environmental monitoring of groundwater and tailings pond water quality and revegetation requirements is specified in the regulations. It is recommended that a solid Tailings Management Plan be developed to prepare the Cordero project for international standards to be satisfied.

Hydrogeology

The following work related to hydrogeology is recommended for the next project phase:

• Further investigation of the location and nature of geological structures (e.g., faults) and the potential compartmentalization of the groundwater system is recommended to support the quantitative estimate of the occurrence and nature of groundwater flow. More detailed investigation is recommended to better characterize the hydrogeological system, especially the hydraulic features of the faults and their hydraulic connectivity.
• It is recommended that pumping wells be drilled, installed, and tested to reliably estimate the hydraulic parameters of the bedrock formations and their sustainable well yield. Additional piezometers will be needed to support the pumping tests, and to improve the knowledge about the geological features including the faults in the pit area; multilevel piezometers are recommended to be installed to allow vertical hydraulic gradients and groundwater flow directions to be characterized.
• The existing RC22 wells are recommended to be sampled for at least one hydrologic year on a quarterly basis to characterize seasonal variations of groundwater quality. The groundwater sampling results are required to confirm the suitability of the pit dewatering pumping water for the mine water supply, as well as for environmental assessment and project permitting.
• New groundwater monitoring wells are recommended to be drilled and installed at the proposed waste rock and tailings storage facilities and along the potential mine contact water seepage flow pathways towards the receiving environment. Once the wells are completed and developed, slug tests should be done to estimate hydraulic conductivities. Water levels and groundwater samples should be collected on a quarterly base for at least one hydrologic year.
• A 3D numerical groundwater model is recommended to be developed based on an updated conceptual hydrogeological model. The calibrated numerical model can be used to validate the pit inflow estimated and simulate the performance of the pit dewatering well system. The model can also be used to conduct pit depressurization analysis (if necessary) and to predict potential impacts of the mine on the groundwater system.
• It is recommended that surface water monitoring be carried out to support the future groundwater model development.

For further information regarding the Cordero Project, see the PFS Report and the documents incorporated by reference in this Prospectus available at www.sedar.com under the Corporation's profile.

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.

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 TSX under the symbol "DSV", on the OTCQX under the symbol "DSVSF", and on the Frankfurt Stock Exchange under the symbol "1CU0". 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") in respect of the PFS Report: Tommaso Roberto Raponi, P. Eng. (Ausenco Engineering Canada Inc.); Yaming Chen, P.Geo. (Ausenco Sustainability Canada Inc.); Jonathan Cooper, P.Eng. (Ausenco Sustainability Canada Inc.); Scott Weston, P.Geo. (Ausenco Sustainability Canada Inc.); Gordon Zurowski, P. Eng. (AGP Mining Consultants Inc.); Manuel Jessen, P. Eng. (AGP Mining Consultants Inc.); Daniel Yang, P.Eng. (Knight Piésold Ltd.); Ken Embree, P.Eng. (Knight Piésold Ltd.); Richard Schwering, SME-REM (Hard Rock Consulting, LLC); and Jennifer J. (J.J.) Brown, SME-RM (Hard Rock Consulting, LLC). 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 PFS Report, and after the preparation of such report, 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 PFS 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, 1,972,100 stock options and 228,873 restricted share units of the Corporation.

AUDITORS

PricewaterhouseCoopers LLP, Chartered Professional Accountants, located at PwC Tower, Suite 2600, 18 York Street, Toronto, Ontario, M5J 0B2 are the independent auditors of the Corporation. PricewaterhouseCoopers LLP has advised that they are independent of the Corporation within the meaning of the Chartered Professional Accountants of Ontario CPA Code of Professional Conduct.

TRANSFER AGENT AND REGISTRAR

The Corporation's transfer agent and registrar for the Common Shares is TSX Trust Company at its principal offices in Vancouver.

EXEMPTIONS

Pursuant to a decision of the Autorité des marchés financiers dated February 14, 2023, the Corporation was granted a permanent exemption from the requirement to translate into French this Prospectus as well as the documents incorporated by reference therein and any Prospectus Supplement to be filed in relation to an "at-the-market distribution". This exemption is granted on the condition that this Prospectus and any Prospectus Supplement (other than in relation to an "at-the-market distribution") be translated into French if the Corporation offers Securities to Québec purchasers in connection with an offering other than in relation to an "at-the-market distribution".

STATUTORY AND CONTRACTUAL RIGHTS OF WITHDRAWAL AND RESCISSION

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 a prospectus and any amendment. However, purchasers of Securities distributed under an at-the-market distribution by the Corporation do not have the right to withdraw from an agreement to purchase the Securities and do not have remedies of rescission or, in some jurisdictions, revisions of the price, or damages for non-delivery of this Prospectus, any prospectus supplement(s), and any amendment relating to Securities purchased by such purchaser because this Prospectus, any prospectus supplement(s), and any amendment relating to the Securities purchased by such purchaser will not be sent or delivered, as permitted under Part 9 of NI 44-102.

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. Any remedies under securities legislation that a purchaser of Securities distributed under an at-the-market distribution by the Corporation may have against the Corporation or its agents for rescission or, in some jurisdictions, revisions of the price, or damages if this Prospectus, any prospectus supplement(s), and any amendment relating to securities purchased by a purchaser contain a misrepresentation will remain unaffected by the non-delivery of the prospectus referred to above. 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 (i.e., Warrants, Subscription Receipts, and Units) 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 exercise 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 130 of the Securities Act (Ontario), and is in addition to any other right or remedy available to original purchasers under Section 130 of the Securities Act (Ontario) 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.

In addition, to the extent that the Corporation files a Prospectus Supplement to qualify the underlying securities issuable upon conversion of any special warrants that the Corporation may in the future issue ("Special Warrants"), the Corporation will grant to each holder of a Special Warrant a contractual right of rescission of the prospectus-exempt transaction under which the Special Warrant was initially acquired. The contractual right of rescission will provide that if a holder of a Special Warrant who acquires securities on exercise of the Special Warrant as provided for in this Prospectus is, or becomes, entitled under the securities legislation of a jurisdiction to the remedy of rescission because of the Prospectus or an amendment to the Prospectus containing a misrepresentation, (a) the holder is entitled to rescission of both the holder's exercise of its Special Warrant and the private placement transaction under which the Special Warrant was initially acquired, (b) the holder is entitled in connection with the rescission to a full refund of all consideration paid to the agent or Corporation, as the case may be, on the acquisition of the Special Warrant, and (c) if the holder is a permitted assignee of the interest of the original Special Warrant subscriber, the holder is entitled to exercise the rights of rescission and refund as if the holder was the original subscriber.

ENFORCEMENT OF JUDGMENTS AGAINST FOREIGN PERSONS

Dan Vickerman and Moira Smith, directors of the Corporation, Richard Schwering, Jennifer Brown, and Manuel Jessen, three of the qualified persons responsible for the PFS 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.

CERTIFICATE OF THE CORPORATION

Dated: March 23, 2023

This short form prospectus, together with the documents incorporated in the prospectus by reference, constitutes full, true, and plain disclosure of all material facts relating to the securities offered by this prospectus as required by the securities legislation of each of the provinces and territories of Canada.

Tony Makuch Chief Executive Officer

"Tony Makuch" "Andreas L'Abbé"

Andreas L'Abbé Chief Financial Officer

On behalf of the Board of Directors

"Murray John" "Jeff Parr"

Murray John Director

Jeff Parr Director