Falcon Gold Corp. — Capital/Financing Update 2021

Jul 8, 2021

FORM 51-102F3 MATERIAL CHANGE REPORT

1. Name and Address of Company:

Cathedral Energy Services Ltd. (the "Company" or "Cathedral") 6030 - 3 Street S.E. Calgary, AB T2H 1K2

2. Date of Material Change:

June 24, 2021

3. News Release:

A news release was issued and disseminated through the facilities of Canada NewsWire and filed on SEDAR on June 24, 2021.

4. Summary of Material Change:

The Company announced that it had entered into certain amendments to its credit facility with ATB Financial (the "Amended Credit Facility") and the facility was extended to June 30, 2023. The Company has also secured a further $1 million through the Highly Affected Sectors Credit Availability Program ("HASCAP") that sees Business Development Bank of Canada ("BDC") guarantee a fixed interest rate loan made available to the Company by ATB (the "HASCAP Loan").

5. Full Description of Material Change:

5.1 Full Description of Material Change

The Company announced that it had entered into the Amended Credit Facility and had also secured a further $1 million through the HASCAP that sees BDC guarantee a fixed interest rate HASCAP Loan made available to the Company by ATB.

Under the Amended Credit Facility, the Company now has access to the full $12 million revolving credit line and the limit on aggregate capital expenditures for the fiscal year ending December 31, 2021 has been increased from $2 million to $6 million. The Consolidated Funded Debt to Tangible Net Worth Ratio will no longer be tested after 2021 Q2. The Consolidated EBITDA for the next 3 quarters will be calculated as follows: (i) 2021 Q3: (2021 Q3 Consolidated EBITDA) X 4; (ii) 2021 Q4: (2021 Q3 Consolidated EBITDA + 2021 Q4 Consolidated EBITDA) X 2; (iii) 2022 Q1: (2021 Q3 Consolidated EBITDA + 2021 Q4 Consolidated EBITDA + 2022 Q1 Consolidated EBITDA) X 4/3; (iv) thereafter Consolidated EBITDA will be calculated using the most recent previous 4 quarters of EBITDA.

Other terms of the Amended Credit Facility include: (i) Consolidated Funded Debt to Consolidated EBITDA will not exceed 3.00:1.00 and will be tested starting 2021 Q3; (ii) Consolidated Interest to Consolidated EBITDA will net exceed 2.50:1.00 and will be tested starting 2021 Q3; (iii) The Company has a one-time option to exist the Consolidated EBITDA Annualization Period; and (iv) interest accrues at ATB's prime rate plus 1.75% to 3.25% or bankers' acceptance rate plus 3.00% to 4.25% with interest payable monthly (during the Consolidated EBITDA Annualization Period interest will accrue at the maximum of these ranges).

The HASCAP Loan details are: (i) the HASCAP Loan is a non-revolving demand loan that is fully drawn; (ii) the HASCAP Loan has an interest rate of 4% and is amortized over a ten-year period; (iii) repayment terms are interest only in year 1 and principal plus interest in years 2-10, payable on a monthly basis; and (iv) the HASCAP Loan is secured by a general security interest over all present and after acquired personal property of the Company granted in favour of ATB.

A copy of the fifth amending agreement in respect of the Amended Credit Facility will be available on SEDAR under Cathedral's profile at www.sedar.com.

5.2 Disclosure of Restructuring Transaction

Not applicable.

6. Reliance on Subsection 7.1(2) of National Instrument 51-102:

Not applicable.

7. Omitted Information:

Not applicable.

8. Executive Officer:

The name and business telephone number of the executive officer of the Company who is knowledgeable about the material change and this report is:

Ian Graham Chief Financial Officer (403) 265-2560

9. Date of Report:

July 8, 2021.