GR SILVER MINING LTD. — Remuneration Information 2020

May 12, 2020

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FORM 51-102F6V STATEMENT OF EXECUTIVE COMPENSATION

(for the fiscal year ended December 31, 2019)

DIRECTOR AND EXECUTIVE COMPENSATION

GR Silver Mining Ltd. (the “ Company ”) is a “ venture issuer ” as defined under National Instrument 51-102 – Continuous Disclosure Obligations and is disclosing its director and executive compensation in accordance with Form 51-102F6V – Statement of Executive Compensation-Venture Issuers (“ Form 51-102F6V ”).

Definitions

In this statement of executive compensation (“ Disclosure Statement ”):

• “ Board ” means the board of directors of the Company.

• “ Chief Executive Officer ” or “ CEO ” means an individual who served as chief executive officer of the Company, or performed functions similar to a chief executive officer, for any part of the most recently completed financial year.

• “ Chief Financial Officer ” or “ CFO ” means an individual who served as chief financial officer of the Company, or performed functions similar to a chief financial officer, for any part of the most recently completed financial year.

• “ Exchange ” means the TSX Venture Exchange.

• “ Named Executive Officer ” or “ NEO ” means each of the following individuals:

• (i) a CEO;

• (ii) a CFO;

• (iii) in respect of the Company and its subsidiaries, the most highly compensated executive officer other than the CEO and CFO at the end of the most recently completed financial year whose total compensation was more than $150,000, as determined in accordance with subsection 1.3(5) of Form 51-102F6V for that financial year; and

• (iv) each individual who would be an NEO under paragraph (iii) but for the fact that the individual was neither an executive officer of the Company, nor acting in a similar capacity, at the end of that financial year.

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Director and Named Executive Officer Compensation, Excluding Compensation Securities

The following table sets out a summary of compensation (excluding compensation securities) paid, awarded to or earned by the Named Executive Officers and any non-NEO directors of the Company for the periods noted therein:

		Table of compensation excluding compensation securities
Name and position	Year Ended Dec 31	Salary, consulting fee, retainer or commission ($)	Bonus ($)	Committee or meeting fees ($)	Value of perquisites ($)	Value of all other compensation ($)	Total compensation ($)
Marcio Fonseca CEO, President & Director	2019 2018(1)	84,000(2) 84,000(2)	Nil Nil	Nil Nil	Nil Nil	Nil Nil	84,000 84,000
Blaine Bailey CFO	2019 2018(1)	54,000(3) 54,000(3)	Nil Nil	Nil Nil	Nil Nil	Nil Nil	54,000 54,000
Trevor Woolfe VP Corporate Development and Exploration	2019 2018(1)	164,450(4) 80,200(4)	Nil Nil	Nil Nil	Nil Nil	Nil Nil	164,450 80,200
Heye Daun Director	2019 2018(1)	Nil Nil	Nil Nil	Nil Nil	Nil Nil	Nil Nil	Nil Nil
Gino DeMichele Director	2019 2018(1)	Nil 13,500(5)	Nil Nil	Nil Nil	Nil Nil	Nil Nil	Nil 13,500
Alan Friedman Director	2019 2018(1)	Nil Nil	Nil Nil	Nil Nil	Nil Nil	Nil Nil	Nil Nil
Michael Thomson Director	2019 2018(1)	6,000 9,000	Nil Nil	Nil Nil	Nil Nil	Nil Nil	6,000 9,000
Darren Bahrey Former Director(6)	2019 2018(1)	Nil Nil	Nil Nil	Nil Nil	Nil Nil	Nil Nil	Nil Nil

Notes:

(1) On March 1, 2018, Goldplay Exploration Ltd., a private company, amalgamated with a reporting issuer, Soleil Capital Corp., to form the Company. Sums noted in this table for the period prior to March 1, 2018 were paid by the Company’s predecessor, Goldplay Exploration Ltd. (2) Paid to Margeo Consulting Inc., a private company wholly owned by Marcio Fonseca.

(3) Paid to Promaid Services Ltd., a private company wholly owned by Blaine Bailey.

(4) Paid to Shordean Pty Ltd., a private company wholly owned by Trevor Woolfe

(5) Paid to A2 Capital Management Inc., a private company wholly owned by Gino DeMichele.

(6) Subsequent to the 2019 fiscal year end, Mr. Bahrey resigned as a director of the Company on April 16, 2020.

Stock Options and Other Compensation Securities

The following table discloses all compensation securities granted or issued to NEOs or non-NEO directors during the financial year ended December 31, 2019, for services provided or to be provided, directly or indirectly, to the Company or any of its subsidiaries .

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Compensation Securities

Compensation Securities	Compensation Securities	Compensation Securities	Compensation Securities	Compensation Securities	Compensation Securities	Compensation Securities	Compensation Securities	Compensation Securities	Compensation Securities
	Name and position	Type of compensation security	Number of compensation securities, number of underlying securities, and percentage of class(1)		Date of issue or grant	Issue, conversion or exercise price ($)	Closing price of security or underlying security on date of grant ($)	Closing price of security or underlying security at year end ($)	Expiry date
	Marcio Fonseca CEO, President & Director	Stock Options		100,000 300,000 400,000(2) (6.5%)	Aug 8, 2019 Nov 27, 2019	0.21 0.185	0.21 0.185	0.21	Aug 8, 2024 Nov 27, 2024
	Blaine Bailey CFO	Stock Options		35,000 150,000 185,000(3) (3.0%)	Aug 8, 2019 Nov 27, 2019	0.21 0.185	0.21 0.185	0.21	Aug 8, 2024 Nov 27, 2024
	Trevor Woolfe VP Corporate Development and Exploration	Stock Options		35,000 150,000 185,000(4) (3.0%)	Aug 8, 2019 Nov 27, 2019	0.21 0.185	0.21 0.185	0.21	Aug 8, 2024 Nov 27, 2024
	Heye Daun Director	Stock Options		50,000(5) (0.8%)	Nov 27, 2019	0.185	0.185	0.21	Nov 27, 2024
	Gino DeMichele Director	Stock Options		200,000(6) (3.2%)	Nov 27, 2019	0.185	0.185	0.21	Nov 27, 2024
	Alan Friedman Director	Stock Options		50,000(7) (0.8%)	Nov 27, 2019	0.185	0.185	0.21	Nov 27, 2024
	Michael Thomson Director	Stock Options		50,000(8) (0.8%)	Nov 27, 2019	0.185	0.185	0.21	Nov 27, 2024
	Darren Bahrey Former Director(9)	Stock Options		50,000(9) (0.8%)	Nov 27, 2019	0.185	0.185	0.21	Nov 27, 2024

Notes:

• (1) There were a total of 6,172,178 outstanding options as at December 31, 2019.

• (2) As at December 31, 2019, Mr. Fonseca held outstanding options exercisable for a total of 1,667,514 common shares of the Company, all of which options are granted to Margeo Consulting Inc., a private company wholly owned by Marcio Fonseca: 617,514 options are exercisable at a price of $0.30/share and expire March 1, 2023, 300,000 options are exercisable at a price of $0.31/share and expire May 7, 2023, 350,000 options are exercisable at a price of $0.22/share and expire December 19, 2023; 100,000 options are exercisable at a price of $0.21/share and expire August 8, 2024; and 300,000 options are exercisable at a price of $0.185/share and expire November 27, 2024.

• (3) As at December 31, 2019, Mr. Bailey held outstanding options exercisable for a total of 673,945 common shares of the Company: 138,945 options are exercisable at a price of $0.30/share and expire March 1, 2023, 150,000 options are exercisable at a price of $0.31/share and expire May 7, 2023, 200,000 options are exercisable at a price of $0.22/share and expire December 19, 2023; 35,000 options are exercisable at a price of $0.21/share and expire August 8, 2024; and 150,000 options are exercisable at a price of $0.185/share and expire November 27, 2024.

• (4) As at December 31, 2019, Mr. Woolfe held outstanding options exercisable for a total of 335,000 common shares of the Company: 150,000 options are exercisable at a price of $0.22/share and expire December 19, 2023; 35,000 options are exercisable at a price of $0.21/share and expire August 8, 2024; and 150,000 options are exercisable at a price of $0.185/share and expire November 27, 2024.

• (5) As at December 31, 2019, Mr. Daun held outstanding compensation securities exercisable for a total of 476,701 common shares of the Company: 169,822 options are exercisable at a price of $0.30/share and expire March 1, 2023; and 40,000 options are exercisable at a price of $0.22/share and expire December 19, 2023; and 50,000 options are exercisable at a price of $0.185/share and expire November 27, 2024. In addition, as at December 31, 2019, Mr. Daun held 216,879 compensation warrants exercisable at a price of $0.18/share and having an expiry date of March 1, 2020.

• (6) As at December 31, 2019, Mr. DeMichele held outstanding compensation securities exercisable for a total of 1,278,445 common shares of the Company: 200,698 options are exercisable at a price of $0.30/share and expire March 1, 2023; 200,000 options are exercisable at a price of $0.22/share and expire December 19, 2023; and 200,000 options are exercisable at a price of $0.185/share and expire November 27, 2024. In addition, as at December 31, 2019, through his private company, A2 Capital Management Inc., Mr. DeMichele held 677,747 compensation warrants exercisable at a price of $0.22/share that expire March 15, 2022, subject to acceleration (406,649 of these warrants are subject to escrow with 101,662 warrants being released from escrow on each of September 1, 2019, March 1, 2020 and September 1, 2020 and 101,663 warrants being released from escrow on March 1, 2021).

• (7) As at December 31, 2019, Mr. Friedman held outstanding compensation securities exercisable for a total of 476,701 common shares of the Company: 40,000 options are exercisable at a price of $0.22/share and expire December 19, 2023; and 50,000 options are exercisable at a price of $0.185/share and expire November 27, 2024. In addition, as at December 31, 2019, through his private company, Grayston Capital Investments Inc., Mr. Friedman held 216,879 compensation warrants exercisable at a price of $0.22/share and having an expiry date of March 1, 2020.

• (8) As at December 31, 2019, Mr. Thomson held outstanding options exercisable for a total of 472,000 common shares of the Company: 182,000 options are exercisable at a price of $0.20/share and expire January 26, 2027; 200,000 options are exercisable at a price of $0.30/share and expire March 1, 2023; 40,000 options are exercisable at a price of $0.22/share and expire December 19, 2023; and 50,000 options are exercisable at a price of $0.185/share and expire November 27, 2024.

• (9) As at December 31, 2019, Mr. Bahrey held outstanding options exercisable for a total of 90,000 common shares of the Company: 40,000 options are exercisable at a price of $0.22/share and expire December 19, 2023; and 50,000 options are exercisable at a price of $0.185/share and expire November 27, 2024. Subsequent to the 2019 fiscal year end, Mr. Bahrey resigned as a director of the Company on April 16, 2020. Consequently, all unexercised options held by Mr. Bahrey on July 15, 2020 will automatically terminate pursuant to the terms of the Stock Option Plan (defined below).

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No compensation securities were exercised by an NEO or non-NEO director during the financial year ended December 31, 2019.

Stock Option Plans and Other Incentive Plans

The Company’s current stock option plan dated March 1, 2018 (the “ Stock Option Plan ”) was the Company’s only equity compensation plan as of December 31, 2019. The Stock Option Plan was most recently approved by the Company’s shareholders at its last annual general meeting on August 20, 2019. In accordance with Exchange policies, as the Stock Option Plan is a “rolling” stock option plan, it must receive approval of the Company’s shareholders yearly at the Company’s annual general meeting.

The following is a summary of the substantive terms of the Stock Option Plan:

• The Stock Option Plan is a “ rolling ” 10% stock option plan. It is administered by the Board who has the full authority and sole discretion to grant options under the Stock Option Plan to any eligible recipient, including themselves. Eligible recipients include: directors, officers, employees and consultants of, or employees of management companies providing services to, the Company or its subsidiaries.

• The aggregate number of optioned common shares that may be issued upon the exercise of stock options granted under the Stock Option Plan may not exceed 10% of the number of issued and outstanding common shares of the Company at the time of granting of options.

• No more than 5% of the common shares of the Company outstanding at the time of grant may be reserved for issuance to any one person (including a company wholly-owned by that person) in any 12 month period, unless the Company has received disinterested shareholder approval to exceed such limit.

• Where required by applicable exchange policies, no more than 2% of the Company’s common outstanding at the time of grant may be reserved for issuance to any one consultant of the Company in any 12 month period.

• No more than an aggregate of 2% of the Company’s common shares outstanding at the time of grant may be reserved for issuance to any person conducting investor relations activities (as such term is defined under applicable exchange policies) in any 12 month period.

• Vesting of options is at the discretion of the Board, however, options may not be granted with vesting provisions if vesting is prohibited under applicable exchange policies.

• If required by applicable exchange policies, options granted to persons performing investor relations activities will vest over a minimum of 12 months with no more than ¼ of such options vesting in any 3 month period.

• The number of common shares of the Company that may be reserved for issuance to Insiders (as such term is defined under applicable exchange policies), as a group (i) at the time of grant; or (ii) within a one year period, may not exceed 10% of the outstanding common shares of the Company calculated at the time of the grant, unless disinterested shareholder approval has been obtained.

• The exercise price of a stock option shall be fixed by the Board; however, the minimum exercise price of a stock option cannot be less than the minimum price permitted under applicable exchange policies at the date of grant.

• Options may have a maximum exercise period of ten (10) years.

• Options are non-assignable and non-transferable.

• Options will expire immediately upon the optionee ceasing to provide services to the Company or its subsidiaries and the optionee may not exercise any options after such optionee ceases to provide services to the Company or its subsidiaries except that:

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• in the case of death of an optionee, any vested options held by the deceased at the date of death will become exercisable by the optionee’s estate until the earlier of one year after the date of death and the date of expiration of the term otherwise applicable to such option;

• in the case of an optionee dismissed from employment/service for cause, such options, whether vested or not, will immediately terminate without right to exercise same; and

• subject to the above two paragraphs, any vested option held by an optionee at the date the optionee ceases to provide services to the Company or its subsidiaries may be exercised by such optionee until the earlier of (i) the date that is 90 days after the date such optionee ceases to provide services; and (ii) the expiry date otherwise applicable to such options.

External Management Companies

During the year ended December 31, 2019, no management functions of the Company were to any substantial degree performed by a person other than the directors or executive officers of the Company.

Employment, Consulting and Management Agreements

The Company has entered into agreements or arrangements under which it pays it NEOs, directors and other executive officers as follows:

Named Executive Officers & Other Executive Officers

1. Marcio Fonseca –CEO & President and a director

Mr. Fonseca was appointed the CEO and President of the Company’s predecessor, Goldplay Exploration Ltd. (“ Goldplay EL ”), on January 1, 2017. Goldplay EL and Soleil Capital Corp. amalgamated on March 1, 2018, forming the Company, at which time Mr. Fonseca was appointed CEO and President of the Company.

By agreement dated October 18, 2017, made effective October 1, 2017, Goldplay EL entered into a CEO Consulting Agreement (the “ MCI Agreement ”) with Margeo Consulting Inc., a private British Columbia company owned and controlled by Marcio Fonseca (“ MCI ”), pursuant to which MCI will provide to Goldplay EL the President and CEO services of Marcio Fonseca. The Company replaced Goldplay EL as a party to the MCI Agreement upon the amalgamation of Goldplay EL and Soleil Capital Corp. on March 1, 2018.

The term of the MCI Agreement is for one year, with automatic renewals of consecutive one year terms, subject to earlier termination as set out therein. Pursuant to the MCI Agreement, MCI is paid a consulting fee at the base rate of $84,000 per annum (+ GST). Effective January 1, 2020, the Board approved an increase in the base rate to $120,000 per annum (+ GST). MCI is entitled to participate in the Company’s stock option plan on such terms as would be commensurate with Mr. Fonseca’s position with the Company. MCI is also entitled to an annual bonus at the sole discretion of the Company’s Board. The consulting fee, including future option grants, will be reviewed by the Company’s Board on an annual basis in December of each year during the term of the contract. The MCI Agreement also requires that the Company provide MCI with a computer/laptop and that the Company provide and pay for liability insurance, including officer liability insurance, to cover potential liability to MCI and Mr. Fonseca in providing services to the Company.

MCI may terminate the MCI Agreement at any time by providing 3 months’ prior written notice, unless the Company is in material default of the MCI Agreement, in which event MCI may terminate the MCI Agreement immediately where such default has not been cured within 15 days of the Company’s receipt of written notice of default.

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The Company may terminate the MCI Agreement:

• (i) immediately upon written notice to MCI, where MCI is in material breach, in which case no compensation will be paid to MCI beyond the date of termination; or

• (ii) for any other reason other than those set out in (i) and (iii), immediately upon written notice to MCI, in which case the Company shall pay to MCI an amount equal to two times (2x) both the then applicable base rate consulting fee and any bonus paid or payable to MCI in respect of the most recently completed financial year. Notwithstanding the foregoing, if payment of the foregoing termination payments would result in the Company not having a minimum cash position sufficient to maintain its activities for 12 months after such termination, then the obligation of the Company to make such termination payments will be void resulting in no termination payments being due to MCI on termination; or

• (iii) in the event of a change of control and subsequent termination by MCI within 3 months thereafter or by the Company within 6 months thereafter, the Company shall pay to MCI a lump sum amount equal to two times (2x) both the then applicable base rate consulting fee and any bonus paid or payable to MCI in respect of the most recently completed financial year. Notwithstanding the foregoing, if payment of the foregoing termination payments would result in the Company not having a minimum cash position sufficient to maintain its activities for 12 months after such termination, then the obligation of the Company to make such termination payments will be void resulting in no termination payments being due to MCI on termination.

• Blaine Bailey - CFO

Mr. Bailey was appointed the CFO of the Company’s predecessor, Goldplay EL, on November 8, 2012. Goldplay EL and Soleil Capital Corp. amalgamated on March 1, 2018, forming the Company, at which time Mr. Bailey was appointed CFO of the Company.

By agreement dated October 18, 2017, made effective October 1, 2017, Goldplay EL entered into a CFO Consulting Agreement (the “ PSL Agreement ”) with Promaid Services Ltd., a private British Columbia company owned and controlled by Blaine Bailey (“ PSL ”), pursuant to which PSL will provide to Goldplay EL the CFO services of Blaine Bailey. The Company replaced Goldplay EL as a party to the PSL Agreement upon the amalgamation of Goldplay EL and Soleil Capital Corp. on March 1, 2018.

The term of the PSL Agreement is for one year, with automatic renewals of consecutive one year terms, subject to earlier termination as set out therein. Pursuant to the PSL Agreement, PSL is paid a consulting fee at the base rate of $54,000 per annum (+ GST), payable in monthly instalments of $4,500 (+ GST). PSL is entitled to participate in the Company’s stock option plan from time to time on such terms as would be commensurate with Mr. Bailey’s position with the Company at the sole discretion of the Company’s Board. PSL is also entitled to an annual bonus at the sole discretion of the Company’s Board. The consulting fee, including future option grants, will be reviewed by the Company’s Board on an annual basis in December of each year during the term of the contract. The PSL Agreement also requires that the Company provide PSL with a computer/laptop and that the Company provide and pay for liability insurance, including officer liability insurance, to cover potential liability to PSL and Mr. Bailey in providing services to the Company.

PSL may terminate the PSL Agreement at any time by providing one month’s prior written notice, unless the Company is in material default of the PSL Agreement, in which event PSL may terminate the PSL Agreement immediately where such default has not been cured within 15 days of the Company’s receipt of written notice of default.

The Company may terminate the PSL Agreement:

• (i) immediately upon written notice to PSL, where PSL is in material breach, in which case no compensation will be paid to PSL beyond the date of termination; or

• (ii) for any other reason other than those set out in (i) or (iii), immediately upon written notice to PSL, in which case the Company shall pay to PSL an amount equal to (i) three months’ pay and (ii) any

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bonus paid or payable to PSL in respect of the most recently completed financial year. Notwithstanding the foregoing, if payment of the foregoing termination payments would result in the Company not having a minimum cash position sufficient to maintain its activities for 12 months after such termination, then the obligation of the Company to make such termination payments will be void resulting in no termination payments being due to PSL on termination; or

• (iii) in the event of a change of control and subsequent termination by PSL within 3 months thereafter or by the Company within 6 months thereafter, the Company shall pay to PSL a lump sum amount equal to two times (2x) both the then applicable base rate consulting fee and any bonus paid or payable to PSL in respect of the most recently completed financial year. Notwithstanding the foregoing, if payment of the foregoing termination payments would result in the Company not having a minimum cash position sufficient to maintain its activities for 12 months after such termination, then the obligation of the Company to make such termination payments will be void resulting in no termination payments being due to PSL on termination.

• Trevor Woolfe – VP Corporate Development and Exploration

Mr. Woolfe was appointed as the Company’s Vice-President of Corporate Development and Exploration on July 31, 2018. By agreement dated August 1, 2018, the Company entered into a Consulting Agreement (the “ SPL Agreement ”) with Shordean Pty Ltd., a private Australian company owned and controlled by Trevor Woolfe (“ SPL ”), pursuant to which SPL provides to the Company the Vice-President of Corporate Development and Exploration services of Trevor Woolfe.

The term of the SPL Agreement is for six months, with automatic renewals of consecutive six month terms, subject to earlier termination as set out therein. Pursuant to the SPL Agreement, SPL is paid a consulting fee at the base rate of CAD$800 per day of work at Mr. Woolfe’s Sydney office or the Company’s Vancouver office or during marketing trips and CAD$1,000 per day of work out of office including travel days in activities directly related to field work at the Company’s operations, payable monthly. SPL is entitled to participate in the Company’s stock option plan from time to time on such terms as would be commensurate with Mr. Woolfe’s position with the Company at the sole discretion of the Company’s Board. SPL is also entitled to an annual bonus at the sole discretion of the Company’s Board. The consulting fee, including future option grants, will be reviewed by the Company’s Board on an annual basis in December of each year during the term of the contract. The SPL Agreement also requires that the Company provide SPL with a computer/laptop and that the Company provide and pay for liability insurance, including officer liability insurance, to cover potential liability to SPL and Mr. Woolfe in providing services to the Company.

SPL may terminate the SPL Agreement at any time by providing one month’s prior written notice, unless the Company is in material default of the SPL Agreement, in which event SPL may terminate the SPL Agreement immediately where such default has not been cured within 15 days of the Company’s receipt of written notice of default.

The Company may terminate the SPL Agreement:

• (i) immediately upon written notice to SPL, where SPL is in material breach, in which case no compensation will be paid to SPL beyond the date of termination; or

• (ii) upon mutual agreements of the parties.

• NEOs and other executive officers are entitled to participate in the Stock Option Plan.

Non-NEO Directors

1. During the fiscal year ended December 31, 2019, Mr. Michael Thomson was paid $6,000 for acting as the Chairman of the Audit Committee. These payments have been terminated.

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1. Except as set out above, non-NEO directors of the Company do not currently receive compensation for acting as a director of the Company. It is anticipated that any directors’ fees that may be payable will be made on an ad hoc basis by the Board.

2. Directors are entitled to be reimbursed for reasonable expenditures incurred in performing their duties as directors.

3. Directors are entitled to participate in the Stock Option Plan.

Oversight and Description of Director and NEO Compensation

Compensation Committee

The Board has appointed a Compensation Committee which in fiscal 2019 was comprised of Gino DeMichele, Alan Friedman and Darren Bahrey. Mr. Bahrey resigned as a director on April 16, 2020, and subsequently the Company’s new director, Eric Zaunscherb, was appointed to fill the vacancy on the Compensation Committee. The members of the Compensation Committee are experienced in the oversight of executive and operational management teams as a result of their experience with various private and public sector businesses. The members of the Compensation Committee review compensation policies of similar companies when making determinations about director and executive compensation. Final decisions concerning employment, consulting or other compensation arrangements between the Company and the directors or executive officers of the Company (or between any subsidiary of the Company and any director or executive officer) are considered and approved by the Compensation Committee and then put forward to the independent directors of the Board for final approval.

The Compensation Committee considers implications of the risks associated with the Company’s compensation practices and policies as part of its oversight and stewardship of its affairs, and also considers previous grants of incentive stock options when making new grants.

Director Compensation

The Company has no standard arrangements pursuant to which directors are compensated by the Company for their services in their capacity as directors, except for the granting from time to time of incentive stock options in accordance with the Stock Option Plan and the policies of the Exchange and ad hoc awards of director fees from time to time. Currently, no formalized fees structure has been implemented with respect to the payment of fees directors for serving as directors of the Company. Should the Company’s financial circumstances change in fiscal 2020, the Compensation Committee will consider and determine compensation payable to the non-NEO directors of the Company, taking into consideration general industry standards for companies similar to the Company and the time and efforts provided to the Company by each non-NEO director, and will make its recommendation to the Board for approval of its director compensation proposals.

The Board believes that the granting of incentive stock options provides a reward to directors for achieving results that improve Company performance and thereby increase shareholder value, where such improvement is reflected in an increase in the Company’s share price. In making a determination as to whether a grant of long-term incentive stock options is appropriate and if so, the number of options that should be granted, the Compensation Committee considers: the number and terms of outstanding incentive stock options held by each director; the aggregate value in securities of the Company that the Board intends to award as compensation; the potential dilution to shareholders; general industry standards and the limits imposed by the terms of the Stock Option Plan and Exchange policies. The granting of incentive stock options allows the Company to reward directors for their efforts to increase value for shareholders without requiring the Company to use cash from its treasury. The terms and conditions of the Company’s stock option grants, including vesting provisions and exercise prices, are governed by the terms of the Stock Option Plan, which are described under “ Description of Stock Option Plan ” below.

The directors may be reimbursed for actual expenses reasonably incurred in connection with the performance of their duties as directors.

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Named Executive Officer Compensation

The Company is a junior resource company focused on its principal silver and gold properties located in Mexico. The Company has, as of yet, no significant revenues from operations and from time to time operates with limited financial resources to ensure that funds are available to complete scheduled work programs on its properties. As a result, the Compensation Committee and the Board have to consider not only the financial situation of the Company at the time of the determination of executive compensation, but also the estimated financial situation of the Company in the mid and long term.

Compensation paid to NEOs during the fiscal year ended December 31, 2019 is noted in the table above. The Company has contractual agreements/arrangements with its CEO, CFO and Vice-President of Corporate Development & Exploration, which are described above under “ Employment, Consulting and Management Agreements ”. It is anticipated that the compensation due and payable under these agreements/arrangements will remain an obligation of the Company during the next fiscal year.

As the Company advances its exploration properties and grows its business, the general objectives of the Company’s compensation strategy will be to (a) compensate management in a manner that encourages and rewards a high level of performance and outstanding results with a view to increasing long-term shareholder value; (b) align management’s interests with the pursuit of the Company’s goals and growth strategies and the long-term interests of shareholders; (c) provide a compensation package that enables the Company to attract and retain talent; and (d) ensure that the total compensation package is designed in a manner that takes into account the financial constraints that the Company is under.

In considering the compensation of its NEOs, the Compensation Committee considers how it can best balance the interests of the Company and provide competitive compensation to attract and retain officers who will contribute to the success of the Company, while mindful of the financial constraints of the Company. The Compensation Committee takes into account the types of compensation and the amounts paid to directors and officers of comparable publicly traded Canadian companies. The Compensation Committee will make recommendations to the Board for its final approval of all consulting or other compensation arrangements between the Company and its NEOs.

An important element of executive compensation is that of stock options, which do not require cash disbursements by the Company. The Board believes that the granting of incentive stock options provides a reward to NEOs for achieving results that improve Company performance and thereby increase shareholder value, where such improvement is reflected in an increase in the Company’s share price. In making a determination as to whether a grant of long-term incentive stock options is appropriate and if so, the number of options that should be granted, the Compensation Committee considers: the number and terms of outstanding incentive stock options held by each NEO; the aggregate value in securities of the Company that the Board intends to award as compensation; the potential dilution to shareholders; general industry standards and the limits imposed by the terms of the Stock Option Plan and Exchange policies. The granting of incentive stock options allows the Company to reward NEOs for their efforts to increase value for shareholders without requiring the Company to use cash from its treasury. The terms and conditions of the Company’s stock option grants, including vesting provisions and exercise prices, are governed by the terms of the Stock Option Plan, which are described under “ Description of Stock Option Plan ” below.

Other than as described above, there are no other perquisites provided to the NEOs. The Company does not use specific benchmark groups in determining compensation or any element of compensation.

PENSION DISCLOSURE

No pension is provided to a director or Named Executive Officer of the Company.

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