Santacruz Silver Mining Ltd. — Capital/Financing Update 2020

Oct 26, 2020

FORM 51-102F3 MATERIAL CHANGE REPORT

ITEM 1. NAME AND ADDRESS OF ISSUER

Santacruz Silver Mining Ltd. (the " Company ") 880 – 580 Hornby Street Vancouver, BC V6C 3B6 Telephone: 604-569-1609 / Fax: 604-684-0642

ITEM 2. DATE OF MATERIAL CHANGE

October 15, 2020

ITEM 3. NEWS RELEASE

Issued on October 16, 2020 and disseminated through the facilities of Newsfile.

ITEM 4. SUMMARY OF MATERIAL CHANGE

The Company closed its non-brokered private placement issuing an aggregate of 10,748,922 units for gross proceeds of approximately $10 million.

ITEM 5.1 FULL DESCRIPTION OF MATERIAL CHANGE

The Company announced that it closed the second and final tranche of its non-brokered private placement offering previously announced on September 21st, September 30th and October 7th 2020 (the " Private Placement ") of units of the Company (each, a " Unit ") with a lead order from Palisades Goldcorp Ltd. Pursuant to the Private Placement, the Company issued an aggregate of 45,427,463 Units at a price of $0.22 per Unit for gross proceeds of approximately $10 million.

Each Unit consisted of one common share of the Company and one non-transferable common share purchase warrant (a " Warrant "). Each Warrant entitles the holder to acquire one common share of the Company at a price of C$0.30 per share for a period of 36 months following the issue of the Warrant. The net proceeds from the Private Placement are expected to be used by the Company to purchase underground equipment for its Zimapan property and for general working capital and corporate purposes.

In consideration for their services in connection with the first and/or second tranche of the Private Placement, the Company paid certain finders cash finders' fees totaling $499,708.75, issued 2,544,130 broker warrants having the same terms as the Warrants and issued 204,000 finder units having the same terms as the Units.

The securities issued under the Private Placement are subject to a four month hold period in addition to such other restrictions as may apply under applicable securities laws of jurisdictions outside of Canada.

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Arturo Prestamo Elizondo, a director and officer of the Company purchased 2,272,727 Units under the second tranche of the Private Placement. The second tranche of the Private Placement constituted a "related party transaction" within the meaning of Multilateral Instrument 61-101 – Protection of Minority Security Holders in Special Transactions (“ MI 61-101 ”) to the extent that the above-noted insider of the Company (the " Interested Party ") subscribed for securities of the Company for an aggregate subscription price of $499,999.94. The directors of the Company unanimously approved the Private Placement (with Mr. Prestamo Elizonzo abstaining with respect to his own subscription) and determined that the transaction is exempt from the formal valuation and minority shareholder approval requirements of MI 61101 in reliance on the exemptions set forth in sections 5.5(a) and 5.7(1)(a) of MI 61101 on the basis that, at the time the transaction was agreed to, neither the fair market value of the securities to be distributed in the Private Placement nor the consideration to be received for those securities, in so far as the Private Placement involves the Interested Parties, exceeds 25% of the Company's market capitalization.

The Private Placement did not result in a material change to the percentage holdings in the Company of the Interested Party.

The Company did not file a material change report at least 21 days before the closing of the second tranche of the Private Placement, as the details of the participation by the related party of the Company were not settled until shortly prior to the closing and the Company wished to close the transaction as soon as practicable for sound business reasons.

Neither the Company nor any director or senior officer of the Company is aware, after reasonable inquiry, of any prior valuation in respect of the Company that relates to the subject matter of or is otherwise relevant to the Private Placement and that has been made in the 24 months before the date of this material change report.

The Company entered into standard form private placement subscription agreements with, and issued Warrant certificates to, the Interested Party on the same terms as the arm's length subscribers to the Private Placement.

The Private Placement has been conditionally approved by the TSX Venture Exchange but remains subject to the final approval of such stock exchange.

This material change report shall not constitute an offer to sell or solicitation of an offer to buy the securities in any jurisdiction. The securities will not be and have not been registered under the United States Securities Act of 1933 and may not be offered or sold in the United States absent registration or applicable exemption from the registration requirements.

ITEM 5.2 DISCLOSURE FOR RESTRUCTURING TRANSACTIONS

Not applicable.

ITEM 6. RELIANCE ON SUBSECTION 7.1(2) OF NATIONAL INSTRUMENT 51-102

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		Not Applicable.
ITEM	7.	OMITTED INFORMATION
		There are no significant facts required to be disclosed herein which have been
		omitted.
ITEM	8.	EXECUTIVE OFFICER
		Contact: Arturo Prestamo Elizondo
		President, Executive Chairman and Interim CFO
		Telephone: (604) 569-1609
ITEM	9.	DATE OF REPORT
		October 19, 2020

Cautionary Note Regarding Forward Looking Statements

Certain statements contained in this material change report constitute "forward-looking information" as such term is used in applicable Canadian securities laws, including statements relating to the TSXV's final approval of the Private Placement, the acquisition of underground equipment for the Zimapan property by the Company. Forward-looking information is based on plans, expectations and estimates of management at the date the information is provided and is subject to certain factors and assumptions. In making the forward-looking statements included in this material change report, the Company has applied several material assumptions, including that the Company's financial condition and development plans do not change as a result of unforeseen events, that the Company will receive all required regulatory approvals and that future metal prices and the demand and market outlook for metals will remain stable or improve. Forward-looking information is subject to a variety of risks and uncertainties and other factors that could cause plans, estimates and actual results to vary materially from those projected in such forward-looking information. Factors that could cause the forward-looking information in this material change report to change or to be inaccurate include, but are not limited to, unanticipated delays in obtaining or failure to obtain final TSXV approval of the Private Placement; unanticipated delays in obtaining or failure to obtain regulatory or stock exchange approvals; the risk that any of the assumptions referred to above prove not to be valid or reliable; risk of delay and/or cessation in planned work or changes in the Company's financial condition and development plans; as well as the other risks and uncertainties applicable to mineral exploration and development activities and to the Company as set forth in the Company's continuous disclosure filings filed under the Company's profile at www.sedar.com. There can be no assurance that any forwardlooking information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, the reader should not place any undue reliance on forward-looking information or statements. The Company undertakes no obligation to update forward-looking information or statements, other than as required by applicable law.