Santacruz Silver Mining Ltd. — M&A Activity 2024

Apr 16, 2024

Amendments to transaction documentation for the sale of Glencore’s Bolivian zinc business to Santacruz

Binding Term Sheet

This binding term sheet (the " Term Sheet ") summarizes the terms on which Glencore and SCZ (each as defined below) are amending certain transaction documents in connection with the sale by Glencore of its Bolivian mining assets to SCZ. It is the intention of the parties that: (i) the terms and conditions of this Term Sheet and all of the rights and obligations of the parties contained herein will be legally binding upon and enforceable against each of the parties upon the execution and delivery of this Term Sheet; (ii) this Term Sheet supersedes any and all previous correspondence, agreements or understanding between the parties; and (iii) upon execution and delivery by each of the parties of the Definitive Agreements (as defined below), the Definitive Agreements shall replace and supersede this Term Sheet in its entirety.

Parties	Santacruz Silver Mining Ltd. (“SCZ”) Glencore Finance (Bermuda) Ltd. (“GFB“) Glencore International AG (‘GIAG”, together with GFB, “Glencore”)
Proportionate Payment	Unless otherwise stated, all payments by SCZ to Glencore under this Term Sheet shall be paid to GFB and GIAG in proportion to the consideration each of GFB and GIAG were supposed to receive under the Share Purchase Agreement between SCZ, GFB and GIAG dated October 11, 2021 (as amended by a letter agreement dated March 18, 2022, and amended by a share purchase agreement amendment dated May 10, 2023) (the “SPA”).
Settlement of Obligations under Transaction Documents	The total consideration payable under this Term Sheet of the Base Purchase Price (as may be adjusted by the Acceleration Option (as defined below)) and the CVRs, in aggregate, will be in lieu of all present and future amounts owing or payable under the following agreements: • SPA; • Term Facility Agreement made as of March 18, 2022 (as amended by an amending agreement dated May 10, 2023) (the “Term Facility”); • VAT Receivables Agreement made as of March 18, 2022 (as amended by an amending agreement dated May 10, 2023) (the “VAT Agreement”); • Ores and Concentrates Inventory Agreement made as of March 18, 2022 (as amended by an amending agreement dated May 10, 2023); • San Lucas royalty agreement made as of March 18, 2022 (as amended by an amending agreement dated May 10, 2023), Sinchi Wayra royalty agreement made as of March 18, 2022 (as amended by an amending agreement dated May 10, 2023), the net smelter return royalty agreement made as of March 18, 2022 (as amended by an amending agreement dated May 10, 2023) and, Illapa royalty agreement made as of March 18, 2022 (as amended by an amending agreement dated May 10, 2023); and • Comibol Advances and Accounts Receivables Agreement dated as of March 18, 2022.

• SPA Base Purchase • Annual instalments : Subject to the Acceleration Option, a total of $80 Price million in cash shall be paid by SCZ to Glencore in eight equal annual instalments of $10 million each (the “ Base Purchase Price ”) with the first payment being made on or before November 1, 2025.

• • Acceleration option : SCZ can exercise an option to accelerate the payment of the outstanding balance of the Base Purchase Price in full at any time, such prepayment amount will be $40 million if exercised prior to November 1, 2025 and shall decrease by $2 million for each annual instalment of $10 million that is paid by SCZ (the “ Acceleration Option ”).

• Contingent Value • Duration : The CVRs and the Bonus Payments (as defined below) shall Rights (“CVRs”) and the have a term effective from the date of this Term Sheet is executed by Bonus Payments all parties until December 31, 2032. • CVR Cap : The maximum total amount SCZ shall pay to Glencore pursuant to the CVRs shall be $77.7 million (the “ CVR Cap ”) (for the avoidance of doubt this does not include any Cash Bonus payments).

• • CVR payments: SCZ shall pay $1,333,333.33 to Glencore for each calendar month (up to a total of $16 million in any calendar year) in the event that in such calendar month after the date the parties enter into this Term Sheet the average zinc LME spot price (or the highest open hedge price if any hedge is open for that calendar month, regardless of whether it is higher or lower than the average zinc LME spot price) is at least $3,850 per tonne (the “ Base Price ”). For greater certainty, if a hedge is open during a calendar month, the highest open hedge price will be used to determine the amounts payable in respect of the Base Price, regardless of the average zinc LME spot price for that calendar month.

• First escalator : For each calendar month, SCZ shall pay an additional $83,333.33 to Glencore for each increase of $100 per tonne above the Base Price and up to a price of $5049.99 per tonne based upon the average zinc LME spot price (or the highest open hedge price if any hedge is open for that calendar month, regardless of whether it is higher or lower than the average zinc LME spot price) for such calendar month (the “ First Escalator ”). For greater certainty, if a hedge is open during a calendar month, the highest open hedge price will be used to determine the amounts payable in respect of the First Escalator regardless of the average zinc LME spot price for that calendar month.

• Second escalator : For each calendar month, SCZ shall pay $166,666.66 to Glencore for each increase of $100 per tonne above $5050 per tonne based upon the average zinc LME spot price (or the highest open hedge price if any hedge is open for that calendar month, regardless of whether it is higher or lower than the average zinc LME spot price), for such calendar month (the “ Second Escalator ”), with 50% of such payment being treated as a CVR payment counting towards the CVR Cap and the remaining 50% of such payment not being treated as a CVR payment and therefore will not count towards the CVR Cap (the “ Bonus Payments ”). For the avoidance of doubt, SCZ’s obligation to make the Bonus Payments terminates once SCZ is no longer obligated to make the CVR payments pursuant to the terms hereof. For greater certainty if a hedge is open during a calendar month, the highest open hedge price will be used to determine the amounts

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	payable in respect of the Second Escalator regardless of the average zinc LME spot price for that calendar month. • Payment of CVRs and Bonus Payments: For any calendar month in which a CVR and/or Bonus Payment is triggered, SCZ shall pay such amounts to Glencore within thirty days of the end of such calendar month. For the avoidance of doubt, if no CVR and/or Bonus Payment, as applicable is triggered in a calendar month, then no such obligation for SCZ to pay Glencore in respect of such an amount shall arise. • Hedging option:Upon the occurrence of the monthly average zinc LME spot price exceeding the Base Price, GIAG, in its sole discretion, can require SCZ to hedge the production of zinc at its Bolivian mining operations (so long as the hedging price would exceed the Base Price) (the “Hedging Option”), excluding for certainty all third party ore sourcing business from San Lucas, subject to a cap of 50% of SCZ’s forecasted production volume from the Bolivian mining operations for the 24 months following the date GIAG notifies SCZ in writing that it is exercising the Hedging Option. SCZ and GIAG will use all reasonable endeavours to negotiate in good faith commercially reasonable terms for such hedging. Each hedge shall account for no less than 25% of the production for the period of time that Glencore requires such hedge to cover. Each hedge is restricted to a duration of no more than 24 months following the date GIAG notifies SCZ in writing that it is exercising the Hedging Option. [REDACTED – COMMERCIALY SENSITIVE _INFORMATION]._GIAG and SCZ shall each use reasonable endeavours to negotiate a commercially reasonable hedging arrangement. Notwithstanding the generality of the foregoing, if SCZ determines, acting reasonably and in good faith, that the cost of entering into a hedging arrangement is not commercially reasonable based on current market conditions, SCZ will, in lieu of entering into a hedging arrangement, pay the CVRs (including any amounts payable, as applicable, pursuant to the Base Price and/or the First Escalator and/or the Second Escalator (including Bonus Payments)) to Glencore over the period that the hedge was to cover pursuant to Glencore’s request under the Hedging Option based on the price at which GIAG had exercised the Hedging Option.
Confidentiality	• Subject to SCZ complying with its continuous disclosure obligations in accordance with applicable securities laws, the parties shall keep the terms and existence of this term sheet strictly confidential (except that such terms can be disclosed to its advisors, affiliates, employees and directors who have a strict need to know in order to further the negotiation of the Definitive Agreements or, for SCZ, to the TSX Venture Exchange), unless authorised by the other parties in writing to disclose the information.
Definitive Agreements	• The parties shall use good faith efforts to finalize, execute and deliver the definitive agreements (the “Definitive Agreements”) containing the terms and provisions outlined in this Term Sheet and other customary terms for transactions of this nature as soon as reasonably practicable after the execution date of this Term Sheet. The Definitive Agreements shall be in form and substance satisfactory to each of the parties, each acting reasonably.
Conditions Precedent	• In addition to the other terms set forth in this Term Sheet and any additional terms and conditions to be included in the Definitive Agreements, the completion of the transactions contemplated herein shall be subject to approval of the TSX Venture Exchange (the “TSXV”)

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Termination	• This Term Sheet may be terminated by notice in writing at any time: o by mutual written agreement of the parties; or o by any party (a "Non-Breaching Party") if the other party (the "Breaching Party") shall have breached, or failed to comply with, any of its material covenants or obligations under this Term Sheet; provided that the Non-Breaching Party shall provide the Breaching Party with prompt written notice of such breach, non-compliance or inaccuracy and the Breaching Party shall have ten (10) business days from receipt of such notice to cure such breach, non-compliance or inaccuracy. • This Term Sheet shall automatically terminate and be of no further force and effect, on the earlier of; o from the execution and delivery of the Definitive Agreements; and o if the TSXV approval is not obtained by May 15, 2024.
Currency	• Amounts denoted as “$” shall refer to United States dollars.
Governing law	• This Term Sheet and all non-contractual rights arising out of it shall be governed, interpreted and construed in accordance with the laws of British Columbia, Canada.

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This Term Sheet may be executed in two or more counterparts, each of which shall be deemed an original, but all of which shall constitute one and the same instrument. A signed copy of this Term Sheet delivered by facsimile, email or other means of electronic transmission is deemed to have the same legal effect as delivery of an original signed copy of this Term Sheet.

Executed this Term Sheet as an agreement as of 28[th] of March 2024:

Santacruz Silver Mining Ltd. Glencore International AG (signed) “John Burton” (signed) “Arturo Prestamo Elizondo” (signed) “Martin Haering” _____ ______ By: Arturo Prestamo Elizondo By: John Burton and Martin Haering Position: Executive Chaiman and Director Position: Director and Officer

Glencore Finance (Bermuda) Ltd.

(signed) “John Burton”

______ By: John Burton Position: Director

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