PENOLES PROJECT

OVERVIEW

COMMODITY: Gold, SilverLOCATION: Durango, MexicoSIZE: 22.9 km²

The Peñoles Project includes an oxide gold prospect (referred to as El Capitan) and two historic silver mines (Jesus Maria and San Rafael) located in the historic Peñoles Mining District of Durango, Mexico. The Peñoles Project is host to multiple mineralized vein systems, fault zone structures, poly-metallic skarns, and silicified low-temperature gold-rich volcaniclastics. Approximately 86 diamond drill holes totalling more than 11,550 metres have now been completed at the Project. Drilling to date on the Peñoles property has defined wide intervals of near-surface gold mineralization (with low silver values) at El Capitan that could potentially be amenable to open-pit extraction methods and significant intervals of near-surface silver mineralization (with associated gold, lead and zinc values) at Jesus Maria zone.

EXPLORATION HISTORY

According to published historic records, Minera Industrias Peñoles was incorporated in 1887 to operate the Jesus Maria and San Rafael silver mines and took its name from the local community of Peñoles. The full extent of the historic mine workings is unknown, but mining appears to have been selective and limited to within approximately 100 metres from the surface. The only modern exploration work that was completed on the property prior to 2011 consisted of a four-hole drill program completed by Aurcana Corporation (“Aurcana”) in 2004, and surface mapping, sampling, a limited IP survey, and a five-hole drill program completed by Riverside in 2008 and 2009. The drill holes completed by Aurcana and Riverside returned encouraging results and showed that El Capitan had potential to host a bulk-tonnage, low-grade gold deposit. Preliminary metallurgical tests completed by Sierra Madre in 2011 using Riverside drill core indicated that the gold mineralization at El Capitan could likely be recovered using cyanide leaching. Since March 2011, exploration work and drilling funded by Riverside’s partner has primarily focused on the El Capitan Gold Zone and the Jesus Maria Silver Zone.

PREVIOUS WORK: EXPLORATION RESULTS

The Peñoles project has an established (305k oz Au at 0.46 g/t & 15M oz Ag at 62 g/t Ag) inferred resource (see NI 43-101 report below), which remains open in multiple directions and at depth. Previous work includes drilling, underground sampling and trenching at the El Capitan gold zone and the historic Jesus Maria silver mine discovered high-grade Ag

El Capitan Gold Zone

• DH 12-13: 124.3m at 0.61 g/t Au
• DH 11-03: 105.25m at 0.58 g/t Au

Jesus Maria Zone (Silver & Gold)

• JM DDH 12-10: 4.25m at 732.24 g/t Ag & 1.2 g/t Au
• JM DDH 14-24: 41.95m at 227.24 g/t Ag including 7.15m at 988.4 g/t Ag & 1.24 g/t Au
• JM DDH 14-27: 18.7m at 203.92 g/t Ag & 0.65 g/t Au

GEOLOGY

The Peñoles property lies in the Altiplano Sub province of the Sierra Madre Occidental (SMO). The SMO is a regionally extensive Eocene to Miocene volcanic field that extends from the US-Mexican border into Central Mexico. The Altiplano sub province is on the eastern flank of the SMO and comprises Jurassic to late Tertiary sedimentary and volcanic rocks (Sedlock et al., 1993). This district hosts extensive hydrothermal-related silver, gold and base-metal deposits and is generally referred to as the Faja de Plata, or Mexican Silver Belt.

The El Capitan deposit, the Jesus Maria deposit, and the San Rafael-El Tubo prospects of the Peñoles Project are located on the concessions owned by Riverside and they appear to be related to intersections between the northwest-striking and northeast-striking regional structures. These occurrences are also localized along the southern margins of a northeast-oriented magnetic anomaly identified from government airborne surveys.

RESOURCE

During the 2011 and 2012 campaign at El Capitan drilling encountered numerous intervals of gold mineralization ranging from 50 m to 140 m in length. Mineralization appears localized along the unconformity between Tertiary-age volcaniclastic rocks and Cretaceous-age sediments. The upper part of the mineralized zone consists of porous, volcanic agglomerate cut by narrow quartz veinlets and hydrothermal breccias (averaging 0.2 g/t to 0.5 g/t Au). At the base of the volcanic unit, there is a shallow-dipping, 10 m to 35 m wide silicified zone (averaging 0.7 g/t to 1.5 g/t Au), and, below this zone, there is a sequence of oxidized shales that is also cut by quartz veinlets and hydrothermal breccias (averaging 0.2 g/t to 0.6 g/t Au) with low silver values.

The Jesus Maria prospect was initially considered to be a relatively narrow but high-grade vein-type target; however, drilling carried out in 2013 and 2014 encountered 20 m to 80 m wide intervals of predominantly silver-rich mineralization (with accessory gold and base-metal values). Based on the widths of mineralization, the Jesus Maria might be amenable to open-pit extraction methods. At their eastern limits, the deposits are separated by approximately 300 m; however, the mineralized zones are interpreted as merging to the west. Additional drilling between the western limit of the Jesus Maria deposit and the El Capitan deposit could connect the two zones and delineate additional mineralization.

The Mineral Resource statement for the El Capitan and Jesus Maria deposits is shown in Table 1.1; the resources are not constrained within pit shells but include mineralization, above cut-off, that is within a maximum depth of 150 m below surface. There are no adjustments for recovery or dilution in the statement of mineral resources. It is important to note that these are estimates of mineral resources, not mineral reserves, as the economic viability has not been demonstrated.

Table 1.1: Inferred Mineral Resource Estimate

To date 86 holes have been drilled in the property.

2020/2021 DRILL PROGRAM

November 2020 - The first seven drill holes from the current and on-going 6,000 metre reverse circulation (RC) drill program at the Peñoles Project is complete. This initial drill campaign is focused on testing the continuity of known gold-silver zones at the Capitan Hill Deposit, both along strike and down-dip of the March 2015, 43-101 compliant, inferred resource outline, as well as infill significant gaps within the resource model. The first seven drill holes of the program are presented herein, all of which intersected Capitan Hill style mineralization that is consistent in grade and width with previous drilling.

Spring-Summer 2021 exploration program

Capitan completed its initial 6,000-metre drill program in early 2021 and began a second stage of drilling in the spring that will continue through the summer working on expanding mineralization in the Capitan gold zone. The Company expects to drill approximately 6,000 metres of reverse-circulation drilling during this period as well as to continue surface exploration work on additional targets within the Peñoles project in order to advance them towards a drill stage.

Drill Highlights:

• _RC Hole (20-CARC-06):_ intersected 45.7 m of 0.63 g/t gold within a larger interval of 111.3 m of 0.34 g/t gold;
• _RC Hole (20-CARC-05): _intersected 76.2 m of 0.41 g/t gold and 21 g/t silver including 16.8 m of 0.68 g/t gold and 28.5 g/t silver;
• _RC Hole (20-CARC-03):_ intersected 68.6 m of 0.4 g/t gold and 11 g/t silver including 16.8 m of 0.74 g/t gold and 15.9 g/t silver;
• _RC Hole (20-CARC-02):_ intersected 56 m of 0.4 g/t gold including 25.9 m of 0.53 g/t gold;
• RC Hole 20-CARC-12: intersected 36.5 m of 0.91 g/t Au equivalent*within a larger interval of 73.15 m of 0.63 g/t gold equivalent; This hole also intersected significant widths of the Hanging Wall Zone mineralization and extended Capitan Hill Zone 65 m down-dip;
• _RC Hole 20-CARC-09: _intersected 64.01 m of 0.69 g/t gold equivalentincluding 13.72 m of 1.26 g/t gold equivalent;
• _RC Hole 20-CARC-08:_intersected 48.77 m of 0.58 g/t gold equivalent including 28.96 m of 0.82 g/t gold equivalent;
• 20-CARC-11 intersected 57.9 m of 0.94 g/t AuEq including 18.3 m of 2.04 g/t AuEq
• 20-CARC-13 intersected 100.6 m of 0.42 g/t AuEq including21.3 m of 0.67 AuEq
• 20- CARC-16 intersected 64m of 0.59 g/t gold equivalent; including 25.8m of 0.87 g/t gold equivalent
• 20-CARC 17 intersected35.1m of 0.33 g/t AuEq and 35.1m of 0.26 AuEq
• RC Hole 21-CARC-19: intersected 33.5m of 0.4 g/t gold equivalent
• RC Holes 21-CARC-19 and 20 extended mineralized zones along strike (to the west) as well as down-dip, and showed improving grades and widths
• _Hole 21-CARC-24_ returned 10.7m @ 0.56 g/t Aueq within a larger interval of 42.7m @ 0.34 g/t Aueq
• _Hole 21-CARC-33_ returned 56.4m at 0.75 g/t Aueq, including a higher-grade interval of 10.7m grading 1.19 g/t Aueq
• _Hole 21-CARC-31_ returned a higher-grade interval of 29m at 0.55 g/t Aueq from the Capitan Main Zone which was within a continuous interval of 187.5m at 0.24g/t Aueq

Overview of the Fall/Winter 2021 Drill Program

2020-2021 Drill Hole Map at Capitan Hill Target

Expansion Drilling, Capitan Main Zone

RC holes 20-CARC-01, 03, and 05 located on sections 100, 400, and 250 respectively, tested the continuity of the gold-silver mineralization down dip of the 2015 Inferred Resource.

All of the RC drill holes above successfully intersected the Capitan Hill Main Zone, with results being consistent with the grade and width of the previous drilling. These new holes extended the Capitan Hill Main gold-silver mineralization down-dip between 50 to 120 m. Drill results include 76.2 m of 0.41 g/t gold in hole 20-CARC-05, 68.58 m of 0.4 g/t gold in hole 20-CARC-03 and 51 m of 0.439 g/t gold in hole 20-CARC-01. Click here for link to cross-sections.

RC Hole 20-CARC-01, located on section 100, collared near the eastern edge of the Capitan Hill Main Zone. The hole was mineralized through its entire length starting from surface and was ended in mineralization. This hole extended the Capitan Hill Main Zone by 120 m down dip from previous drilling.

In addition to intersecting the Capitan Hill Main Zone, RC holes 20-CARC-05 and 20-CARC-03, also cut significant values of silver mineralization, expanding the continuity of silver mineralization at depth. Silver values in RC hole 20-CARC-05 include 60.96 m of 25.15 g/t silver that includes a higher-grade zone of 33.5 m of 33.67 g/t silver.

All of the expansion holes were oxidized through their entire length, with RC holes 20-CARC-01 and 03 getting into sulphide mineralization at drill hole depths of 173.7 m and 184.4 m respectively.

_Infill Drilling, Capitan Main Zone_

Infill drilling in the current program was designed to confirm the presence of the Capitan Hill Main zone in areas where significant gaps (75-100 m ) existed in the 2015 Inferred Resource model. All holes presented below successfully confirmed the presence of the Capitan Hill Main Zone.

RC hole 20-CARC-06 was drilled on section 250 and was designed to test a roughly 100-metre wide gap between previously drilled diamond drill holes CDDH-12-10 and CDDH-08-02. Hole 20-CARC-06 intersected the main Capitan Hill Zone from 35.1 m to 146 m, with a total drilled width of 111.25 m grading 0.342 g/t gold, including 45.7 m of 0.626 g/t gold. (See Drill Table below)

RC Hole 20-CARC-07 was drilled on section 300, between previously drilled diamond drill holes CDDH-08-05 and CDDH-12-12 to infill a large >100 m wide gap. The hole cut the main mineralized zone in three, narrowly separated, intercepts that are bound by anomalous gold mineralization. These include 22.9 m of 0.2 g/t gold, 35.1 m of 0.27 g/t gold and 50.3 m of 0.22 g/t gold. The hole bottomed in anomalous mineralization and could not be drilled to its completed depth due to technical issues.

RC Hole 20-CARC-02 was drilled on section 000 and designed to test a >100 m wide gap between CDDH-12-17 and surface. The hole successfully intersected the Capitan Hill Main Zone and confirmed its presence up-dip, to surface, and was mineralized almost over its entire length. Significant values include 0.284 g/t gold over 29 m and 56.4 m of 0.398 g/t gold.

_New, Near Surface Hanging Wall Gold Zones_

Drilling prior to the March 2015 resource statement at Capitan Hill indicated the possibility of additional zones of oxidized, gold-silver mineralization located in the hanging wall to the Capitan Hill Main Zone. However, due to a lack of drilling, the significance of these zones was poorly understood and precluded from being captured in the March 2015 resource estimate.

In the current program, RC holes 20-CARC-03, 05 and 07 confirmed the presence and continuity of these "Hanging Wall Zones", highlighting the potential to enhance the existing resource. The most significant results include 30.5 m of 0.22 g/t gold starting from surface in RC hole 20-CARC-03; 22.9 m of 0.199 g/t gold in RC hole 20-CARC-07, and 35.05 m of 0.15 g/t gold in RC hole 20-CARC-05.

_Drill Results Discussion_

Drill hole 20-CARC-12 was a step-out hole designed to test the down-dip extension of the main Capitan Hill Zone, as well as test for Hanging Wallmineralization, which was absent in hole CDDH-11-06 located immediately up-dip. The hole was successful in confirming the presence of up to five, > 10 m wide, mineralized zones in the Hanging Wall, starting from surface, with the best interval returning 22.9 m of 0.20 g/t gold, which has extended the zone down-plunge 100 m to the south-east from section 200 (see Figure 2).

Additionally, hole 20-CARC-12 successfully intersected the main Capitan Hill zone as expected, reporting an interval of 73.2 m grading 0.63g/t Aueq including a higher grade interval of 36.6 m of 0.91 g/t Aueq in oxides, which indicates a new higher grade block which may be developing in this area. This new interval extended the main Capitan Hill Zone down-dip approximately 65 m from hole CDDH-11-06.

Hole 20-CARC-09 was an infill hole that was designed to test a gap between two historic drillholes, both of which were terminated in the Capitan Main zone. The hole successfully confirmed the presence of the Capitan Hill Zone, as well as extending the zone approximately 12.5 m to depth, compared to where the historic holes had ended, reporting an interval of 64 m grading 0.69 g/t Aueq, with a higher grade interval of 13.5 m grading 1.26 g/t Aueq. The hole also intersected the Hanging Wall zone between 25 to 65 m, but only sporadic, low grade values were returned.

Hole 20-CARC-08 was designed to test an approximate 100 m wide gap in the Capitan Main zone between surface and historic hole CDDH-12-15. The hole was successful in intersecting the up-dip projection of the Capitan main zone, returning an interval of 48.8 m grading 0.58 g/t Aueq.

Note: All intervals reported above are oxidized with the exception of a 12.2 m wide sulfide intercept in the Capitan Hill zone starting from 179.8 m depth.

Table 1. Table of drill results

20-CARC-16 20-CARC-16

QUALIFIED PERSON, QA/QC & TECHNICAL DISCLOSURES

The scientific and technical data contained in this news release pertaining to the Peñoles Project was reviewed and approved by Marc Idziszek, P.Geo, a non-independent qualified person to Capitan Mining, who is responsible for ensuring that the technical information provided in this news release is accurate and who acts as a “qualified person” under National Instrument 43-101 Standards of Disclosure for Mineral Projects.

Capitan Mining Inc. has a Quality Assurance/Quality Control program that includes insertion and verification of control samples including standard reference material, blanks and duplicates consistent with industry standards.

2021 DRILL PROGRAM FIGURES