Cerro Blanco Drilling Commencement and Credit Facility Closing

The most recent news release from San Lorenzo Gold Corp. on October 17, 2025, announces two key developments:

1. Drilling Commencement at Cerro Blanco: The company has commenced its diamond drilling program at the Cerro Blanco porphyry target on its Salvadora property in Chile. This marks the first of three planned holes, which are targeting strong geophysical anomalies previously identified in the expanded induced polarization (IP) geophysical surveying program (as reported on June 17, 2025). The company intends to provide ongoing drilling updates, including assay results.
2. Credit Facility Closing: San Lorenzo Gold Corp. has received final TSX Venture Exchange approval and closed its second credit facility, providing up to an additional $1,000,000. These funds are specifically earmarked to finance the recently commenced drilling program at Salvadora. The lender is the same company that provided the initial credit facility and is related to a director of San Lorenzo. The facility's terms include an 8% annual interest rate, a maturity date of July 31, 2027, and an option for the lender to convert the loan into common shares at $0.35 per share. No fees, bonuses, or commissions were paid. The transaction was classified as a related-party transaction under MI 61-101 but was exempt from formal valuation and minority shareholder approval due to the total consideration from related parties not exceeding $2.5 million. The board of directors unanimously approved the facility, with the related director abstaining from voting. If fully converted, this facility could result in the issuance of 7,857,143 common shares, representing approximately 9.0% of outstanding shares (when combined with the initial credit facility's potential conversion).

This news is Routine - Positive.

Drilling Commencement: The commencement of drilling at Cerro Blanco is a positive operational step, but it is largely routine. The company has been signaling its intention to drill these targets since the positive IP survey results were announced on June 17, 2025, and specifically stated it was "ready for more drilling" on September 24, 2025. Therefore, while crucial for exploration progress, this is the execution of a previously communicated plan, rather than new, unexpected, or game-changing information. The market had already factored in the expectation of this drilling program.

Credit Facility Closing: The closing of the second credit facility is also mostly routine, as the company had announced its intent to secure this financing on August 6, 2025, stating it was awaiting TSX Venture Exchange approval. Its successful closure removes a minor contingency and confirms the availability of funds for the current drilling campaign.

However, the necessity for this second credit facility, even after a significant warrant exercise in March 2025 that raised $1.5 million, underscores the company's ongoing capital burn rate and its reliance on related-party financing. The previous news on August 6, 2025, explicitly stated that the "Initial credit facility insufficient for anticipated costs of the desired drilling program due to increased drilling, follow-up expenditures, and claim fees." This indicates that despite positive exploration results and a capital raise, the company's expenditures outpaced its liquid assets. The related party continues to be the primary source of growth capital, which can be viewed both positively (insider confidence) and negatively (lack of diverse funding sources, potential for ongoing dilution). The conversion price of $0.35 is higher than the initial facility's $0.20 and the stock price at the time of its announcement ($0.27 on August 6, 2025), which is a favorable sign and suggests the related party sees increased value in the company post recent drill success.

Overall, while not a "game changer" like the initial drill discovery, this news confirms the continuation of exploration activities and secures necessary funding, allowing the company to move forward with its stated plans. The market reaction is likely to be measured, as these events were largely anticipated.

San Lorenzo Gold Corp. (TSXV: SLG, OTC: SNLGF) is a Canadian junior mineral exploration company focused on gold and copper exploration in Chile. Its flagship asset is the Salvadora property, located in Region III, Chile, within the prolific megaporphyry belt and approximately 15 kilometers from the world-class El Salvador copper-gold porphyry deposit and mine. The Salvadora property covers 9,069 hectares.

The company's exploration efforts at Salvadora primarily focus on several high-quality target areas:

1. Cerro Blanco (Gold/Copper Porphyry Target): This target is a large, classic porphyry system characterized by a 2x2 km area with coincident anomalous copper/gold soil and rock geochemistry, IP chargeability anomalies, and an exposed lithocap. Historically undrilled due to access challenges, new road construction has enabled drilling. Initial reconnaissance drilling in Q1 2025 yielded significant gold intercepts (e.g., 153.5m of 1.04 g/t Au, including 3.8m of 12.78 g/t Au in SAL 01-24; and 85.7m of 1.02 g/t Au in SAL 02-24), indicating a large, well-mineralized system open in multiple directions and at depth. The current drilling program is a follow-up to these discoveries.
2. Arco de Oro (Epithermal Gold Target): This is a five-plus kilometer trend of epithermal vein systems, supported by extensive shallow artisanal workings. Previous drilling has consistently returned high-grade gold intercepts (e.g., 23.3m of 4.83 g/t Au including 4m of 17.95 g/t Au in SAL 01-25; and 4.5m of 6.52 g/t Au in SAL 02-25), extending the known strike length to 1.3 km and depths up to 300m. The system remains open in both directions and at depth. The company plans further drilling here following the Cerro Blanco program.
3. Tres Amigos (Copper-rich Epithermal System): Located in the north-central part of the property, this target exhibits a swarming of epithermal/mesothermal vein systems with significant historical mining. Previous sampling showed high-grade copper (up to 15.45% Cu) and gold. Drilling in 2016 intersected 6m of over 5.7% Cu. The company initiated the permitting process for an expanded drilling program in Q1 2025.

San Lorenzo believes, based on its extensive exploration history and drilling results, that the Salvadora property hosts several significant gold and copper enriched epithermal and porphyry style systems. The company has a lean management team and utilizes external services for IR and technical support.