Grafton Resources Announces Letter of Intent for Acquisition of Two Gold Projects in Chile

Executive Summary of Latest Release

• Date: 2026-05-20
• Event Type: M&A / Acquisition (Letter of Intent)
• Counterparty: Newmont USA Ltd.
• Assets: Two gold-focused exploration projects in Chile.
• Status: Non-binding Letter of Intent (LOI); parties negotiating definitive agreement.
• Conditions: Due diligence, regulatory approvals (CSE), and tax/legal advice required.

Strategic Rationale

• Strengthening Grafton's Chilean exploration portfolio.
• Creating operational and geological synergies with existing regional properties (Alicahue/Silver One).
• Building a district-scale position in prospective mineral belts within Chile.

Management Commentary

• CEO Campbell Smyth expressed pleasure at reaching this stage, aligning with the strategy of building strong landholdings.
• No specific financial terms or consideration disclosed in the LOI release.

Evaluation of News Significance

• Speculative Nature: The transaction is a non-binding Letter of Intent (LOI). Historically, many junior mining LOIs fail to close due to due diligence findings or valuation disagreements. This limits immediate material value creation compared to the definitive option agreement signed for Alicahue in December 2025.
• Strategic Alignment: The acquisition aligns with Grafton's established strategy of consolidating assets in Chile (following Silver One and Alicahue acquisitions). It is not an unexpected pivot but a continuation of their district-scale build-out plan.
• Counterparty Credibility: Partnering with Newmont USA Ltd. adds significant credibility to the geological potential of these projects, as major miners typically do not dispose of assets without underlying value or strategic reasons. However, this does not guarantee Grafton will secure the deal on favorable terms.
• Financial Impact: No immediate cash outlay is confirmed in the LOI stage. Future financing requirements may increase if the acquisition proceeds, adding to dilution risk given recent capital needs.

Comparison to Historical Expectations

• Consistent with Strategy: Grafton has been aggressively acquiring Chilean assets since late 2025 (Alicahue Option in Dec 2025, Silver One LOI in Jan 2026). This news is an incremental step rather than a fundamental shift.
• Market Reaction Context: The stock price has corrected significantly from its January 2026 high ($1.10) to current levels (~$0.64). While positive, this LOI may not be sufficient to reverse the downtrend without definitive agreement terms or assay results confirming value.

Corporate Profile

• Ticker: GFT (CSE), GFTFF (OTCQB).
• Focus: Exploration and development of gold, copper, and silver projects in Chile.
• Jurisdiction: Valparaiso Region and Petorca Municipality, Chile.

Flagship Projects

1. Alicahue Copper-Gold Project:
   • Status: Definitive Option Agreement signed (Dec 2025).
   • Terms: $4M exploration spend over 4 years + $3M exercise payment.
   • Royalty: 2% NSR retained by vendor; repurchase option for $5M.
   • Potential: Porphyry copper-gold system with historic samples up to 6.34% Cu and 1.51 g/t Au.
2. Silver One Project:
   • Status: LOI acquired (Jan 2026).
   • Terms: C$820,000 consideration ($100k cash + shares).
   • Potential: High-grade silver-copper vein system; waste dump sampling returned 296 g/t Ag. Drilling planned for H2 2026.
3. Newmont Projects (May 2026):
   • Status: LOI stage.
   • Potential: Two gold projects intended to create district-scale synergies with Alicahue/Silver One.