Impact Silver enters LOI to option Zacualpan area to J2

Executive Summary

• Impact Silver Corp. has executed a letter of intent to option a portion of its Zacualpan mining district to J2 Metals Inc., which has renamed the area the Sierra Plata silver-antimony project.
• J2 Metals will conduct exploration on approximately 22 square kilometers of the property over a three-year period, with a definitive agreement expected to close within 60 days subject to TSX Venture Exchange approval.
• J2 can earn a 100% interest in the property through staged cash payments, share issuances, and qualifying exploration expenditures, while Impact Silver retains a 1.5% net smelter return (NSR) royalty.

Key Details

• Transaction Structure: Letter of Intent (LOI) to option a portion of the Zacualpan southeastern area (approx. 22 sq km) to J2 Metals Inc.
• Property Details: The optioned area is part of the ~211 sq km Zacualpan mining district in central Mexico, located on the northwestern extension of the Taxco mining district. It is beyond economical trucking distance of Impact’s existing processing facilities but has shown encouraging reconnaissance results.
• Earn-In Terms for J2 Metals:
  • Initial Payment: $250,000 in J2 common share subscription receipts within three days of TSX Venture Exchange approval of the LOI.
  • Exploration Expenditures: Approximately $1,353,600 in qualifying exploration expenditures to be incurred in stages over three years.
  • Share Payments: Staged annual payments to Impact totaling up to 6.5 million common shares of J2. Up to 25% of the share value at issuance can be paid in cash (up to $375,000 in cash) over three years.
  • Acceleration Right: J2 may accelerate cash payments and share issuances after the first year by paying an additional $500,000 in cash, J2 common shares, or a combination, at Impact’s election.
• Royalty Terms: Impact Silver retains a 1.5% net smelter return (NSR) royalty. J2 has the right to buy down the royalty to 0.75% upon payment of $1.5 million.
• Administrative Responsibilities: J2 is responsible for work requirements and taxes to keep the property in good standing.
• Strategic Context: Impact Silver’s CEO Fred Davidson stated the strategy allows the company to unlock exploration upside without deploying its own financial or human capital, leveraging J2 as a funded and experienced junior exploration team.

Notable Quotes

• "While Impact's strategy is focused on near-term increases in brownfield exploration and production opportunities close to our processing facilities, transactions such as this, partnering with a funded and experienced junior exploration team, allow us to unlock additional value and exploration upside without deploying our own financial or human capital." — Fred Davidson, President and CEO, Impact Silver Corp.