Mogotes Moves to Buy Back $13M Filo Sur Royalty Before Copper Drilling

• Mogotes Metals has signed a binding offer to acquire GRG Resources' 1.5% net smelter returns (NSR) royalty on its flagship Filo Sur copper-gold project in the Vicuña district for $13 million.
• The price splits equally between $6.5 million in cash and $6.5 million in Mogotes shares, with completion targeted by December 29, 2026, subject to a definitive agreement and approvals.
• The purchase is targeted to close ahead of assays from a 2026-27 drill season of up to 20,000 meters that will test extensions of the Albor and Cruz del Sur discoveries.
• Rio Tinto holds 15 months of exclusivity over Filo Sur running to November 2027, so the royalty is being retired within that period.
• Mogotes reported C$77 million in cash as at September 21, 2026, and is planning approximately 78,000 meters of drilling across Argentina and Chile, Kazakhstan and the US over the coming year.

Filo Sur Royalty Buyback Consolidates the Flagship's Economics

For a district-scale copper explorer, a discovery's value to shareholders depends on 2 variables: how much is found, and how much of the future revenue stream is already committed to third parties. Mogotes Metals (TSXV: MOG | OTCQB: MOGMF | FSE: OY4) is acting on the second variable before the next drill season tests the first.

On October 26, 2026, a subsidiary of Mogotes entered a binding offer with GRG Resources Corp. to acquire GRG's 1.5% net smelter returns (NSR) royalty on Filo Sur. The project adjoins the southern limit of the Filo del Sol resource, which BHP and Lundin Mining acquired through the C$4.5 billion purchase of Filo Corp, and lies on the same north-south belt as NGEx Minerals' Lunahuasi and Los Helados deposits.

The purchase does not change Mogotes' ownership of Filo Sur. It removes GRG's contractual entitlement to 1.5% of net smelter returns from any future production, subject to completion, so the economic benefit depends on Filo Sur advancing to production and generating revenue. Mogotes classifies Filo Sur as a discovery-stage, pre-resource project, so the company is negotiating the buyback on drill results to date, before a resource estimate or development study puts a defined value on the ground the NSR royalty covers.

Deal Structure: Half Cash, Half Shares

The $13 million consideration is split equally between cash and equity, with the two components affecting shareholders differently. The $6.5 million cash portion is fixed, while the $6.5 million share portion will be converted into common shares using the 20-day volume-weighted average trading price (VWAP) on the TSXV as of the date of the definitive agreement. The final number of shares issued, and the resulting dilution, therefore cannot be determined until the agreement is signed. The consideration shares will be listed on the TSXV and subject to a statutory hold period of 4 months plus 1 day.

For reference, Mogotes had 609 million common shares outstanding as at September 16, 2026, and a market capitalization of C$286 million at C$ 0.47 per share at the September 21, 2026 close.

The offer is binding, and both parties intend to negotiate and sign a definitive agreement. Closing is subject to customary conditions, including regulatory and TSXV approvals, required contractual consents, and required notices. The parties will use commercially reasonable efforts to complete the purchase by December 29, 2026, or another date they agree.

President and Chief Executive Officer of Mogotes Metals, Allen Sabet, described the conditions the company looks for before moving on an opportunity:

"The opportunity has to present itself to you at the same time as you have the capital and the time to take advantage of it, and then you need to be the fastest person to make the offer in that brief opportunity window."

What the Royalty Covered: 2 Discoveries in 1 Season

The 2025-26 season at Filo Sur produced 2 discoveries, both on the Macho Muerto Fault Zone, and both would otherwise be subject to the NSR royalty if they reach production.

At Albor, 1 hole returned 180 meters at 0.98% copper equivalent from 108 meters, including 58 meters at 1.77% copper equivalent from 111 meters, in a strongly mineralized magmatic-hydrothermal breccia. It is the highest-grade intercept at Filo Sur to date. Potassic alteration intensifies at the bottom of the hole beside an induced polarization high, which Mogotes is treating as a deeper porphyry target.

At Cruz del Sur, 1 hole intersected 308 meters at 0.46% copper equivalent and 334 meters at 0.45% copper equivalent, with more than 640 meters of mineralization in total, and the gold-copper porphyry remains open in all directions. The Macho Muerto Fault Zone runs about 10 kilometers through the project and is mostly undrilled. Mogotes has drilled 8,392 meters at Filo Sur, so it is buying back the NSR royalty while most of the structure hosting both discoveries remains untested.

Up to 20,000 Meters of Drilling Will Test the Discovery Extensions

The 2026-27 program more than triples drilling at Filo Sur to up to 20,000 meters, and the royalty purchase is targeted to complete as that season gets underway.

Mogotes is planning extension drilling at the Albor high-grade breccia, further drilling at Cruz del Sur to extend the porphyry and its fault-hosted breccias, a first porphyry test on the Luz del Sol-Cuenca alignment, completion of the high-sulfidation and porphyry test at Meseta, and reconnaissance drilling along the full length of the fault zone. Surface work has grown the Cuenca porphyry target to 1.3 kilometers by 0.5 kilometers. The program remains at the planning stage and is subject to permitting, budgets and results from earlier holes.

Filo Sur drills from approximately November to May in the Southern Hemisphere summer and takes priority on company funding. On the company's timeline, mobilization runs through late 2026 and assays from the season arrive in 2027, after the December 29, 2026 target for completing the royalty purchase.

Rio Tinto's Exclusivity Period Frames the Timing

The royalty buyback coincides with an exclusivity arrangement with one of the largest copper companies in the world.

Rio Tinto invested US$15 million in Mogotes, which came with 15 months of exclusivity over Filo Sur, and the company's timeline shows that exclusivity expiring in November 2027. The same Rio Tinto team is Mogotes' counterparty at the Copper Cliff project in Montana, where Mogotes can earn a 51% interest by spending US$16 million on exploration over 3 years, under an option to joint venture up to 60%.

Sabet linked the 2 relationships:

"Of course, the backdrop to all of this is that we have a 15-month exclusivity with Rio Tinto on Filo Sur with the same team and decision-makers. What happens at Filo Sur will also be interesting in relation to this. If we find something exciting in Montana and at Filo Sur, another set of possibilities opens up."

Completion as targeted would remove the GRG NSR royalty before Rio Tinto's exclusivity expires in November 2027, so Filo Sur would no longer carry that third-party revenue entitlement for the remainder of the exclusivity period.

Balance Sheet Capacity Across 3 Projects

Mogotes reported C$77 million in cash and equivalents as at September 21, 2026, a balance that has to cover the royalty purchase and an exploration program in Argentina and Chile, Kazakhstan and the US. The company also had 204 million warrants and options outstanding as at September 16, 2026. The cash portion of the royalty purchase is $6.5 million. The same balance also supports approximately 78,000 meters of planned drilling for the coming year, made up of up to 20,000 meters at Filo Sur, 50,000 meters at the Beskauga copper-gold-silver project in Kazakhstan and 8,000 meters at Copper Cliff subject to permitting. The company also has staged commitments on its option assets: US$24.7 million on back-ended terms over 3 years.

Beskauga has a 2022 historical estimate of 111.2 million tonnes indicated and 92.6 million tonnes inferred, which Mogotes is not treating as a current mineral resource. The estimate contains 333.6 thousand tonnes of copper and 1.8 million ounces of gold in the indicated category, and 222.2 thousand tonnes of copper and 1.5 million ounces of gold in the inferred category. Mogotes is targeting a preliminary economic assessment at Beskauga.

The 3 projects drill in opposite seasons. Filo Sur drills through the Southern Hemisphere summer, while Beskauga and Copper Cliff drill from May to September, which gives Mogotes results across all 12 months of the year.

Sabet described how the flagship relates to the other assets:

"Filo Sur is our flagship, but these assets could stand alone as separate companies."

Conditions & Open Variables

The buyback still has procedural and market steps to clear before completion. The parties have not yet signed a definitive agreement, and closing requires regulatory and TSXV approvals, contractual consents, and notices. The share component will be priced on the 20-day VWAP at signing, so the number of shares issued will move with the Mogotes share price until then. On the exploration side, the 2026-27 Filo Sur program remains subject to permitting, budgets, and earlier results.

The Investment Thesis for Mogotes Metals

• Mogotes Metals has entered a binding offer to acquire the 1.5% net smelter returns royalty held by GRG Resources over the Filo Sur project for $13 million, split equally between cash and shares.
• The purchase removes a contractual claim on future net smelter returns without changing Mogotes' ownership of Filo Sur, and its value to shareholders depends on the project reaching production.
• Filo Sur adjoins the Filo del Sol deposit acquired for C$4.5 billion and returned 180 meters at 0.98% copper equivalent at Albor, including 58 meters at 1.77% copper equivalent, during the 2025-2026 season.
• A drill program of up to 20,000 meters for 2026-2027 targets extensions at Albor and Cruz del Sur and first tests along a mostly undrilled 10-kilometer fault zone.
• Rio Tinto holds 15 months of exclusivity over Filo Sur running to November 2027, and the royalty purchase is targeted to be completed by December 29, 2026.
• Mogotes reported C$77 million in cash as at September 21, 2026, which also supports approximately 78,000 meters of planned drilling and staged option commitments at Copper Cliff and Beskauga.

The buyback removes a 1.5% claim on future Filo Sur revenue before Mogotes has established a resource or defined the project's development potential. Up to 20,000 meters of drilling will test whether the Albor and Cruz del Sur discoveries extend into a larger mineralized system, and those results will provide the geological evidence to assess the $13 million purchase.

TL;DR

Mogotes Metals has a binding offer to buy GRG Resources' 1.5% NSR royalty on Filo Sur for $13 million, half cash and half shares, targeting completion by December 29, 2026. The purchase removes a claim on future revenue without changing project ownership, and follows a season that delivered 180 meters at 0.98% copper equivalent at Albor and more than 640 meters of mineralization in 1 hole at Cruz del Sur. Up to 20,000 meters of drilling comes next, inside Rio Tinto's exclusivity period running to November 2027.

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