Sonoro Gold - Near-Term Gold Producer Positioned to Benefit from Mexico's Improving Mining Climate

• Sonoro Gold is developing a 12,000 tpd open-pit heap leach gold mine in Sonora, Mexico, with a current 9-year mine life producing 33,000 oz gold annually.
• The company has only drilled 30% of known mineralized zones, with potential to grow from current ~500,000 oz to 2M oz resource.
• Recent political changes in Mexico, particularly new President Claudia Sheinbaum's removal of potential open-pit mining ban from policy agenda, create an improved investment climate.
• The Cerro Caliche Project has completed environmental review process and expects permits within 6 months, with low initial capital expenditure of $15.5M.
• Sonoro Gold's activities is located in established mining district surrounded by producing mines, with oxide mineralization to 200m depth and strong IRR at $2,000/oz gold (now significantly higher with gold at $2,700/oz)

Sonoro Gold (TSXV:SGO) represents an emerging opportunity in Mexico's mining sector, developing the Cerro Caliche gold project in Sonora State. The company's timing appears particularly relevant given Mexico's improving stance toward mining investment under incoming President Claudia Sheinbaum and the current strong gold price environment above $2,600/oz.

Gold Project Positioned for Mexico's Mining Renaissance

The Cerro Caliche project is being developed as an open-pit heap leach operation, with planned throughput of 12,000 tonnes per day. Based on the October 2023 Preliminary Economic Assessment (PEA), the project shows a 9-year mine life producing approximately 33,000 ounces of gold annually. Notably, the current resource represents less than 30% of the known mineralized zones on the property, suggesting significant expansion potential. CEO Ken McLeod states:

"We have only developed so far less than 30% of the known mineralized zones in the property, so 70% of the potential resource remains undrilled although we know it's mineralized. The goal is for us now is to go from the current just under half a million ounces of gold within the pit shells to a potential up to 2 million ounces."

The project benefits from its location in an established mining district, surrounded by producing mines including Agnico Eagle's Santa Gertrudis to the north. The property sits within 14 kilometers of the town of Cucurpe, providing access to labor and support services. The mineralization is oxidized to 200 meters depth, ideal for heap leach processing, with no significant contaminants like arsenic that could complicate environmental permitting.

Capital Requirements & Development Timeline

A key attractive feature of Cerro Caliche is its modest initial capital requirement of $15.5 million, positioning it as a relatively low-barrier entry into production. The company has completed its environmental review process with SEMARNAT (the Secretariat of Environment and Natural Resources is Mexico's environmental agency) and anticipates receiving permits within the next six months, following previous delays during the AMLO administration. Perhaps the most significant recent development is the improving investment climate in Mexico under incoming President Claudia Sheinbaum. McLeod explains:

"President Sheinbaum convened a meeting in the palace in Mexico City of 200 CEOs from the US-Mexico forum and she assured these CEOs that Mexico is open for foreign investment. When you disclose that to over 200 foreign CEOs with billions of dollars worth of investment in Mexico and waiting on the sidelines, I think we can safely assume that we will be able to flourish in Mexico through this administration."

Interview with President & CEO, Kenneth MacLeod

Economics & Growth Strategy

The project's economics appear robust, with the PEA showing strong IRR at $2,000/oz gold. With current gold prices around $2,700/oz, the project's returns would be significantly enhanced. The company plans a phased approach to development, using initial cash flow to fund resource expansion drilling.

Sonoro's growth strategy encompasses multiple vectors:

• Near-term production from initial oxide resource
• Resource expansion through drilling of known higher-grade zones
• Potential underground development targeting deeper mineralization
• Development of the San Marcial project, a second 100%-owned property
• Evaluation of additional acquisition opportunities

The project emphasizes sustainability and environmental protection, with plans to exceed regulatory requirements. The site's location on existing disturbed ranchland, away from population centers, and the absence of harmful contaminants in the mineralization support the environmental case.

Sonoro Gold's management team brings significant relevant experience, having collectively built 11 mines in Mexico over the past 40-50 years. This track record provides confidence in their ability to execute on the current development plan.

Investment Thesis for Sonoro Gold

• Near-Term production catalyst: Environmental permits expected within 6 months, low initial CAPEX of $15.5M, and low-cost heap leach operation provides strong margins
• Significant Resource Growth Potential: Only 30% of known mineralization drilled with potential to grow from 500K oz to 2M oz, and higher-grade zones identified for priority drilling
• Strong Gold Price Leverage: Original PEA economics based on $2,000/oz gold where current gold price of $2,700/oz significantly enhances returns
• Improving Political Environment: New administration openly supportive of mining investment, removal of potential open-pit mining ban, billions in foreign investment ready to deploy
• Experienced Management: Track record of building 11 mines in Mexico with deep local operating experience and strong relationships with regulators

Sonoro Gold presents a timely opportunity at the intersection of several positive trends: Mexico's improving stance toward mining investment, strong gold prices, and a project approaching key development milestones. The combination of low initial capital requirements ($15.5M), significant resource growth potential (from 500Koz to potentially 2Moz), and experienced management with local operating expertise positions the company well for near-term development. With environmental permits expected within six months and billions in foreign investment preparing to return to Mexico's mining sector, Sonoro offers investors exposure to both project-specific catalysts and broader macro themes in Mexican mining. The company's strategy of phased development funded by operational cash flow reduces financing risk while maintaining upside potential through resource expansion.

Macro Thematic Analysis

The transition from AMLO's administration to President Claudia Sheinbaum marks a potentially transformative moment for Mexico's mining sector. Following six years of regulatory uncertainty and concerns over potential open-pit mining bans, the new administration is actively signaling its openness to foreign investment and mining development.

This policy shift coincides with several macro factors favoring mining investment in Mexico:

• Nearshoring Trend: Companies seeking to reduce dependence on Asian supply chains are increasingly looking to Mexico as a manufacturing hub, driving infrastructure development.
• Strong Gold Price Environment: With gold trading above $2,600/oz, previously marginal projects become highly economic.
• ESG Focus: Mexico's emphasis on sustainability aligns with global investor requirements.
• Infrastructure Advantages: Established mining jurisdictions like Sonora offer existing infrastructure and skilled workforce.
• Capital Return: Billions in investment capital that has been sitting on the sidelines awaiting policy clarity may now deploy.

The timing appears particularly favorable for companies like Sonoro Gold that have advanced projects through the previous administration's challenges and are now positioned to benefit from improved sentiment and faster permitting processes. For investors seeking exposure to gold production with significant resource growth potential, Sonoro offers a compelling combination of near-term catalysts, experienced management, and macro tailwinds from both strong gold prices and improving Mexican mining policy.