Dear Shareholders and Interested Parties,

Pilar Gold Inc is pleased to announce the completion of the acquisition of the tungsten mine “Bodó Mineração” from Brazil Tungsten Holdings Limited (BTHL). Bodó Mineração is situated in the State of Rio Grande do Norte, Brazil and was producing a high-grade 64% scheelite (caWO3) concentrate up until the mine’s closure in March 2017 with an average plant grade of 1.44% contained Wolfram WO3 (Tungsten). To put that in perspective this is equivalent to 4.3% copper equivalent at current prices. 

At the time of the mines closure the tungsten market suffered an extended period of price weakness due to excessive exports from Chinese producers. Today the market has begun to tighten and is now trading at $33,000 per tonne compared to $18,000 when the mine was closed. The historical high in the tungsten price was $60,000 per tonne in 2012.

Tungsten is considered to be one of the rarer elements and global mine supply is only 80,000 tonnes per year, with 80% produced in China. New mine supply is very constrained with some of the lower grade projects in Portugal and Spain taking time to ramp up and aging mines in China facing declining grades. The only new big mine coming onstream is the exciting Tungsten West mine in Devon, England which will commission in 2023.

We are excited about the potential of Bodó Mineração and its high grade geology. We hope to bring the mine back in a much larger configuration with an intention to produce 800 tonnes of tungsten in 2023 and up to 2,000 tonnes per annum by 2025. The high-grade nature of the Bodó orebody and thickness of the mineralisation makes it suitable to use similar mining techniques we adopt at our Pilar and Maria Lazara mines at PGDM. Our first step is to complete a 5,000 to 6,000 metre drilling campaign to define a 5 year mine plan.   

Please click on this link that Edward has prepared to illustrate the potential of this new business for Pilar Gold shareholders.

The completion of the Bodó Mineração acquisition means Pilar Gold now has 4 Production hubs in Brazil.   Pilar believes that the cost of building new mines and mills will continue to experience significant cost inflation in 2022 with long lead times to commissioning due to difficulty in securing equipment. Our acquisition of Bodó gives us a fast-track approach to a low capex return to production, similar to that of Cascavel and Livramento.

I believe Pilar Gold is well positioned for a rising gold and tungsten price market.  Due to the incredible support of our 350+ investors we have been blessed to seize opportunities when they come along.  Last year our main focus was to raise the US$20.5 million of cash to pay the first two installments to Equinox Gold for the Pilar complex. The third and final payment of US$17.5 million is not payable until November 30th, 2023 which gives us time to grow the business by modernising the Pilar mill, expand the Pilar mines but also to build Cascavel and Livramento into standalone 1,000 ounce a month operations each. If all this goes to plan then there is no reason our business cannot grow from 4,000 ounces to 8,000 ounces per month by mid 2023, excluding the benefits of our new Tungsten business. This cashflow will allow us to achieve our goals as well as our go public strategy which is set for the first half of this year. 

As a vote of confidence perhaps of our strategy, the BTHL Board has agreed an all share deal and will receive Pilar Gold shares at the current fund-raising round of 70 Canadian cents with a full warrant of $1.00 per share. We would like to thank the BTHL Board for their patience and support in completing this transaction and we're very excited to be entering the Tungsten business, which has for the most part been a collection of small under funded western producers struggling to ride the whims of Chinese exports that appear to be drying up.

Our C$3.5 million fund raising is on track to close at the end of this month and we thank everyone who has supported us in this round and previous rounds.  At a post money valuation of only US$120 million we believe Pilar Gold has good scope to continue to grow shareholder value. 

If you would prefer to complete a share subscription using traditional forms please contact Edward.Balme@PilarGold.com

Thanks again for your support and please contact Edward or myself if you have further questions.

Regards,

Jeremy Gray | CEO
jeremy.gray@pilargold.com 
UK: +44 7769 388376

Edward Balme | Head of Investor Relations
edward.balme@pilargold.com
BR: +55 62 98538 0014