Pilar Gold’s MLSE Drilling Update

Dear Pilar Gold Shareholders and Interested Parties,

Pilar Gold Inc is pleased to announce that it has signed a 3 year offtake agreement with Trafigura Group Pte Ltd for all of our gold and silver production from the PDGM mill (Pilar de Goiás Desenvolvimento Mineral) in Brazil. As part of this arrangement Trafigura has provided Pilar Gold with a short term revolver facility which can be drawn anytime. A first gold shipment was made last week to Trafigura and represents an important step in developing a strong long term relationship with this exciting group. We would like to thank Martin Dutto and Alix Prezioso from Trafigura for their hard work and support – they are great to work with.

Production from our Cascavel and Livramento gold mills are not part of this offtake agreement. These two mills are a key focus for Pilar in 2022 to ramp up production through investment in fleet and mine development. See the latest February presentation by clicking on the link below.

Pilar Gold Investor Presentation – February 2022

Due to the ongoing interest since closing our recent PP we have decided to upsize the raise from C$3.5 million to C$5.0 million and will keep the subscription open till the end of this month. This round is set at 70 Canadian cents with a full 2 year warrant at $1 per share. Post money, we expect to have 231m shares and warrants out which implies a valuation of only C$161 million.

We think the global economy might be entering the early stages of hyperinflation and want to have all 4 Production hubs producing as soon as possible to get ahead of costs and take advantage of rising prices. We follow www.shadowstats.com closely where John Williams estimates January’s US Alternate CPI was 15.6% YoY versus the official 7.5% announced last week. If he is right, this implies negative real interest rates of ~13.6%. John says this is “the steepest inflation rate since June 1947.”

We think this is highly supportive for gold and want to increase our monthly production from 4,000 ounces to 6,000 ounces by the end of this year by reopening Caiamar, Cascavel and Livramento mines. At the same time we are putting the team together again at our Bodó Tungsten mine and note that prices continue to rise in this exciting market.

An investor asked me last week what our monthly EBITDA is likely to be if we achieve 6,000 ounces a month based on his $2,250 per ounce gold forecast. Danny is not as bullish as we are about gold but our back of the envelope at this price is around US$5 million per month of EBITDA. This would imply US$60 million EBITDA over 12 months and put our current PP round on just 2.3 EV/EBITDA. We believe Pilar will get to 10,000 ounces per month by early 2024 as Sertão begins to show significant grade and tonnage through the Pilar mill. After years of under investment in the Pilar and Faina businesses we are really keen to grow this exciting collection of mines, create more employment in the district and support our incredible staff and suppliers.

Drilling at Maria Lazara South East which is testing the mineralisation 3km to the south of our current ML mine is going well and Paulo will send you a report later this week. Our third drilling project at the Pilar mine is also showing some excellent intersections that you can see in the presentation attached.

Private Placement Subscription Document (Online Application)

It has certainly been a tough but exciting 3 years since we started building this business and really appreciate the support from our 370+ investors. We are blessed with an amazing management and staff at Pilar and consider Brazil to be the greatest country on earth with so much opportunity to grow. We believe we are primed for an excellent 2022 and will continue to focus on maximising the value of our large portfolio of mines and mills.

In some ways the lack of financing that has been a constant theme for the junior gold miners over the last 8 years has made us stronger and more focused on the pennies. While money has flooded into “tech” over this lean stretch for us, a lot of it went into zombie companies that promise the world and continue to burn cash. Perhaps the tide is turning and money is now flowing back into real businesses with real cashflow and long life mines as we possibly enter the greatest commodity bull market of a lifetime.

Regards,

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

Charles Chebry | President
charles.chebry@pilargold.com
CA: +1 403 680 8511

Edward Balme | Head of Investor Relations
edward.balme@pilargold.com
BR: +55 65 99354 9387