Mr. Gordon Tainton reports

AZARGA METALS AND SABRE GOLD MINES RE-STRUCTURE AGREEMENT

Azarga Metals Corp. has reached terms with Sabre Gold Mines Corp. to restructure the terms of the Marg project acquisition located in central Yukon.

Marg project agreement

Sabre and Azarga Metals are parties to an asset purchase agreement (APA) made Nov. 8, 2021, in respect of the Marg project, on terms announced Nov. 9, 2021. Sabre and Azarga Metals have agreed to amend the APA to an option to purchase agreement, whereby, if Azarga Metals does not complete the option maintenance payments and exercise the option to purchase the Marg project (see below), the option to purchase will expire and the title to the Marg property will be transferred by Azarga Metals to Sabre.

In consideration of Sabre's debt forgiveness, Azarga Metals has agreed to increase the net smelter return royalty (NSR) from 1 per cent to 2 per cent, with 1 per cent continuing to be subject to buy back for cash consideration of $1.5-million.

Option maintenance payments:

• Subject to the approval of the TSX Venture Exchange, Azarga Metals will immediately issue 2,866,666 common shares at a deemed price of 7.5 cents per share and a total value of $215,000 that will satisfy in full the outstanding amount that was due for payment by Azarga Metals to Sabre on Dec. 6, 2022. The shares issued to Sabre will bear a legend restricting trading for a period of 18 months from the date of issue.
• On Dec. 1, 2024, Azarga Metals will pay Sabre $33,500 in cash or shares at the option of Azarga Metals.
• If Azarga Metals has not exercised its option to purchase, on or before Dec. 1, 2024, Azarga Metals will pay Sabre $33,500 in cash or shares, at the option of Azarga Metals on Dec. 1, 2025.

To exercise the option to purchase, on or before Dec. 1, 2025, Azarga Metals will pay Sabre a cash payment of $335,000, after which Azarga Metals will own the Marg project free and clear, subject only to the NSR, and Sabre will immediately thereafter discharge its security charge registered on the Marg project.

Security based compensation

On Jan. 5, 2024, a total of 1.2 million restricted stock units (RSUs) were granted to the three directors of the company under the company's equity incentive plan. The RSUs vest on the first anniversary of the grant date. A portion of these grants represent compensation to the directors for their service to the company in 2023. The company does not currently pay cash to its independent directors.

In addition, a total of 800,000 stock options were granted to certain officers of the company. The stock options are granted pursuant to the company's stock option plan and grant the holder the right to purchase one common share at a purchase price of seven cents per common share for a period of five years from the date of grant.

We seek Safe Harbor.