Mr. Tony Makuch reports

DISCOVERY SILVER PROVIDES CORDERO PROJECT UPDATE

Discovery Silver Corp. has provided a project update on its flagship Cordero project, located in Chihuahua state, Mexico.

Tony Makuch, president and chief executive officer, stated: "We have made excellent progress so far this year on the critical derisking items for Cordero -- surface rights, water, power, permitting and the feasibility study -- as we systematically advance Cordero towards a construction decision. We recently secured surface rights covering the proposed open pit and key infrastructure locations at the project. We have also identified the potential sources of water for the project and recently acquired a significant volume of water rights. We received two power studies earlier this year confirming there is sufficient capacity in the existing grid to supply the project for mine operations and establishing the work required to access the grid.

"We are putting the final touches on our environmental impact statement, a significant step in the permitting process for Cordero and the culmination of detailed social and environmental assessment work completed by the company.

"Our feasibility study work is well advanced and remains on schedule for completion in [the first half of] 2024. Recent drill results highlight the potential to further grow reserves within and on the margins of the open pit. We also remain focused on optimization opportunities within the study, including potentially reducing reagent costs, achieving higher recoveries and lowering mining costs through adopting larger benches and bigger mining equipment."

Key derisking items

The company is set to initiate the permitting process in the next three to four weeks with the submission of its environmental impact statement (manifesto de impacto ambiental, or MIA) to the Mexican federal environmental department (SEMARNAT). The MIA is one of the principal permits required for the development of Cordero and encapsulates extensive social and environmental work programs completed by the company's team in Mexico since 2020 in parallel with multiple reviews by third party consultants.

The company has reviewed the expected changes to be made with the new mining law recently introduced in Mexico and does not expect the new law will have a material impact on the project timeline. It is the company's intention to be in full compliance with all Mexican regulatory requirements alongside its overarching commitment to meet the highest industry standards for environmental protection, social responsibility, and health and safety. The company's MIA submission incorporates the expected changes to the new mining law, in particular the inclusion of supplementary details of the project's closure and reclamation plans. Cordero benefits from being located on private land in an area of Mexico (Chihuahua state), where mining has a long history and is a key economic contributor.

The company recently secured the surface rights that correspond with the planned open pit and key infrastructure locations at Cordero as well as a significant volume of water rights. For hydrogeology, the company is continuing its work with Mexican specialist consultant Investigacion y Desarrollo de Acuiferos y Ambiente (IDEAS) to build on previous hydrogeology drilling to develop a more detailed groundwater flow model within and near the open pit and geophysical surveys farther away from the pit to guide future water exploration drilling campaigns. Discovery also recently engaged M3 Engineering & Technology Corp. to complete a technical review of the scope and cost to source water from existing water treatment plants in the region.

An impact assessment study and power installation study by Mexican electrical infrastructure authority CENACE were delivered earlier this year, with confirmation that there is sufficient capacity in the existing power grid to supply the project with power for operations at peak throughput levels. Standard upgrades of the Camargo II substation will be required as well as the installation of a 74-kilometre power line along the existing power corridor. This scenario confirms prior assumptions about power supply to Cordero and is an important milestone in derisking the project. The work to be undertaken in the feasibility study for power supply will entail a detailed cost estimate for the construction of the power line and preparation of tender documentation to allow qualified contractors to bid on the defined scope. The option to use renewable energy sources at site to supplement grid power will also be evaluated.

Feasibility study update

Study approach: The company will look to accelerate front-end engineering design work as part of the feasibility study (FS) scope to increase the confidence level of the initial capital cost estimate and to shorten the timeline between the study completion and the project build. As part of Discovery's overall approach to ensuring successful project execution, the company plans to expand its owner's team through the course of the year with a skill set focus on processing, mining, and engineering, procurement and construction management.

Reserves/resource update: The FS will be supported by an updated reserves and resource estimate to be released concurrently with the results of the study. The updated estimates will be based on a total of approximately 310,000 metres in 793 drill holes. This includes an additional 35,000 metres in 103 drill holes, completed since the update in January, 2023, focused on resource upgrade and reserve expansion opportunities.

Metallurgical test work: Test work will be focused on the potential reduction of reagent costs through minimizing reagent dosages and testing of lower-cost substitute reagents. Variability test work focused on blend optimization over the life of mine will also be completed. This will consist of testing of rock type blends and of higher oxide-sulphide blends (up to 20 per cent oxides). Additional comminution test work, including sensitivity of regrind sizes on recoveries and testing alternative regrind mills, will also be completed. The test work is being conducted by Blue Coast Research Ltd. with oversight from Libertas Metallurgy Ltd. and Ausenco Engineering Canada Inc.

Process design: The process design will continue to incorporate staged expansions that are roughly in line with the preliminary feasibility study (PFS), with phase 1 expected throughput of approximately 25,000 tonnes per day and phase 2 throughput of approximately 50,000 tonnes per day. The study will focus on optimizing the selection of equipment based on these throughput rates and will also evaluate the opportunity to vary throughput levels over the life of mine based on changes in ore hardness of the different rock type blends.

Mining: Mine planning work for the FS will be completed by AGP Mining Consultants Inc. A trade-off study assessing potential cost reductions by moving to bigger benches and larger mine equipment will be completed as part of this scope. Options to reduce the project's carbon footprint, including the use of automation, electric vehicles and trolley assist technology, will also be assessed. The mine plan for the FS will include a more detailed mine schedule for the early years of the mine life (including monthly and quarterly resolutions). Like the PFS, the mine plan will be focused on mining rates and cut-off grade and stockpiling strategies that optimize the capital efficiency and net present value of the project.

Geotechnical: WSP Global Inc. has been selected for the role of geotechnical engineer for the study and will perform the geotechnical work for the open pit (pit slope analysis) and for the infrastructure locations of the project (input to foundation design). The first part of the geotechnical investigation is continuing through a condemnation drilling campaign with additional geotechnical drilling expected to commence in Q3 2023.

Tailings: WSP has been selected as the tailings storage facility (TSF) engineer for the study and will also be responsible for surface water management and the overall site water balance. Additional settling tests to further improve the water efficiency of the project will be completed. It is expected that the TSF location in the PFS will be maintained, with additional engineering to be completed to further define, cost and derisk this key facility. WSP will also support Discovery's permitting process in the areas of tailings and water.

Feasibility study project team

The feasibility study team consists of Ausenco, WSP and AGP Mining, with support from multiple independent third parties, as outlined in the attached table.

About Discovery Silver Corp.

Discovery's flagship project is its 100-per-cent-owned Cordero project, one of the world's largest silver deposits. The PFS completed in January, 2023, demonstrates that Cordero has the potential to be developed into a highly capital-efficient mine that offers the combination of margin, size and scalability. Cordero is located close to infrastructure in a prolific mining belt in Chihuahua state, Mexico.

Qualified person

Tony Esplin, FAusIMM, chief operating officer of Discovery Silver, is the company's designated qualified person for this news release within the meaning of National Instrument 43-101, Standards of Disclosure for Mineral Projects, and has reviewed and validated that the information contained in this news release is accurate.

We seek Safe Harbor.