AGUA ECOLGICA QUILLAGA A Major, Strategic Water Discovery in - - PowerPoint PPT Presentation

December 2019

1

A Major, Strategic Water Discovery in Northern Chile

AGUA ECOLÓGICA QUILLAGÜA

Certain statements contained in this presentation (“Presentation”) constitute forward‐looking information within the meaning of securities laws. All statements included in this Presentation (other than statements of historical facts) which address activities, events or developments that management anticipates will or may occur in the future are forward‐looking statements, including, without limitation, any statements regarding estimated valuations of assets and the estimated flow rate of any aquifers. Forward‐looking statements are often, but not always, identified by the use of words such as ‘‘seek’’, ‘‘anticipate’’, ‘‘contemplate’’, ‘‘target’’, ‘‘believe’’, ‘‘plan’’, ‘‘estimate’’, ‘‘expect’’, and ‘‘intend’’ and statements that an event or result ‘‘may’’, ‘‘will’’, ‘‘can’’, ‘‘should’’, ‘‘could’’ or ‘‘might’’ occur or be achieved and

• ther similar expressions. These statements are based upon certain reasonable factors, assumptions and analyses made by management in light of its experience and perception of historical trends, current

conditions and expected future developments, as well as other factors management believes are appropriate in the circumstances. However, whether actual results and developments will conform with management’s expectations is subject to a number of risks and uncertainties, including factors underlying management’s assumptions, such as, risks relating to the requirement for significant additional funds for development that may not be available; changes in national and local government legislation, including permitting and licensing regimes and taxation policies and the enforcement thereof; regulatory, political or economic developments in Chile or elsewhere; litigation; title, permit or license disputes related to interests on any of the properties in which the Company holds an interest; excessive cost escalation as well as application, development, permitting, infrastructure, operating or technical difficulties on any of the Company’s properties; risks and hazards associated with the business of development and mining on any of the Company’s properties; terrorism, civil unrest or an outbreak of contagious disease; mining industry operational hazards and environment concerns; uncertainty of estimates of mineral resources and mineral reserves; an impairment or write‐down of the Company’s mineral properties or assets forcing the Company to discontinue exploration and lose its interest in, or be forced to sell some of its properties. While the Company considers these assumptions to be reasonable based on information currently available to it, they may prove to be incorrect. These factors may cause the actual results of the Company to differ materially from those discussed in the forward‐looking statements, and there can be no assurance that the actual results or developments anticipated by management will be realized or, even if substantially realized, that they will have the expected results on the Company. Undue importance should not be placed on forward‐looking information nor should reliance be placed upon this information as of any other date. This Presentation does not purport to contain all information that a prospective investor may require and is subject to updates, revision and amendment. In furnishing this Presentation, the Company does not undertake or agree to any obligation to provide attendees with access to any additional information or to update this Presentation or to correct any inaccuracies in, or omissions from, this Presentation which may become apparent. The information and opinions contained in this Presentation are provided as at the date of this Presentation and are subject to change without notice. No representation or warranty, express or implied, is given by or on behalf of Gold Dragon Resources (GDR), Potash Dragon SpA (PD SPA) , and Compañía Minera Gold Dragon Resources Chile SpA (CMGDRC), their shareholders, directors,

• fficers or employees nor any other person as to the accuracy or completeness of the information or opinions contained in the Presentation.

This Presentation is not, and under no circumstances is to be construed as, a prospectus, an advertisement or a public offering of securities, in the United States, Canada, or any other jurisdiction. No securities commission or similar authority of the United States, Canada, or any other jurisdiction has reviewed or in any way passed upon this document, and any representation to the contrary is an offence. The securities of the Company have not been and will not be registered under the United States Securities Act of 1933, as amended (“Securities Act”) or state securities laws and may not be offered or sold in the United States or to or for the account or benefit of U.S. persons (as such terms are defined in Regulation S under the Securities Act) except pursuant to certain exemptions. This presentation should not be redistributed by recipients to persons with addresses in the United States. Any such distribution could result in violations of US law. The distribution of this Presentation in certain jurisdictions may be restricted by law and therefore persons into whose possession this presentation comes should inform themselves about and observe any such restrictions. Any such distribution could result in a violation of the law of such jurisdiction. Furthermore, this Presentation is not intended for distribution to, or use by any person or entity in any jurisdiction or country where such distribution or use would be contrary to local law or regulation. This Presentation and its contents are confidential and are being supplied for informational purposes and may not be reproduced, further distributed to any other person or published, in whole or in part, for any purpose. By receiving a copy of this Presentation, you agree to be bound by the foregoing provisions.

SAFE HARBOUR

Gold Dragon Resources (GDR), Compañía Minera Gold Dragon Resources Chile SpA (CMGDRC), SpA., and Potash Dragon SpA (PDSPA)

CAUTIONARY STATEMENTS ON FORWARD LOOKING INFORMATION

2

Introduction

Water is life. Everywhere, and especially in the deserts of Northern Chile where stakeholders compete fiercely for the limited available water

• The Quillagüa Artesian Aquifer (QAA), a vast, previously unknown, sustainable artesian reservoir

deep under the Atacama desert and was accidentally discovered while exploring for lithium and potash rich brines

• GDR has control over this sustainable reservoir and its successful development can be

transformative for the region, which suffers severe water shortages and growing demands and pressures from communities, and the nearby mining community, not to mention water needed by nature and natural ecosystems.

AGUA ECOLÓGICA QUILLAGÜA

3

• GDR will incorporate a BC company Agua Ecológica Quillagüa British

Columbia, (“AEQ”); AEQ is raising $10 million in equity to complete a feasibility study, permit two additional production wells and install a distribution system requiring US$17 million in debt to reach full commercialization of a 300 L/s raw process water supply system

• To eliminate the risk of impacting any other water resources, the

project pumps will be set at 100 meters below surface within 500 meter deep concrete sealed steel casings, which will safely extract the water only from the deep reservoir between 500 and 750 meters below surface

Current Situation

Compared to prior Geological times this area of Chile is going through a very dry period. Precipitation is predominantly in the form of mist, locally called the Camanchaca, the rainfall is limited to precipitation in the higher elevations to the east. And the only consistent water flow is from the Rio Loa that has its source high in the Andes. Quillagua has historically been a flood plain type oasis town watering crops via irrigation channels fed by the Rio Loa. Recently this is no longer possible due to:‐

• Initially the nitrate mines and more recently the gigantic copper mines have have reduced the water

volume upstream to process the ore and support the population.

AGUA ECOLÓGICA QUILLAGÜA

4

• All economic drivers in the area are constrained

by the lack of water.

• The natural arsenic pollution and other toxic

element concentration in the river water is aggravated by the reduced fresh water volume flow removed upstream. That combined with industrial pollution has made the water unfit for agriculture

• The nitrate miners to the N have purchased most
• f the water rights and land held by the farmers

at Quillagua in an attempt to re‐water the Salar de Llamara surface aquifer at the Crystal Springs.

Now the Rio Loa is a small, contaminated stream barely making it to the sea and Quillagua is a village that has lost its main source of wealth.

The Quillagua Artesian Aquifer (QAA)

• The QAA is an artesian aquifer located between 500 and 900 m below surface, capped by a thick

clay layer, that does not have any known surface expression, or current users

• The Aquifer is fed by rainfall at high altitude in the Andes foothills, and this recharge is currently

not accounted for in any water balances since no groundwater has ever been exploited here

• GDR’s independent consultants estimate that the newly discovered aquifer may contain up to

606 million m3 of water with a sustainable production capacity of at least of 1000 L/s

AGUA ECOLÓGICA QUILLAGÜA

5

• With Brackish Water Reverse Osmosis (BWRO)

this water can be treated to make it potable using the abundant solar energy harnessed in the area.

• AEQ

has two exclusive water exploration concessions for the prime portion of the

• aquifer. The N concession is secured and the S

concession needs to be renewed at the end of May 2020. AEQ has until end of July 2020 to submit the exploration results and to apply for any water found in addition to a current water use application that is in process for artesian water flow from the discovery well located in the N concession

AEQ PROJECT LOCATION

6

AEQ Project Water Exploration Concessions

Existing water Rights in Region I and II Legend

CMGDR has secured two exclusive water exploration concessions covering 67,125 hectares in Northern Chile

• The project has been broken into stages to reduce financing risk
• Phase one: US$10 million process water feasibility study and process water

commercialisation including the distribution system requiring US$17 million in debt to reach a capacity of a 300 L/s raw process water

• At the conclusion of this Phase 1 project the objective will be to install a 400 L/s

Brackish Water Reverse Osmosis potable water treatment plant and ramp production up from the deep reservoir to a rate between 1,000 to 1,400 L/s

A UNIQUE INVESTMENT OPPORTUNITY

A staged Investment to reduce risk

7

• The Phase 1 project is estimated to

generate US$32 million in annual EBITDA. Without further equity investment, this project could profitably supply industrial water to mines in the area and fund the additional capital infrastructure from cash flow, albeit at a much slower pace

• GDR will continue to be the operator of the

water project under the terms of an existing Operating Agreement approved by GDR and the current Chile subsidiaries

AEQ CAP TABLE

Cap Table

8

All dollar amounts are in US dollars

Goldwater QAA Company model May 2019 BRO v17.xlsx

Ownership of AEQ Pre closing Pre Closing (%) After Tranche 1 After Tranche 1 (%) After Tranche 2 After Tranche 2 (%) Gold Dragon Resources 4,985,291 35.3% 4,985,291 22.2% 4,985,291 18.0% AEQ Directors and Officers 2,689,027 19.0% 2,839,027 12.7% 2,839,027 10.2% Inspiration Mining and Associates 5,250,259 37.2% 5,250,259 23.4% 5,250,259 18.9% Individuals 1,196,476 8.5% 1,196,476 5.3% 1,196,476 4.3% Issued and reserved for new hires under directors control and subject to voting pool agreement 289,560 1.3% 289,560 1.0% Issued to Chile service providers in lieu of additional work fees and subject to voting pool agreement 681,978 3.0% 681,978 2.5% Initial Investor 6,666,667 29.7% 6,666,667 24.0% Finders fee 525,000 2.3% 525,000 1.9% Commercial Investors 5,333,333 19.2% Total Authorised 14,121,052 100% 22,434,257 100.00% 27,767,590 100.0%

AEQ PROJECT FINANCIALS

Use of Proceeds

9

All dollar amounts are in US dollars

Summary Statistics and Price Sensitivity

AEQ QAA company model October 2019 BRO v3

Gold water Summary Statistics Price ‐30% Price ‐15% Price +15% Price +30% Total capital exc ongoing $ $112,354,586 $112,354,586 $112,354,586 $112,354,586 $112,354,586 Hilaricos L/s 1,000 1,000 1,000 1,000 1,000 Water sold (m³) 486,626,857 486,626,857 486,626,857 486,626,857 486,626,857 Revenue Received $1,744,643,579 $2,118,495,774 $2,492,347,970 $2,866,200,165 $3,240,052,361 Water price ($/m³) $1.79 $2.18 $2.56 $2.94 $3.33 Gross operating cost $ $158,766,366 $158,766,366 $158,766,366 $158,766,366 $158,766,366 Cost of water ($/m³) $0.33 $0.33 $0.33 $0.33 $0.33 Operating margin 82% 85% 87% 89% 90% Discount rate 10% 10% 10% 10% 10% NPV of Sales of Water Co $108 $163 $216 $269 $322 IRR of water supply Co 25% 31% 37% 43% 48% Tranche 1 2 Total Grand Total Funding amount 10,000,000 $ 20,000,000 $ 30,000,000 $ 17,019,421 $ 49,838,449 $ 2,688,347 $ 12,808,370 $ 112,354,586 $ Phase 1 2 1 2 1 2 Use of Proceeds Past costs 1,000,000 $ ‐ $ 1,000,000 $ ‐ $ ‐ $ ‐ $ ‐ $ 1,000,000 $ Transaction costs 150,000 $ ‐ $ 150,000 $ ‐ $ ‐ $ ‐ $ ‐ $ 150,000 $ G&A 2,592,023 $ ‐ $ 2,592,023 $ 2,670,158 $ ‐ $ 421,772 $ 36,009 $ 5,719,962 $ Water Wells 4,130,574 $ 2,705,548 $ 6,836,122 $ $ 5,953,565 $ $ 1,541,077 $ 14,330,765 $ Hilaricos delivery Infrastructur 1,037,027 $ 15,536,191 $ 16,573,219 $ 13,050,371 $ 39,290,586 $ 2,061,405 $ 10,070,495 $ 81,046,075 $ Environmental Studies 515,000 $ ‐ $ 515,000 $ ‐ $ ‐ $ ‐ $ ‐ $ 515,000 $ Contingencies 575,376 $ 1,758,261 $ 2,333,637 $ 1,298,892 $ 4,594,297 $ 205,170 $ 1,160,789 $ 9,592,785 $ ‐ $ ‐ $ Total 10,000,000 $ 20,000,000 $ 30,000,000 $ 17,019,421 $ 49,838,449 $ 2,688,347 $ 12,808,370 $ 112,354,587 $ Debt Op Profit Equity Non Equity

DEVELOPMENT SCHEDULE

10

Funding tranches and milestones

1 1 1 1 1 1 1 1 1 1 1 2 2 2 2 2 2 2 2 3 3 3 3 3 4 5 5 5 5 5 5 5 6 6 6 6 6 6 6 7 Month 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 Phase Date Jan‐19 Feb‐19 Mar‐19 Apr‐19 May‐19 Jun‐19 Jul‐19 Aug‐19 Sep‐19 Oct‐19 Nov‐19 Dec‐19 Jan‐20 Feb‐20 Mar‐20 Apr‐20 May‐20 Jun‐20 Jul‐20 Aug‐20 Sep‐20 Oct‐20 Nov‐20 Dec‐20 Jan‐21 Feb‐21 Mar‐21 Apr‐21 May‐21 Jun‐21 Jul‐21 Aug‐21 Sep‐21 Oct‐21 Nov‐21 Dec‐21 Jan‐22 Feb‐22 Mar‐22 Apr‐22 1 Hil2 water application and MOU for Hil2 water 2 Drill 1a and Hil3 3 Receive water permit for Hil2 4 Start sales from Hil2 5 Apply for water permits for Hil 2a and Hil 3 6 Construct Pipeline 7 Complete and permit Production wells 8 Project complete Funding Tranche $m 1 10.0 Initial Investment 2 20.0 Commercial Investment 3 ‐ 4 80.0 Debt DGA Exploration Permit Granted 29 May 2018 ‐ Hil‐2a 20"‐6" 764m hole With Pump at 100m HH Hil‐3 Hil‐3 8"‐3" 592m HH Hil‐1a 20"‐6" 764m hole With Pump at 100m HH Hil‐4 20"‐6" 592m hole With Pump at 100m HH Hil‐5 20"‐6" 764m hole With Pump at 100m HH Hil‐6 20"‐6" 592m hole With Pump at 100m HH Hil‐7 20"‐6" 764m hole With Pump at 100m HH Hil‐8 20"‐6" 592m hole With Pump at 100m HH Hil‐9 ‐ Servitude Servitude Application Impact Settlements with landrights owners Receive Final Servitude Environmental studies Manage studies Draft Report Respond to queries Final Report MOU Water Use Permit Distribution Pipeline 1 Distribution Pipeline 2 Well Power lines BRO plant 1 BRO Plant 2

REGION II WATER MARKET BENCHMARK ANALYSIS AND EMISSIONS

11

Benchmarks: Aguas de Antofagasta S.A.: Sole supplier of regulated water in Region II AGUA ECOLÓGICA QUILLAGÜA (AEQ) Capex and Opex costs and revenue assumptions AGUA ECOLÓGICA QUILLAGÜA (AEQ) Planned emissions comparisons

Cochilco forecast: Desalination of sea water‐ average mine, N Chile (Dec 2018) Kg of CO2/m3 Delivery of process water to average Chile copper mine (Desal.) 9.0* AEQ delivery of potable water at 1000 m.a.s.l. 1.1* % AEQ Equivalent emissions comparison (assuming fossil fueled energy) 12% *NB, Based on fossil fuel supplied energy for direct comparative purposes – The AEQ facility is planned to have sufficient storage and scale to run intermittently using 100% renewable energy only. All dollar amounts are in US dollars. Aguas de Antofagasta S.A. (AR 2017) L/s M

3 p.a.

(million) Total Cost (US$/m

3)

Sales Price $/m

3

Revenue (US$MM) p.a. Cost (US$MM) p.a. EBITDA (US$MM) p.a. EBITDA US$/M

3 Enterprise value

US$MM 10X Cordillera supply water rights (regulated) 341 10.8 0.53 2.3 $25 5.65 19 0.77 190 Cordillera supply water rights (un‐regulated) 591 18.6 0.53 4.2 $78 9.79 68 0.87 683 Desalination La Chimba, Antofagasta 806 25.4 1.96 2.3 $58 49.85 8 0.14 84 Total 1,738 54.8 1.19 2.9 $161 65.30 96 0.59 957 AGUA ECOLÓGICA QUILLAGÜA (AEQ) (2019) L/s M

3 p.a.

(million) Total Cost (US$/m

3)

Sales Price $/m

3

Revenue (US$MM) p.a. Cost (US$MM) p.a. EBITDA (US$MM) p.a. EBITDA US$/M

3 Enterprise value

US$MM 10X Phase One Raw Process water (30 mnths) 300 9.5 0.12 3.5 $33 1.14 32 0.97 320 Phase Two Potable water 400 12.6 0.56 2.3 $29 7.03 22 0.76 219 Phase Two Process water 209 6.6 0.12 3.5 $23 0.79 22 0.97 223 Total 909 28.7 0.31 3.0 $85 8.96 76 0.89 762

Rio Loa Basin Water Market Price Analysis

Water market price analysis summary

12 Confidential

Water is a scarce commodity in the Rio Loa basin. To determine a market price for water, various research and analyses have been conducted:- 1. The current cost to purchase water from the main water utility. Regulated drinking water sales price US$2.90/m3 1738 l/s Unregulated industrial water sales price US$4.2/m3

Aguas de Antofagasta (“ADASA”) operates a 30-year concession for the distribution of water in Chile’s Antofagasta Region, which it acquired from the state-owned Empresa Concesionaria de Servicios Sanitarios S.A. (“ECONSSA”) in

• 2003. The Ministry of Public Works, Law of Tariffs of Sanitary Services, "DFL MOP N ° 70/88"; requires that tariff

formulas are set every five years for the services related to the production and distribution of drinking water and collection and disposal of waters in Region II by ADASA. They were last Gazetted in January 2017. They sell 32% of their water in the industrial unregulated market

• 2. The current cost to deliver water by tanker Ex-Calama-US$4.6/m3 ; FOB Quillagua-US$23.1/m3
• 3. The average price (2010-2014) to purchase water rights in the Rio Loa Basin: US$100,264/L/s

Water rights in Chile are fungible. The January 2016 Chumacero Study analyzed historic prices that water rights were sold in the Rio Loa Basin area, to assist Aguas de Antofagasta purchase water rights in compliance with the Superintendencia de Servicios Sanitarios (SISS) guidelines. N.B. the market availability for new water supply is restricted by the lack of new water discoveries. Desalinated water cost will likely be the the eventual equilibrium price in the Loa Basin due to incremental supply volume being almost non-existent

4. The cost to supply sea water to the Llamara basin. US$2.84m3

Sea water is a viable replacement for fresh water in the processing of caliche ore for Nitrates, Iodine potash. The main constituent in caliche is salt, so salt in the water will leave more salt undissolved.

5. The cost to supply desalinated water to the Copper mines @ 1000 M A.S.L. US$4.24m3

Sea water has been tried in copper flotation but has a negative affect on copper grade and molybdenum recovery, due to the buffering action increasing the lime required to reach the optimal pH for copper flotation. The QAA water does not have this buffering action and can be used for copper flotation with no negative affects compared to fresh water. The QAA water should not be used for copper oxide leach as the chloride content will impact stainless steal corrosion.

RISK ANALYSIS

Downside Scenario Has Value

13

Risk Analysis and Mitigation Permits Not Granted Once a large water well is sunk and operating, AEQ and its consultants will collect the necessary information and submit a technical report to the Dirección General de Aguas (DGA) ‐ the government authority that oversees water permitting. The risk AEQ faces is that the DGA grants a permit for a lower flow rate than expected. Fortunately, the DGA’s processes are based on science and fact Water volumes/flows less than anticipated Based on the current knowledge of the AEQ, the Company’s management believes the aquifer is large and will have very good transmissivity (the rate of flow in the aquifer). Hil‐2 is the only operating well and was not designed as a water well but provides clear evidence that the aquifer is artesian and recharges relatively quickly. The new wells are designed as water wells and should provide the information required to properly characterize the aquifer Reservoir turns out to not be isolated from current known aquifers There have been a number of water exploration holes drilled in the area and have not found an unconfined aquifer above the QAA. There are no water users above the QAA and no visible springs or wetlands. All of the current neighboring aquifers have been modelled and do not show any movement of water from or to the QAA. Failed Wells: Drilling deep water wells is not simple. AEQ has engaged Hellema Holland Engineering, a Chilean company that has the experience and equipment necessary. However, should Hellema Holland encounter significant problems with one of the wells, AEQ should have sufficient contingency funds to restart the drilling of the well Resource gets Nationalized Chile has a good history of respecting corporate rights, however by focusing on a strategy to benefit the local community, this risk should be reduced

• Gordon is a registered professional mining engineer who has 33 years of mining experience
• Previously the founding CEO of Toronto listed First Uranium Corporation and CEO of Simmer and Jack Mines for six years.

Before that Gordon spent four years with the Placer Dome Group in executive roles in South Africa, Canada and Australia

• Gordon started his career with Johannesburg Consolidated Investments where he worked for 18 years and became Chief

Operating Officer for Randfontein Estates and Western Areas Gold mines in South Africa

• Currently the President and CEO of Potash Dragon a 52% subsidiary of Gold Dragon Resources with assets in Chile

Gordon T Miller, President & CEO, Director, Pr Eng, NHDMM, PMD (UCT), SMP (Henley), MSAIMM

• Rob is a partner at Norton Rose Fulbright representing issuers and underwriters on corporate finance transactions, alternative

finance arrangements (royalties, streams, linked-notes), M&A mandates and proxy advisory matters, with a particular emphasis on mining and other natural resource sectors

• He has extensive international experience, having recently led offerings by issuers located in South Africa, Australia, the United

Kingdom and Canada with projects throughout the world. Rob also works in the technology and private equity sectors

Robert K Mason, Secretary, General Counsel and Director BComm (Hons), 1994 Carleton University: LLB, 1997 Osgoode Hall Law School at York University

COMPANY MANAGEMENT TEAM, EXECUTIVE DIRECTORS AND CONSULTANTS

14

• Jim is a Chartered Engineer, a fellow of The Institute of Materials, Minerals and Mining and has over 35 years’ experience in the

Southern African mining industry, including nine years on the Zambian copper belt and the rest in South Africa, covering the metallurgy of gold, uranium, PGM’s and copper

• Jim initiated the feasibility study into tailings treatment for what has become Mine Waste Solutions, serving as Chief Executive

Officer of First Uranium South Africa. This led to the listing of First Uranium on the TSX. After which Jim was the Chief Operating

• fficer and Director in the newly listed company

James W P Fisher, EVP and Director Ceng , Bsc (hons), EMBA (UCT),ARSM, FIMM, MSAIMM

15

• Mike has managed projects in Arizona, Argentina, Bolivia, Brazil, Chile, Colombia, and Mexico. He has spent much of his career

at Montgomery & Associates developing new water supplies and assessing aquifer conditions in arid environments, both in the southwestern U.S. and in the desert regions of South America

• His responsibilities have included designing wells and wellfields, characterizing hydrogeologic systems, analyzing groundwater

chemistry, and designing and implementing monitoring programs. One area of interest has been using satellite image analysis to assess long-term trends in environmental conditions

• He is a Qualified Person under Canadian Securities Administrators National Instrument (NI) 43-101 and a Competent Person

under the Australasian Joint Ore Reserves Committee (JORC) Code for lithium brine resource and reserve estimations. He has published and presented many professional papers during the last 30 years. Mike is also a fluent in Spanish

Michael J Rosko, Principal Santiago Operations Manager, P.G., Hydrogeologist – Montgomery & Associates

GDR DIRECTORS & EXTERNAL CONSULTANTS

• David was an investment banker for approximately 10 years focused on Mergers and Acquisitions of both public large

capitalization companies and smaller privately held companies.

• In 1999, David became the CEO of the Kissner Group which is one of North America’s largest vertically integrated salt mining
• companies. During his time at Kissner the company grew by more than 20 times, acquired 3 companies and issued high yield

bonds in the United States.

• After the sale of Kissner, David accepted Board roles at Polycor, AirSprint and One Floral and is currently the CEO of One Floral.

David Safran – GDR Director Water Resource Consultant

• Wouter starting his mining career with the Rand Mines Group in 1978. He gained extensive experience in both gold and platinum

mining in the Republic of South Africa whilst working for the JCI Group of companies, the Placer Dome Western Areas JV and Messina Platinum mines where he was General manager. Whilst with Placer Dome, Wouter participated in a Critical Incident Initiative task team to determine best practices for the Group in terms of safety and related systems. This assignment was conducted for an extended period of time in Canada, Chile and the USA (Nevada). Wouter also spent time with Read Swatman and Voight as both Construction and Project Manager . Wouter spent the past 4 years as General Manager at both Buffelsfontein Gold Mine and at Ezulwini Gold Mine, a subsidiary of First Uranium. He is a member of the SAIMM and the Association of Mine Managers or S.A. Wouter is currently a Senior Operational Manager working in Zimbabwe as a Mine Consultant, assisting a major Tantalite and Lithium minerals producer in transforming / optimising the Company’s Mine Operations

Wouter de Vos – GDR Director

16

EXTERNAL CONSULTANTS

• Gonzalo is one of the partners that heads the Natural Resources and Mining Group that deals with matters involving Mining,

Corporate and Commercial Law, M&A, Project Development, Foreign Investment and Contracts. He serves as legal counsel to a number of local and foreign companies, assisting in different processes of acquisition and divestment of companies or assets, private and public bids, cross-border transactions, project finance, due diligence, preliminary agreements and negotiation and drafting of contracts, including development of strategy and corporate structures and regulatory issues

• Gonzalo studied at the Law School of Pontificia Universidad Católica de Chile, graduating in 1994 with honors and was admitted

to the bar in 1995. In 1998 he obtained a LL.M. from Northwestern University, School of Law, Chicago, USA. He is member of the Chilean Bar Association and of the Rocky Mountain Mineral Law Foundation. Gonzalo speaks Spanish and English

Gonzalo Grez, Partner – Cariola Diez Perez-Cotapos Manuela Noguera , Associate – Cariola Diez Perez-Cotapos

• Manuela is an associate at Cariola focused on Corporate, M&A, Mining and Natural Resources
• She studied law and in 2014 graduated from Pontificia Universidad Católica de Chile.
• She speaks Spanish and English

Nicholas Walker, Partner – Puente Sur Outsourcing S.A.

• Nicholas is the founder of Puente Sur Outsourcing (“PSO”), a bilingual Chilean back-office management firm for foreign investors
• PSO, established in 1995, is focused on providing back-office management services to foreign companies with operations in Chile.

Services include: corporate registration, advisory and due diligence, accounting and tax compliance, payroll, treasury, logistics and invoice management, internal control, data processing, administrative support and legal representation

• PSO provides bookkeeping, tax filing and management reporting services to the Company

Legal Representative Legal Representative Accounting Services

17

OTHER SLIDES

Delineation of an unprecedented type of groundwater reservoir in N Chile, named the AEQ  In June 2018 CMGDRC secured exclusive water exploration permits

(covering 67,239 hectares) in respect of its newly discovered deep, untapped and pressurized groundwater reservoir near Quillagua in N Chile

 In March 2019 GDR received Ministerio de Bienes Nacionales (MBN)

rights, which provide a new clear path to certainty of water rights exclusivity compared to GDR’s previous planned permitting program

 Based on geophysics, drilling and flow test results, the Quillagua Artesian

Aquifer (AEQ) exploitation capacity is estimated to be excess of 1000 L/s of process water, with significant upside potential, at an altitude of 1065 m

 The pressure of the warm, brackish, artesian aquifer has been increasing

steadily over time and has no known impacts on surface.

 Drilling designs plan to cement‐in the steel casings of the production wells,

within the thick aquitard from surface to the top of the aquifer some 450 meters below surface.

 This will guarantee that the water is only drawn from the unique dynamic

artesian aquifer between 550 meters and 750 m below surface

 The brackish water has a content of 13,000 mg/L of dissolved salts, which

are sodium sulphate dominant and very low in arsenic

 The nearest water production wells, in the Pampa del Tamarugal, are

located approximately 50 km to the north and 90 km south of our project area, respectively

 These hydrogeologic basins are disconnected from the AEQ by outcrops of

impermeable basement rocks, which form extensive barriers. A vast impermeable clay aquitard, hundreds of meters thick, abuts these barriers and seals in the AEQ

A MAJOR, STRATEGIC WATER DISCOVERY IN NORTHERN CHILE

18

The AEQ static pressure on surface is 84 PSI Picture showing flow rate on opening wellhead valve

Core from 380 meters below surface showing the occurrence of a tuff layer, recently age dated by Sernageomin, within a thick sequence of clays that form the aquiclude at(13.45 ± 0.07 Ma.). Core from 639 to 652 meters below surface showing disaggregated and missing core, from within a thick sequence of sands, conglomerates and cobbles that host the pressurized aquifer. Tuffs at the bottom of the aquiclude and above the conglomerates (at 496.7 m) were dated at 24.5 ± 3.5 Ma

• PRIMARY OBJECTIVE IS TO COMMERCIALIZE THE RESERVOIR WITH A SCALABLE PHASE 1 (US$ 10 MILLION) PLAN

TO DELIVER PROCESS WATER TO A NEW CUSTOMER SERVITUDE SUPPLY HUB AT LAGUNAS AND CRUCERO

• PD SpA is in the process of applying for water use rights on the flow of its discovery well on a 23,000 Ha exclusive

water exploration concession owned by one of its controlled subsidiaries in N Chile

• For short term commercialization, GDR will initially target the Ministry of Public Works for water use offtake using

tanker trucking as a low‐capex, zero EIA, zero servitude, solution to supply a water to assist with a difficult contaminated water treatment situation at Quillagua

• GDR’s independent consultants estimate that the newly discovered aquifer may contain up to 606 million m3 of

water with a production capacity of at least of 1000 L/s for 28 years based on a total consumption of 5 % of the exploitable resource volume assuming a highly unlikely scenario of zero aquifer recharge

• the Pre tax project NPV for Phase one project is estimated to be US$ 130 million assuming an attractive FOB

Lagunas average water sales price of US$3.5 /m3

• The truly unique zero‐surface‐impact circumstances provide for the sustainable exploitation of deep, high‐volume,

low‐cost, potable, agricultural and flotation friendly mining water supply

• The AEQ water is not potable in its natural state, but a Brackish Water Reverse Osmosis (BWRO) process will

provide water in this hyper arid area, with a low carbon footprint due to being powered by renewable energy from either wind or solar, abundant on top of the project area

A UNIQUE DISCOVERY WITH SIGNIFICANT NEWLY ACQUIRED PERMTTING ADVANTAGES

AGUA ECOLÓGICA QUILLAGÜA (AEQ) water use commercialisation strategy

19

* Readers are cautioned that any reference to the AEQ’s flow rate is currently an estimate and that significant additional work must be carried out before the issuer will be able to verify such estimate

Mission Statement

To exploit in a socially, environmentally and sustainable way the Quillagüa Artesian Aquifer (AEQ) discovery to the benefit of all stakeholders. In a place where there is an extreme scarcity and need for potable, agricultural and mining water, and to help correct the unintended environmental consequences

• f mining and urbanisation that have severely damaged the ancient settlement
• f Quillagüa

AGUA ECOLÓGICA QUILLAGÜA

20

Background

The AEQ was discovered during the exploration for deep seated brines, a potential source of potassium and

• lithium. The exploration was conducted by Potash Dragon SpA (PD SpA) a subsidiary of Gold Dragon Resources

(GDR). PD SpA with assistance from GEODATOS SAIC and Montgomery and Associates Consultores Limitada, Santiago carried out significant technical work to identify the location and capacity of the aquifer. PD SpA applied for and received an exclusive water exploration right in 2015. which expired in 2017. The same right was applied for and received by Compania Minera Gold Dragon Resources Chile SpA (CMGDRC) in 2018. CMGDRC is also a subsidiary

• f GDR.

Cost to supply seawater to Pampa del Tamarugal (PdT) elevation

to be updated

Seawater and desalinated sea water supply to PdT mines

21

Eloisa SpA pumps seawater from the bay at San Marcos to their mine on the edge of the Salar De

• Llamara. We used their DIA application to

determine the capital and operating cost:

• Volume pumped 200L/s
• Capital Cost US$10.19m
• Operating cost
• Power

US$1.80/m3

• Labour

US$ 0.06/m3

• Maintenance

US$ 0.02/m3 The financial model returned a sales price of US$2.84/m3 for water that gave a $0 NPV over 5 years PD SpA have used a value of US$3.5/m3 for process water in their financial analysis. This includes pumping to Lagunas

Desalination water cost

Desal Capital cost

22

Plant Country Capacity (Ml/day) L/s Completed Capital Cost (USD M) Capital per l/s (US$ M) Gold Coast Desalination Plant Australia 133 1,539 2009 $1,180 $0.7666 Kurnell Desalination Plant Australia 250 2,894 2010 $2,067 $0.7145 Adelaide Desalination Plant Australia 274 3,171 2012 $1,768 $0.5576 Wonthaggi Desalination Plan Australia 411 4,756 2012 $3,382 $0.7110 Southern Seawater Desalination Plant Australia 274 3,171 2013 $1,388 $0.4378 Carlsbad Desalination Project USA 189 2,191 2016 $1,000 $0.4565 Average for Valuation Purposes (highlighted in green) $0.4839

Desal Operating cost

Operating Costs $0.72/m3 Teck QB II Pumping to 1000m $1.30/m3 Total Operating Costs $2.63/m3

DCF

• A DCF for a 1000L/s Desal plant
• US$484m capex and
• $2.63/m3
• 30 year life 10% discount rate
• $4.24/m3 Price gives a 0 NPV

The break even cost to desalinate sea water and pump it up 1000m is $4.24/m3

A UNIQUE INVESTMENT OPPORTUNITY

• The first equity raise of US10m increasing shareholding to 30%
• The second equity raise of US20m increasing shareholding to 43%
• a debt facility of US$67m

Investment proposal highlights:

23

• Two GDR controlled private Chilean companies hold overstaked title to the AEQ project (exploration licenses and

surface rights)

• The Chile subs and to be AEQ has three executives and three directors (Gordon Miller, Jim Fisher and Robert

Mason)

• PD SpA is 100% owned by Potash Dragon (Barbados) Inc. (“PDI”) and has an operating agreement with Gold

Dragon Resources (“GDR”),

• CMGDRC SpA is 100% owned by GDR Canada and has an operating agreement with GDR

GDR’s Private Chilean Companys as owners and applicants for water use rights in JV

CORPORATE STRUCTURE: Equity ownership at closing of the first tranche of financing

Slide 24

30% Gold Dragon Resources Corporation (“GDR”) (British Columbia - BC -) Potash Dragon SpA (Chile) Quillagua Water, Llamara, Solida and Hilaricos potash,

• ther fertilizers and related

minerals 28% Compania Minera Gold Dragon Resources Chile

• SpA. (Chile)

Inspiration Mining (IM) (23%)

AEQ Directors and Officers

13% 100% 22%

December 2019

AGUA ECOLÓGICA QUILLAGÜA, (BRITISH COLUMBIA)

Tranche 1 Finders Fee (2%)

BC AEQ BOARD Voting and Operating Agreement 65%

WATER RIGHTS NEW INVESTORS

CHILE: GDR CONTROLLED

Chile Service Providers (3%) D&O Incentive Plan (1%) IM Individuals (5%)

7%

GDR to incorporate a BC company AGUA ECOLÓGICA QUILLAGÜA BRITISH COLUMBIA , (“AEQ”);

• AEQ to issue shares at nominal value to approximate the current shareholdings of PDI, (primarily because PDI helped to fund the

work that led to the water discovery)

• The founding board of AEQ will mirror the current board of the Chile Subs and GDR (Gordon Miller, Jim Fisher, Wouter de Vos, Robert

Mason and David Safran)

• On closing GDR, its directors of AEQ, and Officers of AEQ will collectively own 35 % of the AEQ shares at closing of the transaction.

This group will enter into a voting agreement with New Investors (30%) to ensure a majority (65%) of the voting shares in AEQ

• At closing of the transaction;
• GDR, CMDGR, PD SpA, AEQ and New Investors will enter into an agreement pursuant to which the GDR‐related parties will

covenant to either ‐ (i) transfer GDR’s shares of CMGDR to AEQ, or ‐ (ii) transfer the water assets from CMGDR to a new Chilean subsidiary of AEQ, whichever can be completed first ‐ GDR will enter into an operating agreement with AEQ to manage the project

• New Investors to nominate two directors to the AEQ board for a total of seven directors on receipt of US$ 10 million by AEQ
• Funding will occur at the AEQ Canada level:
• AEQ would then push the funds down to CMGDR (or the ultimate holder of the water assets) in exchange for intercompany
• debt. When it is time to transfer either CMGDR or the water assets to AEQ, then the consideration for that transfer would be

the extinguishment of the intercompany debt – in order to make this as tax neutral as possible.

AGUA ECOLÓGICA QUILLAGÜA RESTRUCTURING Restructuring on closing the equity financing

25

• There are three major technical risks facing CMGDR:

1. Flow Rates 2. Permitting Outcome 3. Failed Wells

• Flow Rates: Based on the current knowledge of the AEQ, the Company’s management believes the aquifer is large and

will have very good transmissivity (the rate of flow in the aquifer). Hil‐2 is the only operating well and was not designed as a water well, but provides clear evidence that the aquifer is artesian and recharges relatively quickly. The new wells are designed as water wells and should provide the information required to properly characterize the aquifer

• Permitting Outcome: Once a large water well is sunk and operating, CMGDRC and its consultants will collect the

necessary information and submit a technical report to the Dirección General de Aguas (DGA) ‐ the government authority that oversees water permitting. The risk CMGDRC faces is that the DGA grants a permit for a lower flow rate than expected. Fortunately, the DGA’s processes are based on science and fact

• Failed Wells: Drilling deep water wells is not simple. CMGDRC has engaged Hellema Holland Engineering, a Chilean

company that has the experience and equipment necessary. However, should Hellema Holland encounter significant problems with one of the wells, CMGDRC should have sufficient contingency funds to restart the drilling of the well

• CMGDRC believes the downside scenario for the AEQ is one where lower than expected flow rates are encountered

and/or permitted which would reduce the value of the project

DOWNSIDE SCENARIO

Downside Scenario Has Value

26