net cash ($m) $0.0 $0.0 current assets ($m) $0.2 $1.3 total ......2020/12/14 · yahoo!finance,...

All figures in CAD unless otherwise stated.

eResearch Corporation 100 University Avenue, 5th Floor Toronto, Ontario M5J 1V6

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Company Report – Watch List December 14, 2020

Source: Company Reports, S&P Capital IQ, Yahoo!Finance, eResearch Corp.

Chris Thompson, CFA, MBA, P.Eng. Director of Equity Research

Fidelity Minerals Corp. (TSXV:FMN)

Peru Focused Project Generator with a Portfolio of Gold & Copper

Projects

COMPANY DESCRIPTION:

Fidelity Minerals Corp. (“Fidelity Minerals” or “the Company”) is a junior

exploration company engaged in the acquisition, exploration, and development of resource properties with a focus on Peru. In early 2019, the Company shifted its

business focus to a Project Generator model and currently has four gold and copper

exploration projects in Peru. In October 2019, the Company signed an agreement to

sell its fifth project, the Cerro Dorado project, including the Rey Salomon Mine for US$1.43 million.

INVESTMENT THESIS AND UPCOMING CATALYSTS:

Three Main Corporate Objectives:

(1) Develop existing gold & copper projects;

(2) Expand project portfolio with accretive acquisitions; and,

(3) Define at least 1 million-ounce gold resource within 3 years.

Four Large Scale Existing Exploration Projects in northern Peru:

o Las Brujas Gold Project

Project recently expanded to 8,400 hectares (“ha”)

Chip sampling returned Au grades of up to 15.3g/t.

o Greater Las Huaquilla Gold & Base Metal Project

Project size: over 7,400 ha

Hosts a historical 6.57Mt grading 2.08 g/t Au & 25.2 g/t Ag for 0.4M Au oz and 5.3M oz Ag

o Porphyritic Copper Project

Three concessions over 1,200 ha and applied for three new concessions, in order to secure an additional 2,800 ha.

o Cerro El Bronce Gold Project

2 concessions over 500 ha

Strong Management Team: Based on their geological knowledge of the region

and a well-established Peru-based team, the Company is well-positioned to take advantage of exploration opportunities in the region.

Proprietary Regional Data-Sets: Fidelity Minerals believes it has a distinct

edge in northern Peru as the company has developed proprietary regional data-sets which enable it to focus on specific opportunities.

Project Generator Model Reduces Risk: A diversified project portfolio with

development funded by JV Partners, reduces risk and limits equity dilution.

Upcoming Catalysts: (i) Further results from low-cost exploration success; (ii)

interest from possible JV partners; and (iii) potential accretive transactions.

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REVISIONS Rev. Prior

Rating Watch List

Target Price Watch List

Revenue F2020E (M) $0.0

Revenue F2021E (M) $0.0

MARKET DATA

Date:

Current Price (C$):

52-Week Range:

Shares O/S (M):

Mkt Cap ($M);

EV ($M):

Avg. Weekly Vol. (M):

Website: www.fidelityminerals.com

FINANCIALS

Fiscal Year End:

F2019A F2020E F2021E

Revenue ($M) $0.0 $0.0 $0.0

F2019A F2020A

Cash ($M) $0.2 $0.1

Current Assets ($M) $0.2 $1.3

Net Cash ($M) $0.0 $0.0

Total Assets ($M) $5.5 $5.0

Debt ($M) $0.0 $0.0

Total Liabilities ($M) $1.2 $0.8

Key Shareholders (M) % Held

Lions Bay Capital 20.12 40.96%

Bahay Ozcakmak 2.93 5.96%

Ian Graham 1.97 4.02%

31-Jul

$6.5

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Dec 14, 2020

$0.13

$0.02 / $0.13

49.1

$6.4

Fidelity Minerals Corp. (TSXV:FMN) Company Report

eResearch Corporation www.eresearch.com

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COMPANY OVERVIEW

Fidelity Minerals Corp. is a junior mineral exploration company focused on precious metals and copper projects in Peru.

Fidelity Minerals changed its name from Montan Mining Corp. in January 2019. Montan Mining Corp. was formed in 2015 from the amalgamation of Montan

Capital Corp. and Strait Minerals Inc.

Founded in 2003, Strait Minerals operated as a mineral exploration and development

company and focused on projects in Peru. As such, Fidelity Minerals has a long history

of mineral exploration in Peru.

An experienced management team with diverse commercial, market and technical expertise supports Fidelity

Minerals. Based on their geological knowledge of the region and a well-established Peru-based team, the Company

is well-positioned to take advantage of exploration opportunities in the region.

In early 2019, Fidelity Minerals shifted its business focus to a Project Generator model. (See the section below for

more information about the Project Generator business model.) This model involves the acquisition of high-quality

mineral exploration properties that can be further developed through geochemical, geophysics and/or drilling to increase the project’s value in order to find a joint venture Partner or potential Buyer.

Fidelity Minerals believes it has a distinct advantage in northern Peru as the company has developed proprietary regional data-sets which enable it to focus on project opportunities that favour the geology of the region.

In late 2019, Fidelity Minerals started to assemble a portfolio of projects focusing on large gold and copper projects.

To allow Fidelity Minerals to focus on its exploration projects, in October 2019, the Company signed an agreement

to sell the Cerro Dorado project, including the Rey Salomon Mine and proceeded to focus on its four gold and

copper exploration projects in Peru.

The four projects are (see Figure 1 for locations within Peru):

1) Las Brujas Gold Project (100% interest)

Prospective epithermal gold project located within the “Yanacocha External Caldera” region

Project recently expanded to 8,400 ha

Near Cajamarca, Peru

2) Las Huaquillas (44.5% interest) and the Greater Las Huaquillas (100% interest)

Gold and base metal project

Hosts historical resource of 6.57 million tonnes grading 2.12 g/t gold & 25.2 g/t silver


Cajamarca, Peru

3) Porphyritic Copper Project (100% interest)

Porphyritic copper mineralization identified at 2 key mineralized zones approximately 4 km apart

3 concessions over 1,200 ha, plus 3 new concession to secure an additional 2,800 ha

Near La Libertad, Peru

4) Cerro El Bronce Gold Project (100% interest)

2 concessions over 500 ha that hosts gold and copper mineralization including peak grades of up

to 6.8% Cu, and up to 20.3g/t Au

Near La Libertad, Peru

Fidelity Minerals is listed on the TSX Venture (TSXV:FMN), Frankfurt (FSE:S5GN) and Santiago (SSE: FMNCL)

stock exchanges, and trades in the United States on the OTC Markets (OTC:SAIDF).




Figure 1: Fidelity Minerals - Project Location Map

Source: Company Reports; eResearch Corp.




INVESTMENT THESIS – WHY INVEST IN FIDELITY MINERALS

THREE MAIN CORPORATE OBJECTIVES DRIVING THE COMPANY FORWARD

1) Develop existing gold and copper projects;

2) Expand project portfolio with accretive acquisitions; and,

3) Define at least 1 million-ounce gold resource within 3 years.

FOUR LARGE SCALE EXISTING EXPLORATION PROJECTS IN NORTHERN PERU

1) Las Brujas Gold Project

Prospective epithermal gold project located within the “Yanacocha External Caldera” region

Project recently expanded to 8,400 ha.

Chip sampling returned Au grades of up to 15.3 g/t.

2) Greater Las Huaquilla Gold & Base Metal Project

Gold and base metal project


Hosts a historical 6.57Mt grading 2.08 g/t gold and 25.2 g/t silver for 0.4 million gold ounces and

5.3 million silver ounces

3) Porphyritic Copper Project

Porphyritic copper mineralization identified at 2 key mineralized zones approximately 4 km apart

Three concessions over 1,200 ha and applied for three new concessions, in order to secure an

additional 2,800 ha. Total project size now 4,000 ha.

4) Cerro El Bronce Gold Project

2 concessions over 500 ha.

Hosts gold and copper mineralization including peak grades of up to 6.8% copper, and up to

20.3g/t gold

STRONG MANAGEMENT TEAM

Based on their geological knowledge of the region and a well-established Peru-based team, the Company is well-

positioned to take advantage of exploration opportunities in the region.

PROPRIETARY REGIONAL DATA-SETS

Fidelity Minerals believes it has a distinct edge in northern Peru as the company has developed proprietary regional

data-sets which enable it to focus on specific opportunities.

PROJECT GENERATOR MODEL REDUCES RISK

A diversified portfolio of projects with development funded by Joint Venture partners, reduces company risk and

limits equity dilution.

UPCOMING CATALYSTS

(i) Project Sale: Complete sale of Cerro Dorado and reinvest net proceeds

(ii) Exploration: Further results from low-cost exploration and deliver Technical Studies

(iii) Joint Venture Partners: Interest from possible JV partners in all portfolio projects, including from major

regional mining operators.

(iv) Transactions: Potential accretive transactions.




FIDELITY MINERALS’ PROJECTS

Summary of active projects: (1) Las Brujas Gold Project, (2) The Greater Las Huaquillas Project, (3) Porphyritic Copper Project, (4) Cerro El Bronce Gold Projects, and (5) Cerro Dorado (currently in a sales process).

1. Las Brujas Gold Project (100% interest)

In June 2019, Fidelity Minerals acquired a 100% interest in the Las Brujas Gold Project. The project consists of

four concessions over 1,900 ha located in the Cajamarca province, in northern Peru. The project was expanded to 3,400 ha in early 2020, and in the autumn was expanded to 8,400 ha in total with some additional concessions.

The prospective epithermal gold project located within the "Yanacocha External Caldera" region and located within 10 km of the La Zanja gold mine, 20 km from the Tantahuatay epithermal (gold & silver) mine, and 23 km

from Cerro Corona porphyry (copper & gold) mine. (See Figures 2 and 3.)

Previous exploration at the project identified at least three zones of mineralization, including surface chip samples over 10 metres grading 1.5 g/t gold and a geochemical signature that appears typical of an epithermal precious metal

system.

In March 2020, Fidelity Minerals announced that it completed a short field program at the Las Brujas project. In

order to secure additional targets identified beyond the current project area, the Company applied for two new

adjacent concessions covering 1,500 ha, increasing the total project footprint to 3,400 ha. On June 12, 2020, Fidelity

Minerals announced that Las Brujas sampling program identified three distinct structures of visible mineralization

along a road cut. Three grab samples returned gold grades of up to 15.3 g/t, 1.59 g/t and 1.16 g/t.

On November 9, 2020 the Company reported that the geological mapping and sampling projects initiated in September 2020, confirms the potential for gold mineralization at the El Ambique Prospect in the Las Brujas Project.

Of the 406 samples collected, 273 samples have been processed and 57 samples displayed anomalous gold

concentrations ranging from 0.101 to 0.632 g/t Au.

Upcoming catalysts and next steps:

Project-wide geochemistry, more detailed geophysical surveys, and additional channel sampling to assist in

target identification for a drill program.

In August, the Company announced the delineation of 4 high-priority gold prospects and plans for a more

comprehensive field program consisting of geophysics and additional sampling project to build on the

initial positive results.

Figure 2: Las Brujas Project Map

Source: Company Presentation (2020)




Figure 3: Las Brujas Project - Regional Setting - Section A to B from Figure 2





2. Las Huaquillas (44.5% interest) and the Greater Las Huaquillas (100% interest) Project

The Las Huaquillas and the Greater Las Huaquillas Project (“GLH” Project) is a gold, silver and base metal project

in northern Peru, immediately south of the border with Ecuador, near Cajamarca, Peru.

Fidelity Minerals completed the acquisition of a 44.5% interest in the Las Huaquillas project in February 2019.

After acquiring the Las Huaquillas project (3,600 ha), the Company obtained 100% interest in the highest priority prospect areas contiguous with the Las Huaquillas project, forming the GLH project that now comprises 7,400 ha.

The Company believes the GLH project is part of a key north-south trending mineralized belt that extends from northern Peru into southern Ecuador.

The project consists of at least 5 mineralized zones. Based on historical exploration by a previous operator, Sulliden

Gold Corporation (1996-1999), the Los Socavones Zone was identified as the most advanced of the mineralized zones.

A non-43-101 historical resource was estimated at 6.57 million tonnes grading 2.08 g/t gold and 25.2 g/t silver for 443,000 ounces of gold and 5.3 million ounces of silver at a 1 g/t gold cut-off. This historic resource estimate was

reported in an NI 43-101 Technical Report prepared for an unrelated party in 2011. However, neither Fidelity

Minerals nor a Qualified Person as identified in the context of National Instrument 43-101 has conducted any work to establish the relevance and reliability of this historical estimate.

In addition to the Los Socavones zone, historic drilling outside the Los Socavones zone identified two potentially

large porphyry copper-gold zones, Cementerio and San Antonio.


Infill and extended geochemistry

Reprocessing of geophysics underway

Channel sampling

Initial focus on 100% owned concessions, GLH Project

Utilizing the extensive historical datasets, including data relating to historical drilling and extensive

resource appraisal studies.

Drilling Sulliden Gold’s historical drill hole that intercepted 78 metres at 2.7g/t gold from surface. This

drill result highlights the potential for a low-cost, open pit mining operation.

Key to the project:

The historical resource studies (non-NI 43-101 compliant) provide Fidelity Minerals with a starting point

for exploration and confidence about the resource potential for the GLH project.

Figure 4: GLH Project - 3D Magnetics Inversion Model (2020)





3. Porphyritic Copper Project (100% interest)

In May 2019, Fidelity Minerals completed the acquisition of a 100% interest in the Porphyritic Copper project

located in La Libertad, northern Peru. The Porphyritic Copper Project comprises three contiguous concessions over

1,200 ha. In the summer, the Company applied for three new concessions, in order to secure an additional 2,800 ha of this project to bring the project total to 4,000 ha.

The project hosts near surface mineralization of visible copper as well as small-scale artisanal workings developed for the purpose of mining small tonnages of gold bearing ore.

An assessment of the two zones (“Upper Zone” and “Lower Zone”), situated approximately 4.0 km apart, identified mineralization similarities. Historical sampling at the project indicates grades of 0.36% - 0.66% copper and >1%

copper at the two different zones.

Upcoming catalysts and next steps: An initial program of mapping and sample checking with local geochemistry before magnetic and induced

polarization (IP) geophysical surveys.

Figure 5: Porphyritic Copper Project - Selected Sampling Results‡

Source: Company News Release (9/23/2019); ‡ALS Method Code ME-MS41. The laboratory location, chain of custody record,

use of blanks and standards by the Vendor is not recorded or independently verified by a Qualified Person. The Certificate of Assay / Analysis has not been independently verified for Fidelity Minerals Corp.

Figure 6: Porphyritic Copper Project – Historical Sampling Photos

Source: Company News Release (9/23/2019)




4. Cerro El Bronce Gold Project (100% interest)

In June 2019, Fidelity Minerals acquired a 100% interest in the Cerro El Bronce Gold Project. The project consists

of two concessions over 500 ha located in the Ancash province, near La Libertad, in northern Peru. Major gold mining companies, including Newmont, control and are exploring the concessions surrounding the Cerro El Bronce

project.

Historical exploration at the project has identified the potential for copper and gold mineralization with sampled

values of up to 6.8% copper. In the project area, historical small-scale artisanal workings have identified a relatively

shallow high-grade gold resource. Samples of gold veins on the property have returned a peak value of 20.3 g/t gold and 41.0 g/t silver.


Focused geological mapping and geochemical sampling program.

5. Cerro Dorado (currently in a sales process)

On October 1, 2019, Fidelity Minerals entered into a binding agreement with certain private Peruvian interests to

sell the Cerro Dorado project, including the Rey Salomon mine, the Cerro Dorado gold plant, and all the property,

plant and equipment.

The sale of Cerro Dorado will allow the Company to focus on a Project Generator model and provide funding to

manage its current portfolio of four exploration projects. The total cash consideration for the sale of Cerro Dorado is US$1.43 million. After paying various liabilities and fees, the Company expects to net approximately US$0.8

million from the transaction.

On May 19, 2020, Fidelity Minerals provided an update on the sale and announced it has allowed the purchaser of

Cerro Dorado to defer the scheduled March payment. The timing of the payment is expected to immediately follow

the current lockdown, due to Covid-19, being lifted.

Subsequently, due to the Peruvian COVID-19 lockdown, Fidelity Minerals has allowed the purchaser of Cerro

Dorado to defer the scheduled March payment. The timing of the payment is expected to immediately follow

the lockdown being lifted.

On October 13, 2020, Fidelity Minerals announced revised payment terms in relation to the sale of its Cerro Dorado

gold plant. Further to the US$1.43 million sale agreement announced on October 1, 2019, payments made by the

Purchaser have totaled US$500,000, meeting the conditions of the sale through to March 2020. As a result of regulatory delays and disruptions due to COVID-19, the Company has executed an addendum to the original sale

purchase agreement, with a revised payment schedule for the remaining US$930,000.

The revised payment terms for the outstanding balance, is outlined below:

Figure 7: Cerro Dorado Sale - Revised Payment Terms

October 10, 2020 US$100,000

November 25, 2020 US$100,000

January 25, 2021 US$100,000

April 25, 2021 US$310,000

July 24, 2021 US$320,000

TOTAL US$930,000

Source: Company News Release (October 13, 2020)




CAPITAL STRUCTURE & CASH POSITION

In December 2019, Fidelity Minerals completed a 5:1 consolidation of the common shares of the Company.

Following the consolidation, the number of outstanding common shares was 26.46 million, reduced from 132.29

million.

As of April 30, 2020, the Fidelity Minerals had net working capital of $0.70 million. Financial Assets include Cash

($23 thousand) and Sales Proceeds Receivable ($1.2 million) versus Financial Liabilities of $0.66 million.

On June 3, 2020, Fidelity Minerals announced the closing of a $242 thousand private placement financing of 9.68

units at $0.025 per unit. Each unit consisted of one common share and one warrant with an exercise price of

$0.05/share until December 17, 2021. As part of the offering, strategic and long-time investor Lions Bay Capital

Inc. subscribed to 4 million units. Lions Bay Capital Inc. (TSXV:LBI) owns approximately 31% of Fidelity

Minerals.

On October 1, 2019, Fidelity Minerals entered into a binding agreement to sell the Cerro Dorado project for US$1.43

million in cash. The Company expects to net approximately US$0.8 million from the transaction. As of May 19,

2020, Fidelity Minerals has received US$0.5 million with the balance of payments expected by September 2020.

As of September 30, 2020, Fidelity Minerals had 49.11 million common shares, 3.79 million stock options and

18.87 million share purchase warrants outstanding.

Figure 8: Capitalization (as of 12/2/2020)

Source: S&P Capital IQ

Figure 9: Shareholders (as of 12/2/2020)

Source: S&P Capital IQ

Capitalization

Shares Outstanding (M) 49.11

Options Outstanding

Options Outstanding at the End of the Period (M) 3.79

Options - Weighted Average Strike Price $0.12

Warrants Outstanding

Warrants Outstanding at the End of the Period (M) 18.87

Warrants - Weighted Average Strike Price $0.21

TypeShares Held

(M)

Total Shares

Outstanding

Corporations

Lions Bay Capital Inc. 20.12 41.0%

Individuals/Insiders

Bahay Ozcakmak 2.93 6.0%

Ian Graham 1.97 4.0%

Bob Balic 1.81 3.7%

Public and Other 22.27 45.4%

Total 49.11 100%




PROJECT GENERATOR BUSINESS MODEL

The business model of a Project Generating or Prospect Generating Company (“Project Generator”) in the mining industry is to acquire mineral properties and advance the properties, in order to find a third-party Partner (“Partner”)

that will option, acquire, or work with the Project Generator in a Joint Venture (“JV”) capacity on a specific property.

A Project Generator searches for properties that it believes, through its knowledge of geology, has the potential to

become an economic mineral deposit.

A Project Generator will advance the project by completing early stage work such as geological mapping,

geochemical sampling, and geophysical surveys while it seeks a Partner on the project who will undertake the next

phase of the project – the more expensive drilling – Diamond Core Drilling (diamond drilling), Reverse Circulation

Drilling (RC drilling), or Rotary Air Blasting (RAB).

At any given time, a Project Generator has a portfolio of projects at different stages that can be optioned out to a

Partner. By utilizing a Partner’s capital to advance the project, the Project Generator does not have to constantly raise capital by issuing equity.

Although the goal is to find a Partner to further develop the properties, in some cases, if the Project Generator has a

strong belief in the property, the Project Generator will raise funds to advance the project in the hopes of attracting a Partner to take over the project once some of the initial groundwork and geophysical work has been completed.

Project Generators create value for shareholders in three ways:

(i) Share Price Increase: This can happen as the Project Generator receives revenue (cash and/or shares)

from Partners, or royalties from producing mines; the share price can also increase on mineral discovery, even if the project is with a Partner. In fact, mineral discovery, either by a Partner or from a self-funded

project, is the single most important value creator for a Project Generator company.

(ii) Spinout of a New Company: This can happen when the Project Generator has a critical mass of

properties that would benefit from economies of scale or when a discovery is made and raising capital in a separate company is more prudent. When this occurs, shareholders often receive free shares in the

new spinout company, as well as retain their shares in the Project Generator.

(iii) Acquisition: This occurs when the Partner decides to buy out the Project Generator when there is a mineral discovery or the Partner wants to take control of the project. In addition, the Project Generator

will usually still benefit from the royalty it retains on the project.

The only slight downside to this model, is that the Project Generator may not get the financial upside if a discovery

is made and the Project Generator has not maintained some equity stake or royalty in the project; however, the

number of projects, revenue streams, and royalties provide sufficient benefits for the reduced overall risk. In

addition, a traditional junior mining company often severely dilutes shareholders as the company spends on the expensive exploration and capital-intensive development of the project.

However, the Project Generator model reduces company and project risk by:

(i) Having a diversified portfolio of projects that can lead to multiple discoveries, often in different

commodities, in various geographic areas;

(ii) Conserving capital and limiting equity dilution by finding Partners to fund the high-risk, more expensive

exploration and development of the project while the Project Generator benefits from short-term payments and long-term royalties to build value for shareholders; and

(iii) Using cash payments from Partner agreements for exploration to advance existing properties, pay

property maintenance costs, or acquire new properties to add to the portfolio of projects.




APPENDIX A: MANAGEMENT & BOARD OF DIRECTORS

Management

Ian Graham, Chief Executive Officer

Ian Graham has over 30 years of experience in mining and exploration as a geologist and businessman, and currently

holds Board of Directors positions with Goldcore Resources Ltd. (TSXV:GEM), Spey Resources Corp. (CNSX:SPEY) and Oroco Resource Corp. (TSXV:OCO) to name a few.

Prior to Fidelity Minerals, Mr. Graham has held management positions at several companies including Academy

Metals Inc., CMC Metals Ltd., Discovery Harbour Resources Corp., MGX Minerals, Kennescott Canada Exploration Inc., Anglo American Research Laboratories Pty Ltd., Rio Tinto Exploration Canada, Western Potash

Corp., and Diavik Diamond Mines Inc.

Mr. Graham received a Bachelor of Science degree in Geology and Applied Geology from the University of Kwa-

Zulu Natal and a Bachelor of Science degree in Geology from the University of Regina.

Anthony Balic, Chief Financial Officer

Anthony Balic has over 20 years of experience in finance and accounting, and currently holds positions including

CEO and CFO for Goldgroup Mining Inc., CFO for Omni Commerce Corp, CFO for Greenbriar Capital Corp, and CFO for Captiva Verde Land Corp.

Prior to Fidelity Minerals, Mr. Balic worked in assurance and advisory at Deloitte for almost 10 years, after which he joined Fidelity Minerals as the Director of Finance, promoted shortly after to CFO.

Mr. Balic is currently a Chartered Accountant under ICABC, and received both a Bachelor of Commerce degree

and a Diploma of Accounting from the University of British Columbia.

Board of Directors

Bahay Ozcakmak, Executive Chairman

Bahay Ozcakmak has over 20 years of experience in corporate strategy, M&A, and business development within the natural resource and energy sectors, and currently holds positions including Managing Director for Consolidated

Potash Corporation, Executive Director for Pan Andean Capital Ltd., and Managing Director for Parkway Minerals

NL,

Mr. Ozcakmak is currently on the board of several mining related companies including Activated Water

Technologies, Consolidated Potash Corporation, and Fidelity Minerals.

Mr. Ozcakmak received a Bachelor of Science degree majoring in Natural Resource Economics, Macroeconomics,

and Biotechnology from the University of Melbourne, and a Master of Business degree from the University of

Melbourne.

Ian Graham, Director

See his biography in the Management section.

Anthony Balic, Director

See his biography in the Management section.




APPENDIX B: RECENT NEWS RELEASES

Lions Bay Capital: Early Warning News Release

December 4, 2020

Lions Bay Capital Inc. (TSXV:LBI) announced that on December 1, 2020 it acquired ownership of an additional

1.6 million common shares of Fidelity Minerals and now owns a total of 20,115,811 common shares of Fidelity Minerals, representing approximately 40.96% of the issued and outstanding common shares of the

Issuer on an undiluted basis. Lions Bay Capital also owns warrants exercisable to acquire up to 10,815,583

common shares.

Fidelity Minerals Confirms Significant Gold Potential of El Ambique Prospect at Las Brujas Project, in the

Northern Yanacocha gold district

November 9, 2020 Fidelity Minerals provided an update on the surface sampling progress at its Las Brujas gold project in Cajamarca,

Peru and the Company has enlarged its concession holdings from 5,000 ha to 8,400 ha.

Fidelity Minerals Provides Update on Sale of Cerro Dorado

October 13, 2020

Fidelity Minerals announced revised payment terms in relation to the sale of its Cerro Dorado gold plant. Further to

the US$1.43 million sale agreement announced on October 1, 2019, payments made by the Purchaser have totaled US$500,000, meeting the conditions of the sale through to March 2020. As a result of regulatory delays and

disruptions due to COVID-19, the Company has executed an addendum to the original sale purchase agreement,

with a revised payment schedule for the remaining US$930,000.

Fidelity Minerals defines 4 high priority gold prospects with multi-million ounce potential at Las Brujas

Project

August 24, 2020

Fidelity Minerals announced the delineation of 4 high-priority gold prospects at the Las Brujas project and

provided an update on near-term plans to further evaluate the potential of these prospects.

Fidelity Minerals Significantly Expands Footprint at Las Brujas and Porphyritic Copper Projects

August 12, 2020

Fidelity Minerals provided an update on the expansion of key projects, through the acquisition of contiguous concessions. At Las Brujas Project, the Company expanded the project further to 5,000 ha in total. At the

Porphyritic Copper Project, the Company is adding an additional 2,800 ha with 3 new concessions.

Fidelity Minerals Announces Closing of Private Placement Financing

August 10, 2020

Fidelity Minerals reported that it has closed a previously announced non-brokered private placement of 7.67 million

units at $0.06 per unit for gross proceeds of $460,087. Each Unit consists of one common share and one transferable share purchase warrant with each warrant exercisable into an additional common share at $0.07 per share for 24

months.

Fidelity Minerals Announces the Issuance of Options

July 8, 2020

Fidelity Minerals announced that the Company has granted 1.925 million stock options to certain directors,

officers and consultants of the Company pursuant to the Company's previously approved Stock Option Plan. The stock options are exercisable at a price of $0.075 per share for a period of 5 years.

Fidelity Minerals announces Las Brujas reconnaissance sampling program returns gold grades of up to

15.3g/t.

June 12, 2020

Fidelity Minerals provided an update on its Las Brujas project in Cajamarca, Peru.




Fidelity Minerals Announces Closing of Private Placement Financing

June 3, 2020 Fidelity Minerals announced that it has closed the non-brokered private placement previously announced in its News

Release dated May 25, 2020. The Company issued 9.68 million units at $0.025 per unit for gross proceeds of

$242,000. Each Unit consists of one common share and one share purchase warrant, exercisable into one additional common share at $0.05 per share until December 17, 2021.

Fidelity Minerals Provides Update on Cerro Dorado and Las Brujas Field Program

March 27, 2020 Fidelity Minerals announced the completion of a short field program at its Las Brujas project, located in the greater

Yanacocha District, and arrangements were made to secure the continuation of the Cerro Dorado sale process during

the COVID-19 shutdown in Peru.

Fidelity Minerals Completes Shares for Debt Transaction

February 26, 2020 Fidelity Minerals announced the completion of a debt settlement agreement made in February 2020 for

AUD$100,000 in obligations, settled through a payment of AUD$20,000 in cash and an issuance of 300,000

common shares. The newly issued shared have a lock-up period expiring June 27, 2020.

Fidelity Minerals Provides Update on Sale of Cerro Dorado and Announces the Issuance of Options

January 24, 2020

Fidelity Minerals announced it had received conditional TSX-V approval for its sale of the Cerro Dorado Plant, in addition to receiving its first scheduled payment of US$150,000. In addition, 1,725,000 incentive stock options were

granted to certain directors, officers and consultants of Fidelity Minerals, with an exercise price of US$0.075 per

share and a 5-year expiry period.

Corporate Update – Asset Sale Cash Received and Growth Project Plans

January 7, 2020

Fidelity Minerals announced that it had received US$250,000 in payment for the sale of the Cerro Dorado Plant with the previously announced payment schedule otherwise unchanged. Growth project plans include the Las Brujas

project, which is expected to start mobilizing in February 2020, and the Las Huaquillas project, which is advancing

its integration with the Greater Las Huaquillas Project.

Corporate Update – Positioned for Growth

December 4, 2019

Fidelity Minerals provided the following corporate updates: deal signed to sell the Cerro Dorado Gold Plant for US$1.43 million with an initial payment of US$100,000 already made; final capital investment to commission the

Cerro Dorado CIL plant underway; acquisition of a portfolio of mineral projects in Peru underway; plan to

consolidate shares on a 5:1 basis to 26 million shares.

Fidelity Minerals Arranges Sale of Cerro Dorado Plant for US$1,430,000

October 2, 2019 Fidelity Minerals announced an agreement to sell its 100% owned Cerro Dorado Gold Plant for US$1.4 million,

which includes substantial non-refundable capital improvements by the purchaser over a 12-month period. The

divestment will allow Fidelity Minerals to focus its strategy on its project generator model, which has so far

developed a portfolio of four high impact gold and copper mines.




APPENDIX C: FINANCIAL STATEMENTS

Figure 10: Income Statement



Income Statement

(C$, in thousands) F2017 F2018 FY2019 FY2020

July 31 July 31 July 31 July 31

Total Revenue - - - -

Cost Of Goods Sold 0.382

Gross Profit (0.382) - -

Selling General & Admin Exp. 1.358 1.351 1.468 0.570

Exploration/Drilling Costs 0.039

Stock-Based Compensation 0.457 0.281 0.302 0.223

Depreciation & Amort. 0.031 0.106 0.113 0.028

Operating Expense Total 1.846 1.738 1.922 0.821

Operating Income (2.227) (1.738) (1.922) (0.821)

Interest Expense (0.032) (0.029) (0.021) (0.006)

Interest and Invest. Income

Net Interest Exp. (0.032) (0.029) (0.021) (0.006)

Currency Exchange Gains (Loss) 0.055 (0.043) (0.052) 0.000

Other Non-Operating Inc. (Exp.) (0.489) 0.017 0.005 (0.144)

EBT Excl. Unusual Items (2.694) (1.794) (1.991) (0.971)

Impairment of Goodwill

Gain (Loss) On Sale Of Assets (0.042)

Other Unusual Items 0.004 (0.292) 0.068

EBT Incl. Unusual Items (2.689) (2.086) (1.991) (0.945)

Income Tax Expense - - - -

Earnings from Cont. Ops. (2.689) (2.086) (1.991) (0.945)

Net Income (2.689) (2.086) (1.991) (0.945)




Figure 11: Balance Sheet


F2017 F2018 FY2019 FY2020


ASSETS

Cash And Equivalents 0.023 0.016 0.204 0.053

Other Receivables 0.058 0.034 0.016 1.249

Prepaid Exp. 0.076 0.049 0.022

Total Current Assets 0.157 0.100 0.243 1.302

Gross Property, Plant & Equipment 1.764 1.849 5.530 3.961

Accumulated Depreciation (0.031) (0.137) (0.250) (0.278)

Net Exploration And Evaluation Assets 1.733 1.712 5.280 3.682

Other Intangibles

Total Assets 1.889 1.811 5.523 4.984

LIABILITIES

Accounts Payable 0.765 0.632 0.912 0.690

Short-term Borrowings 0.288 0.306 0.112 0.037

Current Portion of Long-term Debt 0.185 0.367 0.202 0.102

Other Current Liabilities 0.092 0.024 0.009 0.000

Total Current Liabilities 1.331 1.330 1.235 0.829

Long-Term Debt 0.270

Other Non-Current Liabilities

Total Liabilities 1.601 1.330 1.235 0.829

EQUITY

Common Stock 4.869 6.589 10.608 10.945

Retained Earnings (6.652) (8.738) (10.728) (11.673)

Comprehensive Inc. and Other 2.072 2.631 4.409 4.883

Total Common Equity 0.288 0.481 4.288 4.155

Total Liabilities And Equity 1.889 1.810 5.523 4.984

Total Shares Outstanding on Filing Date (M) 5.6 12.2 26.5 49.1

Total Shares Outstanding on Balance Sheet Date (M) 5.6 12.2 26.0 41.4


Balance Sheet

($C, in thousands)




Figure 12: Cash Flow Statement

Source: Company Reports; eResearch Corp

.

F2017 F2018 FY2019 FY2020


Net Income (2.689) (2.086) (1.991) (0.945)

Depreciation & Amortization 0.031 0.106 0.113 0.028

(Gain) Loss From Sale Of Assets 0.042

Stock-Based Compensation 0.457 0.281 0.302 0.223

Other Operating Activities (0.027) 0.316 (0.024) (0.013)

Change in Acc. Receivable (0.040) 0.023 0.019 0.013

Change in Acc. Payable 0.269 0.456 0.747 (0.262)

Change in Other Net Operating Assets 0.062 0.027 0.027 0.022

Cash Used in Operating Activities (1.937) (0.877) (0.807) (0.892)

Capital Expenditure (0.001) - (0.094) (0.052)

Cash Acquisitions (0.012) - -

Divestitures 0.654

Cash from Investing (0.013) 0.0 (0.094) 0.602

Short Term Debt Issued 0.222 0.777 0.257 0.03

Long-Term Debt Issued

Total Debt Issued 0.222 0.777 0.257 0.030

Short Term Debt Repaid - - (0.107)

Long-Term Debt Repaid (0.124) (0.118) (0.173) (0.101)

Total Debt Repaid (0.124) (0.118) (0.28) (0.101)

Issuance of Common Stock 1.169 0.24 1.131 0.209

Other Financing Activities 0.837

Cash from Financing 2.104 0.900 1.108 0.138

Foreign Exchange Rate Adj. (0.134) (0.03) (0.019)

Net Change in Cash 0.020 (0.008) 0.187 (0.151)


Cash Flow

($C, in thousands)




APPENDIX D: Company Risks

Fidelity Minerals operates in the mining exploration and development industry, which inherently brings high levels of risk and uncertainty with no guarantees that further explorations will result in economically profitable projects.

Other risks include the following:

Business and Operating Risks:

Fidelity Minerals operates in certain countries where title options for concessions have no guarantees for

future renewal or extension, which may materially affect exploration forecasts.

Fidelity Minerals relies on a few key individuals who are core to its operations, and the loss of any of whom

could materially impact the business.

Fidelity Minerals is a project generator with projects in early phases of exploration, therefore there is no

assurance that it will receive adequate funding to develop a mine once exploration is successful.

Fidelity Minerals’ revenue forecasts are based on resource estimations, which may differ from actual

mineral supply due to inherent risks of sample variability, metal price fluctuations, variations in mining and

processing parameters, and adverse changes in environmental or mining laws and regulations.

Fidelity Minerals’ mining and exploration projects have risks of environmental disasters and hazards

normally incidental to resource companies, including fires, power outages, flooding, explosions, cave-ins,

and landslides, which could be dangerous for workers and bring damage to properties.

Fidelity Minerals mines and sells an unrenewable source of materials with a limited supply in each body of

land, which brings inherent risks for the number of available projects in the future.

Financial Risks:

Fidelity Minerals’ various subsidiaries operate in the currency respective to the jurisdiction, which may

materially affect financial forecasts due to uncertainties and fluctuations in currency values.

The fair value of precious metals and minerals are subject to uncertainty and volatility in price dependent

on the market’s speculation for its future need and supply, which may affect revenue projections.

Exploration for minerals and mining is a capital-intensive business. There is no certainty that capital

invested into mining exploration and development will result in an economic source of resources and

revenue.

Fidelity Minerals has no history of paying dividends and does not expect to pay dividends in the near future

as it has limited operating cash flows with all available funds expected to be reinvested into mineral

exploration projects.

Legal and Regulatory Risks:

Fidelity Minerals operates in numerous jurisdictions with different regulations and rules, which brings

different standards for taxes, labour and occupational laws, use of water and land, and land claims.

Fidelity Minerals has operations where Environmental NGOs and Aboriginal tribes have a history of

enacting changes in regulations and laws that have adverse effects on the advancement of exploration and

development properties.

Fidelity Minerals may acquire and invest in future mining properties, which may be negatively impacted by

litigation or consent decrees entered by previous mineral rights owners, risking disturbances and additional legal costs.

Sales and Marketing Risks:

Every phase of the mining industry has a very competitive landscape, therefore potential competitors who

have significant resources can readily compete for numerous mining projects.

Technology Risks:

Fidelity Minerals is reliant on information systems and other technologies used in operational management

for both managing technical data and operating mining explorations, therefore Fidelity Minerals must invest

in more efficient processes and equipment to stay competitive in the industry.




APPENDIX E: ERESEARCH DISCLOSURE eRESEARCH CORPORATION

eResearch was established in 2000 as Canada's first equity issuer-sponsored research organization. As a primary source for professional investment research, our Subscribers (subscription is free!!!) benefit by having written research on a variety of small-

and mid-cap, under-covered companies. We also provide unsponsored research reports on middle and larger-sized companies, using a combination of fundamental and technical analysis. We complement our corporate research coverage with a diversified selection of

informative, insightful, and thought-provoking research publications from a wide variety of investment professionals. We provide our professional investment research and analysis directly to our extensive subscriber network of discerning investors, and electronically

through our website: www.eresearch.com

NOTE: eResearch company reports are available FREE on our website: www.eresearch.com

eResearch Intellectual Property: No representations, express or implied, are made by eResearch as to the accuracy, completeness

or correctness of the comments made in this Company Perspective. This report is not an offer to sell or a solicitation to buy any security of the Company. Neither eResearch nor any person employed by eResearch accepts any liability whatsoever for any direct or indirect

loss resulting from any use of its report or the information it contains. This report may not be reproduced, distributed, or published without the express permission of eResearch.

ANALYST ACCREDITATION

eResearch Analyst on this Report: Chris Thompson CFA, MBA, P.Eng.

Analyst Affirmation: I, Chris Thompson, hereby state that, at the time of issuance of this research report, I do not own common

shares, share options or share warrants of Fidelity Minerals Corp. (TSXV:FMN).

eRESEARCH DISCLOSURE STATEMENT

eResearch is engaged solely in the provision of equity research to the investment community. eResearch provides published research and analysis to its Subscribers on its website (www.eresearch.com ), and to the general investing public through its extensive

electronic distribution network and through newswire agencies. With regards to distribution of its research material, eResearch makes all reasonable efforts to provide its publications, via e-mail, simultaneously to all of its Subscribers.

eResearch does not manage money or trade with the general public, provides full disclosure of all fee arrangements, and adheres to the strict application of its Best Practices Guidelines.

eResearch accepts fees from the companies it researches (the "Covered Companies"), and from financial institutions or other third parties. The purpose of this policy is to defray the cost of researching small and medium capitalization stocks which otherwise receive

little or no research coverage.

A Third-Party company paid eResearch a fee to have it conduct research and publish this report.

To ensure complete independence and editorial control over its research, eResearch follows certain business practices and compliance procedures. For instance, fees from Covered Companies are due and payable prior to the commencement of research. Management

of the Covered Companies are sent copies, in draft form without a Recommendation or a Target Price, of the Initiating Report and the Update Report prior to publication to ensure our facts are correct, that we have not misrepresented anything, and have not included

any non-public, confidential information. At no time is management entitled to comment on issues of judgment, including Analyst opinions, viewpoints, or recommendations. All research reports must be approved, prior to publication, by eResearch's Director of

Research, who is a Chartered Financial Analyst (CFA).

All Analysts are required to sign a contract with eResearch prior to engagement, and agree to adhere at all times to the CFA Institute

Code of Ethics and Standards of Professional Conduct. eResearch Analysts are compensated on a per-report, per-company basis and not on the basis of his/her recommendations. Analysts are not allowed to accept any fees or other consideration from the companies

they cover for eResearch. Analysts are allowed to trade in the shares, warrants, convertible securities or options of companies they cover for eResearch only under strict, specified conditions, which are no less onerous than the guidelines postulated by IIROC.

Similarly, eResearch, its officers and directors, are allowed to trade in shares, warrants, convertible securities or options of any of the Covered Companies under identical restrictions.

net cash ($m) $0.0 $0.0 current assets ($m) $0.2 $1.3 total ......2020/12/14 · yahoo!finance,...

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