Mr. Chris Wright reports

DEFIANCE SILVER EXERCISES OPTION FOR 100% OWNERSHIP OF LUCITA LICENSES AND PROVIDES UPDATE ON SAN ACACIO AGREEMENT

Defiance Silver Corp. has completed all purchase payments to acquire a 100-per-cent interest in Pan American Silver Corp.'s Lucita property in Zacatecas, Mexico. Pan American Silver retains a 2.0-per-cent net smelter royalty (NSR) on the Lucita property.

Defiance also reports that the terms of the San Acacio property agreement were renegotiated with the vendor.

Terms of Lucita property agreement

On Dec. 2, 2020, Defiance entered into a definitive option agreement with Pan American Silver to acquire a 100-per-cent interest in Pan American Silver's Lucita property, located adjacent to Defiance's San Acacio property in Mexico's prolific Zacatecas silver district (see news release dated Dec. 2, 2020).

Defiance acquired 100-per-cent ownership of the Lucita property, while Pan American Silver retains a 2-per-cent NSR. The option terms included an initial payment of $100,000 (U.S.) upon signing, $100,000 (U.S.) on or before the first-year anniversary, $500,000 (U.S.) on or before the second-year anniversary, and a final payment of $800,000 (U.S.) on or before the third-year anniversary. The terms were completed as of December, 2023, with total payments of $1.5-million (U.S.) being made.

Highlights of the Lucita acquisition

Defiance's 100-per-cent-owned Lucita land package includes both the Lucita project and the Panuco project.

• Defiance's Zacatecas district landholdings increased from 1,600 hectares to over 4,300 hectares.
• Lucita project: successful 2021 maiden drill program on the Palenque vein system including:
  • Discovery of a blind epithermal system returning multiple high-grade results in hole DDLU-22-10 (see news release dated Aug. 9, 2022);
  • Fresnillo-style high-grade silver mineralization encountered over intercepts greater than three metres, including results up to 3,260 grams per tonne silver (DDLU-21-05, from 154.10 m -- see news release dated April 13, 2022);
  • Wide widths of moderate-grade silver hosted in sediments, including an interval of 49.87 m with a weighted average of 58.79 g/t Ag (DDLU-22-13 -- see news release dated April 13, 2022);
• Panuco project: continuing exploration indicates the presence of silver-rich polymetallic systems with large footprints:
  • Historic drilling by Pan American intercepted multiple high-grade silver results from different veins, including 1.25 m of 779 g/t Ag (LU-11-09 from 180.10 m) and 3.35 m of 325 g/t Ag (LU-11-16 from 125.20 m) (see news release dated Dec. 2, 2020);
  • Surface mapping and sampling within Defiance's Panuco project demonstrate the presence of the mineralized on-strike extension of the vein structure, which hosts Zacatecas Silver Corp.'s 16.4-million-ounce-silver-equivalent Panuco deposit** (see Zacatecas Silver's National Instrument 43-101 technical report dated Jan. 28, 2022);
  • Initial exploration results suggest that Defiance's Panuco project is one of the top polymetallic targets in the district; Defiance will provide an update once the full analytical results have been received by the company.

** Defiance's qualified person and technical team have not independently verified this information, and the information is not necessarily indicative of the mineralization on the company's Panuco project.

• Further work: More than 10 key target areas exist on Defiance's Lucita acquisition:
  • Systematic ranking of the target areas will continue as the company receives results from the continuing property-wide mapping, sampling and relogging program.
  • To facilitate an extensive drill campaign over the Lucita property, the company has completed the necessary work to submit a new permit. Drill permissions are in place for a preliminary drill program whilst the company awaits the grant of the new permit.
  • Follow-up drilling is planned for the most prospective targets.

Management commentary

Chris Wright, chairman and chief executive officer, commented: "This acquisition nearly tripled Defiance's Zacatecas district land position to over 4,300 hectares. The Lucita land package contains some of the most prospective targets in the historically underexplored Zacatecas silver district. Exercising the Lucita option represents a key milestone for Defiance Silver in establishing a district-scale land package in one of the most prolific historic silver districts in the world.

"Work to date on the Lucita land package continues to confirm our exploration thesis and strategy in the district. Both the historical high-grade drill results in the Panuco project area and Defiance's drill discoveries on the Palenque structure demonstrate the district-scale discovery potential of the Lucita property."

Update on San Acacio option agreement

Defiance is also pleased to announce that the company has restructured the option to acquire 100 per cent of the San Acacio property in the Zacatecas district.

The project vendor has agreed to extend the option agreement terms by one year from Sept. 27, 2023, to Sept. 27, 2024. Defiance will be making quarterly payments, over the year, to the property vendor totalling $539,721.51 (U.S.), with the final option payment of $2.3-million (U.S.) due Sept. 27, 2024. In accordance with the original agreement, the vendor retains a 2.5-per-cent NSR, which may be purchased for $2.5-million (U.S.).

Shares for debt/shares for services

The company also announces that it has settled and extinguished $36,000 of outstanding debt through the issuance of common shares of the company. In accordance with the settlement of debt, the company issued 257,143 shares at a deemed price of 14 cents per share to one non-arm's-length creditor of the company. The company chose to settle and extinguish the debt through the issuance of shares to preserve cash and improve the company's balance sheet. The debt settlement is subject to approval by the TSX Venture Exchange.

The company previously entered into a non-arm's-length administrative service agreement dated May 1, 2023, for services provided by an officer of the company. As part of the consideration payable by the company under the agreement, the company has agreed to issue that number of common shares equal to $1,330 per month to be issued on a semi-annual basis and pursuant to the policies of the TSX-V. The agreement was for a term of three months and has automatically renewed in accordance with its terms, terminable by either party providing 30 days notice of such termination.

The deemed value of the service shares to be issued for a particular month is to be the closing price of the company's shares on the last trading day of the month.

For services rendered under the agreement between the period of May 1, 2023, and Dec. 31, 2023, the company intends to issue 80,406 shares at a weighted-average price of 13.6 cents per share, subject to the approval of the TSX-V.

The service shares issued are subject to a four-month hold period, which will expire on a date that is four months and one day from the date of issuance.

The issuance of the shares pursuant to the debt and the issuance of the service shares remain subject to the approval of the TSX-V. No new insiders will be created, nor will any change of control occur, as a result of the issuance of the debt shares and service shares.

As certain insiders are party to the agreement, it may be considered a related-party transaction under Multilateral Instrument 61-101 (Protection of Minority Security Holders in Special Transactions) and the TSX-V. The company is relying on the exemptions from the formal valuation and the minority shareholder approval requirements of MI 61-101 contained in Section 5.5(a) and Section 5.7(1)(a) as the fair market value of the common shares being issued to insiders in connection with the service shares does not exceed 25 per cent of the market capitalization of the company as determined in accordance with MI 61-101.

About Defiance Silver Corp.

Defiance (TSX Venture Exchange: DEF) (OTCQX: DNCVF) (Frankfurt Stock Exchange: D4E) is an exploration company, advancing the district-scale Zacatecas project, located in the historic Zacatecas silver district and the Tepal gold/copper project in Michoacan state, Mexico. Defiance is managed by a team of proven mine developers with a record of exploring, advancing and developing several operating mines and advanced resource projects. Defiance's corporate mandate is to expand the San Acacio and Tepal projects to become premier Mexican silver and gold deposits.

George Cavey, PGeo, is a qualified person within the meaning of National Instrument 43-101 and has approved the technical information concerning the company's material mineral properties contained in this press release.

We seek Safe Harbor.