Mr. Duane Poliquin reports

ALMADEN PROVIDES UPDATE ON ARBITRATION PROCEDURE WITH MEXICO

A public copy of the memorial document that Almaden Minerals Ltd. filed in March of this year regarding its international arbitration proceedings (the claim) under the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) with the United Mexican States (Mexico), is now available on the website of the International Centre for the Settlement of Investment Disputes (ICSID).

As noted in previous press releases, Almaden is pursuing the claim together with Almadex Minerals Ltd., on behalf of themselves and their Mexican subsidiaries (the claimants). Prior to the illegal acts of Mexico which resulted in the complete loss of the investment, Almaden held 100 per cent of the Ixtaca precious metals project in Mexico, while Almadex held a 2.0-per-cent NSR (net smelter return) royalty on the project.

The Memorial outlines how Mexico breached its obligations under the CPTPP through actions which blocked the development of the Ixtaca project and ultimately retroactively and arbitrarily terminated the company's mineral concessions. Specifically, the memorial demonstrates how Mexico (i) unlawfully expropriated the claimants' protected investments without any compensation; (ii) failed to accord the claimants' protected investments fair and equitable treatment; and (iii) unlawfully discriminated against the claimants and their protected investments.

After the claimants' memorial filing, Mexico filed a request for the arbitration panel to establish a separate phase of the proceedings (bifurcation) to consider certain jurisdictional objections. Among other arguments, Mexico alleges that the claimants lack standing to bring the claim because the bylaws of Almaden's and Almadex's Mexican subsidiaries contain standard form declarations which are mandated by Mexican law for all Mexican enterprises with foreign investment. The company believes that if Mexico's argument were correct, it would render every single one of Mexico's investment treaties devoid of any investor protection.

Almaden considers Mexico's bifurcation request to be fundamentally flawed and disingenuous, motivated by its desire to defer Mexico's countermemorial and its responses to the claimants' claims, and to delay the resolution of the proceedings. The claimants have now submitted their response to Mexico's request and expect a decision from the arbitration panel on whether or not to bifurcate the proceedings later this summer.

Background to the claim

In April, 2015, an ejido community filed a lawsuit against Mexico (the President, Congress, Ministry of Economy, Directorate of Mines, Mining Registry Office), claiming that Mexico's mineral title system was unconstitutional because indigenous consultation was not required before the granting of mineral title. Under Mexican law, an ejido refers to a form of communal land tenure where a group of individuals, known as ejidatarios, collectively own and manage agricultural land.

The ejido in question is a small, remote mountain village of approximately 150 residents, located at an altitude of 2,569 metres, a higher elevation than the project. It is situated entirely outside the project's "area of influence" as defined in the company's environmental permit application of February, 2019, approximately 45 minutes to an hour by car from the project site. The ejido lands cover an area of approximately 330 hectares, in the southeastern portion of the mineral concessions which were owned by the company and which underpinned the project. The lawsuit was supported by internationally funded non-governmental organizations.

Upon learning of the lawsuit, Almaden immediately sought to relinquish approximately 7,000 hectares of its mineral title area including the portion overlapping with the ejido lands, believing that this would address the ejido's concerns. The reduced title area was confirmed by the Mexican mining authorities in 2017. However, the ejido appealed this reduction, and in late 2020 the Mexican courts confirmed that the company was obligated to continue in its possession of the larger title area.

In 2018, President Lopez-Obrador (AMLO) came into power in Mexico. The AMLO regime is widely recognized as having been hostile to the mining industry, in particular foreign mining companies that owned or sought to develop mining projects in Mexico.

In 2022, Mexico's Supreme Court (SCJN) ruled on the lawsuit. In effect, the SCJN ruling concluded that the Mexican mining law was not unconstitutional, but that the Mexican mining authority (Economia) had improperly issued the claimants' mineral titles as it had not incorporated Mexico's indigenous consultation obligations into the mineral title issuance procedures. The SCJN required that the company's two mineral titles be suspended, in order that the company's mineral title applications, originally made in 2002 and 2008 and approved in 2003 and 2009, could be reissued by Economia after it complied with its indigenous consultation obligations.

The rights endowed by the company's mineral titles were suspended in June, 2022, and the company began working co-operatively with Economia to facilitate what it thought would be the first ever indigenous consultation in Mexico in respect of the granting of mineral titles. In October, 2022, however, the head of Economia was replaced and the company's access to Economia ceased.

In February, 2023, Economia filed a notice with the courts charged with implementing the SCJN decision, seeking to deny the two mineral title applications retroactively. The notice claimed that the applications contained alleged de minimis technical faults, despite Economia's acceptance of the mineral title applications and grant of the mineral titles in 2003 and 2009. By alleging such de minimis technical faults in the mineral title applications, Economia breached Mexican domestic law and international law to deny arbitrarily and pre-emptively the grant of the mineral titles and thereby avoid the indigenous consultation ordered by the SCJN. Such consultation would have been welcomed by both the company and community members living in the area of influence of the project.

Despite the legal appeals of the company and surrounding community members that indigenous consultation should proceed, the Mexican courts endorsed Economia's position. Therefore, the mineral rights underpinning the project were definitively cancelled and reverted to the government of Mexico, and indigenous consultation never occurred.

The claimants have suffered substantial harm arising out of Mexico's conduct in breach of its investment protection obligations under the CPTPP, including (without limitation):

• Economia's reassessment of the original applications for the mineral titles, holding them to be deficient and unfeasible, contradicting the position previously adopted by it decades earlier, and violating the company and its subsidiary's right to amend or supplement the original mineral title applications;
• The Mexican Secretariat of Environment and Natural Resources' (Secretaria del Medio Ambiente y Recursos Naturales (SEMARNAT)) delay in issuance and ultimate refusal to issue the environmental permit (Manifiesto de Impacto Ambiental) for the project.

The claimants filed their request for arbitration in June, 2024, and the three-person arbitration panel has now been formed. Almaden filed its memorial in March, 2025, and the claimants are seeking damages of $1.06-billion (U.S.), in the aggregate. This number will be further updated as the claim proceeds, to reflect future movements in precious metal prices, exchange rates, interest rates and other factors.

The claimants' legal counsel for this arbitration are Boies, Schiller, Flexner LLP and RiosFerrer + Gutierrez S.C.

We seek Safe Harbor.