Mr. Marc-Andre Pelletier reports

BONTERRA ANNOUNCES RESULTS OF CANADA REVENUE AGENCY AUDIT

The Canada Revenue Agency (CRA) is completing a tax audit of Bonterra Resources Inc.'s renunciation of Canadian exploration expenses (CEE) in favour of subscribers of the private placements of flow-through shares which closed in Dec. 13, 2019, and Oct. 21, 2021, for aggregate gross proceeds of approximately $16.96-million. Renunciations made pursuant to other flow-through offerings by the company are not affected by the audit.

CRA has notified the company of CRA's intention to reclassify approximately $11.05-million of previously renounced CEE on the basis that they did not meet the definition of CEEs, as defined for income tax purposes. CRA's notification relies on the incorrect assumption that the Moroy deposit constitutes an extension of the Bachelor mine, a finding that Bonterra strongly disagrees with. Bonterra has voiced its disagreement with the proposed tax adjustments and the audit process followed by the CRA, and intends to continue to vigorously defend its position by objecting to any forthcoming notice of reassessment.

CRA will contact directly the subscribers of the flow-through financings regarding a reassessment of deductions claimed in connection with the related CEEs. It is to be expected that the CRA will begin by providing notice of reassessments to subscribers in the December, 2019, flow-through financing, with the other reassessment following later this year. The company anticipates that the reductions in renounced CEE will be made on a pro rata basis among all subscribers of the same financing.

The company agreed to indemnify subscribers for tax attributable to disallowed renunciations of CEE pursuant to the terms of the subscription and renunciation agreements entered into by the company and the subscribers in connection with the flow-through financings. The company invites subscribers of the flow-through financings who receive a notice of reassessment from CRA in connection with the proposed tax adjustments to contact the company as soon as possible in connection with this right of indemnification for more information about next steps. To support the company's appeal, subscribers may need to file a notice of objection in respect of their reassessment.

The maximum aggregate amount of the company's exposure with respect to the indemnification obligation from the flow-through financings, together with interest and penalties payable to CRA, and anticipated Part XII.6 tax payable under Section 211.91 of the Income Tax Act, is presently estimated to be approximately $9.5-million, although the initial liability anticipated in respect of the initial reassessment's that will be issued by CRA will be closer to $3-million. The company expects to account for this liability in its financial statements for the year ending Dec. 31, 2025. This provision does not include any provision for the effect, if any, of the reclassification on provincial tax credits received by the company.

The company is actively working to address the obligations resulting from the proposed tax adjustments and will provide additional information when available.

We seek Safe Harbor.