Mr. Stephen Barley reports

MAGMA SILVER CEO LETTER TO SHAREHOLDERS

QUOTE

Dear Shareholders,

Welcome to 2026. Magma Silver started 2025 without a project and in January acquired 100% control of Ninobamba, a primary silver asset in the mining-friendly country of Peru. This places Magma in a highly leveraged position relative to silver prices. By the end of 2025, we had a silver-gold asset that is drill-ready and permitted in a market that is significantly revaluing both precious metals. 2026 will be a year of confirming existing resources and meaningful expansion through an effective and intelligent utilization of a fully funded exploration program.

In 2025, Magma completed the acquisition of the controlling interest in Ninobamba on favorable business terms, established operations in Peru, and retained consultants to maintain a sound relationship with the affected communities. Our technical team, with a combined 60 years of experience in the Peruvian mining sector, reviewed vast amounts of historical data and conducted two field programs to verify the accuracy of known geological data and to collect additional samples to expand our knowledge base as a precursor to the upcoming 2026 drill program.

Magma had meaningful advancements on the corporate side during the year. We completed financings totaling $6.5M to fully fund our programs through 2026. Through these financings and warrant exercises, we ended the year with over $5M in the treasury. The oversubscribed $5M financing, which closed in October, was led by Research Capital and attracted a more mature investor audience, including Eric Sprott, who now holds a 13.4% fully diluted interest, marking an important shift toward a long-term shareholder base. Magma's share price increased by 209% during 2025.

2026 will be an expansion and new discovery year for Magma. Ninobamba has been quietly waiting to show its potential. Drills will turn in Q1 on one segment of the project for the first time since 2010, and drilling and assay results are expected to continue throughout the year. Concurrently with drilling, our team will conduct surface sampling, trenching, and geological mapping on the balance of the project, in preparation for an expanded drill program on high-potential but not drill-tested silver and gold targets. Ninobamba is a shallow-to-near-surface project, so assayed samples from surface work will provide a meaningful indication of mineralization lying slightly deeper. We will begin adding compliant ounces to further support the project's potential.

We will continue our efforts commenced in late 2025 to bring the Ninobamba project to the attention of the strategic long-term investment community through conferences, direct contact, and other media. We will maintain our relationship-building process with the affected local communities, as that is paramount to a successful long-term operation and of the utmost importance within our corporate philosophy.

Historical work by Newmont, AngloGold, Bear Creek, and Rio Silver indicated Ninobamba would be a viable mining operation at lower silver and gold prices. The two field programs conducted by Magma in August and September of 2025 confirmed and, in certain cases, exceeded the historical results. Highlights from the Joramina and Randypata programs included (news release dated October 30, 2025):

Grab sampling on the Joramina zone returned 17 g/mt to 300 g/mt silver and 0.50 g/mt to 14.56 g/mt gold, averaging 136 g/mt silver and 5.32 g/mt gold.

Drift sampling on the Joramina zone returned a 5-metre composite returning 115.09 g/mt silver and 10 m of 2.32 g/mt gold.

Sampling close to the drift returned 0.70m of 395.19 g/mt silver and 17.41 g/mt of gold.

A random composite grab sample returned 242 g/mt silver and 0.20 g/mt gold from the undrilled Randypata zone 2 km silver anomaly.

Silver prices rose by approximately 173% in 2025, and many forecast the trend to continue. Based on internal studies, including metallurgical testing and internal economic studies completed by Newmont, Ninobamba is anticipated to be a shallow, low-cost open-pit operation with projected low extraction and processing costs. Increases in silver price should go directly to the bottom line of any future mining operation.

2025 was an organizational year, and 2026 will be a year to start delivering on the promise of this project. We are taking the correct steps to position our company and shareholders to realize the potential of Ninobamba. Our efforts are designed to expand on historical results and create long-term incremental value for all stakeholders. We appreciate your continued support.

Sincerely,

Stephen Barley, chairman and chief executive officer.

UNQUOTE

Qualified person

Jeffrey Reeder, PGeo, a qualified person as defined in National Instrument 43-101, and a senior technical adviser of the company, has prepared, or supervised the preparation of the assays and approved the scientific and technical disclosure contained in this communication.

We seek Safe Harbor.