Sonoran Desert Copper Corporation Announces That the TSX Venture Exchange Approves The Cuatro Hermanos Project Acquisition

Vancouver, British Columbia–(Newsfile Corp. – October 20, 2023) – Sonoran Desert Copper Corporation (TSXV: SDCU) (“SDCU” or the “Company“) is pleased to announce that further, to its February 9, 2023 and September 6, 2023 news releases, the TSX Venture Exchange has approved the Exploration Right Assignment Agreement with Definitive Rights Assignment Option between the Company and Minerales Y Yacimientos Mexicanos Sacaramento, S.A. de C.V. (the “Agreement”) The Company will provide an overview news release on the new NI 43-101 Technical Report (the “Report”) for Cuatro Hermanos Project, once the Report has been filed on SEDAR+.

4H transaction details

Pursuant to the agreement, the company will make cash payments to Minerales Y Yacimientos Mexicanos Sacramento (the vendor) and complete work expenditures over 60 months for a 100-per-cent ownership of the Cuatro Hermanos concessions, as shown in the associated table (in U.S. dollars).

The vendor retains a 1-per-cent net smelter royalty (NSR), registered with the Mining Ministry of Mexico. The company is obligated to pay for the continuing mining taxes/duties/fees to maintain the concessions in active status during the term of the purchase option. The Cuatro Hermanos concessions are in good standing before the Mexican Mines Bureau (known in Spanish as Direccion General de Minas).

Additional mining duties for the San Lorenzo concession

Mexican Federal Fees Law establishes the obligation for titleholders of non-productive mining concessions in which there are non-exploitation or exploration works performed during two consecutive years to pay a mining fee, denominated as an additional mining duty, payable on a six-month basis.

Within the Cuatro Hermanos project, only the San Lorenzo concession may be categorized as a non-productive mining concession, as the obligation to report works and labours in connection with such mining title has been suspended during the periods of 2018, 2019, 2020, 2021 and 2022. Based on historic arithmetic procedures, the amount that could eventually be required by the Mining Authority for San Lorenzo would amount to an approximated sum of $10-million Mexican pesos ($569,978 (U.S.)). This sum is just an estimated amount for informational purposes, that may vary over time and be subjected to increases or decreases due to surcharges and fines, or calculation criteria established by the authority, which, as of today, are still unknown, thus, this amount is an estimate and not a precise amount.

In the extremely unlikely event that the Mining Authority conducts a process aimed to achieve the collection of the additional mining duty, the lack of payment would not lead automatically to the cancellation of the title, but instead the Mining Authority is legally obligated to start a cancellation process against the title, in which the titleholder will be granted with a term to perform the payment and avoid cancellation. If the titleholder fails to prove payment, the Mining Authority can cancel the title.

Under the law, the Mining Authority is entitled to require the payment of the additional mining duty, and the breach of this obligation can lead to a cancellation process. A collection process is unlikely to be initiated, and the owed amount will likely expire. As of today, the additional mining duties that may have resulted may neither be ascertained nor required by tax authorities, as the powers of the tax authority to ascertain, verify and collect such duties and related penalties expires after five years following the date on which fees should have been duly covered. This term has already elapsed.

Surface access rights

The Cuatro Hermanos concessions are surrounded by an independent and long-surfaced concession, denominated as Tonichi Frac. IV, owned by a third party. This Tonichi Frac. IV concession could eventually present an obstacle to access to the surface of the Cuatro Hermanos concessions, as the Tonichi Frac. IV titleholder has a preferential right to obtain access and has occupation rights over the Tonichi Frac. IV concession. This is not an imminent risk and this circumstance does not lead to further risks other than those detailed here.

About Sonoran Desert Copper Corp.

Sonoran Desert Copper is focused on the development of its Cuatro Hermanos copper/molybdenum porphyry project in Sonora, Mexico (the 4H property).