Exhibit 4.1


 


 


 


 


 


Annual
Information Form (Amended and Restated) 


For
the year ended December 31, 2020 


December 1, 2021


 






     


     


    

 


 


 


TABLE OF CONTENTS


 


	INTERPRETATION	     6
	Definitions	     6
	CIM Definition Standards	     6
	CAUTIONARY NOTE REGARDING FORWARD LOOKING INFORMATION	     7
	CAUTIONARY NOTE REGARDING MINERAL RESOURCE AND MINERAL RESERVE ESTIMATES	     11
	OTHER INFORMATION	     11
	Currency	     11
	Third Party Information	     11
	Non-GAAP Measures	     12
	Date of Information	     12
	STRUCTURE OF THE COMPANY	     13
	Name, Address and Incorporation	     13
	Intercorporate Relationships	     13
	GENERAL DEVELOPMENT OF THE BUSINESS	     14
	Overview	     14
	Three Year History	     14
	Operations	     14
	Environmental Social and Governance	     16
	DESCRIPTION OF THE BUSINESS	     20
	Overview	     20
	Lithium Properties	     20
	Royalties	     27
	Life Cycle Analysis and Net Zero Strategy	     27
	Environmental Licensing and Permitting	     28
	Surface Rights and Other Permitting	     29
	Specialized Skills and Knowledge	     29
	Mineral Price and Economic Cycles	     29
	Economic Dependence	     29
	Bankruptcy and Similar Procedures	     29
	Reorganizations	     29
	Foreign Operations	     29
	Employees	     30



 






     


     


    

 


 


 


	Environmental Protection	     30
	Social and Environmental Policies	     30
	SUMMARY OF UPDATED FEASIBILITY STUDY REPORT	     30
	Property Description and Location	     30
	Accessibility, Climate, Local Resources, Infrastructure and Physiography	     31
	History	     31
	Geological Setting and Mineralization	     31
	Exploration	     32
	Drilling	     32
	Sample Preparation, Analyses and Security	     33
	Data Verification	     35
	Mineral processing and Metallurgical Testing	     35
	First Mine	     35
	Second Mine	     36
	Mineral resource estimates	     36
	Mineral Reserve Estimates	     40
	Mining methods	     41
	First Mine	     41
	Second Mine	     41
	Recovery methods	     42
	Processing Plant Description	     42
	Design Criteria and Utilities Requirements	     42
	Project Infrastructure	     43
	Buildings, Roads, Fuel Storage, Power Supply and Water Supply	     43
	Waste Rock and Tailings Disposal and Stockpiles	     43
	Control Systems and Communication	     44
	Market Studies and Contracts	     44
	Demand and Consumption	     44
	Supply	     44
	Contracts	     44
	Price Forecast	     45
	Environmental Studies, Permitting and Social or Community Impact	     45
	Applicable Legal Requirements for Project Environmental Permitting	     45
	Current Project Environmental Permitting Status	     45



 






     


     


    

 


 


 


	Authorizations	     46
	Land Access	     46
	Social License Considerations	     46
	Rehabilitation, Closure Planning and Post-Closure Monitoring	     47
	Second Mine Environmental Work to Date	     47
	Capital and Operating Costs	     47
	Capital Costs First Mine	     47
	Operating Costs First Mine	     48
	Plant CAPEX and OPEX Second Mine	     49
	Mining Capital Costs Second Mine	     49
	Mining Operating Costs Second Mine	     49
	Economic Analysis	     50
	Production Phase 1	     50
	Production Phase 2	     53
	Interpretation and Conclusions	     56
	Risk Assessment	     56
	Opportunities	     56
	Recommendations	     57
	Geology and Resources	     57
	First Mine Recommendations	     57
	Second Mine Project Recommendations	     57
	Competitive Conditions and Anticipated Trends	     58
	Emerging Market Disclosure	     61
	RISK FACTORS	     63
	Risk Factors	     63
	Risks Related to Resource Development	     64
	DESCRIPTION OF CAPITAL STRUCTURE	     78
	Common Shares	     78
	DIVIDENDS AND DISTRIBUTIONS	     78
	MARKET FOR SECURITIES	     79
	Market	     79
	Trading Price and Volume	     79
	PRIOR SALES	     80
	DIRECTORS AND OFFICERS	     80
	Name and Occupation	     80
	Shareholdings of Directors and Officers	     82



 






     


     


    

 


 


 


	Cease Trade Orders, Bankruptcies, Penalties or Sanctions	     82
	Committees of the Board	     83
	Conflicts of Interest	     83
	AUDIT COMMITTEE INFORMATION	     84
	Audit Committee Charter	     84
	Composition of the Audit Committee	     84
	Relevant Education and Experience	     84
	Audit Committee Oversight	     85 
	Reliance on Certain Exemptions	     85
	Pre-Approval Policies and Procedures	     85
	Audit Fees	     86
	LEGAL PROCEEDINGS AND REGULATORY ACTIONS	     85
	INTEREST OF MANAGEMENT AND OTHERS IN MATERIAL TRANSACTIONS	     85
	TRANSFER AGENT AND REGISTRAR	     85
	MATERIAL CONTRACTS	     85
	INTERESTS OF EXPERTS	     86
	ADDITIONAL INFORMATION	     86
	SCHEDULE “A” Audit Committee Charter	     87
	EXHIBIT “A” TO THE AUDIT COMMITTEE CHARTER	     92
	SCHEDULE “B” DEFINITIONS 	     94


 









     


     


    

 


 


 


INTERPRETATION


 


Definitions


 


For a description
of defined terms and other reference information used in this Annual Information Form (this “AIF”), please refer to
Schedule “B”.


 


CIM Definition Standards


 


The disclosure
included in this AIF uses mineral resources and mineral reserves classification terms that comply with reporting standards in Canada.
All mineral resource and mineral reserve estimates are made in accordance with the CIM Definition Standards and NI 43-101, which is a
set of rules developed by the Canadian Securities Administrators that establishes standards for all public disclosure an issuer
makes of scientific and technical information concerning mineral projects and operations. The following definitions are reproduced from
the CIM Definition Standards:


 


A mineral resource
is a concentration or occurrence of solid material of economic interest in or on the Earth’s crust in such form, grade or quality
and quantity that there are reasonable prospects for eventual economic extraction. The location, quantity, grade or quality, continuity
and other geological characteristics of a mineral resource are known, estimated or interpreted from specific geological evidence and
knowledge, including sampling. Mineral resources are sub-divided, in order of increasing geological confidence, into inferred, indicated
and measured categories, which are defined as follows:


 


		·	An
                                            inferred mineral resource is that part of a mineral resource for which quantity, grade or
                                            quality are estimated on the basis of limited geological evidence and sampling. Geological
                                            evidence is sufficient to imply but not verify geological and grade or quality continuity.
                                            An inferred mineral resource has a lower level of confidence than that applying to an indicated
                                            mineral resource and must not be converted to a mineral
reserve. It is reasonably expected that the majority of inferred mineral resources could be upgraded to indicated mineral resources with
continued exploration.



 


		·	An
                                            indicated mineral resource is that part of a mineral resource for which quantity, grade or
                                            quality, densities, shape and physical characteristics are estimated with sufficient confidence
                                            to allow the application of modifying factors (as defined below) in sufficient detail to
                                            support mine planning and evaluation of the economic viability of the deposit. Geological
                                            evidence is derived from adequately detailed and reliable exploration, sampling and testing
                                            and is sufficient to assume geological and grade or quality continuity between points of
                                            observation. An indicated mineral resource has a lower level of confidence than that applying
                                            to a measured mineral resource and may only be converted to a probable mineral reserve.



 


		·	A
                                            measured mineral resource is that part of a mineral resource for which quantity, grade or
                                            quality, densities, shape, and physical characteristics are estimated with confidence sufficient
                                            to allow the application of modifying factors to support detailed mine planning and final
                                            evaluation of the economic viability of the deposit. Geological evidence is derived from
                                            detailed and reliable exploration, sampling and testing and is sufficient to confirm geological
                                            and grade or quality continuity between points of observation. A measured mineral resource
                                            has a higher level of confidence than that applying to either an indicated mineral resource
                                            or an inferred mineral resource. It may be converted to a proven mineral reserve or to a
                                            probable mineral reserve.



 


“Modifying
factors” are considerations used to convert mineral resources to mineral reserves. These include, but are not restricted to, mining,
processing, metallurgical, infrastructure, economic, marketing, legal, environmental, social and governmental factors.


 






    
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A
mineral reserve is the economically mineable part of a measured and/or indicated mineral resource. It includes diluting materials and
allowances for losses, which may occur when the material is mined or extracted and is defined by studies at pre-feasibility or feasibility
level as appropriate that include application of modifying factors. Such studies demonstrate that, at the time of reporting, extraction
could reasonably be justified. Mineral reserves are sub-divided, in order of increasing geological confidence, into probable and proven
categories, which are defined as follows:


 


		·	A
                                            probable mineral reserve is the economically mineable part of an indicated, and in some circumstances,
                                            a measured mineral resource. The confidence in the modifying factors applying to a probable
                                            mineral reserve is lower than that applying to a proven mineral reserve.



 


		·	A
                                            proven mineral reserve is the economically mineable part of a measured mineral resource.
                                            A proven mineral reserve implies a high degree of confidence in the modifying factors.



 


CAUTIONARY NOTE
REGARDING FORWARD LOOKING INFORMATION


 


Certain information
and statements in this AIF may constitute “forward looking information” within the meaning of Canadian securities legislation
and “forward looking statements” within the meaning of U.S. securities legislation (collectively, “Forward Looking
Information”), which involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance
or achievements of the Company, or industry results, to be materially different from any future results, performance or achievements
expressed or implied by such Forward Looking Information. All statements, other than statements of historical fact, may be Forward Looking
Information, including, but not limited to, mineral resource or mineral reserve estimates (which reflect a prediction of mineralization
that would be realized by development). When used in this AIF, such statements generally use words such as “may”, “would”,
 “could”, “will”, “intend”, “expect”, “believe”, “plan”, “anticipate”,
 “estimate” and other similar terminology. These statements reflect management’s current expectations regarding future
events and operating performance and speak only as of the date of this AIF. Forward Looking Information involves significant risks and
uncertainties, should not be read as guarantees of future performance or results, and does not necessarily provide accurate indications
of whether or not such results will be achieved. A number of factors could cause actual results to differ materially from the results
discussed in the Forward Looking Information, which is based upon what management believes are reasonable assumptions, and there can
be no assurance that actual results will be consistent with the Forward Looking Information.


 


In particular (but
without limitation), this AIF contains Forward Looking Information with respect to the following matters: statements regarding anticipated
decision making with respect to the Project; capital expenditure programs; estimates of mineral resources and mineral reserves; development
of mineral resources and mineral reserves; government regulation of mining operations and treatment under governmental and taxation regimes;
the future price of commodities, including lithium; the realization of mineral resource and mineral reserve estimates, including whether
mineral resources will ever be developed into mineral reserves; the timing and amount of future production; currency exchange and interest
rates; expected outcome and timing of environmental surveys and permit applications and other environmental matters; the Company’s
ability to raise capital and obtain project financing; expected expenditures to be made by the Company on its properties; successful
operations and the timing, cost, quantity, capacity and quality of production; capital costs, operating costs and sustaining capital
requirements, including the cost of construction of the processing plant for the Project; and competitive conditions and anticipated
trends post-COVID-19 pandemic and the ongoing uncertainties and effects in respect of the COVID-19 pandemic.


 






    
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Forward Looking
Information does not take into account the effect of transactions or other items announced or occurring after the statements are made.
Forward Looking Information is based upon a number of expectations and assumptions and is subject to a number of risks and uncertainties,
many of which are beyond the Company’s control, that could cause actual results to differ materially from those disclosed in or
implied by such Forward Looking Information. With respect to the Forward Looking Information, the Company has made assumptions regarding,
among other things:


 


		·	General
                                            economic and political conditions






		·	Stable
                                            and supportive legislative, regulatory and community environment in the jurisdictions where
                                            the Company operates






		·	Stability
                                            and inflation of the Brazilian Real, including any foreign exchange or capital controls which
                                            may be enacted in respect thereof, and the effect of current or any additional regulations
                                            on the Company’s operations






		·	Anticipated
                                            trends and effects in respect of the COVID-19 pandemic and post-pandemic






		·	Demand
                                            for lithium, including that such demand is supported by growth in the electric vehicle (“EV”)
                                            market






		·	Estimates
                                            of, and changes to, the market prices for lithium






		·	The
                                            impact of increasing competition in the lithium business and the Company’s competitive
                                            position in the industry






		·	The
                                            Company’s market position and future financial and operating performance






		·	The
                                            Company’s estimates of mineral resources and mineral reserves, including whether mineral
                                            resources will ever be developed into mineral reserves






		·	Anticipated
                                            timing and results of exploration, development and construction activities






		·	Reliability
                                            of technical data






		·	The
                                            Company’s ability to develop and achieve production at the Project






		·	The
                                            Company’s ability to obtain financing on satisfactory terms to develop the Project






		·	The
                                            Company’s ability to obtain and maintain mining, exploration, environmental and other
                                            permits, authorizations and approvals for the Project






		·	The
                                            timing and possible outcome of regulatory and permitting matters for the Project






		·	The
                                            exploration, development, construction and operational costs for the Project






		·	The
                                            accuracy of budget, construction and operations estimates for the Project






		·	Successful
                                            negotiation of definitive commercial agreements, including off-take agreements for the Project






		·	The
                                            Company’s ability to operate in a safe and effective manner.



 


Although management
believes that the assumptions and expectations reflected in such Forward Looking Information are reasonable, there can be no assurance
that these assumptions and expectations will prove to be correct. Since Forward Looking Information inherently involves risks and uncertainties,
undue reliance should not be placed on such information.


 


The Company’s
actual results could differ materially from those anticipated in any Forward Looking Information as a result of various known and unknown
risk factors, including (but not limited to) the risk factors referred to under the heading “Risk Factors” in this AIF. Such
risks relate to, but are not limited to, the following:


 


		·	The
                                            Company may not develop the Project into a commercial mining operation






		·	There
                                            can be no assurance that market prices for lithium will remain at current levels or that
                                            such prices will improve






		·	The
                                            market for electric vehicles (“EVs”) and other large format batteries currently
                                            has limited market share and no assurances can be given for the rate at which this market
                                            will develop, if at all, which could affect the success of the Company and its ability to
                                            develop lithium operations






		·	Changes
                                            in technology or other developments could result in preferences for substitute products






		·	New
                                            production of lithium hydroxide or lithium carbonate from current or new competitors in the
                                            lithium markets could adversely affect prices






		·	The
                                            Project is at development stage and the Company’s ability to succeed in progressing
                                            through development to commercial operations will depend on a number of factors, some of
                                            which may be outside its control






		·	The
                                            Company’s financial condition, operations and results of any future operations are
                                            subject to political, economic, social, regulatory and geographic risks of doing business
                                            in Brazil



 






    
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		·	Violations
                                            of anti-corruption, anti-bribery, anti-money laundering and economic sanctions laws and regulations
                                            could materially adversely affect the Company’s business, reputation, results of any
                                            future operations and financial condition






		·	The
                                            Company is subject to regulatory frameworks applicable to the Brazilian mining industry which
                                            could be subject to further change, as well as government approval and permitting requirements,
                                            which may result in limitations on the Company’s business and activities






		·	The
                                            Company’s operations are subject to numerous environmental laws and regulations and
                                            expose the Company to environmental compliance risks, which may result in significant costs
                                            and have the potential to reduce the profitability of operations






		·	Physical
                                            climate change events and the trend toward more stringent regulations aimed at reducing the
                                            effects of climate change could have an adverse effect on the Company’s business and
                                            future operations






		·	As
                                            the Company does not have any experience in the construction and operation of a mine, processing
                                            plants and related infrastructure, it is more difficult to evaluate the Company’s prospects,
                                            and the Company’s future success is more uncertain than if it had a more proven history
                                            of developing a mine






		·	The
                                            Company’s future production estimates are based on existing mine plans and other assumptions
                                            which change from time to time. No assurance can be given that such estimates will be achieved






		·	The
                                            Company may experience unexpected costs and cost overruns, problems and delays during construction,
                                            development, mine start-up and operations for reasons outside of the Company’s control,
                                            which have the potential to materially affect its ability to fully fund required expenditures
                                            and/or production or, alternatively, may require the Company to consider less attractive
                                            financing solutions






		·	The
                                            Company’s capital and operating cost estimates may vary from actual costs and revenues
                                            for reasons outside of the Company’s control






		·	The
                                            Company’s operations are subject to the high degree of risk normally incidental to
                                            the exploration for, and the development and operation of, mineral properties






		·	Insurance
                                            may not be available to insure against all such risks, or the costs of such insurance may
                                            be uneconomic. Losses from uninsured and underinsured losses have the potential to materially
                                            affect the Company’s financial position and prospects






		·	The
                                            Company is subject to risks associated with securing title and property interests






		·	The
                                            Company is subject to strong competition in Brazil and in the global mining industry






		·	The
                                            Company may become subject to government orders, investigations, inquiries or other proceedings
                                            (including civil claims) relating to health and safety matters, which could result in consequences
                                            material to its business and operations






		·	The
                                            Company’s mineral resource and mineral reserve estimates are estimates only and no
                                            assurance can be given that any particular level of recovery of minerals will in fact be
                                            realized or that identified mineral resources or mineral reserves will ever qualify as a
                                            commercially mineable (or viable) deposit






		·	The
                                            Company’s operations and the development of its projects may be adversely affected
                                            if it is unable to maintain positive community relations






		·	The
                                            Company is exposed to risks associated with doing business with counterparties, which may
                                            impact the Company’s operations and financial condition






		·	Any
                                            limitation on the transfer of cash or other assets between the Company and the Company’s
                                            subsidiaries, or among such entities, could restrict the Company’s ability to fund
                                            its operations efficiently






		·	The
                                            Company is subject to risks associated with its reliance on consultants and others for mineral
                                            exploration and exploitation expertise






		·	The
                                            current COVID-19 pandemic could have a material adverse effect on the Company’s business,
                                            operations, financial condition and stock price






		·	If
                                            the Company is unable to ultimately generate sufficient revenues to become profitable and
                                            have positive cash flows, it could have a material adverse effect on its prospects, business,
                                            financial condition, results of operations or overall viability as an operating business






		·	The
                                            Company is subject to liquidity risk and therefore may have to include a “going concern”
                                            note in its financial statements






		·	The
                                            Company may not be able to obtain sufficient financing in the future on acceptable terms,
                                            which could have a material adverse effect on the Company’s business, results of operations
                                            and financial condition. In order to obtain additional financing, the Company may conduct
                                            additional (and possibly dilutive) equity offerings or debt issuances in the future



 






    
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		·	The
                                            Company may be unable to achieve cash flow from operating activities sufficient to permit
                                            it to pay the principal, premium, if any, and interest on the Company’s indebtedness,
                                            or maintain its debt covenants






		·	The
                                            Company has not declared or paid dividends in the past and may not declare or pay dividends
                                            in the future






		·	The
                                            Company will incur increased costs as a result of being a public company both in Canada listed
                                            on the TSXV and in the United States listed on the Nasdaq Capital Market (“Nasdaq”),
                                            and its management will be required to devote further substantial time to United States public
                                            company compliance efforts






		·	If
                                            the Company does not maintain adequate and appropriate internal controls over financial reporting
                                            as outlined in accordance with NI 52-109 or the Rules and Regulations of the SEC, the
                                            Company will have to report a material weakness and disclose that the Company has not maintained
                                            appropriate internal controls over financial reporting






		·	As
                                            a foreign private issuer, the Company is subject to different U.S. securities laws and rules than
                                            a domestic U.S. issuer, which may limit the information publicly available to its shareholders






		·	Failure
                                            to retain key officers, consultants and employees or to attract and, if attracted, retain
                                            additional key individuals with necessary skills could have a materially adverse impact upon
                                            the Company’s success






		·	The
                                            Company is subject to currency fluctuation risks






		·	From
                                            time to time, the Company may become involved in litigation, which may have a material adverse
                                            effect on its business financial condition and prospects






		·	Certain
                                            directors and officers of the Company are, or may become, associated with other natural resource
                                            companies which may give rise to conflicts of interest






		·	The
                                            market price for the Company’s shares may be volatile and subject to wide fluctuations
                                            in response to numerous factors beyond its control, and the Company may be subject to securities
                                            litigation as a result






		·	If
                                            securities or industry analysts do not publish research or reports about the Company’s
                                            business, or if they downgrade the Common Shares, the price of the Common Shares could decline






		·	The
                                            Company will have broad discretion over the use of the net proceeds from offerings of its
                                            securities






		·	There
                                            is no guarantee that the Common Shares will earn any positive return in the short term or
                                            long term






		·	The
                                            Company has a major shareholder which owns 55.5% of the outstanding Common Shares and, as
                                            such, for as long as such shareholder directly or indirectly maintains a significant interest
                                            in the Company, it may be in a position to affect the Company’s governance, operations
                                            and the market price of the Common Shares






		·	As
                                            the Company is a Canadian corporation but most of its directors and officers are not citizens
                                            or residents of Canada or the U.S., it may be difficult or impossible for an investor to
                                            enforce judgements against the Company and its directors and officers outside of Canada and
                                            the U.S. which may have been obtained in Canadian or U.S. courts or initiate court action
                                            outside Canada or the U.S. against the Company and its directors and officers in respect
                                            of an alleged breach of securities laws or otherwise. Similarly, it may be difficult for
                                            U.S. shareholders to effect service on the Company to realize on judgments obtained in the
                                            United States






		·	The
                                            Company is governed by the corporate and securities laws of the Province of British Columbia
                                            and of Canada, which in some cases have a different effect on shareholders than U.S. corporate
                                            laws and U.S. securities laws






		·	The
                                            Company is subject to risks associated with its information technology systems and cyber-security






		·	The
                                            Company may be a Passive Foreign Investment Company, which may result in adverse U.S. federal
                                            income tax consequences for U.S. holders of Common Shares



 


Readers are cautioned
that the foregoing lists of assumptions and risks is not exhaustive. The Forward Looking Information contained in this AIF is expressly
qualified by these cautionary statements. All Forward Looking Information in this AIF speaks as of the date of this AIF. The Company
does not undertake any obligation to update or revise any Forward Looking Information, whether as a result of new information, future
events or otherwise, except as required by applicable securities law. Additional information about these assumptions, risks and uncertainties
is contained in the Company’s filings with securities regulators, including the Company’s most recent annual and interim
MD&A, which are available on SEDAR at www.sedar.com.


 






    
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CAUTIONARY NOTE REGARDING MINERAL RESOURCE
AND MINERAL RESERVE ESTIMATES


 


Technical disclosure regarding the Company’s
properties included in this AIF, and in the documents incorporated herein by reference has not been prepared in accordance with the requirements
of U.S. securities laws. Without limiting the foregoing, such technical disclosure uses terms that comply with reporting standards in
Canada and estimates are made in accordance with NI 43-101. Unless otherwise indicated, all mineral reserve and mineral resource estimates
contained in the technical disclosure have been prepared in accordance with NI 43-101 and the CIM Definition Standards.


 


Under the SEC rules regarding disclosure
of technical information, the definitions of “proven mineral reserves” and “probable mineral reserves” are substantially
similar to the corresponding CIM Definition Standards, and the SEC recognizes “measured mineral resources”, “indicated
mineral resources” and “inferred mineral resources” which are also substantially similar to the corresponding CIM Definition
Standards. However, there are still differences in the definitions and standards under the SEC rules and the CIM Definition Standards.
Therefore, the Company’s mineral resources and reserves as determined in accordance with NI 43-101 may be significantly different
than if they had been determined in accordance with the SEC rules.


 


OTHER INFORMATION


 


Currency


 


This AIF contains references to United States
dollars, Canadian dollars and Brazilian Reais. All dollar amounts referenced, unless otherwise indicated, are expressed in Canadian dollars
 “Cdn$”. United States dollars are referred to as “US$”. Brazilian Reais are referred to as “R$”.


 


The following table sets forth the high and low,
average and period-end exchange rates for one US dollar expressed in Canadian dollars and Brazilian Reais for each period indicated, based
upon the daily exchange rates provided by the Bank of Canada and FactSet:


 


	United States Dollars into Canadian Dollars and Brazilian Reais
	 	 	 	2020	 	 	 	2019	 
	High	 	 	Cdn$1.45/R$5.93	 	 	 	Cdn$1.36/R$4.27	 
	Low	 	 	Cdn$1.27/R$4.02	 	 	 	Cdn$1.30/R$3.64	 
	Rate at end of period	 	 	Cdn$1.27/R$5.19	 	 	 	Cdn$1.30/R$4.02	 
	Average rate for period	 	 	Cdn$1.34/R$5.15	 	 	 	Cdn$1.33/R$3.94	 



 


On November 30, 2021, the rate for Canadian dollars
(as quoted by the Bank of Canada) and Brazilian Reais (as quoted by FactSet) in terms of the United States dollar was US$1.00 = Cdn$1.2828/R$5.6486.


 


Third Party Information


 


This AIF includes market, industry and economic
data and projections obtained from various publicly available sources and other sources believed by the Company to be true. Although the
Company believes these to be reliable, it has not independently verified the information from third party sources, or analyzed or verified
the underlying reports relied upon or referred to by the third parties, or ascertained the underlying economic and other assumptions relied
upon by the third parties. The Company believes that the market, industry and economic data and projections are accurate and that the
estimates and assumptions are reasonable, but there can be no assurance as to their accuracy or completeness. The accuracy and completeness
of the market, industry and economic data and projections in this AIF are not guaranteed and the Company does not make any representation
as to the accuracy or completeness of such information.


 






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Non-GAAP Measures


 


This AIF and the Updated Feasibility Study Report
incorporated by reference herein contains certain non-GAAP measures. The non-GAAP measures do not have any standardized meaning within
IFRS and therefore may not be comparable to similar measures presented by other companies. These measures provide information that is
customary in the mining industry and that is useful in evaluating the Project. This data should not be considered as a substitute for
measures of performance prepared in accordance with IFRS.


 


Qualified Person


 


Mr. Wes Roberts, P.Eng., a member of the technical
committee of the Company, is the “qualified person” under NI 43-101 who reviewed and approved the technical information disclosed
in this AIF and the documents incorporated by reference herein.


 


Date of Information


 


Except
as otherwise indicated, all information disclosed in this AIF is as of December 1, 2021.


 









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STRUCTURE OF THE COMPANY


 


Name, Address and Incorporation


 


Sigma Lithium Corporation (the “Company”
or “Sigma”) is domiciled in Canada and was incorporated under the Canada Business Corporations Act on June 8,
2011 originally under the name Margaux Red Capital Inc. The current business of Sigma was acquired through a reverse take-over transaction
on April 30, 2018 pursuant to which the Company acquired Sigma Lithium Resources Inc (“Sigma Holdings”) which held (and
continues to hold) the Grota do Cirilo Project, located in the state of Minas Gerais in Brazil (the ”Project”) through a Brazilian
wholly-owned subsidiary, Sigma Mineração S.A. (“Sigma Brazil”). On completion of the reverse take-over transaction,
the Company implemented a share consolidation. On July 5, 2021, the Company changed its name from “Sigma Lithium Resources
Corporation” to “Sigma Lithium Corporation”.


 


The head office of the Company is at Suite 2200,
HSBC Building, 885 West Georgia St. Vancouver, BC V6C 3E8 Canada and its web site is www.sigmalithium.ca.


 


Intercorporate Relationships


 


The corporate structure of the Company, its subsidiaries,
the jurisdiction of incorporation of such corporations and the percentage of equity ownership are set out in the following chart:


 





 


 






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GENERAL
DEVELOPMENT OF THE BUSINESS


 


Overview


 


Sigma is a Canadian-based mineral processing and
development company, focused on advancing, with an environmental sustainability directed strategy, one of the largest hardrock lithium
projects in the Americas - its wholly-owned Grota do Cirilo Project in Brazil, with the goal of participating in the rapidly expanding
lithium-ion battery supply chain for EVs. For further information on the business of the Company, please refer to “Description
of the Business”.


 


Three Year History


 


The following is a summary of the key developments
that have generally influenced the development of the Company’s business and projects over the last three years.


 


Operations


 





The Company continues to advance toward initiating
commercial production in 2022. On November 9, 2021, the Company announced that it is mobilizing its workforce and equipment on site
for construction of the Production Plant. This stage comprises the earthworks necessary for installation of the Production Plant and infrastructure
foundations. It is expected that approximately one million cubic meters of soil/subsoils will be moved, employing a workforce of approximately
180 personnel. Completion of this stage is expected within three months.


 


The Company successfully completed several workstreams
involved in the pre-construction of the Project within its schedule and budget parameters. In 2021, the Company reached major milestones
towards engineering and construction, despite challenging circumstances created by the COVID-19 pandemic.


 


The Company is managing three interconnected workstreams
aimed to develop the Project as a whole:


 


		·	The completion of detailed engineering and execution
and management of construction activities for Production Phase 1 and the Production Plant



 


		·	The completion of the pre-feasibility study of Production Phase 2, aimed
at a potential production expansion



 


		·	The continued exploration and expansion of the
Project’s estimated mineral resources, with the objective of increasing the Project’s mine life and/or a potential Production
Phase 3 expansion scenario



 


For further information on Production Phase 1, Production
Phase 2 and Production Phase 3, please refer to “Description of the Business – Current Status of the Project”.


 


In relation to the Production Phase 1 workstream,
the Company expects Front-End Engineering and Design (“FEED”) to be finalized in the fourth quarter of 2021. The revised capital
expenditure (“CAPEX”) estimation is ongoing and final CAPEX with a Project Execution Plan (“PEP”) is also expected
to be complete in the fourth quarter of 2021. Subsequently, Board approval for the Production Phase 1 construction plan could be made
formalizing a final investment decision. Immediately thereafter, the Company would place orders for long lead items and reserve manufacturing
slots with the key vendors whose equipment is part of the construction critical path. Contracts for earthmoving, civil construction, and
the orders for long lead items, will be paid for with funds already in the Company treasury and currently earmarked for construction.


 


Following the successful conclusion of the
first phase of FEED, Promon Engenharia Ltda. (“Promon”) and Primero Group Ltd (“Primero”) will remain
engaged by the Company and continue to focus on negotiating and securing long lead items for the construction of the Production
Plant. The Company is currently negotiating an agreement for the engineering, procurement, and construction management
(“EPCM”) of the Production Plant and associated infrastructure with both engineering firms. The Company is also in
negotiations with two finalist mining contractors to build and operate the First Mine at the Project.


 


The Company continued to demonstrate the unique
extent and high-purity quality of its hard rock lithium mineralization at the Project and its commercial and market relevance by having
significantly advanced its strategic goals on three fronts: short term production scheduled for 2022, the viability of a near-term production
expansion contemplated for 2023, and the determination of the ultimate extent of mineral resources at the Project, all while maintaining
its strategic leadership in ESG in the lithium supply chain.


 






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For further information on the Project, please
refer to “Description of the Business – Current Status of the Project”.


 


On December 1, 2021, the Company filed on SEDAR
the Updated Feasibility Study Report in respect of its preliminary economic assessment on Production Phase 2 of the Project. The Updated
Feasibility Study Report was prepared by leading mining consultancies and the professional services firms Primero, SGS Canada Lakefield
(“SGS”), and GE21 Consultoria Mineral (“GE21”). Please refer to “Description of the Business –
Current Status of the Project” and “Summary of Updated Feasibility Study Report”. This approach was the result
of a thorough review of the Company ́s strategic priorities, with the objective of potentially responding to a significant increase
in demand from its customers and solidifying its unique market position as a future supplier of high purity 6% battery grade lithium concentrate
(“Battery Grade Green and Sustainable Lithium”). It also aims to significantly increase both the scale of the Project and
its commercial and market importance on three fronts: (i) future production, (ii) scale of mineral reserves and (iii) scale of mineral
resources, all while maintaining its battery grade green lithium products and the Company’s strategic leadership in ESG in the lithium
supply chain.


 





The Company (prior to the severe second wave of
COVID-19) revised its strategy regarding certain international third-party engineering service providers and replaced them with Brazil-based
specialists, anticipating the severely restrictive global travel bans that followed in the fourth quarter of 2020 as a result of the second
wave. This pre-emptive change enabled the Company to successfully complete all field activities on time and on budget, and to continue
to execute engineering activities during the rest of 2021.


 


In that regard, the Company has also made significant
progress in further strengthening its project team, aligning and defining scope requirements as well as advancing the Project’s
execution strategy. The Company has added several senior professionals as part of its project implementation team. Key Project consultants
include a mix of experienced Brazilian and international engineers actively engaged on or off site, and currently includes GE21, MDGeo
Hidrogeologia e Meio Ambiente (“MDGEO”), APL Engenharia (“APL”), Primero, SGS, Metso-Outotec (“Metso”)
and SRK Consulting Inc (“SRK”).


 


The Company added two senior project management
professionals to lead the Project Management Office (“PMO”): a senior mineral processing engineer and a senior geotechnical
geologist. They report to Calvyn Gardner, one of the Company’s co-CEOs, who has primary responsibility for all technical workstreams
and has been based full time at the Project since August 2020. This core team has been providing valuable oversight on project delivery,
while interfacing with the detailed engineering team, construction contractors, equipment vendors and other stakeholders, aligning them
to the Project objectives. The PMO has established standard management processes and strategies regarding project execution, contract
management, project delivery and document controls.


 


In addition, following the listing on the Nasdaq,
the corporate finance and business development teams were also strengthened with the addition of two senior professionals: the company
appointed a new CFO and a Director of Business Development and Investor Relations.


 


Overall, although working under a strict COVID-19
Protocol (the “Protocol”), the Company made significant progress in 2021 to date, despite the circumstances created by the
COVID-19 pandemic. The Protocol was developed in conjunction with Brazilian health advisors, who are consulted on a regular basis to
refine and adapt the Protocol to respond to the evolving COVID-19 situation in Brazil. An average of 86 people worked at the Project
site, of which only two tested positive for COVID-19. They received prompt medical assistance and have fully recovered. Since the implementation
of the Protocol, the Company has not reported any new cases on site. Nevertheless, the COVID-19 situation in Brazil remains challenging.
The Company has been actively monitoring any additional impacts on pre-construction activities and the pre-construction schedule. Mandatory
mask wearing on site and premises, physical distancing requirements and additional sanitary measures, along with testing measures for
workers accessing the site, have brought delays to the expected date to commence production in the fourth quarter of 2022. In addition,
the Company continues to support the municipalities of Itinga and Araçuaí in their ongoing response to the pandemic (please
refer to “Environmental Social and Governance”).


 






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Further to the information referenced above regarding
Production Phase 1, based on the design considered by the Updated Feasibility Study Report, the Production Plant will have the capacity
to process 1.5 million metric tonnes of mineralized spodumene material per year from the Project. The Production Plant design is projected
to produce 220,000 tonnes of Battery Grade Green and Sustainable Lithium per annum, with one of the lowest reported levels of impurities
in the world. The Updated Feasibility Study Report assumes: (i) conventional open-pit mining operation; (ii) a low risk approach,
building a commercial production plant utilizing conventional lithium Dense Media Separation (“DMS”) and attributing a conservative
recovery rate of 60%, (iii) average annual production of 220,000 tonnes of 6% battery grade lithium concentrate, (iv) a mine
life of 9.2 years, (v) projected cash operating costs of US$238 per tonne of lithium concentrate (cash cost CIF China of US$ 342
per tonne of lithium concentrate), among the lowest reported costs globally. The Updated Feasibility Study Report estimates were prepared
using a cut-off grade of 0.5% Li2O and include: (i) a Mineral Reserves estimate of 10.27 million tonnes of proven reserves
with average 1.45% Li2O content and 3.52 million tonnes of probable reserves with 1.47% Li2O content, and (ii) a
Mineral Resources estimate of 26.34 million tonnes of measured resources with average 1.39% Li2O content, 19.44 million tonnes
of indicated resources with average 1.37% Li2O content and 6.6 million tonnes of inferred resources (representing approximately
1,560,919 tonnes of LCE in the measured and indicated categories, with a further 220,070 tonnes LCE in the inferred category).


 


The positive economics reflected in the Updated
Feasibility Study Report provides a strong platform to continue developing the Company’s extensive mineral properties at the Project,
which includes nine past-producing lithium mines.


 


On November 6, 2019, the Company filed the
Feasibility Study Report on Production Phase 1 and the Production Plant.


 





Since the fourth quarter of 2018, the Company
has been producing low carbon high purity lithium concentrate at an on-site demonstration pilot plant and has shipped samples to potential
customers for product certification and testing (the “Demonstration Plant”). The production from the Demonstration Plant has
been an important part of the Company’s successful commercial strategy for its Battery Grade Green and Sustainable Lithium.


 


On March 23, 2018, Sigma Holdings published
a technical report relating to the Project titled “Technical Report, Northern and Southern Complexes Project, Araçuaí
and Itinga, Brazil” with an effective date of January 29, 2018 and prepared by Marc-Antoine Laporte, P. Geo, of SGS.


 


Environmental Social and Governance


 


In November 2021, Ana Cabral-Gardner, the
other co-CEO of the Company, was nominated by a national focal point (“NFP”) as a representative to the United Nations Convention
on Climate Change. She actively participated in the event as a speaker, including a panel on the theme “Circular Economy and the
21st Century City: Unlocking the Social & Environmental Benefits of the Sustainable City,” presenting the Company’s
project to recycle tailings from its greentech plant and the ensuing economic development impact for the region. Ana also spoke at the
main event/Blue Zone regarding “The Future of ESG Investing: Enabling the Energy Transition to a Net Zero World.”


 


In September 2021, the Company announced
the constitution of an environmental sustainability and social impact committee (the “ESG Committee”), created to assist the
Board with its ESG centric strategy. Ana Cabral-Gardner and Marcelo Paiva were appointed as co-Chairs of the ESG Committee. Maria Salum,
Chief Sustainability Officer will act as senior advisor to the ESG Committee. The purpose of the committee is to advise and support co-CEOs
Ana Cabral-Gardner and Calvyn Gardner in determining and implementing the Company’s wide range environmental and social sustainability
initiatives, based on the selected sustainable development goals (the “Mission Critical SDGs”) for each of the two aspects
of ESG: “E” environmental and “S” social. There are two key initiatives that will be the focus of the Committee:
(i) establishing the Investment Agency which encompasses the coordination of the social programs of the Company; and (ii) overseeing
strategy and coordinating with Board’s Technical Committee to drive the Company to its ambitious net zero 2024 targets (measured
as emissions minus carbon credits), within this Decade of Action and 26 years ahead of United Nations’ 2050 targets.


 






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In September 2021, Ana Cabral-Gardner, co-CEO,
was invited to the United Nations (“UN”) High-Level Dialogue on Energy Transition that took place in tandem with the UN General
Assembly in New York. The Company demonstrated its alignment with the Paris Climate Accord and submitted an Energy Compact proposal committing
to supply the production levels of lithium materials to enable energy transition. The Company targeted to reach net zero carbon emissions
after its second year of production in 2024 (26 years ahead of UN targets for net zero emissions in 2050 and six years ahead of UN Decade
of Action targets outlined at 2030 Agenda for Sustainable Development and the Paris Agreement on climate change).


 


Earlier in 2021, the Company commissioned two
assessments of its net carbon footprint. It conducted an independent ISO 14000 compliant audit of its life cycle analysis, and is in process
to complete an independent expert validation of its carbon credits generated by its internal preservation, reforestation, and compensation
forestry programs.


 


Following the principles of the United Nations
Sustainable Development Goals (“UN-SDGs”), in particular UN-SDG #11 (sustainable cities) and UN-SDG #8 (decent
work and economic growth), the Company is leading the creation, structuring and operations of an independent agency to promote private
investment and economic diversification of the Vale do Jequitinhonha region, where the Project is located (the “Investment Agency”).
The Investment Agency aims to transform the region with organized activities to stimulate development, contributing to the diversification
of the business environment through the attraction of investments to the two municipalities of Araçuaí and Itinga in Brazil.


 


The Company has successfully obtained institutional
support for the Investment Agency from the government of Minas Gerais and the Secretary of Special Development Projects (“INDI”)
and from the mayors of Araçuaí and Itinga, following the principles of UN-SDG #17 (partnership for the goals). The
Company engaged TSX Advisors Ltda (“TSX Advisors”), a specialist consulting firm, to lead the project to structure and implement
the Investment Agency. TSX Advisors has a successful track record of executing similar projects for Brazil ́s largest mining companies.
At a ceremony presided over by the Vice Governor of Minas Gerais, the Investment Agency was launched in September 2021, during the
week celebrating the 150 years of establishment of the town of Araçuai.


 


In 2021, the Company revived and expanded its
COVID-19 prevention initiative, distributing an additional 12,000 units of hospital disinfectant (totaling 12 tonnes) as well as 2,400
 “family size” hand sanitizers (totaling 840 kg of the product). The Company was able to access the procurement of most of
these items at cost as a result of the support of certain of its shareholders. All these actions to combat and prevent COVID-19 were in
partnership with the municipalities of Araçuaí and Itinga, that led the logistics of distributing the materials to the end
users.


 


On April 29, 2021, in line with UN-SDGs #17
(partnership for the goals), UN-SDG #1 (no poverty) and UN-SDG #2 (zero hunger), the Company launched “Sigma
contra a fome” (Sigma against hunger) - an initiative to provide humanitarian relief during the next 10 months of the pandemic
for the population living in poverty. The initiative has been distributing 600 basic food baskets per month to 600 families, totaling
6,000 food baskets (with an average of four people), feeding approximately 2,400 people per month. Additionally, the Company ́s initiative
fostered the social entrepreneurship of the community, where local businesses, by means of the Rotary Club, matched the initiative and
committed to donate 5,000 food baskets. The Company was also an anchor donor to the Rotary Club initiative, donating an additional 1,000
food baskets.


 


On May 4, 2020, in line with UN-SDG #3 (Good
Health and Well Being), the Company announced, as part of its active engagement in the fight against the spread of COVID-19, that
it donated 12 tonnes of sodium hypochlorite (hospital sanitizer liquid bleach) in 12,000 bottles to 16 entities in the Vale do Jequitinhonha
region, including hospitals, medical clinics, prisons, nursing homes, care centers for people with disabilities and religious entities.
This amount was sufficient to supply these entities until December 2020.


 






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In addition to the initiatives described above,
the Company has ongoing comprehensive environmental and social programs in process, consistent with its leadership role in ESG in the
lithium mining sector and its commitment to sustainable mining.


 


The mitigating social and environmental programs
already initiated or to commence during the construction phase aim to establish actions to proactively mitigate, prevent, control and
compensate for the environmental impacts that could be caused by mining and processing activities to be carried out by the Company once
it commences production. These programs and actions, which are described below, are also based on the UN-SDGs:


 


		·	Programs and actions to commence in the fourth
quarter of 2021: the Company expects to complete a program for the implementation and maintenance of rain drainage systems and containment
of erosion processes; noise and vibration levels control and monitoring program; and a monitoring program for domestic and industrial
effluents.



 


		·	Programs and actions initiated in the second
half of 2021: air emissions control and air quality monitoring programs and surface water quality monitoring program.



 


		·	Programs and actions initiated in the first half
of 2021: program to rescue and drive away the local fauna from industrial site; program to rescue threatened and endemic flora; and a
fauna monitoring program.



 


		·	Programs and Actions initiated in 2020: solid
waste management program; waste reuse plan; environmental education program; program for the prioritization and professional training
of local suppliers; accident prevention and public health program; social communication program; maintenance and conservation program
for permanent preservation areas and legal reserves; environmental management and supervision plan; monitoring program for vegetation
planted; program for visual monitoring of environmental impacts and mitigating measures; and specific conservation and monitoring programs
for endangered species.



 


On November 8, 2019, Ana Cabral-Gardner addressed
the World Climate Summit during the UN Climate Change Conference COP-25 in Madrid and presented a case study for the Company as an ESG
 “green mining” company and the role played by its investors in providing the capital and leadership to drive the implementation
of environmental and social best practices in developing the Project.


 


Corporate


 


On October 5, 2021, the Company announced
the signing of a binding term sheet for an offtake agreement on a “take or pay” basis (the “Offtake”) for the
sale of Battery Grade Green and Sustainable Lithium to LG Energy Solution, Ltd (“LGES”), one of the world’s largest
manufacturers of advanced lithium-ion batteries for electric vehicles. The six-year Offtake for Battery Grade Green and Sustainable Lithium
scales from 60,000 tonnes per year in 2023 to 100,000 tonnes per year from 2024 to 2027 subject to the Company and LGES executing a mutually
acceptable definitive documentation to implement the Offtake. The Company and LGES also agreed to negotiate each year, starting in 2022,
an additional optional supply of Battery Grade Green and Sustainable Lithium, not otherwise committed in other Sigma Lithium offtake arrangements.
The purchase price for the Battery Grade Green and Sustainable Lithium under the Offtake will be linked to market prices for the high
purity lithium hydroxide during the term of the Offtake. The Offtake is intended to be legally binding on both the Company and LGES, and
is subject to, among other things, completion of the negotiation of definitive written agreement(s), which are to be consistent with the
agreed terms contained in the binding term sheet.


 


On September 13, 2021, the Company
completed its dual-listing process and the Common Shares began trading in the U.S. on the Nasdaq. The Company is pleased to report that
its corporate governance policies and the make up of the Board are compliant with required Nasdaq and SEC governance standards, including
Nasdaq’s diversity requirement for a company’s board to have at least one female director and at least one additional diverse
director.


 






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On September 8, 2021, the Company announced
the appointment of Ana Cabral-Gardner as Co-CEO, joining Calvyn Gardner, who was previously CEO and also became Co-CEO as well as the
new management appointment of Felipe Peres as Chief Financial Officer. The Company also announced the constitution of an ESG Board Committee
resulting from the program intended to achieve Net Zero emissions by 2024 and the issuance of performance-based RSUs to the Co-CEOs.


 


On June 29, 2021, the Company held the annual
and special meeting of the Company’s shareholders. At such meeting, the Company’s shareholders approved: (i) the election
of Gary Litwack (independent), Frederico Marques (independent), Calvyn Gardner, Marcelo Paiva, and Ana Cabral-Gardner as the directors
of the Company; (ii) the re-appointment of KPMG LLP as the auditors of the Company for the financial year ended December 31,
2021; (iii) a special resolution authorizing and approving the amendment to the Company’s articles to effect the change of
the Company’s name from “Sigma Lithium Resources Corporation” to “Sigma Lithium Corporation”; (iv) an
ordinary resolution approving the repeal and replacement of the existing by-laws of the Company with a new By-Law No. 1; and (v) a
special resolution approving the amendment to the articles of the Company to effect a consolidation of the Common Shares on the basis
of one (1) post-consolidation common share for up to ten (10) pre-consolidation common shares, as determined by the Board at
its sole discretion.


 


On February 12, 2021, the Company
announced the closing of a non-brokered private placement (the “2021 Offering”) of 9,545,455 Common Shares at a price of
Cdn$4.40 per Common Share for aggregate gross proceeds of Cdn$42.0 million. The size of the 2021 Offering reflected a significant
upsizing due to strong institutional investor demand.


 


On December 7, 2020, the Company announced
that it received a binding commitment for a Cdn$18,750,000 (R$75,000,000) credit line (“Development Credit Line”) from Banco
de Desenvolvimento de Minas Gerais. The closing of the Development Credit Line is subject to the negotiation of definitive documentation
and other customary closing conditions, followed by final credit approval for draw-downs.


 


On September 25, 2020, the Company announced
a management appointment and updates to the Board. The Company appointed Maria Jose Salum as its Chief Sustainability Officer. The Company
also announced the constitution of a Technical Board Committee with Wes Roberts and Vicente Lobo as the Co-Chairs. Ana Cabral-Gardner
was appointed as Co-Chairman of the Board, joining Calvyn Gardner, who was previously Chairman and also became Co-Chairman of the Board.


 


On August 13, 2020, the Company announced
the closing of a non-brokered private placement (the “2020 Offering”) of 8,250,200 Common Shares at a price of Cdn$2.15 per
Common Share for aggregate gross proceeds of US$13.3 million (approximately Cdn$17.8 million). The size of the 2020 Offering reflected
an upsizing by one-third from the original intended amount announced on July 27, 2020, due to strong institutional investor demand.


 


On June 29, 2020, the Company announced the
signing of a term sheet for a US$45 million senior secured project finance facility (the “Bank Project Finance Facility”)
to be led by Societe Generale. The consummation of the Bank Project Finance Facility remains subject to completion of due diligence, credit
approval, the negotiation of definitive documentation and other customary closing conditions.


 


A10 Group has supported the Company ́s liquidity
needs without additional equity incentives on two occasions, both in connection with then challenging capital markets conditions:


 


		1)	On November 29, 2019, in order to fund its working capital, the Company entered into an agreement
with the A10 Group providing for a Cdn$6.6 million (US$5.0 million) revolving credit facility (the “Unsecured Credit Facility Agreement”),
bearing interest at 11% per annum, calculated from the day funds were drawn. The Unsecured Credit Facility Agreement did not include any
warrants or other incentives. It had a one-year term, which was the maturity for all funds drawn, and allowed funding for lender-approved
expenses. Its term was extended twice by A10 Group, for both principal and accrued interest, without any penalties or additional charges
until September 2021, when it was repaid in full.



 






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		2)	During March of 2018, A10 Group, provided several bridge loans to the Company in the aggregate amount
of R$1,747,600 (US$595,932) with interest calculated pursuant to the CDI (Brazilian Interbank Rate) plus a 4% per year spread, accrued
from the date of each disbursement. The bridge loans had due dates on April 30 and May 30, 2018 and were automatically renewable
on a rolling basis. On July 18, 2018, the loans were repaid in full.



 


On April 5, 2019, the Company announced the
execution of a binding heads of agreement with Mitsui & Co. Ltd. (“Mitsui”) (the “Mitsui HOA”). In accordance
with the Mitsui HOA, Mitsui would prepay the Company the amount of US$30,000,000 for battery grade lithium concentrate supply of up to
80,000 tonnes annually over six years, extendable for another five years at the option of Mitsui. The initial tranche payment of US$3,000,000
was received by the Company on April 4, 2019 and recorded as deferred revenue, while disbursement of the remaining tranches is to
occur subject to certain conditions, including obtaining senior debt commitments for the remaining amount of the estimated Capex for the
construction of the Production Plant. The consummation of the transactions contemplated by the Mitsui HOA remain subject to the negotiation
of definitive documentation and other customary conditions.


 


On January 9, 2019, the Company announced
an increase in mineral resource at the Project, and certain other updates to the Board and management of the Company.


 


On April 30, 2018, the Sigma Merger Transaction
was completed. In connection with the Sigma Merger Transaction, Sigma Holdings completed a $20,040,000 private placement offering of subscription
receipts, which were exchanged for pre-consolidation Common Shares upon the implementation of the Sigma Merger Transaction.


 





DESCRIPTION OF THE BUSINESS


 


Overview


 


Sigma is a Canadian mineral processing and development
company, focused on advancing, with an environmental sustainability directed strategy, one of the largest hardrock lithium projects in
the Americas - its wholly-owned Grota do Cirilo Project, located in Minas Gerais in Brazil - with the goal of participating in the rapidly
expanding lithium-ion battery supply chain for EVs.


 


In order to secure a leading position supplying
environmentally sustainable lithium for the next generation of EV supply chains, the Company has adhered consistently to the highest principles
and standards of ESG practices, which were established as part of its core purpose at inception in 2012. As a result, the Company has
undertaken an ESG-centric management strategy, whereby its environmental and social sustainability purposes determine its strategic steps.


 


Sigma ́s Common Shares are listed and trade
on the TSXV and Nasdaq under the symbol SGML.


 


Lithium Properties


 


The Project comprises four properties owned by
Sigma Brazil: Grota do Cirilo (the area of the Project where the First Mine and Second Mine are located), and the Sao Jose, Genipapo and
Santa Clara properties. The Project consists of 27 mineral rights (which include mining concessions, applications for mining concessions,
exploration authorizations and applications for mineral exploration authorizations) spread over 191 km2. Within the Project
area there are nine past producing lithium mines and 11 first-priority development targets.


 


The Project is located in the northeastern part
of the state of Minas Gerais, in the municipalities of Araçuaí́ and Itinga, approximately 25 km east of
the town of Araçuaí́ and 600 km northeast of Belo Horizonte, the state capital. The Project is approximately
500km from the Port of Ilheus, from where samples have been shipped for product certification and testing and from where future production
is planned to be shipped.


 






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Current Status of the Project


 


The Project will be vertically integrated, as
the Company ́s own mining operations will supply mineralized spodumene material with exceptional mineralogy to its lithium production
and processing plant (the “Production Plant”). The Production Plant is designed to be environmentally friendly, fully automated
and digitally controlled separating, purifying and concentrating the spodumene in an environmentally friendly process to produce Battery
Grade Green and Sustainable Lithium, engineered to the specifications of the Company’s customers in the rapidly expanding lithium-ion
battery supply chain for EVs.


 


The Production Plant is planned to have two separate
production lines with similar processing flowsheets, which are projected to share certain elements of a common plant infrastructure. The
first phase of production for the Project (“Production Phase 1”) is the subject of the feasibility study analysis included
in the Updated Feasibility Study Report. It will initially utilize as feedstock spodumene from the Project’s Xuxa deposit (the “First
Mine”). Its detailed design has been completed and the capital expenditures are being confirmed with firm quotes by suppliers to
reach FEL-3 stage of precision. Based on the Updated Feasibility Study Report, the Company plans to produce 220,000 tonnes per year of
Battery Grade Green and Sustainable Lithium (33,000 tonnes per year of lithium carbonate equivalent (“LCE”)) in Production
Phase 1 and expects to be amongst the world’s lowest cost producers.


 


The next production phase of the Project (“Production
Phase 2”) has been the subject of the preliminary economic assessment (the “PEA”) included in the Updated Feasibility
Study Report, and could potentially increase production utilizing feedstock from the Project’s Barreiro deposit (the “Second
Mine”). GE21, based on the Mineral Resource, prepared the PEA for the Second Mine. The PEA is preliminary in nature and includes
inferred mineral resources that are too speculative geologically to have economic considerations applied them that would enable them to
be categorized as mineral reserves, and there is no certainty that the PEA will be realized. It is noted that the Company has not yet
made a production decision in respect of the Second Mine. The Company expects that it will assess the results of a pre-feasibility study
and a definitive feasibility study before making a production decision in respect of the Second Mine. All statements regarding mine development
or production in respect of the Second Mine in this AIF are expressly qualified by this statement.


 


The Company completed the PEA with the objective
of potentially responding to a significant increase in demand from its customers and solidifying its unique market position as a future
supplier of Battery Grade Green and Sustainable Lithium. As reflected in the Updated Feasibility Study Report, the PEA projects significant
economies of scale for Production Phase 2 (if warranted, following completion of the ongoing pre-feasibility study and definitive feasibility
study), resulting from the low capital expenditure (“CAPEX”) of adding a second environmentally-friendly lithium processing
line and vertically integrating it to the Project, mining an average of 1.68 million tonnes (“Mt”) per year during approximately
12.7 years of projected mine life.


 


The Company also commenced a further pre-feasibility
study for Production Phase 2 contemplating the addition of a second processing line with similar capacity of 220,000 tonnes per year of
Battery Grade Green and Sustainable Lithium from Production Phase 1 (once onstream in 2022), therefore potentially doubling the Project
total capacity to 440,000 tonnes per year (66,000 tonnes per year of LCE) of Battery Grade Green and Sustainable Lithium. Production Phase
2 is expected to benefit from economies of scale by utilizing most of the Production Plant infrastructure established for Production Phase
1.


 


This approach is the result of a thorough review
of the Company ́s strategic priorities in light of the significant change in lithium market conditions and aims to significantly
increase both the scale of the Project and its commercial and market importance on three fronts: future production, scale of mineral resources
and of mineral reserves, all the while maintaining its battery grade green lithium products and the Company’s strategic leadership
in environmental, social and governance (“ESG”) in the lithium supply chain.


 


The Company is accelerating its site exploration
activities for the Project with the goal of increasing the Project mine life or potentially increasing production at expanded production
levels in Production Phase 2, if warranted after completing the ongoing pre-feasibility study (and definitive feasibility study) or a
third production expansion phase (“Production Phase 3”) if warranted following completion of further feasibility study.


 






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The Production Plant has a lithium processing
design that includes dense media separation (“DMS”) technology which does not utilize hazardous chemicals in the separation
and purification of the lithium. The Company will apply a customized algorithm developed to contemplate the specificities of the mineralogy
in each of the Company’s mines to digitally control the dense media levels in the Production Plant.


 


In addition, the Production Plant will be 100%
powered by clean energy and it will use water efficiently, while preserving land ecosystems when production scales. As a result of state-of-the-art
recirculation and tailings management circuits:


 


		·	the tailings will be dry stacked (and therefore
will not create a tailings dam). Because the DMS technology of the Production Plant does not utilize hazardous chemicals, the dry-stacked
tailings materials could also be entirely recyclable as feed for ancillary industries, such as ceramics



 


		·	the water utilized in the production process
is 100% recirculated into the plant. Approximately 10% of the water is either lost or evaporates, with 90% of water consumed in the production
process reutilized back into the Production Plant, achieving a high level of water efficiency



 


Since the fourth quarter of 2018, Sigma Brazil
has been producing low carbon high purity lithium concentrate at an on-site Demonstration Plant and has shipped samples to potential customers
for product certification and testing. This demonstration production has been an important part of the successful commercial strategy
of the Company for its Battery Grade Green and Sustainable Lithium.


 


The Company expects to submit a net zero execution
plan to achieve its emission reduction targets after its second year of full operations, expected to be in 2024, partly as a result of
its strategic decision to decrease emissions through the introduction of biofuels to fuel the trucks and other heavy equipment of the
mining fleet starting in the second year of production. The Company also plans to pursue generation of carbon credits through “in-setting”
strategies such as preserving water streams and developing the agroforestry systems within its regional ecosystem. As part of that strategy,
the Company is studying future partnerships with generators of renewable power for self-generation of the electricity required to power
the Production Plant.


 


Operations Overview


 


Detailed Engineering and Conclusion of Pre-Construction Activities
for the Production Plant


 





The FEED work progressed well in the third quarter.
Key achievements during this period include:


 


		·	Material Take-Offs (“MTOs”) and revised
equipment lists issued for CAPEX updates



 


		·	Detail of the MTOs issued and revisions in all
lay-out drawings



 


		·	3D Model 30% progress review completed for the
DMS plant and crushing circuit. Modelling effort for the FEED phase is effectively completed



 


		·	Detail design schedule issued for review



 


		·	Carried out constructability review of DMS plant
and completed tables outlining required construction sequence



 


		·	Larger crushing equipment (Primary, Secondary
and Tertiaries) was defined and incorporated in current design



 


		·	Adjustment of the associated equipment, platework,
steel and concrete



 


Promon continued to organize meetings with vendors
for various critical packages as per the Company’s request to optimize the number and ordering of long lead times.


 


The PEP in progress contemplates a procurement
strategy formulated to derive maximum CAPEX effectiveness, protecting shareholder returns. This workstream is currently being led by the
Company’s Project management team, Promon and TSX Advisors, a consulting company specializing in domestic and global procurement,
including equipment and import logistics to Brazil.


 






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Production Plant EPCM


 


The design related activities of the Production
Plant have been completed, aiming to ensure a rapid start to the Project following a final investment decision. All designs completed
include consideration for a future parallel Production Phase 2 plant.


 


The related infrastructure design is complete.
All long lead items have been identified and are currently being negotiated and secured. Discussions are being held with vendors to reduce
delivery times and establish requirements to reserve manufacturing slots.


 


The Company is in contract negotiations to
engage Promon as the EPCM contractor for Project execution and Primero to provide engineering services for the Production Plant,
equipment and field services during construction. For a detailed outline of the work breakdown outlining the division engineering
and design between Promon and Primero during the Project execution stage, see the most recent interim MD&A of the Company under
the heading “Production Plant EPCM”.


 


Detailed engineering will be developed in a collaborative
manner between Promon, Primero and the Company using the FEED documents that will be revised and/or new documents to be developed as applicable,
considering the division of responsibilities defined in the document.


 





The responsibility for the development of detailed
design of Area 700 - Mining will be divided between the mining engineering subconsultant and mining contractor, who will be also responsible
for haul roads design. Promon will only develop the design of the access roads.


 


Procurement services considered under the EPCM
contractor’s scope encompass the phases of supplier list definition (together with the Company): request for quotation, tabulation
of commercial proposals, commercial negotiations and issuance of purchase recommendation, kick-off meeting with the chosen supplier, expediting
of supplier documentation during the project period and management of the company contracted by the Company expediting and inspecting
the supplies and receiving on the field, as detailed in the activities below.


 


The following items describe the activities to
be developed by the Company, in conjunction with Promon's construction and safety management team, throughout the execution of the construction:


 


		·	Manage the execution and certify the quality
of the execution of the Project



 


		·	Analyze, criticize and propose containment, prevention
and correction measures, continuously and proactively, for the management of the entire implementation of the Project (covering all aspects
of Health & Safety, environment, quality, schedule, costs and scope)



 


		·	Manage the expediting of supply processes, to
be executed by a specialized company to be hired by the Company



 


		·	Manage the quality of the Project implementation



 


		·	Coordination of commissioning activities, together
with assembly contractors and equipment and systems suppliers, testing and delivery of the Project



 


		·	Manage, supervise and enforce labor, social security
and tax standards and the client's specific corporate and specific standards with contractors: occupational safety and health - H&S,
environmental, technical, others



 


Commissioning and Startup


 


Promon’s scope includes the Project future
commissioning and startup management, with the support of the Company's operational team, equipment suppliers and assembler, including
the following activities:


 


		·	Preparation of commissioning and testing procedures
of the implemented facilities and systems



 


		·	Monitoring of commissioning tests and analysis
of the respective issued reports



 


		·	Identification, registration and communication
of non-conformities related to commissioning and tests procedures



 






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		·	Monitoring and updating the backlog



 


		·	Control of commissioning tests reports issuance



 


		·	Expediting, together with the contractors, the
sending of the data-books, available for the pre¬operational phase



 


		·	Coordination of interfaces between contractors.



 





		·	Primero’s assistance will be secured for
commissioning.



 


Capex Estimation (IPA Front End Loading FEL-3)


 


Promon is currently undertaking a series of engineering
tasks to prepare a comprehensive CAPEX estimation at FEL-3 level of confidence for the Production Plant (with FEED documentation), including
overall planning of the Project, 3D models, the bulk site earthworks and site layouts. Promon will develop the following items: (i) ROM
pad, including retaining wall structures, (ii) Settlement ponds, (iii) Site Wide Bulk Earthworks, including the following areas:
Greentech process circuits and infrastructure and water capture, (iv) General site drainage.


 


Mining


 


The responsibility for the development of detailed
engineering of mining related infrastructure will be divided between the mining engineering subconsultant and mining contractor, that
will also be responsible for haul roads design. Promon is to complement this scope, developing the engineering and design of: (i) mining
general - access roads, (ii) mining infrastructure and services - fire hydrants, (iii) fuels storage and distribution.


 


Pre-Construction Outlook for
the First Mine (Production Phase 1)


 


The First Mine will supply 100% of the feedstock
for the Production Plant during Production Phase 1, creating a fully integrated and low-cost operation. The Company and GE21 are in the
process of completing a final scenario for an optimized mine design for the First Mine to supply the Production Plant for eight years,
potentially integrating with an eventual Second Mine (should its feasibility study so warrant) as the feedstock for the production of
Battery Grade Green and Sustainable Lithium.


 


The Company has successfully completed several
critical workstreams involved in the pre-construction of the First Mine within the scheduled and budgeted parameters. This includes all
activities required for the geotechnical validation at detailed engineering level, as well as critical hydrogeological analysis and validation
(including the installation of 12 piezometers for ongoing monitoring).


 


The Company is currently optimizing the mining
plan with two pit layouts under consideration, including preparation of detailed mine production sequencing.


 


These validations at detailed engineering
confidence levels were initiated as a result of the Company’s ESG-centered strategy. A key element of the environmental
strategy for Production Phase 1, as detailed in the Updated Feasibility Study Report, was the decision to open the First Mine as two
separate pits to preserve the Piauí river’s seasonal “stream” and its surrounding ecosystems (collectively,
the “Piaui”). This decision was a result of the Piaui ́s pivotal role in providing the only source of freshwater
for the surrounding communities for four to five months of the year during the rainy season (the Project is located within a
semi-arid region with extended dry season). The following workstreams of the pre-construction for the First Mine have been
completed:


 


		·	Completed 100% of geotechnical workstreams and
refined North and South pit designs and pit wall slopes of the First Mine. Completed 100% of geotechnical modeling and analysis. All planned
additional geotechnical holes were successfully drilled with core orientations targeting all wall orientations (i.e. hanging wall, end
walls, and footwall).



 


		·	The Company, GE21 and MDGEO completed 100% of
hydrogeological workstreams. The Company decided to conduct a hydrogeology detailed assessment and complete a model of groundwater pathways
to increase confidence that, in the scenario of climate change substantially altering rainfall patterns in the region (increasing seasonal
water flows at the Piaui), the Company would be equipped with information to determine the most suitable pit dewatering methodology. Piezometers
were installed for ongoing analysis of data for subsequent geo-hydrogeological modelling during the first year



 






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		·	The Company and GE21 are in the process of completing
a final scenario for an optimized mine design for the First Mine. It has the benefit of enhancing the life cycle analysis of the Project
by substantially decreasing its carbon footprint by: (i) decreasing the vegetation suppression of trees in the construction of the
pit to less than 50 hectares and (ii) segregation of mine waste piles and processed tailings with the goal of future recycling as
feed for ancillary industries, promoting a circular economy



 





The following pre-construction activities have
been concluded for the First Mine:


 


		·	Completed the strategic monthly mining sequencing
plan for the first three years of the life of mine, then quarterly for year four and annually for the remaining years



 


		·	Completed the design of final pit (with final
operating parameters: berm, ramp, ultimate wall slope angles)



 


		·	Developed a comprehensive grade control program
utilizing geostatistical methods to ensure feed grades are maintained within the expected range. The proposed grade control system will
be designed to minimize schist waste rock dilution with the pegmatite ore recovery in pit



 


		·	Finalization of the waste piles design



 


		·	Designing the ROM pad for Production Phase 1
together with Promon



 


Preliminary Economic Assessment, Pre-Feasibility
and Feasibility Studies for Increased Scale in Production Phase 2


 


The Company continues to advance multiple Project
workstreams in geology, geotechnical, metallurgical, environmental and regulatory permitting with the objective of preparing for Production
Phase 2 after 2023. The Company completed the PEA for the Second Mine and Production Phase 2, filing the Updated Feasibility Study Report
on July 15, 2021. The PEA contemplated utilizing as feedstock the mineralized spodumene material from the Second Mine (Barreiro Mine)
with the objective of significantly increasing production.


 


The Company has engaged SGS, Primero and GE21
to build on the results of the PEA and prepare pre-feasibility and feasibility studies for Production Phase 2, adding to the Production
Plant a second similar DMS processing line with capacity of 220,000 tonnes per year (33,000 LCE) of battery grade high purity lithium
concentrate. The results of the various workstreams are planned to be completed in stages. Following the PEA, the pre-feasibility study
is to be completed during December 2021.


 


The PEA demonstrated the significant cost benefit
of vertically integrating a second production line and utilizing as feedstock the mineralized spodumene material from the Second Mine,
potentially mining an average of 1.68Mt per year during 12.7years of mine life.


 





The Second Mine is the Project’s largest
deposit. It is a high-purity, high-grade lithium deposit, with 19.58Mt of measured and indicated mineral resources at 1.43% Li2O and 1.76Mt
of inferred mineral resources at 1.45% Li2O suitable for open pit mining.


 


Additional drilling continues seeking to both
increase the mineral resource and to strengthen the geological data for the mineral resource model.


 


GE21, based on the Mineral Resource, prepared
the PEA for the Second Mine. The PEA is preliminary in nature and includes inferred mineral resources that are too speculative geologically
to have economic considerations applied them that would enable them to be categorized as mineral reserves, and there is no certainty that
the PEA will be realized. It is noted that the Company has not yet made a production decision in respect of the Second Mine. The Company
expects that it will assess the results of a pre-feasibility study and a definitive feasibility study before making a production decision
in respect of the Second Mine. All statements regarding mine development or production in respect of the Second Mine in this AIF are expressly
qualified by this statement.


 






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The Company and
Primero completed all the metallurgical and variability pre-feasibility test work at SGS laboratories with the aim of customizing a flowsheet
for the processing line of Production Phase 2 with the Barreiro deposit.


 


		·	The heavy liquid separation testing results achieved
66% Li2O recovery



 





		·	This was followed by pilot plant scale DMS metallurgical
testing, which achieved 60.7% Li2O recovery producing a battery grade concentrate of 6.11% Li2O



 


		·	The processing and metallurgy tests achieved
good lithium recoveries in an environmentally friendly DMS plant, with similar flowsheet (and capital costs) to the first production line,
without requiring a more capital-intensive and less environmentally friendly flotation process.



 


		·	These DMS recoveries are a result of the Second
Mine having a similar exceptional mineralization to the First Mine



 


The Company completed
all field work for the preparation of a Phase 2 pre-feasibility study, including geotechnical drilling and hydrogeology test work. Following
the completion of the additional drilling program, GE21 will complete the mining plan, geotechnical program and modelling of the Barreiro
deposit. The field work required for the hydrogeological section of the pre-feasibility study has been completed, as all groundwater level
measurements have been completed.


 


Environmental
Impact Study for Phase 2 Production


 


The Company conducted
detailed environmental impact studies for the fauna and the flora in the area of the Barreiro deposit where the pit and waste piles will
be located. These studies started in the dry season of the second quarter of 2020 and continued throughout the wet season during the third
and fourth quarters of 2020. The environmental impact studies as well as a comprehensive environmental and social impact assessment report
(“EIA/RIMA”) are ongoing by the Company.


 


The design proposed
by the Company in the EIA/RIMA for the area directly impacted by the Project (the “Project Impacted Area”) has followed the
Company ́s ESG-centric approach to minimize distances by combining the minimization of greenhouse gas emissions of diesel in mining
trucks with a minimization of semi-arid bush and vegetation suppression. Therefore, the Company contemplated the location of its processing
tailings dry stacking piles in the vicinity of the Production Plant. As a result, the life cycle analysis of the Company is substantially
enhanced, decreasing environmental and carbon footprints.


 


Once the EIA/RIMA
is approved by regulators, a permit for the construction and installation of the Second Mine (LP/LI) as well as operation permits from
environmental authorities will be required.


 


Exploration &
Development of Other Deposits in the Project Area


 





The Company is
accelerating its site exploration activities for the Project with the goal of potentially increasing the Project mine life at the expanded
production levels of 440,000 tonnes per year of Production Phase 2 or potentially increasing production output after 2024 in a third production
phase should EV penetration growth continue to accelerate, and lithium demand forecasts continue to demonstrate strength. The objective
of the exploration program is to substantially increase estimated mineral resources during the first quarter of 2022.


 


The Company’s
dedicated geological teams and SGS Canada are carrying out an exploration program to determine the ultimate extent of the property mineralization
and more rapidly increase the scale of estimated mineral resources, while demonstrating the uniqueness of the high-purity quality of its
hard rock lithium mineralization.


 


		·	The Company has continued to conduct a campaign
to diamond drill the remaining 10,000 meters (in a campaign targeting 20,000 meters) to further define current mineralized structures
validated in the Updated Feasibility Study Report, increasing the scale of known deposits



 






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		·	In addition, it has focused on five other targets,
previously identified by historical mining and surface trenching



 


This geology
workstream did not impact the Phase 1 Production pre-construction workstreams as it is managed by a separate geological team. This geological
team is currently operating with five drill rigs on two shifts and adding a sixth rig in Q4 2021.


 


		·	Additionally, the Company ́s geological
teams continued to evaluate the potential of known deposits that were not included in the mineral resource estimate in the Updated Feasibility
Study Report. Two deposits with significant potential were targeted with diamond drilling campaigns



 


		·	The Company focused the 2021 drilling campaign
in an area with pegmatite surface exposure that returned promising results in the 2018-2019 drilling program. This regional exploration
program, of drilling designed to test the target object was very positive, totaling 6538m in 47 positive holes. An additional 5,000m of
drilling will be made, totaling 11,537m by the end of 2021. The drilling will be completed on 100m x 50m spacing along a 500m open strike



 


Additional operational
and business updates in respect of the Company and the Project are provided in the Company’s most recently filed MD&A.


 


Royalties


 


The Brazilian government levies a royalty on mineral
production: Compensação Financeira pela Exploração de Recursos Minerais (“CFEM”). Lithium production
is subject to a 2% CFEM royalty, payable on the gross income from sales. The Project is also subject to two third-party royalties:


 


		(i)	an NSR royalty (“NSR Royalty”) of 1% over the gross revenues of the Company from sales of
minerals extracted from the Project less all taxes and costs incurred in the process of extraction, production, processing, treatment,
transportation and commercialization of the products sold. The NSR Royalty can be “put by the owner” and “called by
the Company” for US$ 3.8 million, once the Company reaches commercial production of 40,000 tonnes of lithium concentrate



 


		(ii)	another one that provides to the holder (currently LRC LP I) a royalty of 1% over the gross revenues of
the Company from sales of minerals extracted from the Project, less taxes, returns and sale commissions (“Net Revenue Royalty”)



 


Life Cycle Analysis and Net Zero Strategy


 


The Company has engaged Minviro Ltd. for the preparation
of an independent ISO 14000 compliant life cycle assessment (“LCA”). The Company has engaged BeZero Carbon Ltd for
the assessment of the Company ́s internal carbon offsetting projects (“in-setting projects”) and advisory on a portfolio
of carbon additional in-setting projects and initiatives which the company may undertake in order to deliver its plans to make a robust
net zero declaration by 2024.


 


The objectives of both workstreams are to understand
the greenhouse gas emissions associated with the positive activities of carbon sequestering undertaken by the Company, link the results
to the overall carbon footprint of existing and planned operations, create an in-setting and offsetting plan for residual emissions and
provide an evidence-based assessment for the Company ́s net zero targets. The Company will take responsibility for all of its expected
scope 1, 2, and 3 emissions, as is the expectation in today’s international carbon accounting environment for maximizing the robustness
and defensibility of the Company’s strategy. Net zero targets will be undertaken in two phases: (i) Net zero by 2023: incorporating
scope 3 emissions from mine to port of shipment in Brazil; (ii) deliver its plans to make a robust Net zero declaration by 2024:
incorporating scope 3 emissions at port of delivery.


 


The study and the audit are contemplating its
production route of Battery Grade Green and Sustainable Lithium with spodumene mining and lithium purification and concentration production
in Brazil. The final ISO 14000 audit report is ongoing and will include: (i) a cradle to grave life cycle inventory and impact assessment
to generate impact data for climate change, water consumption, land use and certain impact categories selected by the Company, and (ii) a
complete contribution analysis outlining the major inputs contributing to the impact categories.


 






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The Company expects to publish results from the
LCA in the first quarter of 2022, including its carbon insetting and off-setting strategies. The Company plans to adapt to the most up
to date norms in the industry, as this is an important pillar of the Company’s plans to develop and maintain a net zero strategy,
while the expectations and norms for offsetting and emissions reporting continue to evolve.


 


Environmental Licensing and Permitting


 





In August 2020, the Company filed at SUPPRI
(the “Priority Projects Superintendence of Minas Gerais”) a complementary environmental impact study and environmental mitigation
plan (the “Complementary EIA/RIMA”) to the Company ́s current environmental license for construction of Production Phase
1. The objective was to increase the scope area (Area Diretamente Afetada) of its current construction and installation license
to include the south pit of the First Mine.


 


The Complementary EIA/RIMA contemplates the simultaneous
mining of both north and south pits of the First Mine, potentially also supplying the mineralized spodumene material for the first few
years of Production Phase 2. The Complementary EIA/RIMA also includes a dry stacking tailings plan that separates rock waste and tailings
piles in order to allow for the potential recycling of 100% of the tailings to ancillary industries, such as ceramics.


 


The south pit of the First Mine is being designed
to have the lowest possible environmental impact and greatest socioeconomic return. The simultaneous mining of the north pit and the south
pit by the Company to feed the Production Plant will allow the municipality of Araçuaí (where the south pit is located)
to receive royalties from mining (“CFEM”), previously restricted to the municipality of Itinga, where the north pit is located,
spreading financial prosperity to both municipalities, meeting SDG # 16 (Peace, Justice and Strong Institutions).


 


Concurrent environmental licensing is required
for construction and installation (which comprises pre-operation and commissioning of the production plant, including pre-stripping and
all mining required for commissioning). An operating license (“LO”) is required for the commercial operations, when external
sales of the products are conducted.


 


The Company obtained the required environmental
licenses for both construction (“LP”) and installation and commissioning (“LI”) of the Production Plant from the
environmental authority of the State of Minas Gerais (the “LP/LI Environmental License”), the Council of Environmental Policy
(Conselho Estadual de Politica Ambiental or “COPAM”) in Brazil. COPAM issued a dual LP and LI Certificate in June 2019
for a period of six years expiring on May 31, 2025. The LP/LI Environmental License permits the Company to build the First Mine and
Production Plant and to install the plant, conduct trial mining, and testing of the DMS beneficiation process of mineralized spodumene
material into battery grade lithium concentrate building a reserve stockpile for future sale.


 


The Company's mining easement request (“Servidão
Mineral”) was published in the Official Gazette of the Federal Government on July 29, 2020. This is an important step towards
obtaining the operational license (licença operacional, LO) required after commissioning and ramp-up in order for the Project to
enter full scale Production Phase 1. It contemplates the mining and processing activities of the First Mine.


 


The Company has a definitive water usage
license for the construction of the Production Plant, which was granted by ANA (Agência Nacional de Águas), the Federal
Government’s water agency, in February 2019. The water usage license is valid for 10 years, which is expected to be
sufficient for the life-of mine (LOM) requirements for mining and product processing from Production Phase 1, as currently planned
by the Company. The water usage license received should also be sufficient to process lithium mineralized material at the planned
rate of production of an expected 440,000 tonnes of lithium concentrate as well as additional production phases contemplated,
subject to confirmation by feasibility studies.


 






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Surface Rights and Other Permitting


 


Certain surface rights in the Production Phase
1 area, the current primary focus of the Company’s activity, are held by two companies owned by the co-CEOs of the Company, Arqueana
Empreendimentos e Participações S.A. (“Arqueana”) and Miazga Participações S.A. (“Miazga”).
The Company has entered into two right-of-way agreements with these companies to support its exploration and development activities within
the Grota do Cirilo property, as well as with third-party surface owners in the Project area.


 


The Company has a mining easement (Servidão
Mineral) with a total of 413.3 hectares and aims to cover the areas of waste and tailings piles, Production Plant, all access roads (internal),
electrical substation, installation of fueling station and support structures. The Servidão Mineral was published in the Official
Gazette of the Federal Government. It contemplates the mining and processing activities of the First Mine (ANM Process No. 824.692/1971).


 


The Company also obtained a key approval for Production
Phase 2 plan with the Agência Nacional de Mineração (the “ANM”) approving its economic feasibility study
(“Plano Econômico de Avaliação” - PAE). This approval advanced the Production Phase 2 permitting process
to the mining concession request stage (“Requerimento de Concessão de Lavra”).


 





The Company holds approved economic mining plans
(Plano de Aproveitamento Econômico or PAE) over the Xuxa, Barreiro, Lavra do Meio, Murial, and Maxixe deposits within the Grota
do Cirilo property. The Brazilian government levies a royalty on mineral production: Compensação Financeira pela Exploração
de Recursos Minerais (CFEM). Lithium production is subject to a 2.0% CFEM royalty, payable on the gross income from sales. The Xuxa Project
is also subject to two third-party royalties, one on the net income from sales and the other on a net smelter return (NSR), of 1% each.


 


Specialized Skills and Knowledge


 


All aspects of the Company’s business require
specialized skills and knowledge. Such skills and knowledge include the areas of geology, drilling, logistics planning and implementation
of exploration programs as well as regulatory, finance and accounting. To date, the Company has been able to locate and retain such professionals
from Australia, Brazil, Canada, Russia, South Africa and the UK, and believes it will be able to continue to do so. The Company relies
upon its management, employees and various consultants for such expertise.


 


Mineral Price and Economic Cycles


 


The mining business is subject to mineral price
cycles. The marketability of minerals and mineral concentrates is also affected by worldwide economic cycles. Lithium markets are affected
by demands for lithium batteries and global economic conditions. Fluctuations in supply and demand in various regions throughout the world
are common.


 


Economic Dependence


 


The Company’s business is dependent on the
exploration, development and operation of lithium properties and the EV market. The Company does not expect to be dependent on any sole
contract to sell the major part of the Company’s products or services or to purchase the major part of the Company’s requirements
for goods, services or raw materials.


 


Bankruptcy and Similar Procedures


 


There are no bankruptcies, receivership or similar
proceedings against the Company, nor is the Company aware of any such pending or threatened proceedings. The Company has not commenced
any bankruptcy, receivership or similar proceedings during the Company’s history.


 


Reorganizations


 


There have been no corporate reorganizations of
the Company within the three most recently completed financial years.


 


Foreign Operations


 


The Project exposes the Company to various degrees
of political, economic and other risks and uncertainties. See “Emerging Market Disclosure” and “Risk Factors”
below.


 






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Employees


 


As at December 31, 2020, the Company had eight employees and
sixteen part time and/or consultants working at various locations.


 


Environmental Protection


 


The current and future operations of the Company, including exploration
and development activities, are subject to extensive laws and regulations governing environmental protection, employee health and safety,
exploration, development, tenure, production, taxes, labour standards, occupational health, waste disposal, protection and remediation
of environment, reclamation, mine safety, toxic substances and other matters. Compliance with such laws and regulations can increase
the costs of, and potentially delay planning, designing, drilling and developing the Company’s mineral properties, including the
Project.


 


Social and Environmental Policies


 


The Company aims to minimize the impact of its operations on both
local communities and the environment. The Company is committed to developing the Project in a responsible and sustainable manner. The
Company takes its responsibilities seriously to protect the environment, to conduct business based on high ethical standards and to make
a positive difference in the communities in which it operates.


 


SUMMARY OF UPDATED FEASIBILITY STUDY REPORT


 


Set
out below is an extract from the Updated Feasibility Study Report dated November 22, 2021, with an effective date of June 2,
2021, prepared by by Homero Delboni Jr, B.E., M.Eng.Sc., Ph.D., Guilherme Gomides Ferreira (MEng) MAIG, Marc-Antoine Laporte, P. Geo,
Stephane Normandin, P. Eng., Jacques Parent, P.Eng., Jarrett Quinn, P.Eng., Porifrio Cabaleiro Rodriguez, MEng., and Jacqueline Wang,
P.Eng. (the “FS Qualified Persons”). Reference should be made to the full text of the Updated Feasibility Study Report, which
is the current technical report on the Project, is available on the Company’s website at www.sigmalithium.ca or at www.sedar.com
and is incorporated by reference into this AIF, for the detailed disclosure in respect of the Project. All statements in the summary
below are as of the effective date of the Updated Feasibility Study Report.


 


Property
Description and Location


 


The Project is located in Northeastern
Minas Gerais State, in the municipalities of Araçuaí and Itinga, approximately 25 km east of the town of Araçuaí
and 450 km northeast of Belo Horizonte.


 


The Project comprises four properties
owned by Sigma Brazil and is divided into the Northern Complex (the Grota do Cirilo, Genipapo and Santa Clara properties) and the Southern
Complex (the São José property).


 


The Project consists of 27 mineral
rights, which include mining concessions, applications for mining concessions and exploration permits, spread over 191 km2,
which include nine past producing lithium mines and 11 first-priority exploration targets. Granted mining concessions are in good standing
with the Brazilian authorities.


 


The surface rights in the
Grota do Cirilo area, the current primary focus of activity, are held by two companies, Arqueana Minérios e Metais (Arqueana)
and Miazga Participações S.A. (Miazga). Sigma Brazil has entered into two right-of-way agreements with these companies
to support the Company’s
exploration and development activities within the Grota do Cirilo property, as well as third-party surface owners.


 


The Company has been granted a
flow of 150 m3/h from the Jequitinhonha River for all months of the year for a period of 10 years, which is sufficient for
life-of mine (LOM) requirements.


 


The Brazilian Government levies
a Compensação Financeira pela Exploração de Recursos Minerais (CFEM) royalty on mineral production. Lithium
production is subject to a 2.0% CFEM royalty, payable on the gross income from sales. The Project is subject to two third-party net smelter
return (NSR) royalties of 1% each.


 






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To the extent known to the FS
Qualified Persons, there are no other significant factors and risks that may affect access, title, or the right or ability to perform
work on the Project that have not been discussed in the Updated Feasibility Study Report.


 


Accessibility,
Climate, Local Resources, Infrastructure and Physiography


 


The Project is easily accessible
from regional paved road BR-367, which runs through the northern part of the Project. Within the Project area, accessibility is provided
by a network of maintained arterial and back country service roads. A municipal airport services the town of Araçuaí. The
closest major domestic airport is located at Montes Claros, 327 km west of Araçuaí.


 





The Eastern Brazil region is characterized
by a dry, semi-arid and hot climate. It is expected that future mining operations could be conducted year-round. Exploration activities
are year-round but can be interrupted by short-term rainfall events.


 


Mining operations have been previously
conducted in the Project area. Existing infrastructure includes power supply and substation, an extensive office block equipped with internet
and telephones, accommodation for 40 persons on site, dining hall and kitchen, workshop, on-site laboratory and sample storage building,
warehouse and a large store, a fuel storage facility with pumping equipment, and a water pumping facility from the Jequitinhonha river
with its reservoir. The main 138 kV transmission line from the Irape hydro power station runs through the northern part of the Project
area. The town of Araçuaí can supply basic services. Other services must be sourced from Belo Horizonte or São Paulo.


 


The topography consists of gently
rolling hills with less than 100 m difference in elevation. The Project area typically hosts thorn scrub and savannah. Much of the area
has been cleared for agriculture. The primary source of water for this project is the Jequitinhonha River.


 


 History




 


Exploration and mining activities
prior to the Company’s project interest were conducted by Companhia Estanìfera do Brazil (CEBRAS), Arqueana Minérios
e Metais (Arqueana), Tanex Resources plc (Tanex; a subsidiary of Sons of Gwalia Ltd (Sons of Gwalia)), and RI-X Mineração
S.A. (RI-X). CEBRAS produced a tin/tantalite concentrate from open pit mines from 1957 to the 1980s. Arqueana operated small open pit
mines from the 1980s to the 2000s, exploiting pegmatite and alluvial gravel material for tin and tantalite. Tanex Resources obtained a
project interest from Arqueana, and undertook channel sampling, air-track, and reverse circulation (RC) drilling. The Project was subsequently
returned to Arqueana. In 2012, RI-X obtained a controlling interest in Arqueana, and formed a new subsidiary company to Arqueana called
Araçuaí Mineração whose name was later changed to Sigma Brazil. Sigma Brazil completed mapping, data compilation,
a ground magnetic survey, channel sampling, and HQ core drilling. A heavy mineral separation (HMS) pilot plant was built during 2014–2015.
Lithium-specific mining activities were conducted over at least five deposits in the Northern Complex, and four deposits in the Southern
Complex.


 


In 2017, the Company purchased
a DMS unit to produce a 6% Li2O spodumene concentrate. The Company has completed ground reconnaissance, satellite image interpretation,
geological mapping, channel and chip sampling, trenching, core drilling, Mineral Resource and Mineral Reserve estimation, and a feasibility
study. The Company initially focused on a geological assessment of available field data to prioritize the 200 known pegmatites that occur
on the various properties for future evaluation. A ranking table that highlighted pegmatite volume, mineralogy and Li2O and
Ta2O5 grade was established. Within the more prospective areas, the Company concentrated its activities on detailed
geological and mineralogical mapping of historically mined pegmatites, in particular, on the larger pegmatites.


 


Geological
Setting and Mineralization


 


The pegmatites in
the Project area are classified as lithium–cesium–tantalum or LCT types. The Project area
lies in the Eastern Brazilian Pegmatite Province that encompasses a very large region of about 150,000 km2, stretching from
the state of Bahia to the state of Rio de Janeiro.


 






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The pegmatite swarm
is associated with the Neoproterozoic Araçuaí
orogeny and has been divided into two main types: anatectic (directly formed from the partial melting of the country rock) or residual
pegmatite (fluid rich silicate melts resulting from the fractional crystallization of a parent magma). The pegmatites in the Project
area are interpreted to be residual pegmatites and are further classified as LCT types.


 


Pegmatite bodies are typically hosted in a grey
biotite–quartz schist and form bodies that are generally concordant with the schist foliation but can also cross-cut foliation.
The dikes are sub-horizontal to shallow-dipping sheeted tabular bodies, typically ranging in thickness from
a few metres up to 40 m or more, and display a discontinuous, thin, fine-grained chilled margin. Typical
pegmatite mineralogy consists of microcline, quartz, spodumene, albite and muscovite. Spodumene typically comprises about 28–30%
of the dike, microcline and albite around 30–35%, and white micas about 5–7%. Locally, feldspar and spodumenes crystals can
reach as much as 10–20 cm in length. Tantalite, columbite and cassiterite can occur in association with albite and quartz. The primary
lithium-bearing minerals are spodumene and petalite. Spodumene can theoretically contain as much as 3.73% Li, equivalent to 8.03% Li2O,
whereas petalite, can contain as much as 2.09% lithium, equivalent to 4.50% Li2O.


 


Features of the pegmatites where
mineral resources have been estimated include:


 





First Mine:
foliation concordant, strikes northwest–southeast, dips to the southeast at 40o to 45o, and is not zoned. The strike length
is 1,700 m, averages 12–13 m in thickness and has been drill tested to 259 m in depth. First Mine remains open to the west, east,
and at depth


 


Second Mine:
foliation discordant, strikes northeast–southwest, dips to the southeast at 30o to 35o, and is slightly zoned with a distinct
spodumene zone as well as an albite zone. The pegmatite is about 600 m long (strike), 30–35 m wide, and 800 m along the dip direction.
Second Mine remains open to the northeast and at depth


 


Murial:
foliation discordant, strikes north–south, and has a variable westerly dip, ranging from 25o to 75o. The strike length
is about 750 m, with a thickness of 15–20 m, and the down-dip dimension is 200 m. The pegmatite is zoned with a spodumene-rich intermediate
zone and a central zone that contains both spodumene and petalite. The southern section of the pegmatite has lower lithium tenors than
the norther portion of the dike. Murial remains open to the north, south, and at depth


 


Lavra do Meio:
foliation concordant, strikes north–south, dips 75o–80o to the east. The strike length is 300 m with an average
thickness of 12–15 m and a down-dip distance of 250 m. The pegmatite is zoned and contains both spodumene and petalite and remains
open at depth.


 


 Exploration




 


The Company began working on the
Project in June 2012, focusing on a geological assessment of available field data to prioritize the 200 known pegmatites that occur
on the various properties for future evaluation. A ranking table that highlighted pegmatite volume, mineralogy and Li2O and
Ta2O5 grade was established.


 


Within the more prospective
areas, the Company concentrated its activities on detailed geological and mineralogical mapping of
historically mined pegmatites, in particular, on the larger pegmatites, First Mine and Second Mine. These dikes were channel sampled and
subsequently assessed for their lithium, tantalum and cassiterite potential. This work was followed by bulk sampling and drilling. In
the southern complex area, the Company’s geologists have visited sites of historical workings,
and undertaken reconnaissance mapping and sampling activities. The Lavra Grande, Samambaia, Ananias, Lavra do Ramom and Lavra Antiga pegmatites
were mined for spodumene and heavy minerals, and in some cases gem-quality crystals were targeted. These pegmatites are considered to
warrant additional work.


 


 Drilling




 


Drilling completed
by the Company across the Project area consists of 255 core holes totalling 42,959.76 m. As at the
date of the Updated Feasibility Study Report, this drilling has concentrated on the Grota do Cirilo pegmatites. Drilling was at HQ core
size (63.5 mm core diameter) in order to recover enough material for metallurgical testing. Drill spacing is variable by pegmatite,
but typically was at 50 m with wider spacing at the edges of the drill pattern. Drill orientations were tailored as practicable to the
strike and dip of the individual pegmatites. The drill hole intercepts range in thickness from approximately 85–95% of true width
to near true width of the mineralization.


 






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All core was photographed.
Drill hole collars were picked up in the field using a Real Time Kinematic (RTK) global positioning system (GPS) instrument with an average
accuracy of 0.01 cm. All drill holes were down-hole surveyed by the Company’s personnel using
the Reflex EZ-Track and Reflex Gyro instruments. Calibrations of tools were completed in 2017 and 2018.


 


Sampling intervals were determined
by the geologist, marked and tagged based on lithology and mineralization observations. The typical sampling length was 1 m but varied
according to lithological contacts between the mineralized pegmatite and the host rock. In general, 1-2 m host rock samples were collected
from each side that contacts the pegmatite.


 


The Company conducted
HQ drilling programs in 2014, 2017, and 2018 on selected pegmatite targets. The drill programs have used industry-standard protocols that
include core logging, core photography, core recovery measurements, and collar and downhole survey measurements. There are no drilling,
sampling or recovery factors that could materially impact the accuracy and reliability of the results in any of the drill campaigns. Drill
results from Grota do Cirilo property support the Mineral Resource estimates and the feasibility study.


 


Sample
Preparation, Analyses and Security


 


Sampling intervals were determined
by the geologist, marked and tagged based on lithology and mineralization observations. The typical sampling length was 1 m but varied
according to lithological contacts between the mineralized pegmatite and the host rock. In general, 1 m host rock samples were collected
from each side that contacts the pegmatite.


 


All samples collected
by Sigma Brazil during the course of the 2012–2018 exploration programs were sent to the SGS Geosol laboratory (SGS Geosol) located
in the city of Belo Horizonte, Brazil. A portion of the 2017–2018 sample pulps were prepared by ALS Brazil Ltda. in Vespasiano,
Brazil (ALS Vespasiano) and shipped to ALS Canada Inc. Chemex Laboratory (ALS Chemex) in North Vancouver, BC, Canada for cross check validation.
A portion of the 2014 samples were resampled by the QP and sent for validation to the SGS Lakefield Laboratory (SGS Lakefield) in Lakefield
Canada. All laboratories, including ALS Chemex, ALS Vespasiano, SGS Lakefield and SGS Geosol are ISO/IEC 17025 accredited. The SGS Geosol
laboratory is ISO 14001 and 17025 accredited by the Standards Council. All laboratories used for the technical report are independent
from Sigma Brazil and the Company and provide services to Sigma Brazil pursuant to arm’s length
service contracts.


 


Sample preparation conducted at
SGS Geosol consisted of drying, crushing to 75% passing 3 mm using jaw crushers, and pulverizing to 95% passing 150 mesh (106 μm)
using a ring and puck mill or a single component ring mill. In 2017, SGS Geosol performed 55-element analysis using sodium peroxide fusion
followed by both inductively coupled plasma optical emission spectrometry (ICP-OES) and inductively coupled plasma mass spectrometry (ICP-MS)
finish (SGS code ICM90A). This method uses 10 g of the pulp material and returns different detection limits for each element and includes
a 10 ppm lower limit detection for Li and a 10,000 ppm upper limit detection for Li. In 2018, SGS Geosol used a 31-element analytical
package using sodium peroxide fusion followed by both Inductively Coupled Plasma Atomic Emission Spectrometry (ICP-AES) and ICP-MS finish
(SGS code ICP90A).


 


Sample preparation at ALS Vespasiano
comprised drying, crushing to 70% passing 2 mm using jaw crushers, and pulverizing to 85% passing 200 mesh (75 μm) using a ring
and puck mill or a single component ring mill. Lithium and boron were determined by sodium peroxide fusion followed by ICP-AES analysis
(ALS Chemex method ME-ICP82b).


 


The 2017 witness samples collected
on the 2014 drill core were analyzed at SGS Lakefield using sodium peroxide fusion followed by both ICP-OES and ICP-MS finish (SGS code
ICM90A).


 


In addition to the
laboratory quality assurance quality control (QA/QC) routinely implemented by SGS Geosol and ALS Chemex using pulp duplicate analysis,
Sigma Brazil developed an internal QA/QC protocol for the First Mine drilling, which consisted of the insertion of analytical standard
reference materials (standards), blanks and core duplicates on a systematic basis with the samples shipped to the analytical laboratories.
In 2017, the Company also sent pulps from selected mineralized intersections to ALS Chemex for reanalysis.
No pulp reanalysis was performed by the Company in 2013 and 2014. A total of 664 pulp samples from
the 2017 First Mine drilling program were sent to ALS Vespasiano for third-party verification.


 






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Sigma Brazil inserted standards
in sample batches during the 2014 and 2017–2018 sampling programs. During the 2014 campaign, the standard used was made of locally
sourced and prepared pegmatite and was not certified. Sigma Brazil inserted an uncertified standard into the sample stream for every 25
samples for a total of five uncertified standards inserted. The 2017–2018 campaign used seven certified standards from African Mineral
Standards (AMIS), an international supplier of certified reference materials. A total of 88 standards were inserted during the 2017 campaign
and 315 were inserted during the 2018 campaign. Results were considered acceptable and no material accuracy issues were noted.


 


During the 2017–2018 campaign
Sigma Brazil included insertion of analytical blanks in the sample series as part of their internal QA/QC protocol. The blank samples,
which are made of fine silica powder provided by AMIS, are inserted an average of one for every 20 samples by the Sigma Brazil geologist
and subsequently sent to SGS Geosol. The same procedure was used by Sigma Brazil for the 2014 drilling campaign. A total of 647 analytical
blanks were analysed during the 2014 and 2017–2018 exploration programs. Results were considered acceptable and no material contamination
issues were noted.


 


Sigma Brazil inserted core duplicates
every 20th sample in the sample series as part of their internal QA/QC protocol. The sample duplicates correspond to a quarter HQ core
from the sample left behind for reference, or a representative channel sample from the secondary channel cut parallel to the main channel.
Assay results were considered acceptable between the two sample sets.


 


Bulk densities of the lithologies
were measured by SGS Geosol by pycnometer measurement. Measurements were by lithology with special attention to the lithium bearing pegmatite.
Separate measurements were made for the First Mine and Second Mine.


 





A total of 188 measurements were
made on Xuxa core from 2017–2018. Of the 188 measurements, 24 were made on albite-altered pegmatite, 54 on schist, and 110 on lithium-bearing
pegmatite. For Second Mine, a total of 401 measurements were made on core from the 2018 drill program. Of the 401 measurements, 82 were
made on albite-altered pegmatite, 177 on schist, and 142 on lithium-bearing pegmatite. For Murial, a total of 134 measurements were made
by the same method on core from the 2018 drill program. Of the 134 measurements, 32 were made on the albite-altered pegmatite, 58 on the
schist and 44 on the lithium bearing pegmatite. For Lavra do Meio, a total of 51 measurement were made by the same method on core from
the 2018 drill program. Of the 51 measurements, nine were made on the albite altered pegmatite, 22 on the schist and 20 on the lithium
bearing pegmatite.


 


In 2017, SGS validated the exploration
processes and core sampling procedures used by Sigma Brazil as part of an independent verification program. The QP concluded that the
drill core handling, logging and sampling protocols are at conventional industry standard and conform to generally accept best practices.
The chain of custody was followed by Sigma Brazil employees and the sample security procedure showed no flaws. The QP considers that the
sample quality is good and that the samples are generally representative.


 


As additional QAQC, SMSA sent
664 samples from the 2017-2018 Grota do Cirillo drilling campaign to ALS Chemex for analysis using the protocol ME-ICP82b with sodium
peroxide fusion. Preparation was done by ALS Vespasiano and the samples were subsequently shipped to Vancouver. The average Li concentration
for the original was 6,411.4 ppm Li while the duplicate average was 6,475.9 ppm Li. This indicates a slight bias of the ALS Chemex duplicates
which is well within the accepted margin of error.


 


Overall, the QP is confident that
the system is appropriate for the collection of data suitable for a Mineral Resource estimate and can support Mineral Reserve estimates
and mine planning.


 






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Data
Verification


 


Visits to the Project site were
conducted by Marc-Antoine Laporte, P.Geo., M.Sc. from September 11 to September 15, 2017, from July 11 to July 17,
2018 and from September 18 to 23, 2018. These visits enabled the QP to become familiar with the exploration methods used by Sigma
Brazil, the field conditions, the position of the drill hole collars, the core storage and logging facilities and the different exploration
targets.


 


The database for
the Project was first transmitted to SGS by the Company on September 15, 2017 and was regularly
updated by the Company’s geologists. The database contains data for: collar locations; downhole
surveys; lithologies and lithium assays. Upon importation of the data into the modelling and mineral resources estimation software (Genesis©),
SGS conducted a second phase of data validation where all the major discrepancies were removed from the database. Finally, SGS conducted
random checks on approximately 5% of the assay certificates, to validate the assay values entered in the database.


 


Witness samples were taken from
previously sampled intervals and the half cores were cut to quarter cores. A total of nine mineralized intervals were sampled to compare
the average grade for the two different laboratories. The average for the original samples is 1.61 % Li2O while the average
for the control samples is 1.59 % Li2O. The average grade difference is 0.02% which makes a relative difference of 1.28% between
the original and the control samples.


 


Following the data verification
process and QA/QC review, the QP is of the opinion that the sample preparation, analysis and QA/QC protocol used by Sigma Brazil for the
Project follow generally accepted industry standards and that the Project data is of a sufficient quality. However, more attention should
be put into the blank material selection in the future in order improve the similarity between the batches.


 


Mineral
processing and Metallurgical Testing


 


Drill core samples from the First
Mine were processed at the SGS Lakefield facility in October 2018, while samples from Barreiro were tested between November 2020
and May 2021. Work conducted on the Xuxa samples included comminution, heavy liquid separation (HLS), REFLUXTM
classifier, DMS and magnetic separation, while the Barreiro test work program included sample characterization, grindability testing
and heavy liquid separation (HLS).


 


First
Mine


 


Drill core samples were selected
and combined into six variability (Var) samples for a test work program comprising of mineralogical analyses, grindability, HLS, REFLUXTM
classifier, DMS, and magnetic separation testing. Flowsheets for lithium beneficiation were developed in conjunction with the testwork.
The goal was to produce spodumene concentrate grading a minimum 6% Li2O and maximum 1% Fe2O3 while maximizing
lithium recovery.


 


Four HLS tests, at four crush
sizes (15.9 mm, 12.5 mm, 9.5 mm, and 6.3 mm) were carried out on each of the six variability samples to evaluate the recovery. The 9.5
mm crush size was selected as the optimum crush size for DMS test work, as it results in the highest lithium recovery with minimal fines
generation.


 


The DMS variability samples were
each crushed to -9.5 mm and screened into four size fractions: coarse (-9.5/+6.3 mm), fines (-6.3/+1.7 mm), ultrafines (-1.7/+0.5 mm)
and hypofines (-0.5 mm). The coarse, fines and ultrafines fractions of each variability sample were then processed separately for lithium
beneficiation. The REFLUXTM classifier test work was carried out with a RC-100 unit for mica rejection from the fines and ultrafines
fractions only. This test work was conducted at FLSmidth’s Minerals Testing and Research Center in Utah, USA.


 


The coarse and fines REFLUXTM
classifier underflow and ultrafines RC underflow of each variability sample were processed separately through DMS. The DMS concentrate
from each of these fractions underwent a magnetic separation step at 10,000 Gauss.


 


The DMS test work flowsheet for
the coarse and fines fractions included two passes through the DMS; the first at a lower specific gravity (SG) cut-point (~2.65) to reject
silicate gangue and the second at a higher specific gravity (SG) cut-point (~2.90) to generate spodumene concentrate. The coarse DMS middlings
were re-crushed to -3.3 mm and a two stage HLS test conducted. The ultrafines DMS test work flowsheet included only a single pass through
the DMS circuit at a high SG cut-point (~2.90) to generate spodumene concentrate.


 






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The DMS test results demonstrated
that DMS was able to produce spodumene concentrate with >6% Li2O in most of the tests, for an average recovery of 60.4%.


 


The Var 3 and Var 4 samples were
determined to best represent the deposit.


 


Second
Mine


 


Four variability and one composite
sample were tested for Second Mine, with the goals of the program to provide preliminary process information on the metallurgical performance
of mineralized material samples from the Second Mine. The test work program was developed based on previous test work and flowsheet developed
for the First Mine. The aim of the test work program was to produce chemical grade spodumene concentrate (>6% Li2O) with
low iron content (<1% Fe2O3), while maximizing lithium recovery.


 


Two sets of HLS tests were undertaken.
The first set was conducted using the Composite to test optimal crush size (i.e., top size of 15.9 mm, 12.5 mm, 10.0 mm, and 6.3 mm).
HLS tests were then performed on each variability sample at the optimum crush size. The fine fraction (i.e., -0.5 mm) was screened out
from each sub-sample and the oversize fraction was submitted for HLS testing. A crush size of -10 mm was determined to be optimal and
variability HLS testing was undertaken at this crush size. Interpolated stage recoveries (6% Li2O concentrate) for the four
variability samples ranged from 56.0% to 77.3%.


 


In all four variability samples,
HLS tests produced >6% Li2O spodumene concentrate with low iron content (<1.0% Fe2O3).


 


Mineral
resource estimates


 


Mineral Resources for the Grota
do Cirilo pegmatite were estimated using a computerised resource block model. Three-dimensional wireframe solids of the mineralisation
were defined using drill hole Li2O analytical data.


 


Data were composited to 1 m composite
lengths, based on the north–south width of the block size defined for the resource block model. Compositing starts at the schist-pegmatite
contact. No capping was applied on the analytical composite data. The First Mine models used a 6 m x 3 m x 5 m block size. Murial and
Lavra do Meio models used a 5 m x 3 m x 5 m block size and the Second Mine model used a 5 m x 5 m x 5 m block. Average densities were
applied to blocks, which varied by pegmatite, from 2.65 t/m3 at Lavra do Meio to 2.71 t/m3 at the Second Mine.


 


Variography was undertaken for
First Mine, Second Mine and Lavra do Meio and the projection and Z-axis rescaling were done according to the mineralization orientation.


 


The grade interpolation for the
First Mine, Second Mine and Lavra do Meio resource block models were completed using ordinary kriging (OK). The Murial model was estimated
using an inverse distance weighting to the second power (ID2) methodology. The interpolation process was conducted using three successive
passes with more inclusive search conditions from the first pass to the next until most blocks were interpolated, as follows:


 


Pass
1:


 


First
Mine: search ellipsoid distance of 75 m (long axis) by 75 m (intermediate axis) and 25 m (short axis) with an orientation of 130°
azimuth and -50° dip to the southeast; minimum of seven composites, a maximum of 15 composites and a minimum of three drill holes


 


Second
Mine: search ellipsoid distance of 55 m (long axis) by 55 m (intermediate axis) and 25 m (short axis) with an orientation of 155°
azimuth and -35° dip to the southeast; a minimum of seven composites, a maximum of 15 composites and a minimum of three drill holes


 


Murial:
75 m (long axis) by 75 m (intermediate axis) and 35 m (short axis) with an orientation of 95° azimuth and -80° dip to the west;
minimum of seven composites, a maximum of 15 composites and a minimum of three drill holes


 


Lavra
do Meio: 50 m (long axis) by 50 m (intermediate axis) and 25 m (short axis) with an orientation of 280° azimuth and -75° dip
to the east; minimum of five composites, a maximum of 15 composites and a minimum of three drill holes


 






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Pass
2:


 


First
Mine: twice the search distance of the first pass; minimum of seven composites, a maximum of 15 composites and a minimum of three drill
holes


 


Second
Mine: twice the search distance of the first pass; a minimum of seven composites, a maximum of 15 composites and a minimum of three drill
holes


 


Murial:
twice the search distance of the first pass; minimum of seven composites, a maximum of 15 composites and a minimum of three drill holes


 


Lavra
do Meio: twice the search distance of the first pass; minimum of five composites, a maximum of 15 composites and a minimum of three drill
holes


 


Pass
3:


 


First
Mine: 300 m (long axis) by 300 m (intermediate axis) by 100 m (short axis) with a minimum of seven composites, a maximum of 25 composites
and a minimum of three drill holes


 


Second
Mine: 250 m (long axis) by 250 m (intermediate axis) by 100 m (short axis) with a minimum of seven composites, a maximum of 25 composites
and no minimum number of drill holes


 


Murial:
200 m (long axis) by 200 m (intermediate axis) by 100 m (short axis) with a minimum of seven composites, a maximum of 20 composites and
no minimum number of drill holes


 


Lavra
do Meio: 125 m (long axis) by 125 m (intermediate axis) by 75 m (short axis) with a minimum of five composites, a maximum of 15 composites
and no minimum composites required per drill hole.


 


The estimates and models were
validated by statistically comparing block model grades to the assay and composite grades, and by comparing block values to the composite
values located inside the interpolated blocks. The estimates were considered reasonable.


 


Mineral Resources are classified
into Measured, Indicated and Inferred categories. The Mineral Resource classification is based on the density of analytical information,
the grade variability and spatial continuity of mineralization. The Mineral Resources were classified in two successive stages: automated
classification, followed by manual editing of final classification results. Classifications were based on the following:


 


Measured
Mineral Resources


 


First
Mine: the search ellipsoid used was 50 m (strike) by 50 m (dip) by 25 m with a minimum of seven composites in at least three different
drill holes


 


Second
Mine, Murial, and Lavra do Meio: the search ellipsoid was 55 m (strike) by 55 m (dip) by 35 m with a minimum of five composites in
at least three different drill holes


 


Indicated
Mineral Resources


 


In
all deposits, the search ellipsoid was twice the size of the Measured category ellipsoid using the same composites selection criteria


 


Inferred
Mineral Resources


 


In
all deposits, all remaining blocks.


 


The conceptual economic parameters
were used to assess reasonable prospects of eventual economic extraction. A series of economic parameters were estimated to represent
the production cost and economic prospectivity of an open pit mining operation in Brazil and came either from SGS Canada or Sigma Brazil.
These parameters are believed to be sufficient to include all block models in future open pit mine planning, due mostly to the relatively
low mining costs in Brazil.


 


The Mineral Resource estimates
for Grota do Cirilo are reported in Table 0-1 to Table 0-4 using a 0.5% Li2O cut-off. The Mineral Resource estimates are
constrained by the topography and are based on the conceptual economic parameters. The estimate has an effective date of January 10,
2019. The QP for the estimate is Mr. Marc-Antoine Laporte, P.Geo., an SGS employee.


 






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Table 0-1 – First Mine Deposit Mineral
Resource Estimate


 


	Cut-off
    Grade 

    Li2O (%)	Category	Tonnage

    (t)	Average
    Grade 

    Li2O (%)
	0.5	Measured	10,193,000	1.59
	0.5	Indicated	7,221,000	1.49
	0.5	Measured + Indicated	17,414,000	1.55
	0.5	Inferred	3,802,000	1.58


 


Notes to accompany
Table 0-1 First Mine Deposit Mineral Resource Estimate:


 


		1.	Mineral Resources have an effective date of January 10, 2019 and have been classified using the 2014
CIM Definition Standards. The Qualified Person for the estimate is Mr. Marc-Antoine Laporte, P.Geo., an SGS employee.



 


		2.	Mineral Resources are reported assuming open pit mining methods, and the following assumptions: lithium
concentrate (6% Li2O) price of US$1,000/t, mining costs of US$2/t for mineralization and waste, US$1.2/t for overburden, crushing
and processing costs of US$12/t, general and administrative (G&A) costs of US$4/t, concentrate recovery of 85%, 2% royalty payment,
pit slope angles of 55o, and an overall cut-off grade of 0.5% Li2O.



 





		3.	Tonnages and grades have been rounded in accordance with reporting guidelines. Totals may not sum due
to rounding.



 


		4.	Mineral Resources are reported inclusive of those Mineral Resources converted to Mineral Reserves. Mineral
Resources that are not Mineral Reserves do not have demonstrated economic viability.



 


		5.	Long-term lithium concentrate price of $1,000/t assumes processing cost of US$12/t and metallurgical recovery
of 85%.



 


Table 0-2 – Second Mine Deposit Mineral
Resource Estimate


 


	Cut-off
    Grade 

    Li2O (%)	Category	Tonnage

    (t)	Average
    Grade 

    Li2O (%)
	0.5	Measured	10,313,000	1.4
	0.5	Indicated	10,172,000	1.46
	0.5	Measured + Indicated	20,485,000	1.43
	0.5	Inferred	1,909,000	1.44


 


Notes
to accompany Table 0-2 Second Mine Deposit Mineral Resource Estimate


 


		1.	Mineral Resources have an effective date of January 10, 2019 and have been classified using the 2014
CIM Definition Standards. The Qualified Person for the estimate is Mr. Marc-Antoine Laporte, P.Geo., an SGS employee.



 


		2.	Mineral Resources are reported assuming open pit mining methods, and the following assumptions: lithium
concentrate (6% Li2O) price of US$1,000/t, mining costs of US$2/t for mineralization and waste, US$1.2/t for overburden, crushing
and processing costs of US$12/t, general and administrative (G&A) costs of US$4/t, concentrate recovery of 85%, 2% royalty payment,
pit slope angles of 55o, and an overall cut-off grade of 0.5% Li2O.



 


		3.	Tonnages and grades have been rounded in accordance with reporting guidelines. Totals may not sum due
to rounding.



 


		4.	Mineral Resources that are not Mineral Reserves do not have demonstrated economic viability.



 


		5.	Long-term lithium concentrate price of $1,000/t assumes processing cost of US$12/t and metallurgical recovery
of 85%.



 






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Table 0-3 – Murial Deposit
Mineral Resource Estimate


 


	Cut-off
    Grade 

    Li2O (%)	Category	Tonnage

    (t)	Average
    Grade 

    Li2O (%)
	0.5	Measured	4,175,000	1.17
	0.5	Indicated	1,389,000	1.04
	0.5	Measured + Indicated	5,564,000	1.14
	0.5	Inferred	669,000	1.06


 


Notes
to accompany Table 0-3 Murial Deposit Mineral Resource Estimate


 


		1.	Mineral Resources have an effective date of January 10, 2019 and have been classified using the 2014
CIM Definition Standards. The Qualified Person for the estimate is Mr. Marc-Antoine Laporte, P.Geo., an SGS employee.



 


		2.	Mineral Resources are reported assuming open pit mining methods, and the following assumptions: lithium
concentrate (6% Li2O) price of US$1,000/t, mining costs of US$2/t for mineralization and waste, US$1.2/t for overburden, crushing
and processing costs of US$12/t, general and administrative (G&A) costs of US$4/t, concentrate recovery of 85%, 2% royalty payment,
pit slope angles of 55o, and an overall cut-off grade of 0.5% Li2O.



 


		3.	Tonnages and grades have been rounded in accordance with reporting guidelines. Totals may not sum due
to rounding.



 


		4.	Mineral Resources that are not Mineral Reserves do not have demonstrated economic viability



 


		5.	Long-term lithium concentrate price of $1,000/t assumes processing cost of US$12/t and metallurgical recovery
of 85%.



 


Table 0-4 –
Lavra do Meio Deposit Mineral Resource Estimate


 


	Cut-off
    Grade 

    Li2O (%)	Category	Tonnage

    (t)	Average
    

    Grade Li2O 

    (%)
	0.5	Measured	1,626,000	1.16
	0.5	Indicated	649,000	0.93
	0.5	Measured + Indicated	2,275,000	1.09
	0.5	Inferred	261,000	0.87


 


Notes
to accompany Table 0-4 Lavra do Meio Deposit Mineral Resource Estimate


 


		1.	Mineral Resources have an effective date of January 10, 2019 and have been classified using the 2014
CIM Definition Standards. The Qualified Person for the estimate is Mr. Marc-Antoine Laporte, P.Geo., an SGS employee.



 


		2.	Mineral Resources are reported assuming open pit mining methods, and the following assumptions: lithium
concentrate (6% Li2O) price of US$1,000/t, mining costs of US$2/t for mineralization and waste, US$1.2/t for overburden, crushing
and processing costs of US$12/t, general and administrative (G&A) costs of US$4/t, concentrate recovery of 85%, 2% royalty payment,
pit slope angles of 55o, and an overall cut-off grade of 0.5% Li2O.



 


		3.	Tonnages and grades have been rounded in accordance with reporting guidelines. Totals may not sum due
to rounding.



 


		4.	Mineral Resources that are not Mineral Reserves do not have demonstrated economic viability.



 


		5.	Long-term lithium concentrate price of $1,000/t assumes processing cost of US$12/t and metallurgical recovery
of 85%.



 


Factors that can affect Grota
do Cirilo Mineral Resource estimates include but are not limited to:


 


		·	Changes to the modelling method or approach



 


		·	Changes to geotechnical assumptions, in particular,
the pit slope angles



 


		·	Metallurgical recovery assumption that are based
on preliminary test results



 


		·	Changes to any of the social, political, economic,
permitting, and environmental assumptions considered when evaluating reasonable prospects for eventual economic extraction.



 






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Mineral Resource estimates can
also be affected by the market value of lithium and lithium compounds.


 


Mineral
Reserve Estimates


 


First Mine Mineral Reserve estimates
have an effective date of 5 June 2019 and have been converted from Measured and Indicated Mineral Resources. The key parameters upon
which the 5 June 2019 Mineral Reserve estimates were defined are summarized in Table 0-5.


 





Table 0-5 – Parameters Used in First
Mine Pit Optimization


 


	Parameter	Value
	Lithium concentrate price	US$700/t concentrate
	Royalties (CFEM)	2% of revenue
	Exchange rate	3.7 BRL/ US$
	Costs	 
	Mining	US$2.15/t mined
	Processing	US$10.51 /t ore
	G&A	US$3,809,106/ year
	Logistics	US$82/t concentrate wet
	Plant recovery	60.4%
	Concentrate grade	6%
	Mining recovery	100%
	Dilution	9.3%
	Overall Pit slopes	33.6° – 53°


 


Note:
CFEM is the Brazilian government royalty


 


The total Proven and Probable
Mineral Reserves are as presented in Table 0-6.


 


Table 0-6 – First Mine Mineral Reserves


 


	Reserve	Tonnage
    (t)	Li2O
    (%)
	Proven	10,270,000	1.45
	Probable	3,520,000	1.47
	TOTAL	13,790,000	1.46


 


Note
to accompany Mineral Reserves table:


 


		1.	Mineral Reserves have an effective date of 5 June 2019. The Qualified Person for the estimate is
Porfirio Cabaleiro Rodriguez, FAIG, an employee of GE21.



 


		2.	Mineral Reserves are confined within an optimized pit shell that uses the following parameters: lithium
concentrate price: US$700/t concentrate; mining costs: US$2.15/t mined; processing costs: US$10.51/t processed; general and administrative
costs: US$3.8 M/a; logistics costs: US$82/t wet concentrate; process recovery of 60.4%; mining dilution of 9%; pit inter-ramp angles that
range from 40.5 – 74.8o.



 


		3.	Tonnages and grades have been rounded in accordance with reporting guidelines. Totals may not sum due
to rounding.



 






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The existing high voltage transmission line at Pit
1 will need to be relocated in Year 2 so as not to interfere with the mining of the pit’s northern part. The Company has been given
the legal authority to relocate the line by 150 m.


 


The Company has not purchased the surface rights
for Pit 2 but has applied to the ANM (Brazilian mining regulatory agency) for the granting of authority to mine the area. Pit 2 will
come into operation 1.5 years after plant start-up.


 


Mining
methods


 


First
Mine


 


The Company has undertaken a program of resource
drilling for the First Mine deposit. Most of these drill holes have been geotechnically logged for structural data. The geotechnical
data logged from these holes has been analyzed to provide estimates of slope stability, using industry standard empirical techniques.


 


The mine layout and operation are
based on the following criteria:


 


Two
independent open pits areas: Pit 1 in the north and Pit 2 in the south 


Single
access from both pits to the mine infrastructure pad and the processing plant  


Low
height ore benches to reduce mine dilution and maximize mine recovery 


Pre-splitting
of the ore zone to reduce mine dilution 


Elevated
inter-ramp angles for the waste to reduce strip ratio.


 


The basis for the scheduling includes:


 


Six
months of pre-stripping to liberate the ore 


Mining
of Pit 1 first as this is closer to the processing plant and is also included in the current environmental license process 


Disposal
of the waste rock at the start of operation at pile 1 (close to processing plant) and pile 2 


Commence
disposal of waste rock at pile 3 after one year and three months from the start of the operation 


Commence
mining of Pit 2 from Year 3 onwards 


Mine
both pits in conjunction from Year 3 to Year 6 to reduce the drop-down rate and to facilitate the 1.5 Mtpa production rate  


The
planned open pit mine life is nine years and three months 


The
mining fleet is based on off-highway trucks for the waste movement and road trucks for the ore to be operated by a mining contractor.


 


Second
Mine


 


GE21, based on the Mineral Resource,
prepared the PEA for the Second Mine.


 


The PEA is preliminary in nature
and includes inferred mineral resources that are too speculative geologically to have economic considerations applied them that would
enable them to be categorized as mineral reserves, and there is no certainty that the PEA will be realized.


 


It is noted that the Company has
not yet made a production decision in respect of the Second Mine. The Company expects that it will assess the results of a pre-feasibility
study and a definitive feasibility study before making a production decision in respect of the Second Mine. All statements regarding
mine development or production in respect of the Second Mine in this AIF are expressly qualified by this statement.


 






    
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The mine layout and operation are
based on the following criteria:


 


		·	A
                                            single open pit on the Second Mine pegmatite






		·	Low
                                            height mineralized material benches to reduce mine dilution and maximize mine recovery






		·	Pre-splitting
                                            of the mineralized material to reduce mine dilution






		·	Elevated
                                            inter-ramp angles for the waste to reduce strip ratio



 


The basis for the scheduling includes:


 


		·	Pre-stripping
                                            the pit to liberate mineralized material









		·	Pit
                                            cut-backs in years 5 and 6 to expand and deepen pit






		·	Mining
                                            at a rate of 1.68 Mtpa






		·	The
                                            planned open pit mine life is 12 years and eight months






		·	The
                                            mining fleet is based on off-highway trucks for the waste movement and road trucks for the
                                            mineralized material to be operated by a mining contractor



 


Recovery
methods


 


The First Mine concentrator plant
is designed to produce a minimum 6.0% Li2O spodumene concentrate from an ore grade of 1.46% Li2O (diluted) with
an average iron content of 0.97%, using DMS.


 


If a positive production decision
is made for the Second Mine, a second DMS concentrator plant would be constructed to process the Second Mine mineralized material. This
plant would produce a minimum 6.0% Li2O spodumene concentrate from a mineralized material grade of 1.44% Li2O (diluted)
with an average iron content of 0.97%.


 


Processing
Plant Description


 


The First Mine plant throughput
capacity is based on 1.5 Mtpa (dry) of ore fed to the crushing circuit. The in-house crushing circuit is sized for 3.0 Mtpa, which will
accommodate the additional mineralized material from Second Mine, if developed. The First Mine wet plant (DMS) is sized for 1.5 Mtpa
throughput capacity, while the possible Second Mine DMS is based on a 1.68 Mtpa throughput capacity.


 


The concentrator plants are designed
based on a proven DMS circuit and include three-stage conventional crushing and screen circuit, up-flow classification for mica removal,
two-stage coarse DMS circuit, two-stage fines DMS circuit, single-stage ultrafines circuit, as well as magnetic separation and optical
sorting on the final product stream.


 


Design
Criteria and Utilities Requirements


 


The data for the feasibility study
engineering and design were sourced from metallurgical test-work conducted at SGS Lakefield. Recovery data are based on results from
variability samples #3 and #4. The mass balance, process design criteria and process flow diagrams were developed based on these test
work data.


 


The utilities consumption requirements
are approximately 6.7 MW for the process plant and 1.5 MW for non-process infrastructure at the process plant.


  


The raw water consumption for process
water is nominal at 23 m3/hr (make-up raw water requirement).


 


The process water will be recycled
within the plant using a thickener, where all fines slurry streams will be directed and recovered. This water will be pumped to the process
water tank and recycled to the circuits.


 


Consumables will include reagents
and operational consumables for the crushing circuit and the DMS plant.


 






    
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Project
Infrastructure


 


The First Mine project infrastructure
will be constructed on earthworks pads for the mineral processing plant, the mine operation support units, the open pits of the mines
and the areas of waste rock and tailings disposal.


 


If developed, the Second Mine will
utilize the infrastructure developed for the First Mine.


 


Buildings,
Roads, Fuel Storage, Power Supply and Water Supply


  


Access to the processing plant will
be by municipal road linking BR367 within the communities of Poço D’antas and Taquaril Seco. The current road will be suitable
for truck traffic; however, construction of a new section of the road will be necessary to bypass the plant.


 


The plant and mine services areas
will have administrative buildings such as offices, changeroom, cafeteria, concierge, clinic, fire emergency services and operation support
facilities such as workshops and warehouses.


 


Fuel will be stored and dispensed
from a fuel facility located at the mine services area.


 


Power will be supplied from the
existing power grid line. Two main sub-stations (CEMIG and plant) will be installed to supply power to the plant, the mine services area
and associated infrastructure.


 


Raw water will be supplied from
the Jequitinhonha River, treated as necessary and reticulated within the plant for process, potable and firewater needs.


  


Waste
Rock and Tailings Disposal and Stockpiles


 


At the First Mine, waste rock and
tailings will be stored in two piles in the initial years of operation. Waste pile 1 will be located near the process area (both in the
Olimpio area) and will be used for co-disposal of waste rock and tailings generated from the plant.


 


Waste pile 2 will be located to
the south, in the Gilson area.


 


Both piles will have 25m wide access
ramps with maximum gradients of 10%.


 


Waste piles 3 and 4 will be located
adjacent to the north and south pits respectively. Table 0-7 provides the projected storage requirements.


 


Table 0-7 – Waste
Pile Storage


 


	 	 	Waste
                                            Rock 
 m3 
	 	 	Tailings 
 m3 
	 	 	Waste &
    
Tailings Total  
MT	 	 	Years
    -

    Storage	 
	Waste pile #1	 	7,845,000	 	 	 	567,400	 	 	17 (Note 1)	 	 	 	1.3	 
	Waste pile #2	 	456,731 (Note 2)	 	 	 	39,879	 	 	1.0	 	 	 	1.3	 
	Waste pile #3	 	17,399,267	 	 	 	8,582,001	 	 	88.26	 	 	 	4.5	 
	Waste pile #4	 	26,776,556	 	 	 	-	 	 	101.14	 	 	 	5.2	 



 


Note 1: approximately 6.0 Mt of
mine pre-stripping (first 2 quarters of mine production) will be disposed of at waste pile 1


 


Note 2: 314,072 m3 will
be clear and grub from the process area and mine services area and 142,659 m3 from the earthworks cut material.


 






    
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Control
Systems and Communication


 


A process control system (PCS) including
a main plant SCADA system will be installed for monitoring and control purposes.


 


The telecommunications network will
consist of the telecommunications network, access control system and RFID.


 


Market
Studies and Contracts


 


The key information contained in
the market study was prepared by Roskill Consulting Group Ltd (Roskill).


 


Demand
and Consumption


 


The short-, medium- and long-term
outlook for lithium consumption appears strong, with overall consumption growth forecast at 15.2% per annum, and demand growth 14.5%
per annum, to 2033 in the base-case scenario. Growth will be higher in the shorter-term, at 22.7% per annum to 2023, and then slow to
14.0% per annum from 2023 to 2028, and 9% per annum from 2028 to 2033, as the market matures.


 


There are, however, considerable
upside and downside risks to the outlook for growth in consumption of lithium to 2028, dependant on the global economic growth and the
demand of Li-ion battery-powered hybrid and electric vehicles (xEVs).


 


 Supply




 


At end-2018, global nameplate production
capacity for mining lithium totalled 588,540 tpa lithium carbonate equivalent (LCE). Based on announced capacity expansions and new project
schedules, lithium mine production capacity is forecast to increase to almost 1.0 Mtpa LCE by 2022. The largest additions to mine capacity
are in Australia for mineral-based production and Chile for brine-based production. Additional mine capacity will be required from the
mid/late-2020s.


 


 Contracts




 


The Company has entered into the Mitsui HOA for
a strategic offtake and funding partnership with Mitsui for a significant portion of the funding required for the capital expenditures
and project construction.


 


Pursuant to Mitsui HOA, Mitsui and the Company have
agreed terms on:


 


		·	Production
                                            pre-payment to the Company of US$30,000,000 for battery-grade lithium concentrate supply
                                            of up to 55,000 t annually over six years, extendable for five years plus an off-take agreement
                                            supplementary 25,000 t of product annually






		·	Advancement
                                            of deposit for long-lead items for the project






		·	Strategic
                                            collaboration to leverage Mitsui’s considerable global logistics and battery materials
                                            marketing expertise as well as an agreement to continue discussions regarding additional
                                            funding for further exploration and development of the Company’s mineral properties






		·	Mitsui’s
                                            right to participate in the Company’s future capital for production expansion with
                                            other deposits conditional to concluding a feasibility study and Mineral Reserves estimates






		·	Sales
                                            prices are set quarterly based on the published price of nominal arms-length chemical-spodumene
                                            concentrate above 6% Li2O (SC6).



 


For more information in respect of additional contracts
entered into after the date of the Updated Feasibility Study Report, see “General Development of the Business – Three
Year History - Corporate”.


 






    
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The Company has no contracts in place in support
of operations. Any future contracts are likely to be negotiated and renewed on an annual or biannual basis. Contract terms are expected
to be typical of similar contracts in Minas Gerais State.


  


Price
Forecast


 


The Company is using the 10-year
Roskill forecast for the average spodumene concentrate nominal arms-length sales price of US$750 US (cost, insurance and freight (CIF)
delivered to Port of Shanghai, China) in the economic assessment.


 


Environmental
Studies, Permitting and Social or Community Impact


 


Conselho Estadual de Politica Ambiental (COPAM)
granted an Operation License in support of certain Sigma Brazil mining concessions on the Grota do Cirilo property on August 25,
1994. The licence was renewed on August 14, 2008 but has subsequently been allowed to lapse as it was not suitable for the new level
of mining contemplated by the Company. The Company applied and was issued the first phase of the Preliminary License (Licença
Previa or LP) and an Installation License (Licença de Instalação or LI) to commence construction at the First Mine.
Mining licenses are for life of mine and environmental licences are timely renewed when due.


 


The Company holds approved economic
mining plans (Plano de Aproveitamento Econômico or PAE) over the Xuxa, Barreiro, Lavra do Meio, Murial, and Maxixe deposits within
the Grota do Cirilo property. The PAE for the First Mine was updated and approved in August 2018.


 


Reclamation plans (referred to as
degraded area plans or PRADs) have been developed and implemented for certain past-producing areas within the Grota do Cirilo property.
The successful recovery of these areas is managed by Sigma Brazil personnel and external consultants in conjunction with the governing
regulatory agencies.


 


The Company has held regular meetings
and consultation sessions with local stakeholders regularly over the last five years. The further development of Sigma Brazil mining
activities in the Jequitinhonha Valley is viewed by both communities as an important regional economic driver.


 


Applicable
Legal Requirements for Project Environmental Permitting


 


CONAMA Resolution N° 237 (1997)
defines environmental licensing as an administrative procedure by which the competent environmental agency permits the locating, installation,
expansion and operation of enterprises and activities that use environmental resources in a manner considered to be effectively or potentially
polluting.


 


The licensing process in Minas Gerais
has been developed in accordance with COPAM Regulatory Deliberation N° 217, dated December 6, 2017 and establishes classification
criteria based on scale and polluting potential, as well as the locational criteria used to define the modalities of environmental licensing
of ventures and activities that use environmental resources in the state of Minas Gerais.


 


In compliance with CONAMA Resolution
09/90, the environmental licensing of mining projects is always subject to an Environmental Impact Assessment (”EIA”), followed
by an Environmental Impact Report (”RIMA”), which supports the technical and environmental feasibility stage of the project
and the granting of a LP and/or a concurrent LP + LI.


 


Current
Project Environmental Permitting Status


 


A Concurrent Environmental Licensing
Type CEL 2 (LP + LI) will be required in support of operations.


 


The water license for the uptake
of 150 m3/h of water from the Jequitinhonha River was approved by the Agencia Nacional das Águas (ANA) in February 2019.


 






    
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The CEL 2 (LP + LI) for the initial
project phase, consisting of the north pit (Pit #1), waste piles 1 and 2 and the plant area was submitted on December 20, 2018 and
was followed by the complete presentation of the EIS, the EIR and the Environmental Control Plan (ECP) as well the other documents listed
in Basic Guidance Form (BGF). The EIS (Estudo e Relatorio de Impacto Ambiental – EIA-RIMA dated 30 October 2018) and
Plano de Controle Ambiental – PCA dated December 2018 were prepared and issued for submittal to the authorities by NEO Soluções
Ambientais and ATTO GEO Geologia e Engenharia. Approval was obtained on June 3, 2019.


 


A second EIS covering Pit #2 and
waste piles #3 and #4 was formally submitted for approval in March 2020 in line with the prescribed permitting timing requirements.
for the process plant coming online with Pit #1.


 


 Authorizations




 


Sigma Brazil is the owner of the
mining rights registered under DNPM No 824.692/1971, and the holder of Mining Concession Ordinance No 1.366, published on October 19,
1984. In 2018 a new Economic Development Plan (EDP) was registered with the National Mining Agency (ANM), which was approved on November 16,
2018.


 


The approval of the EDP and environmental
study involves the technical and legal analysis and formal approval of the proposed project. With the granted LP + LI, the company must
now install the project within 5 years, comply with the environmental conditions established in the LP + LI certificate and finally,
apply for the Operation License after installation in order to begin operational activities.


 


The formalization of the environmental
licensing process also included requesting and granting of the EIA. This allows for environmental intervention in an approximately 64
ha area.


 


Land
Access


 


The Company has a lease agreement
with Miazga Participações S.A., owner of the Poço Danta-Paiuí, Poço Danta and Poço Dantas Farms,
to carry out mining activities on its properties. These farms include Legal Reserves (LR) which are preserved and registered in the National
Rural Environmental Registration System (NRERS), in accordance with Law No 12.651, dated May 25, 2012.


  


Social
License Considerations


 


The Company understands and accepts
the importance of proactive community relations as an overriding principle in its day-to-day operations as well as future development
planning. The company therefore structures its community relations activities to consider the concerns of the local people and endeavors
to communicate and demonstrate its commitment in terms that can be best appreciated and understood to maintain the social license to
operate.


 


The Jequitinhonha Valley is the poorest region
in Minas Gerais which is plighted by poverty and is in the lowest quartile of the Human Development Index (HDI). The Company is the
largest investment and operation in the area by a factor of ten and the project will be transformational to the local communities.
The largest direct economic benefit is that the Company is subject to a 2% royalty on revenue which is divided between the Federal
Government, State Government and Local Government. Secondly a portion of the taxes on local procurement of goods and services is
shared with the Local Government. These incomes from the royalty and tax are a most important source of funding for local Government
and the Company is the largest direct contributor in the region. The Company will be by far the largest employer in the region with
an estimated 500 direct jobs being created with 3 to 4 times this number being indirect.


 


Farming in the area is small-scale
subsistence type as the area is semi-arid. There is minimal impact on the neighbouring farms of Grota do Cirilo properties. The Company
and contractor workforce will live in the cities of Araçuaí and Itinga and strict environmental management plans are in
place to minimize the environmental footprint of the project. An example is 90% of the process water is re-circulated and there is zero
run-off water from the site except during the wet season, when excess water from the pond will be discharged in an overflow channel.
The process uses dry stacking technology and no slimes dam will be built. Regular environmental monitoring will be conducted, and results
will be shared with the local communities.


 






    
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The Company has targeted and continues
with consultations/engagements with numerous stakeholders in support of project development of the Project and has hosted visits from
representatives of government departments and local academic institutions.


 


Rehabilitation,
Closure Planning and Post-Closure Monitoring


 


The closure plan for the Grota do Cirilo
property encompasses the following: dismantling of building and infrastructure, removal of heavy mobile and surface equipment,
restoration by reconstituting vegetal cover of the soil and the establishment of the native vegetation, grading and capping with
vegetation suppression layer and revegetation of the waste rock and overburden stockpiles, removal of suppressed vegetation along
with slope cover and surface drainage for water management, fencing of site, environmental liability assessment studies where there
may have been spillages and soil and water contamination and safe disposal, revegetation of the open pit berm areas and fencing
around the open pits.


 


In the post-closure phase, a socioenvironmental
and geotechnical monitoring program will be carried out, to support ecosystem restoration or preparation for the proposed future use.


 


The monitoring program will collect
soil and diversity of species on an annual basis, continuing for a five-year period after mine closure.


 


Second
Mine Environmental Work to Date


 


The Environmental Impact Study -
EIA and its respective Environmental Impact Report - RIMA will be submitted to the regulatory agency, Bureau of Priority Projects - SUPPRI,
as a supporting document to obtain a Preliminary License - LP and an Installation License - LI for Grota do Cirilo Project - Second Mine
Pegmatite.


 


Considering the parameters defined
by the current laws and regulations, CONAMA Resolution 09/90, the environmental licensing of mining projects is conditioned to EIA/RIMA
submission, and these studies are the main technical resources to assess project feasibility.


 


The environmental licensing process
started in October 2020 and will be formalized with the submission of the technical studies requested through the Environmental
Licensing System - SLA, request No.: 2020.10.01.003.0003780 for the production of: 1,500,000 t/year for open pit mining and 251.89 ha
for waste heaps.


 


Capital
and Operating Costs


 


Capital
Costs First Mine


 


The Production Phase 1 capital cost
(CAPEX) estimate includes the process plant, site infrastructure, mining and Owner’s costs. Pre-production, working capital, sustaining
and deferred capital costs were also included.


 


Equipment costs were obtained with
firm price quotations for six long lead mechanical equipment and with budgetary quotations for the remaining equipment packages. In-country
(Brazil) quotations were obtained for the installation unit rates and to the extent feasible for equipment supply. Brazilian fabricators
were selected for structural steel and platework supply and fabrication.


 


Material take-offs (MTOs) were generated
from the feasibility study designs with the unit rate costs applied per commodity. The CAPEX estimate has an accuracy of ±15%
and is summarized in Table 0-8.


 






    
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Table 0-8 – Capital Cost Estimate Summary
First Mine


 


	Description	 	Capital
    

    Cost 
US$ (Million)	 
	Processing plant	 	 	32.8	 
	Site infrastructure	 	 	32.2	 
	Owner’s cost	 	 	4.6	 
	Contingency	 	 	7.5	 
	Recoverable taxes	 	 	-6.0	 
	SUBTOTAL CAPITAL COST	 	 	71.1	 
	Pre-production and working capital	 	 	27.3	 
	Sustaining and deferred capital	 	 	15.2	 



 


Operating
Costs First Mine


  


The Production Phase 1 operating
cost (OPEX) estimate is based on contract mining, build-own-operate (BOO) high-voltage electrical sub-stations and non-process infrastructure
substations and contract crushing, as per the Company’s preferred commercial strategy.


 


The concentrate transport cost has
been estimated to be US$22.90M per annum or US$15.30/t of ore per the Company input based on preliminary quotations. This includes all
the transport costs from the site to the Port of Ilhéus, Brazil, port storage and handling fees and CIF shipment to the port of
Shanghai, China.


 


General and administration costs
have been estimated to be US$2.64M per annum or US$1.76/t of ore.


 


Operating cost estimates are summarized
in Table 0-9.


 


Table 0-9 – Operating
Cost Estimate Summary First Mine


 


	Description	 	OPEX
    

    US$/t	 
	Mining cost per tonne of ore mined	 	 	21.91	 
	Process cost per tonne of ROM	 	 	10.69	 
	G&A cost per tonne of ROM	 	 	1.76	 
	Shipping per tonne of ROM	 	 	15.30	 
	NPI (included in Process and G&A)	 	 	-	 
	TOTAL	 	 	49.66	 



 


The OPEX costs are inclusive of
taxes. The OPEX accuracy is ± 15%.


 






    
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Plant
CAPEX and OPEX Second Mine


 


GE21, based on the Mineral Resource,
prepared the PEA for the Second Mine.


 


The PEA is preliminary in nature
and includes inferred mineral resources that are too speculative geologically to have economic considerations applied them that would
enable them to be categorized as mineral reserves, and there is no certainty that the PEA will be realized.


 


The Production Phase 2 plant and
infrastructure CAPEX is estimated at US$38.0 million.


 


The Production Phase 2 plant and
infrastructure OPEX is as per operating costs estimated for the First Mine.


 


Mining
Capital Costs Second Mine


  


GE21, based on the Mineral Resource,
prepared the PEA for the Second Mine.


 


The PEA is preliminary in nature
and includes inferred mineral resources that are too speculative geologically to have economic considerations applied them that would
enable them to be categorized as mineral reserves, and there is no certainty that the PEA will be realized.


  


Total Production Phase 2 pre-production
capex were estimated at about US$1.62 million.


 


Table 0-10 – CAPEX Summary Second Mine


 


	Description	 	Investment (USDx1.000)	 
	Mining Equipment	 	 	 	NA (contractor fleet)	 
	Owner’s Cost	 	 	 	1,252.9	 
	Sub-total 1	 	 	 	1,252.9	 
	Contingency	30%	 	 	 	375.9	 
	TOTAL CAPEX	 	 	 	1,623.6	 



 


Mining
Operating Costs Second Mine


 


GE21, based on the Mineral Resource,
prepared the PEA for the Second Mine.


 


The PEA is preliminary in nature
and includes inferred mineral resources that are too speculative geologically to have economic considerations applied them that would
enable them to be categorized as mineral reserves, and there is no certainty that the PEA will be realized.


 


The Production Phase 2 mining operating
costs were based on the estimated operating costs for the neighbouring First Mine which is currently in a detailed engineering stage
of development and construction. Table 0-11 shows the summary OPEX costs and assumptions.


 






    
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Table 0-11: OPEX Summary Second Mine


 


	description	 	total	 
	Total Operating Cost LOM $US M	 	 	605.82	 
	Total Mined Mt	 	 	263.04	 
	Operating Cost $US/t	 	 	2.30	 



 


Economic
Analysis


 


Production
Phase 1


 


The Production Phase 1 economic
analysis was developed using the discounted cash flow method and based on the data and assumptions for capital and operating costs detailed
in this report for the First Mine project mining, processing and associated infrastructure. An exchange rate of 3.85 BRL per US$ was
used to convert particular components of the cost estimates into US$. No provision was made for the effects of inflation and the base
currency was considered on a constant 2019 US$ basis. The evaluation was undertaken on a 100% equity basis. Exploration costs are deemed
outside of the project and any additional project study costs have not been included in the analysis.


 


Production Phase 1 base case scenario
results are presented in Table 0-12.


 


Table 0-12 – Base Case Economic Analysis
Results First Mine


 


	Item	 	Unit	 	Value	 
	Pre-tax NPV @ 8%	 	US$	 	 	299,074,000	 
	After-tax NPV @ 8%	 	US$	 	 	248,507,000	 
	Pre-tax IRR	 	%	 	 	47.6	 
	After-tax IRR	 	%	 	 	43.2	 
	Pre-tax payback period	 	Years	 	 	2.9	 
	After-tax payback period	 	Years	 	 	3.1	 



 


Note:
NPV = net present value, IRR = internal rate of return.


 


The main economic assumptions/input
parameters used for the base case are shown in Table 0-13.


 


Table 0-13 – Main Macroeconomic Assumptions
First Mine


 


	Item	 	Unit	 	Value	 
	Spodumene
    price @ 6.00% Li2O (CIF China) (Note 1)	 	US$/t	 	 	733	 
	Spodumene price @ 6.00% Li2O (FOB Ilhéus Port) (Note 2)	 	US$/t	 	 	629	 
	Exchange rate (Note 3)	 	BRL/US$	 	 	3.85	 
	Discount rate	 	%	 	 	8.0	 




 


Note 1: Roskill
forecast of average nominal arms-length selling price


Note 2: China spodumene price
minus budgetary estimate shipping cost.


Note 3: An exchange
rate of 4.10 BRL/US$ was used for update of the CAPEX. OPEX was based on 3.85 BRL/US$.


 






    
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The main technical assumptions for
the base case are shown in Table 0-14.


 


Table 0-14 – Technical Assumptions (base
case) First Mine


 


	Item	 	Unit	 	Value	 
	Total Mineral Reserves (P&P)	 	t	 	 	13,784,000	 
	Annual ROM ore processed	 	t	 	 	1,496,000	 
	Annual Spodumene Concentrate Production	 	t	 	 	220,000	 
	Lithium carbonate equivalent (LCE) production (Note 1)	 	t	 	 	33,000	 
	Strip ratio	 	ratio	 	 	9.6: 1	 
	Average Li2O grade of the Mineral Reserve	 	%	 	 	1.46	 
	Spodumene recovery rate	 	%	 	 	60.4	 
	Concentrate grade	 	% Li2O	 	 	6.00	 
	Mine life	 	years	 	 	9.25	 
	Cost of spodumene concentrate ex-works	 	US$/t	 	 	238	 
	Transportation costs (CIF China)	 	US$/t	 	 	104	 
	Total cash cost (CIF China)	 	US$/t	 	 	342	 
	Processing costs per tonne ROM	 	US$/t	 	 	11.03	 
	Mining costs per waste + ore mined	 	US$/t mined	 	 	2.07	 




 


Note
1: tonnage based on direct conversion to LCE excluding conversion rate


 


In the analysis, a 10-year average
Roskill forecast of an average nominal arms-length selling price of US$733 (CIF Shanghai) for the spodumene concentrate has been assumed.


 


Figure 0-1 illustrates the after-tax
cash flow and cumulative cash flow profiles of the project under the base case scenario.


 






    
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Figure 0-1 – After-Tax Cash Flow and Cumulative
Cash Flow First Mine


 


The First Mine project has been
evaluated on pre- and after-tax basis.


 


Sudene
is a government agency tasked with simulating economic development in specific geographies of Brazil. The project will be installed in
a Sudene-covered area, where a tax incentive granted to the project indicates a 75% reduction of income tax for 10 years, after achieving
at least 20% of its production capacity. The considered Brazilian income tax rate is assumed to be 15.25%, which represents the Sudene
tax benefit applied to the Brazilian maximum corporate tax of 34% on taxable income (25% income tax plus 9% social contribution).


 


The project
is expected to benefit from RECAP (IN SRF 605/2006 – a special tax regime for fixed assets acquisition for exporting companies)
which grants PIS (Social Integration Program) and COFINS (Social Security Contribution) exemptions on federal sales taxes charged on
gross revenues. The economic analysis assumes that the project is granted this exemption.


 


The project is expected to be exempt
from all importation taxes for products for which there is no similar item produced in Brazil (Ex-Tarifário). Assembled
equipment where some but not all individual components are produced in Brazil can be considered exempt from import taxes under these
terms. The Project royalties include:


 


		·	A
                                            2.0% CFEM royalty on gross spodumene revenue, paid to the Brazilian Government. The CFEM
                                            royalty amount is split between: the Federal Government Entities (10%), State Government
                                            of Minas Gerais (15%), and Municipal Government of Araçuaí (60%), for the Federal
                                            District and Municipalities, when affected by mining activity and production does not occur
                                            in their territories (15%)






		·	Two
                                            1% NSR royalties



 


A sensitivity analysis was carried
out with the base case (including closure costs) as described above as the midpoint. An interval of ±20% versus base case values
was considered using 10% increments. Results are shown in


 


Figure 0-2 to Figure 0-3 for commodity price,
exchange rate, initial CAPEX, OPEX, discount rate, and lithium grade. A further sensitivity analysis was conducted on a case excluding
closure costs.


 






    
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The Project’s NPV (and IRR)
are not significantly vulnerable to changes in the pre-production initial capital expenditure nor discount rate considered, as shown
by the smoother curves associated with these variables. Note that the Project IRR is independent of the discount rate considered.


 


The Project’s NPV (and IRR)
are most sensitive to variation in CIF spodumene price, lithium grade and BRL per US$ exchange rate as shown by the steeper curves associated
with these variables. The Project’s NPV is significantly positive at the lower limit of the price interval and the examined exchange
rate interval. The NPV is also significantly positive at the upper limit of the operating expenses interval.


 


 


 


Figure 0-2 – Pre-tax NPV (US$ million)
First Mine


 





 


Figure 0-3 – After-tax NPV (US$ million)
First Mine


 


Production
Phase 2


 


GE21, based on the Mineral Resource,
prepared the PEA for the Second Mine.


 






    
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The PEA is preliminary in nature
and includes inferred mineral resources that are too speculative geologically to have economic considerations applied them that would
enable them to be categorized as mineral reserves, and there is no certainty that the PEA will be realized.


 


It is noted that the Company has
not yet made a production decision in respect of the Second Mine. The Company expects that it will assess the results of a pre-feasibility
study and a definitive feasibility study before making a production decision in respect of the Second Mine. All statements regarding
mine development or production in respect of the Second Mine in this AIF are expressly qualified by this statement.


 


The Production Phase 2 base case
scenario results are presented in Table 0-15.


 


Table 0-15 – Base Case Economic Analysis
Results Second Mine


 


	Item	 	Unit	 	Value	 
	Pre-tax NPV @ 8%	 	US$ M	 	 	449	 
	After-tax IRR	 	%	 	 	208	 
	After-tax payback period	 	Years	 	 	0.4	 



 


The main economic assumptions/input
parameters used for the Production Phase 2 base case are shown in Table 0-16.


 


Table 0-16 – Main Macroeconomic Assumptions
Second Mine


 


	Item	 	Unit	 	Value	 
	Spodumene price @ 6.00% Li2O (CIF China) (Note 1)	 	US$/t	 	 	750	 
	Spodumene price @ 6.00% Li2O (FOB Ilhéus Port) (Note 2)	 	US$/t	 	 	646	 
	Exchange rate	 	BRL/US$	 	 	5.20	 
	Discount rate	 	%	 	 	8.0	 



 


Note 1: Roskill forecast of
average nominal arms-length selling price


Note 2: China
spodumene price minus budgetary estimate shipping cost.


 






    
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The main technical assumptions for
the Production Phase 2 base case are shown in Table 0-17.


 


Table 0-17 – Technical Assumptions (base
case) Second Mine


 


	Item	 	Unit	 	Value	 
	Total Quantity Milled (LOM)	 	Mt	 	 	21.3	 
	Annual ROM feed processed	 	Mt	 	 	1.68	 
	Annual Spodumene Concentrate Production	 	t	 	 	220,000	 
	Lithium carbonate equivalent (LCE) production (Note 1)	 	t	 	 	33,000	 
	Strip ratio	 	ratio	 	 	11.6:1	 
	Average Li2O grade of the Mineral Resource	 	%	 	 	1.44	 
	Spodumene recovery rate	 	%	 	 	66	 
	Concentrate grade	 	% Li2O	 	 	6.00	 
	Mine life	 	years	 	 	12.7	 
	Cost of spodumene concentrate ex-works	 	US$/t	 	 	256	 
	Transportation costs (CIF China)	 	US$/t	 	 	104	 
	Total cash cost (CIF China)	 	US$/t	 	 	360	 
	Processing costs per tonne ROM	 	US$/t	 	 	8.6	 
	Mining costs per waste + mineralized material mined	 	US$/t mined	 	 	2.3	 



 


Note
1: Tonnage based on direct conversion to LCE excluding conversion rate


Note 2: Mineral Resources
that are not Mineral Reserves do not have demonstrated economic viability.


 


In the analysis, a 10-year average
Roskill forecast of an average nominal arms-length selling price of US$750.00 (CIF Shanghai) for the spodumene concentrate has been assumed.


 


The Second Mine project is subject
to the same royalties as Production Phase 1.


 


Table 0-18 analyses the impact on NPV when spodumene
pricing and recovery percentages fluctuate.


 


The Project NPV is most sensitive to movements in
the price of spodumene, metallurgical recovery rate of the lithium at the Second Plant. Foreign exchange fluctuations impact operating
cash costs (mostly derived from Brazilian Real) and development capital (approximately 70% derived from Brazilian Real prices).


 


Table 0-18: Sensitivity Analysis on NPV with
Different Recovery and Pricing Second Mine


 


	 	 	 	After-Tax	 
	Sensitivity Matrix	 	 	NPV (US$ M)	 
	Spodumene Price (CIF China)	 	 	Recovery (%)	 
	(US$/t)	 	 	60.4%	 	 	66.0%	 
	$ 650	 	 	$	260
M	 	 	$	320
M	 
	700	 	 	 	319	 	 	 	384	 
	750	 	 	 	378	 	 	 	449	 
	800	 	 	 	437	 	 	 	513	 
	850	 	 	 	496	 	 	 	578	 



 


 


 






    
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Interpretation
and Conclusions


 


Mineral Resources are reported for four pegmatite
bodies, Xuxa, Barreiro, Murial and Lavra do Meio. Mineral Reserves are reported for the First Mine.


 


A PEA which is the subject of the Updated Feasibility
Study Report, has been conducted on the Second Mine.


 


The extraction plan in the PEA assumes development
of one open pit and construction of a process plant to process 1,680,000 dry tonnes of feed per year for a mine life of 12 years and
eight months.


 


Under the assumptions presented in the PEA, the
mine and process plans are feasible, and the project shows positive economics.


 


It is noted that the Company has not yet made
a production decision in respect of the Second Mine. The Company expects that it will assess the results of a pre-feasibility study and
a definitive feasibility study before making a production decision in respect of the Second Mine. All statements regarding mine development
or production in respect of the Second Mine in this AIF are expressly qualified by this statement.


 


Risk Assessment


 


The PEA is preliminary in nature and includes
inferred mineral resources that are too speculative geologically to have economic considerations applied them that would enable them
to be categorized as mineral reserves, and there is no certainty that the PEA will be realized.


 


Risk assessment sessions were conducted individually
and collectively by all parties. These are summarized in the sections below.


 


Most aspects of the Project are well defined.
The key residual risks are summarized below. One of the most significant risks identified for the Project are related to lithium markets.


 


The following risks are highlighted for the project:


 


Lithium market
sale price and demand (commercial trends)


Fluctuations
in the exchange rate and inflation


Delay in obtaining
financing: impact to NTP


Delay in obtaining
the license for the Second Mine


More fines generated
from mining and crushing: potential negative impact on recovery


Ongoing geotechnical
monitoring system can change some final pit slope parameters: potential increase in strip ratio.


 


Further details on the risk assessment are provided
in Section 25.2 of the Updated Feasibility Study Report.


 


 Opportunities




 


The PEA is preliminary in nature and includes
inferred mineral resources that are too speculative geologically to have economic considerations applied them that would enable them
to be categorized as mineral reserves, and there is no certainty that the PEA will be realized.


 


The following opportunities are identified for
the Second Mine:


 


		·	Recovery
                                            of Li2O from hypofines with a flotation circuit
		·	Potential
                                            upgrading of some or all of the Inferred Mineral Resources to higher-confidence categories
                                            and eventually conversion to Mineral Reserves.



		·	Recovery
                                            of Li2O from petalite



		·	Potential
                                            for future underground mining of the First Mine and Second Mine pegmatites if a trade-off
                                            study supports the concept



		·	Exchange
                                            rate may work in the Project’s favour.



 






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 Recommendations




 


The following summarizes the recommendations
from the First Mine feasibility study and Second Mine PEA in the Updated Feasibility Study Report. A phased work program is planned,
which consists of continued exploration over the known pegmatites in the Grota do Cirilo area, together with the implementation of the
recommendations of First Mine feasibility study and the Second Mine PEA recommendations.


 


It is important to note that the recommendations
for the different projects can be conducted concurrently.


 


Geology and
Resources


 


The FS Qualified Persons recommend that additional
exploration drilling be conducted across the property to update existing resources and potentially discover new resources. The overall
cost for the drill program is estimated at US$6.1M and consists of a 36,000 m drill program to test the Xuxa, Barreiro, Nezinho
do Chicao, Murial and Bee areas.


 


First Mine
Recommendations


 


The recommendations for the First Mine will be
implemented in the project execution phase, prior to commencement of operations, and are estimated to be a total of US$1,275,000, consisting
of:


 


		·	Process
                                            plant (testing for wet magnetic separation equipment, a middlings recrushing recovery trade-off
                                            study): US$60,000



		·	Mine
                                            design (finalize topographic survey; complete density, moisture and blasted swell effect
                                            analyses for ore and waste; implement a reconciliation system and grade control program;
                                            evaluate underground mining potential for below the open pit levels of the mine, conduct
                                            a reserve study for underground mining; implement geotechnical monitoring system): US$345,000



		·	Geotechnical
                                            (supplementary geotechnical and hydrogeological investigations of planned infrastructure
                                            sites including at waste pile areas; supplementary geochemical tests (ARD); large-scale waste
                                            rock and tailings co-disposal stockpile field test): US$870,000. (Note: further details of
                                            the proposed geotechnical, hydrogeological and geochemical program are provided in Section
                                            26.3 of the Updated Feasibility Study Report)



 


Second Mine
Project Recommendations


 


The PEA is preliminary in nature and includes
inferred mineral resources that are too speculative geologically to have economic considerations applied them that would enable them
to be categorized as mineral reserves, and there is no certainty that the PEA will be realized.


 


Based on the results of the Second Mine PEA,
the FS Qualified Persons recommend that the Company proceed to completing a pre-feasibility study (PFS), and thereafter (based on the
results of the PFS) conduct a definitive feasibility study (FS) in respect of the Second Mine.


 


The 24 m wide accesses significantly affect the
overall slope angle of the final pit. If the same access width is maintained in the details of the study, it is recommended to estimate
the impact of the ramps in the overall slope angle, so that this value is used in the optimization process. Thus the optimization result
will be more adherent with the designed operational pit.


 






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Due to the depth of the pit it is necessary to
remove a large amount of waste to maintain the 24 m access roads in the final pit. This impact is even more relevant in the annual pits
in which it is sought to minimize the stripping ratio in the first years for a better cash flow. It is recommended to evaluate the feasibility
of working only with road trucks, thus maintaining all access roads 10 or 12 m wide.


 


If it is not feasible to operate only with road
trucks (due to large amounts of mineralized material/waste), it is recommended to evaluate the use of off-road trucks only in the pre
stripping operation. The pre-stripping mining fronts are usually separated from the mining fronts, so that temporary 24-metre accesses
would be created only in these regions. In addition, it is possible that the details of the mining plan indicate the option of a new
pre stripping around year 9.


 


In detailing the sequential mining plan it is
important to assess the amount of mineralization released by the end of each period because it is often necessary to make a large pushback
of waste to access the mineralization. Therefore. it is necessary to plan so that there is no shortage of mineralized fronts released
during the period in question.


 


It is also recommended to implement the hydrological
and hydrogeological studies for the next phases of the Project.


 


Competitive Conditions and Anticipated
Trends


 


Lithium Industry Trends and Demand Outlook


 


Lithium’s application within end-use sectors
has traditionally been restricted to technical markets (ceramics, greases etc), where demand growth is typically aligned to GDP. Since
2010, however, lithium’s demand growth narrative has dramatically shifted toward rechargeable lithium-ion batteries. This is largely
owing to structural changes in the automotive sector as manufacturers transition toward EVs. Unlike technical sectors, demand from batteries
will be influenced by a combination of macroeconomics, EV policy targets, emissions mandates, and alignment with international treaties
on climate change. Lithium-based batteries are expected to be key in the decarbonization of ground transport, via light and commercial
vehicles.


 


 


 


World forecast lithium demand by end-use
application, 2019-2031 (kt LCE)


 


Source: Roskill, August 2021


 


Strong battery demand growth allows for an increasing
diversification of battery cathode chemistries requiring different lithium compounds. Use of, and substitution between, compounds is
not binary, but rather dictated by the cathode composition, primarily the nickel content. Both carbonate and hydroxide demand are expected
to be strong, though Roskill expects demand for hydroxide to increase at a faster rate than carbonate over the outlook period (17% vs
26% CAGR between 2021-2031, respectively) owing to an increasing uptake of high nickel chemistries forecast post-2025.


 






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Forecast battery-grade carbonate vs
hydroxide demand (kt LCE), 2019-2031f


 


Source: Roskill, August 2021


 


Supply Outlook


 


Historically, the majority of refined supply
has originated from brine operations. However, the previous decade has seen the rise of mineral conversion from hard rock mines which
have accounted for over half of global refined supply since the mid-2010s. This growth trend is forecast to continue throughout the 2020s
largely owing to shorter construction timelines for both hard rock mines (2-3yrs in Australia) and mineral conversion capacity growth
(1.5-2yrs within China) compared to that of greenfield brine projects (+3yrs in South America). This will, in turn, require significantly
larger quantities of spodumene concentrate feedstock to match the growth in mineral conversion capacity. Supply from additional projects
outside of Roskill’s base-case are considered most likely to come online in the latter half of the decade. These could provide
an additional 253kt LCE supply by 2031, after considering construction and ramp-up delays.


 


 


 


Forecast refined lithium compound
output by source type, 2019-2031 (kt LCE),


 


Source:
Roskill, August 2021


 


Notes:
1 – Additional projects adjusted for development probability


 






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Geographically
refined lithium production is highly concentrated within China and South America. Major Chinese producers have invested heavily in expanding
capacity since 2015. This has primarily been in the form of mineral conversion plants utilizing spodumene concentrate feedstock from
Australia. China’s lower cost of capital and process technology competencies are expected to continue to incentivize future investment
in additional capacity domestically. By 2031, Roskill forecast 54% of the growth in global supply to come from Chinese operations, with
Australian supply accounting for 18%.


 


 


 


Forecast refined lithium compound
output by country, 2019-2031 (kt LCE),


 


Source:
Roskill, August 2021


 


Notes:
1 – CAGR expressed as 2021-2031 for Australia and additional new projects (adjusted for development probability)


 


Price
Outlook


 


In 2020,
the COVID-19 pandemic brought significant uncertainty for global economic activity. With the disruption came large scale fiscal stimulus
by the European Commission and EU member states directed to the automotive industry with the intention to continue the transition to
a “green economy”. This support propelled demand for EVs across Europe and resulted in Y-o-Y demand growth for refined lithium
products. Policy and emissions reduction frameworks are expected, such as China’s pledge to reach carbon neutrality by 2060 with
emissions peaking by the end of 2030, alongside a post-COVID-19 global economic recovery to continue to drive automotive electrification
into the 2030s.


 


 


 






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Forecast lithium hydroxide and spodumene
concentrate prices, US$/t, 2019-2031


 


Source:
Roskill, August 2021


 


Notes:
1 – Real prices adjusted to constant 2021 US dollars using United States GDP deflator data from the Federal Reserve and the International


 


Monetary
Fund's World Economic Outlook Database


 


2
 – Contract Asia battery-grade hydroxide expressed on CIF Asia terms; Arm’s length spodumene concentrate expressed on CIF
China terms


 


Over the
2021-2031 outlook horizon, Roskill forecasts real 2021 US dollar average prices for spodumene concentrate and lithium hydroxide of US$712/t
and US$14,834/t, respectively. Spodumene feedstock for mineral conversion is forecast to be sufficient until 2028 should all new projects
globally come online, though this is not guaranteed. Battery-grade compound supply shortfalls are expected to reach 1.7Mt LCE by 2031,
with quality certification for new supply exacerbating entry timelines into top tier cell maker supply chains. Forecast supply shortages,
marginal costs of production of US$5,000-11,000/t LCE, and incentive prices (where approximately 40% of identified new capacity requires
 >US$10,000/t) through to 2031, are expected to drive the forecast price trend. Demand-side dynamics will likely see increasingly strict
requirements on refined product quality, with tier one cell makers driving this trend. A finite number of refined producers currently
certified will be able to fulfil these needs moving forward. Future prices, however, will not be solely dependent on supply and demand
balances. External market factors also pose significant risks to the forecast price trends.


 


 


Long-term risks to price outlook


 


Source:
Roskill, August 2021


 


Emerging Market Disclosure


 


The Project is located in Brazil, an emerging
market, and the Company’s interest in the Project is held indirectly through Sigma Brazil, a Brazilian corporation. Operating in
an emerging market exposes the Company to risks and uncertainties that do not exist, or are significantly less likely to occur, in jurisdictions
such as the United States or Canada. In order to manage and mitigate these risks, the Company has designed a system of corporate governance
for itself and its subsidiaries that include internal controls over financial reporting and disclosure controls. These systems are coordinated
by the Company's senior management and overseen by the Board in order to monitor the Company’s operating subsidiaries. See “Risk
Factors” below.


 


Board and Management Experience and Oversight


 


Key members of the Company’s management
team have experience running business operations in emerging markets, including Brazil. Calvyn Gardner, Co-Chair and the Co-Chief Executive
Officer of the Company, is a British national and Brazilian resident and has held senior positions in large, multinational corporations
operating throughout South America. Ana Cabral-Gardner, Co-Chair and the Co-Chief Executive Officer of the Company, is a Brazilian national
and has substantial business operating experience in Brazil. Vicente Lobo, Co-Chair of the Company’s Technical Committee, is a
Brazilian national and has held executive roles at major Brazilian natural resources companies and has served as the Secretary of Geology,
Mining and Mineral Transformation at Brazil’s Ministry of Mines and Energy. Maria José Salum, Chief Sustainability Officer,
is a Brazilian national and a prominent environmental & social responsibility professional who has held a number of roles such as
Director of Sustainable Development in Mining at the Ministry of Mines and Energy and Senior Representative for the Ministry at the National
Council for the Environment (CONAMA).


 






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The Board, through its corporate governance practices,
regularly receives management and technical updates, risk assessments and progress reports in connection with the Company’s operations
in Brazil. Through these updates, assessments and reports, the Board gains familiarity with the operations, laws and risks associated
with operations in Brazil. Several members of the Board (a) are familiar with the laws, business culture and standard practices of Brazil;
(b) have Portuguese language proficiency; (c) are experienced in working in Brazil and in dealing with Brazilian government authorities;
and (d) have experience and knowledge of the local banking systems and treasury requirements of Brazil.


 


Communication


 


The
Company maintains open communication with its operations in Brazil through management team members who are fluent in Portuguese and are
proficient in English, removing language barriers between management and the Board. The primary language used in Board meetings is English
and material documents relating to the Company's operations that are provided to the Board are in English. Material documents relating
to the Company's material operations in Brazil are either in English or, where in Portuguese, are translated into or summarized in English.
With the exception of one board member, all others are fluent in Portuguese.


 


Controls Relating to Corporate Structure Risk


 


The Company has implemented a system of corporate
governance, internal controls over financial reporting and disclosure controls and procedures that apply to the Company and its subsidiaries.
These systems are overseen by the Board and implemented by the Company’s senior management. The relevant features of these systems
include:


 


		·	The
                                            Company’s Control Over Subsidiaries. The Company’s corporate structure has
                                            been designed to ensure that the Company has direct oversight over the operations of its
                                            subsidiaries, including that senior management of its subsidiaries includes individuals that
                                            are senior management of the Company (and members of the Board), and such individuals are
                                            also the directors of the subsidiaries. In addition, such individuals review and approve
                                            programs, budgets and other key decisions. The Company reviews its subsidiaries’ financial
                                            reporting as part of preparing its consolidated financial reporting. The Company has adopted
                                            a simple structure for its Brazilian business operations, with the Company wholly-owning
                                            Sigma Holdings, and Sigma Holdings in turn wholly-owning Sigma Brazil.



 


		·	Signing
                                            Officers for Foreign Subsidiary Bank Accounts. The establishment of any new banking relationships
                                            and/or new bank accounts requires approval from the Company. Monetary authorization limits
                                            are established by the Company and put in place with the respective banking institutions.
                                            Signatories and authorization limits for bank accounts are reviewed and revised as necessary,
                                            with changes being communicated to the appropriate banking institutions. Each payment requires
                                            approvals from two authorized signatories.



 


		·	Strategic
                                            Direction. The Board is responsible for the overall stewardship of the Company and, as
                                            such, supervises the management of the business and affairs of the Company. More specifically,
                                            the Board is responsible for reviewing the strategic business plans and corporate objectives,
                                            and approving acquisitions, dispositions, investments, capital expenditures and other transactions
                                            and matters that are material to the Company, including those of its subsidiaries.



 


		·	Internal
                                            Control Over Financial Reporting. The Company prepares its consolidated financial statements,
                                            on a quarterly and annual basis, using IFRS. The Company implements internal controls over
                                            the preparation of its financial statements and other financial disclosures (including its
                                            MD&A) to provide reasonable assurance that its financial reporting is reliable, that
                                            the quarterly and annual financial statements are being prepared in accordance with IFRS
                                            and that other financial disclosures (including its MD&A) are being prepared in accordance
                                            with relevant securities legislation. These systems of internal control over financial reporting
                                            require that any payments are reviewed and approved by two board members, being at least
                                            one co-CEO, and are designed to ensure that, among other things, the Company has access to
                                            material information about its subsidiaries.



 






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		·	Disclosure
                                            Controls and Procedures. The Company has a disclosure policy that establishes the protocol
                                            for the preparation, review and dissemination of information about the Company. This policy
                                            provides for multiple points of contact in the review of important disclosure matters, which
                                            includes input from key members of management located in Brazil.



 


		·	CEO
                                            and CFO Certifications. In order for the Company’s Co-Chief Executive Officers
                                            and Chief Financial Officer to be in a position to attest to the matters addressed in the
                                            quarterly and annual certifications required by Canadian securities laws and for the Company’s
                                            management to be in a position to furnish the report on the Company’s internal control
                                            over financial reporting required by the U.S. Sarbanes-Oxley Act (as defined below), the
                                            Company has developed internal procedures and responsibilities throughout the organization
                                            for its regular periodic and special situation reporting in order to provide assurances that
                                            information that may constitute material information will reach the appropriate individuals
                                            who review public documents, and that statements relating to the Company and its subsidiaries
                                            containing material information is prepared with input from the responsible officers and
                                            employees and is available for review by the Co-Chief Executive Officers and Chief Financial
                                            Officer in a timely manner.



 


Intercompany Fund Transfers


 


Differences
in banking systems and controls between Canada and Brazil are addressed by having stringent controls over cash kept in the jurisdiction,
especially with respect to access to cash, cash disbursements, appropriate authorization levels, performing and reviewing bank reconciliations
on at least a monthly basis and the segregation of duties. In executing certain normal course monetary transactions, funds are transferred
between the Company and its subsidiaries by way of wire transfer. These transactions would typically include the payment of applicable
fees for services; reimbursement of costs incurred by the Company on behalf of the subsidiaries; advances in the form of intercompany
loans or equity contributions to subsidiaries; repayment of interest and/or principal on intercompany loans; and the return of capital
or payment of dividends from subsidiaries. Capital structure and funding arrangements are established between the Company and the subsidiaries,
and intercompany loan agreements are established with defined terms and conditions. Where regulatory conditions exist in the form of
exchange controls, all necessary approvals are obtained in advance of the proposed transactions.


 


Managing Cultural Differences


 


Differences in cultures and practices between
Canada and Brazil are addressed by employing competent staff in Canada and Brazil who are familiar with the local laws, business culture
and standard practices, have local language proficiency, are experienced in working in that jurisdiction and in dealing with the relevant
government authorities and have experience and knowledge of the local banking systems and treasury requirements.


 


Records Management of the Company’s
Subsidiaries


 


The original minute books and corporate records
of each of the Company’s subsidiaries are kept at the Sigma Brazil office. Company management and the Board have complete access
to these records.


 


RISK FACTORS


 


Risk Factors


 


The Company is subject to numerous risk factors
at any given time (many of which are beyond its control) which could materially adversely impact upon its business, financial condition,
results of operations, cash flows, ability to obtain financing and prospects and, as a result, the trading price of the Common Shares.
The following are risk factors that the Company’s management believes are most important. The below described risks are not an
exhaustive description of all risks. See also “Cautionary Note Regarding Forward Looking Information” above.


 







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Risks Related to Resource Development


 


The Company may not develop the Project into
a commercial mining operation.


 


The Company’s business strategy depends
in large part on developing the Project into a commercially viable mining operation. Whether a mineral deposit will be commercially viable
depends on numerous factors, including: (i) the particular attributes of the deposit, such as size, grade and proximity to infrastructure;
(ii) commodity prices, which are highly volatile; and (iii) government regulations, including regulations relating to prices, taxes,
royalties, land tenure, land use, importing and exporting of minerals, environmental protection and capital and operating cost requirements.
The development of the Project is subject to the Company securing the necessary funding and other resources and is also subject to numerous
development and operational risks. Accordingly, there can be no assurance that the Company will ever develop the Project into a commercial
mining operation.


 


There can be no assurance that market prices
for lithium will remain at current levels or that such prices will improve.


 


Lithium is not a traded commodity like base and
precious metals. Sales agreements are negotiated on an individual and private basis with end-users or intermediaries. In addition, there
are a limited number of producers of lithium compounds, and it is possible that these existing producers will try to prevent newcomers
from entering the chain of supply by increasing their production capacity and lowering sales prices. Other factors, such as supply and
demand of lithium-based end-products (such as lithium hydroxide), pricing characteristics of alternative sources of energy, industrial
disruption and actual lithium market sale prices, could have an adverse impact on the market price of lithium and as such render the
Project uneconomic. There can be no assurance that such prices will remain at current levels or that such prices will improve.


 


The market for EVs and other large format
batteries currently has limited market share and no assurances can be given for the rate at which this market will develop, if at all,
which could affect the success of the Company and its ability to develop lithium operations.


 


The success of the Company and its ability to
develop lithium operations is largely dependent on the adoption of lithium-ion batteries for EV and other large format batteries. The
market for EV and other large format batteries currently has limited market share and no assurance can be given that it will develop
further (or at what rate this market will develop, if at all). To the extent that such markets do not develop in the manner or according
to the timeline contemplated by the Company, the long-term growth in the market for lithium products will be adversely affected, which
would inhibit the potential for development of the Project and its potential commercial viability.


 


Changes in technology or other developments
could result in preferences for substitute products.


 


Lithium and its derivatives are preferred raw
materials for certain industrial applications, such as rechargeable batteries and liquid crystal displays (LCDs). Many materials and
technologies are being researched and developed with the goal of making batteries lighter, more efficient, faster charging and less expensive.
Some of these technologies could be successful and could adversely affect demand for lithium batteries in personal electronics, electric
and hybrid vehicles and other applications. The Company cannot predict which new technologies may ultimately prove to be commercially
viable and on what time horizon. In addition, alternatives to such products may become more economically attractive as global commodity
prices shift. Any of these events could adversely affect demand for and market prices of lithium, thereby resulting in a material adverse
effect on the economic feasibility of extracting any mineralization the Company discovers and reducing or eliminating any reserves it
identifies.


 


New production of lithium hydroxide or lithium
carbonate from current or new competitors in the lithium markets could adversely affect prices.


 


In recent years, new and existing competitors
have increased the supply of lithium hydroxide and lithium carbonate, which has affected its price. Further production increases could
negatively affect prices. There is limited information on the status of new lithium hydroxide production capacity expansion projects
being developed by current and potential competitors and, as such, the Company cannot make accurate projections regarding the capacities
of possible new entrants into the market and the dates on which they could become operational. If these potential projects are completed
in the short term, they could adversely affect market lithium prices, thereby resulting in a material adverse effect on the economic
feasibility of extracting any mineralization the Company discovers and reducing or eliminating any reserves it identifies.


 






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The Project is at development stage and the
Company’s ability to succeed in progressing through development to commercial operations will depend on a number of factors, some
of which may be outside its control.


 


The Project is at development stage and will
require a substantial increase in skilled personnel and operational support as the Project transitions to a more advanced development
and then operating stage. The Company’s ability to succeed in progressing through development to commercial operations will depend
on a number of factors, including management’s ability to manage this transition, the availability of working capital, and the
ability to recruit and train additional qualified personnel (and, where appropriate, to engage third party contractors with qualified
personnel).


 


The Company’s financial condition, operations
and results of any future operations are subject to political, economic, social, regulatory and geographic risks of doing business in
Brazil.


 


Investments in emerging markets like Brazil generally
pose a greater degree of risk than investments in more mature market economies because the economies in the developing world are more
susceptible to destabilization resulting from domestic and international developments and exposes the Company to heightened risks related
to prevailing and changing political and socioeconomic conditions. Changes in mining, investment or other applicable policies or shifts
in political attitude in Brazil may adversely affect the Company’s operations or profitability and may affect the Company’s
ability to fund its ongoing expenditures. Regardless of the economic viability of the Company’s properties, such political changes,
which are beyond the Company’s control, could have a substantive impact and prevent or restrict (or adversely impact the financial
results of) mining of some or all of any deposits on the Project.


 


The Brazilian economy has been characterized
by frequent, and occasionally material, intervention by the Brazilian federal government, which has often modified monetary, credit and
other policies intending to influence Brazil’s economy. The Brazilian government’s actions to control inflation and effect
other policy changes have involved wage and price controls, changes in existing, or the implementation of new, taxes and fluctuations
of base interest rates. Actions taken by the Brazilian federal government concerning the economy may have important effects on Brazilian
companies or companies with Brazilian assets and on market conditions and the competitiveness of Brazilian products abroad. In addition,
actions taken by the Brazilian state and local governments with respect to labor and other laws affecting operations may have an effect
on the Company.


 


The Company’s financial condition and results
of any future operations may also be materially adversely affected by any of the following, and the Brazilian federal government’s
actions, or failure to act, in response to them:


 


		·	currency
                                            depreciations and other exchange rate movements;



		·	monetary
                                            policies



		·	inflation
                                            rate fluctuations



		·	economic,
                                            political and social instability



		·	environmental
                                            regulation



		·	energy
                                            shortages or changes in energy prices



		·	interest
                                            rates



		·	disasters
                                            at third party mineral projects



		·	corruption
                                            or political scandal



		·	exchange
                                            rate controls and restrictions on remittances abroad



		·	liquidity
                                            of the domestic capital and lending markets



		·	tax
                                            policy, including international tax treaties



		·	other
                                            political, diplomatic, social and economic policies or developments in or affecting Brazil



 


Uncertainty over whether the Brazilian federal
government will implement changes in policy or regulation affecting these or other factors in the future may contribute to economic uncertainty
in Brazil and to heightened volatility in the market value of securities issued by Brazilian companies or companies with Brazilian assets.


 


The Brazilian government has frequently implemented
changes to tax laws, tax treaties and other regulations, including modifications to tax rates. Any such changes, as well as changes in
the interpretation of such tax laws and regulations, may result in increases to the Company’s overall tax burden, which would negatively
affect its profitability.


 






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Political instability or changes in government
policy (which may be arbitrary) may result in changes to laws affecting the ownership of assets, mining activities, taxation, rates of
exchange, environmental regulations and labour relations. This may affect both the Company’s ability to undertake exploration and
development activities in respect of present and future properties in the manner currently contemplated, as well as its ability to continue
to explore, develop and operate those properties in which it has an interest or in respect of which it has obtained exploration and development
rights to date. The possibility that a future government may adopt substantially different policies cannot be ruled out.


 


Brazil’s long-term foreign and local currency
debt is rated sub-investment grade. Brazil’s ratings or outlooks may be downgraded further or placed on watch by the various rating
agencies in the future. Downgrades of Brazil’s sovereign credit ratings could limit access to funding and/or raise the cost of funding
for the Company. Downgrades of Brazil’s sovereign credit ratings could also heighten investors’ perception of the risk of
having operations in Brazil.


 


These and other future developments in the Brazilian
economy and governmental policies may materially adversely affect the Company.


 


Violations of anti-corruption, anti-bribery,
anti-money laundering and economic sanctions laws and regulations could materially adversely affect the Company’s business, reputation,
results of any future operations and financial condition.


 


Brazilian markets have historically experienced
heightened volatility due to the uncertainties generated by corruption and bribery allegations and investigations of certain senior politicians,
including congressmen and officers and directors of some of the major state-owned and private companies in Brazil. In addition, certain
media posts and reports of corruption, or allegations of corruption, in Brazil may have an adverse effect on the public perception and
reputation of Brazilian companies and may adversely affect the trading price of the Common Shares. The Company’s value and share
price could also be adversely affected by illegal activities by others, corruption or by claims, even if groundless, implicating the Company
in illegal activities.


 


The Company is subject to anti-corruption, anti-bribery
and anti-money laundering laws and regulations in various jurisdictions, including Canada, U.S. and Brazil. In addition, it is subject
to economic sanctions regulations that restrict dealings with certain sanctioned countries, individuals and entities. There can be no
assurances that the internal policies of the Company will be sufficient to prevent or detect all inappropriate practices, fraud or violations
of such laws, regulations and requirements by its employees, directors, officers, partners, agents and service providers or that any such
persons will not take actions in violation of its policies and procedures. Any violations of anti-bribery and anti-corruption laws or
sanctions regulations could have a material adverse effect on the Company’s business, reputation, results of any future operations
and financial condition.


 


The Company has not purchased any “political
risk” insurance coverage and currently has no plans to do so.


 





The Company is subject to regulatory frameworks
applicable to the Brazilian mining industry which could be subject to further change, as well as government approval and permitting requirements,
which may result in limitations on the Company’s business and activities.


 


Government approvals and permits are required
in connection with the Company’s activities. Any instances where such approvals are required and have not been obtained, the Company
may be restricted or prohibited from proceeding with planned exploration, development or operational activities. Failure to comply with
applicable laws, regulations and permitting requirements may result in enforcement actions thereunder, including orders issued by regulatory
or judicial authorities causing development or operations to cease or be curtailed, and may include corrective measures requiring capital
expenditures, installation of additional equipment, or other remedial actions. Parties engaged in mining operations may be required to
compensate those suffering loss or damage by reason of the mining activities and may be liable for civil or criminal fines or penalties
imposed for violations of applicable laws or regulations. Amendments to current laws, regulations and permitting requirements, or a more
stringent application of existing laws, could have a material adverse impact on the Company and cause increases in capital expenditures
or production costs, reductions in the levels of production at producing properties or require abandonment or delays in the development
of the Project.


 


In Brazil, the ANM regulates the conduct of exploration,
development and mining operations. The ANM requires: (i) certain fee payments for exploration authorizations (known as the Annual
Fee per Hectare), (ii) certain royalty payments to be made to the federal government for the mining concessions (known as Financial
Compensation for the Exploitation of Mineral Resources - “CFEM”) and (ii) royalty payments to be made to the landowner
if the surface rights are not held by the holder of the mineral rights. There is also a monthly inspection fee related to the transfer
and commercialization of certain minerals in some Brazilian states. Royalties, taxes and fees related to the exploration authorizations
and mining concessions may change or increase substantially in the future.


 






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In Brazil, failure to demonstrate the existence
of technical and economically viable mineral deposits covered by an exploration authorization for a period of at least one year may lead
to the authorization being required to be returned to the federal government. The federal government may then grant the exploration authorization
to other parties that may conduct other mineral prospecting activities at said area. In addition, mining concessions and exploration authorizations
may not be granted due to changes in laws and regulations governing mineral rights. Accordingly, retrocession requirements, loss of mineral
rights, or the inability to renew concessions, authorizations, permits and licenses may materially adversely affect the Company.


 


Tailings dam failures involving other mining companies
in Brazil, and the resultant loss of life and damage, have resulted in (and could in the future result in further) increased requirements,
delays in licensing and other material consequences to all mining companies, even if the circumstances of the Project or the Company’s
development and operational methodologies are significantly different then such other companies and projects.


 


The regulatory framework applicable to the Brazilian
mining industry could be subject to further change, which may result in limitations on the Company’s business and activities, including
in connection with some existing mineral rights, and an increase in expenses, particularly mining royalties, taxes and fees.


 


The Company’s operations are also subject
to Brazilian regulations pertaining to the use and development of mineral properties and the acquisition or use of rural properties by
foreign investors or Brazilian companies under foreign control, and various other Brazilian regulatory frameworks.


 


The Company’s operations are subject
to numerous environmental laws and regulations and expose the Company to environmental compliance risks, which may result in significant
costs and have the potential to reduce the profitability of operations.


 


All phases of operations are subject to numerous
environmental laws and regulations in Brazil on the federal, state and municipal levels, including laws and regulations relating to specially
protected areas, air emissions, wastewater discharge and the use, manufacture, handling, transportation, storage, disposal, remediation
of waste and hazardous substances. Environmental hazards may exist which are unknown to the Company at present which may have been caused
by previous owners or operators of the Project. In the event of an accident or exposure to hazardous materials, environmental damages
may occur and trigger the obligation to remediate the environmental conditions, which may result in significant costs. The victim of such
damages or whoever the law so authorizes (such as public attorneys’ office, foundations, state agencies, state-owned companies and
associations engaged in environmental protection) is not compelled to sue all polluting agents in the same proceeding, but rather the
aggrieved party may choose to sue only one of the polluting agents to redress damages.


 


Environmental liability may be litigated in
civil, administrative and criminal courts, with the application of administrative, civil and criminal sanctions, in addition to the
obligation to redress the damages caused. The lack of a conviction or a finding of liability in one proceeding does not necessarily
preclude the finding of liability in other proceedings. Accordingly, in respect of environmental compliance matters, there could be
unexpected interruptions to operations, fines, or penalties as well as third-party claims for property damage or personal injury or
remedial or other costs, which may have a material adverse effect on the Company’s operations. Municipal, state and federal
governments may revise and impose stricter environmental regulations in the future. There can be no assurance that environmental
regulation will not adversely affect development or operations, with increased fines and penalties for non-compliance, more
stringent environmental assessments of proposed projects and a heightened degree of responsibility for companies and their officers,
directors and employees. The cost of compliance with changes in governmental regulations has the potential to reduce the
profitability of operations.


 


Physical climate change events and the trend
toward more stringent regulations aimed at reducing the effects of climate change could have an adverse effect on the Company’s
business and future operations.


 


Climate change is increasingly perceived as a
broad societal and community concern. Stakeholders may increase demands for emissions reductions and call upon mining companies to better
manage their consumption of climate-relevant resources. Physical climate change events, and the trend toward more stringent regulations
aimed at reducing the effects of climate change, could impact the Company’s decisions to pursue future opportunities, or maintain
existing operations, which could have an adverse effect on its business and future operations. The Company can provide no assurance that
efforts to mitigate the risks of climate changes will be effective and that the physical risks of climate change will not have an adverse
effect on its operations and profitability.


 






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As the Company does not have any experience
in the construction and operation of a mine, processing plants and related infrastructure, it is more difficult to evaluate the Company’s
prospects, and the Company’s future success is more uncertain than if it had a more proven history of developing a mine.


 





The Company does not have any experience in the
construction and operation of a mine, processing plants and related infrastructure, as it has not previously been involved in the development
of a mining project. Although certain of its officers, directors and consultants have such experience, the Company itself does not have
any experience in taking a mining project to production. As a result, it is more difficult to evaluate the Company’s prospects,
and the Company’s future success is more uncertain than if it had a more proven history of developing a mine.


 


The Company’s future production estimates
are based on existing mine plans and other assumptions which change from time to time. No assurance can be given that such estimates will
be achieved.


 


The Company has prepared estimates and projections
of future production for the Project. Any such information is forward-looking and no assurance can be given that such estimates will be
achieved. These estimates are based on existing mine plans and other assumptions which change from time to time. The Company’s actual
production may vary from estimates for a variety of reasons, including: actual mineralized material mined varying from estimates of grade,
tonnage, dilution and metallurgical and other characteristics; revisions to mine plans; unusual or unexpected deposit formations; risks
and hazards associated with mining; natural phenomena, such as inclement weather conditions, water availability, floods, and seismic activity;
and unexpected labour shortages, strikes, local community opposition or blockades. The economic analysis for the Project is based in part
on achieving at least the contemplated minimum operating and production levels.


 


The Company may experience unexpected costs
and cost overruns, problems and delays during construction, development, mine start-up and operations for reasons outside of the Company’s
control, which have the potential to materially affect its ability to fully fund required expenditures and/or production, or, alternatively,
may require the Company to consider less attractive financing solutions.


 


It is common in new mining operations to experience
unexpected costs and cost overruns, problems and delays during construction, development and mine start-up. A number of factors could
cause such delays or cost overruns, including (among others) permitting delays, construction pricing escalation, changing engineering
and design requirements, the performance of contractors, labour disruptions, adverse weather conditions and challenges in obtaining financing.
Even if commercial production is achieved, equipment and facilities may not operate as planned due to design or manufacturing flaws, which
may not all be covered by warranty. Mechanical breakdown could occur in equipment after the period of warranty has expired, resulting
in loss of production as well as the cost of repair. Any delay, or cost overrun, may adversely impact the Company’s ability to fully
fund required expenditures, or alternatively, may require the Company to consider less attractive financing solutions. Accordingly, the
Company’s activities may not result in profitable mining operations at its mineral properties, including the Project.


 


The Company’s capital and operating cost
estimates may vary from actual costs and revenues for reasons outside of the Company’s control.


 


Capital costs, operating costs, production
and economic returns and other estimates may differ significantly from those anticipated by current estimates, and there can be no
assurance that the actual capital, operating and other costs will not be higher than currently anticipated. Actual costs and
revenues may vary from estimates for a variety of reasons, including (among others): lack of availability of resources or necessary
equipment; unexpected construction or operating problems; lower realized lithium prices; revisions to construction plans; risks and
hazards associated with mineral production; natural phenomena; floods; unexpected labour shortages or strikes; general inflationary
pressures; and interest and currency exchange rates.


 






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The Company’s operations are subject
to the high degree of risk normally incidental to the exploration for, and the development and operation of, mineral properties.


 


The Company’s operations are subject to
all of the risks normally incidental to the exploration for, and the development and operation of, mineral properties. Mineral exploration
and exploitation involves a high degree of risk. Operations can be affected by such factors as permitting regulations and requirements,
weather, environmental factors, unforeseen technical difficulties, unusual or unexpected geological formations, work interruptions, fires,
power outages, shutdowns due to equipment breakdown or failure, unexpected maintenance and replacement expenditures, human error, labour
disputes, flooding, explosions, releases of hazardous materials, tailings impoundment failures, cave-ins, landslides, earthquakes and
the inability to obtain or properly maintain adequate machinery, equipment or labour. The Company expects to rely on third-party owned
infrastructure in order to develop and operate its projects, such as power, utility and transportation infrastructure. Any failure of
this infrastructure without adequate replacement or alternatives may have a material impact on the Company.


 


Insurance may not be available to insure against
all such risks, or the costs of such insurance may be uneconomic. Losses from uninsured and underinsured losses have the potential to
materially affect the Company’s financial position and prospects.


 





In the course of exploration, development and
production of mineral properties, certain risks (in particular, risks related to operational and environmental incidents) may occur. Insurance
may not be available to insure against all such risks, or the costs of such insurance may be uneconomic. The Company may also elect not
to obtain insurance for other reasons. Should such liabilities arise, they could reduce or eliminate any future profitability and result
in increasing costs and a decline in the value of the Company. The Company maintains liability insurance in accordance with industry standards,
however, the nature of these types of risks is such that liabilities could exceed policy limits and the Company could incur significant
costs that could have a material adverse effect on its business, results of operations and financial condition. Losses from uninsured
and underinsured liabilities have the potential to materially affect the Company’s financial position and prospects.


 


The Company is subject to risks associated
with securing title and property interests.


 


There can be no assurance the Company’s
property mineral tenure interests, or that such title interests will ultimately be secured. No assurance can be given that applicable
governments will not revoke or significantly alter the conditions of the applicable exploration and mining authorizations nor that such
exploration and mining authorizations will not be challenged or impugned by third parties. The Company’s property interests may
also be subject to prior unregistered agreements or transfers or other land claims, and title may be affected by undetected defects and
adverse laws and regulations.


 


The Company cannot guarantee that title to its
properties will not be challenged. A successful challenge to the precise area and location of the Company’s mineral claims could
result in the Company being unable to develop its mineral properties or being unable to enforce its rights with respect to its mineral
properties.


 


While the Company has the surface rights, Servidão
Mineral, for Production Phase 1, as described above, there can be no assurance that the Company will obtain such rights for Production
Phase 2 or thereafter.


 


The Company is subject to strong competition
in Brazil and in the global mining industry.


 


The mining industry is competitive in all of its
phases and requires significant capital, as well as technical and operational resources. Competition is also intense for mining equipment,
supplies and qualified service providers, particularly in Brazil where mining personnel are in high demand and short supply. If qualified
expertise cannot be sourced and at cost effective rates within Brazil, the Company may need to procure those services outside of Brazil,
which could result in additional delays and higher costs to obtain work permits, particularly during the COVID-19 pandemic. Because of
the high costs associated with exploration, the expertise required to analyze a project’s potential and the capital required to
develop a mine, larger companies with significant resources may have a competitive advantage over the Company. The Company faces strong
competition from other mining companies, some with greater financial resources, operational experience and technical capabilities. As
a result of this competition, the Company may be unable to maintain or acquire financing, personnel, technical resources or attractive
mining properties on terms it considers acceptable.


 






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The Company may become subject to government
orders, investigations, inquiries or other proceedings (including civil claims) relating to health and safety matters, which could result
in consequences material to its business and operations.


 


The mineral exploration, development and production
business carries inherent risk of liability related to worker and surrounding population health and safety, including the risk of government-imposed
orders to remedy unsafe conditions, potential penalties for contravention of health and safety laws, licenses, permits and other approvals,
and potential civil liability. Compliance with health and safety laws (and any future changes) and the requirements of licenses, permits
and other approvals remain material to the Company’s business, and will continue to remain material at all stages of the development
and operation of the Project. The Company may become subject to government orders, investigations, inquiries or other proceedings (including
civil claims) relating to health and safety matters. Mining, like many other extractive natural resource industries, is subject to potential
risks and liabilities due to accidents that could result in serious injury or death. The impact of such accidents could affect the profitability
of the operations, potentially result in fines, penalties or other prosecutions, cause an interruption to operations, lead to a loss of
licenses, affect the reputation of the Company and its ability to obtain further licenses, damage community relations and reduce the perceived
appeal of the Company as an employer. The occurrence of any of these events or any changes, additions to or more rigorous enforcement
of health and safety laws, licenses, permits or other approvals could have a significant impact on development or operations and result
in additional material expenditures. As a consequence, no assurances can be given that additional workers’ health and safety issues
relating to presently known or unknown matters will not require unanticipated expenditures, or result in fines, penalties or other consequences
(including changes to operations) material to its business and operations.


 


The Company’s mineral resource and mineral
reserve estimates are estimates only and no assurance can be given that any particular level of recovery of minerals will in fact be realized
or that identified mineral resources or mineral reserves will ever qualify as a commercially mineable (or viable) deposit.


 


The Company’s Mineral Resource and Mineral
Reserve estimates are estimates only. No assurance can be given that any particular level of recovery of minerals will in fact be realized
or that identified mineral resources or mineral reserves will ever be mined or processed profitably. In addition, the grade of mineralization
which may ultimately be mined may differ from that indicated by drilling results and such differences could be material. By their nature,
mineral resource and mineral reserve estimates are imprecise and depend, to a certain extent, on analyses of drilling results and statistical
inferences that may ultimately prove to be inaccurate. These estimated mineral resources and mineral reserves should not be interpreted
as assurances of certain commercial viability or of the profitability of any future operations. Investors are cautioned not to place undue
reliance on these estimates.


 


Mineral Resources are not Mineral Reserves and
have a greater degree of uncertainty as to their feasibility and prospects for economic extraction. Mineral Resources that are not Mineral
Reserves do not have demonstrated economic viability. Mineral Resources that are in the Inferred category are even more risky. An Inferred
Mineral Resource is that part of a Mineral Resource for which quantity and grade or quality are estimated on the basis of limited geological
evidence and sampling. Geological evidence is sufficient to imply but not verify geological and grade or quality continuity. An Inferred
Mineral Resource has a lower level of confidence than that applying to any other category of Mineral Resource. It is reasonably expected
that the majority of Inferred Mineral Resources could be upgraded to Indicated Mineral Resources with continued exploration. However,
the estimate of Inferred Mineral Resources may be materially affected by environmental, permitting, legal, title, taxation, socio-political,
marketing, or other relevant issues. 


 


The PEA relating to the Barreiro deposit is preliminary
in nature, and includes inferred mineral resources that are considered too speculative geologically to have economic considerations applied
that would enable them to be categorized as mineral reserves, and there is no certainty that the PEA will be realized. The Company has
not yet made a production decision in respect of the Barreiro deposit. The economic viability of the Mineral Resources of the Barreiro
deposit has not been demonstrated.  The Company expects that it will assess the results of a preliminary feasibility study and a
definitive feasibility study before making a production decision in respect of the Barreiro deposit.


 






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The Company’s operations and the development
of its projects may be adversely affected if it is unable to maintain positive community relations.


 


The Company’s relationships with host communities
are critical to ensure the success of its existing operations and the construction and development of new operations. There is an increasing
level of public concern relating to the perceived effects of mining activities on the environment and on host communities due to events
that happened with other companies in the recent past. The evolving expectations related to human rights, indigenous rights, and environmental
protection may result in opposition to the Company’s current and future operations or further development of the Project. Such opposition
may be directed through legal or administrative proceedings or expressed in public opposition such as protests, roadblocks or other forms
of expression against the Company’s activities, and may have a negative impact on the Company’s reputation and operations.


 


Opposition by any of the aforementioned groups
to the Company’s operations may require modification of, or preclude the operation or development of, the Company’s projects
or may require the Company to enter into agreements with such groups or local governments with respect to the Company’s projects,
in some cases causing increased cost and considerable delays to the advancement of the Company’s projects. Further, publicity adverse
to the Company, its operations or extractive industries generally could have an adverse effect on the Company and may impact relationships
with the communities in which the Company operates and other stakeholders. There can be no assurance that its efforts to operate in a
socially responsible manner will mitigate this potential risk.


 


The Project may also be impacted by relations
with various community stakeholders, and the Company’s ability to develop related mining assets may still be affected by unforeseen
outcomes from such community relations.


 


The Company is exposed to risks associated
with doing business with counterparties, which may impact the Company’s operations and financial condition.


 


The Company is exposed to various counterparty
risks including, but not limited to: (i) financial institutions that hold the Company’s cash and short-term investments; (ii) companies
that are expected to have payables to the Company; (iii) third party contractors engaged for the development of the Project; (iv) the
Company’s insurance providers; and (v) the Company’s lenders. The risks associated with doing business with several counterparties,
including any defaults or other breaches of any agreements entered into by the Company with such counterparties, may impact the Company’s
operations and financial condition.


 


Any limitation on the transfer of cash or other
assets between the Company and the Company’s subsidiaries, or among such entities, could restrict the Company’s ability to
fund its operations efficiently.


 


The Company conducts operations through subsidiaries,
including a foreign subsidiary located in Brazil. Accordingly, any limitation on the transfer of cash or other assets between the parent
corporation and such entities, or among such entities, could restrict the Company’s ability to fund its operations efficiently.
Any such limitations, or the perception that such limitations may exist now or in the future, could have an adverse impact on the Company’s
valuation and stock price.


 


The Company is subject to risks associated
with its reliance on consultants and others for mineral exploration and exploitation expertise.


 


The Company has relied on, and is expected to
continue to rely on, consultants and others for mineral exploration and exploitation expertise. If the work conducted by those consultants
is ultimately found to be incorrect or inadequate in any material respect, the Company may experience delays or increased costs in developing
its properties.


 


Risks Related to the Company’s Business
and Securities


 


The current COVID-19 pandemic could have a
material adverse effect on the Company’s business, operations, financial condition and stock price.


 


The Company faces risks related to pandemics and
epidemics, such as the outbreak of COVID-19 that surfaced in December 2019 and has spread around the world, including Canada, the
United States and Brazil, which could significantly disrupt the Company’s operations and may materially and adversely affect its
business and financial condition.  The full extent to which COVID-19 impacts the Company’s business, including its operations
and the market for its securities, will depend on future developments that are highly uncertain and will depend on numerous evolving factors
that the Company may not be able to accurately predict or assess, including, but not limited to, the duration, severity, the availability
of approved vaccines and the timing for completion of vaccine distribution programs around the globe, and the continued governmental,
business and individual actions taken in response to the pandemic. Moreover, the actual and threatened continue or spread of COVID-19,
especially in Brazil, could materially and adversely impact the Company’s business, including without limitation on the regional
economies in which the Company operates, employee health, workforce productivity, increased insurance premiums and medical costs, restrictions
on travel by the Company’s personnel and by the personnel of the Company’s various service providers, quarantine, the availability
of industry experts and personnel, and other factors that will depend on future developments beyond the Company’s control, all or
some of which may have a material adverse effect on the Company’s business, financial condition and stock price.


 






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Government efforts to curtail the spread of COVID-19
may also result in temporary or long-term suspensions or shut-downs of the Company’s operations. Given the unforeseen conditions
resulting from the ongoing evolution of the COVID-19 pandemic and its global impact, there can be no assurance that the Company’s
future response and business continuity plans will continue to be effective in managing the pandemic and changing conditions could result
in a material adverse effect on the Company's business, financial condition and/or results of operations. Travel restrictions to and from
Brazil, currently implemented by governments, as well as quarantine, isolation and physical distancing requirements during this period,
may have a negative impact on workforce mobility. Further, the protective measures implemented by the Company may cause higher operating
costs, combined with a decrease in workforce productivity, lower production outputs and in some cases, temporary cessation of mining development,
could have a material adverse effect on the Company’s business and financial conditions.


 


In addition, the outbreak has caused a worldwide
health crisis that has adversely affected economies and financial markets resulting in a global economic downturn that has impacted lithium
markets and, therefore, been negative for lithium mining companies.


 


If the Company is unable to ultimately generate
sufficient revenues to become profitable and have positive cash flows, it could have a material adverse effect on its prospects, business,
financial condition, results of operations or overall viability as an operating business.


 


The Company has a history of operating losses
and it can be expected to generate continued operating losses and negative cash flows in the future while the Company carries out
its current business plan to further develop and expand its business. The Company has made significant up-front investments in order
to rapidly develop and expand its business. The Company is currently incurring expenditures related to its operations that have
generated negative operating cash flows from operations. The successful development and commercialization of these operations will
depend on a number of significant financial, logistical, technical, marketing, legal, regulatory, competitive, economic and other
factors, the outcome of which cannot be predicted. There is no guarantee that such operations will become profitable or produce
positive cash flow or that the Company will be successful in generating significant revenues in the future or at all. The
Company’s inability to ultimately generate sufficient revenues to become profitable and have positive cash flows could have a
material adverse effect on its prospects, business, financial condition, results of operations or overall viability as an operating
business.


 


The Company is subject to liquidity risk and
therefore may have to include a “going concern” note in its financial statements.


 


The Company’s ability to continue as a going
concern is dependent upon the ability to ultimately generate future profitable operations and to obtain the necessary financing to meet
its obligations and repay its liabilities arising from normal business operations when they come due. The Company has reported net losses
and comprehensive losses for the three and nine months ended September 30, 2021 and for the year ended December 31, 2020. The
Company’s business does not currently operate on a self-sustaining basis and until it is successfully able to fund its expenditures
from its revenues, its ability to continue as a going concern is dependent on raising additional funds. The Company expects to continue
to sustain operating losses in the future until it generates revenue from the commercial production of its mineral properties. There is
no guarantee that the Company will ever be profitable.


 


The Company may not be able to obtain sufficient
financing in the future on acceptable terms, which could have a material adverse effect on the Company’s business, results of operations
and financial condition. In order to obtain additional financing, the Company may conduct additional (and possibly dilutive) equity offerings
or debt issuances in the future.


 


There is no assurance that the Company will be
able to obtain sufficient financing in the future on terms acceptable to meet the Company’s capital requirements. The ability of
the Company to arrange additional financing in the future will depend, in part, on prevailing capital market conditions as well as the
business performance of the Company. Failure to obtain additional financing on a timely basis may cause the Company to postpone, abandon,
reduce or terminate its operations and could have a material adverse effect on the Company’s business, results of operations and
financial condition. A likely source of future financing is the sale of additional Common Shares, which would mean that each existing
shareholder would own a smaller percentage of the Common Shares then outstanding. In addition, the Company may issue or grant convertible
securities (such as warrants or stock options) in the future pursuant to which additional Common Shares may be issued. The exercise of
such securities would result in dilution of equity ownership to the Company’s existing shareholders.


 






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Alternatively, the Company may rely on debt financing
and assume debt obligations that require it to make substantial interest and principal payments and which may be secured against the Company’s
assets, including the Project. Failure to meet debt obligations as they become due may result in loss of the Project. The Company may
also sell additional royalties on the Project, which would mean that the Company’s share of returns from the Project would decrease.


 


The Company may be unable to achieve cash flow
from operating activities sufficient to permit it to pay the principal, premium, if any, and interest on the Company’s indebtedness,
or maintain its debt covenants.


 


The Company’s ability to make scheduled
payments on or refinance its debt obligations (if necessary) depends on its financial condition and operating performance, which are subject
to prevailing economic and competitive conditions and to certain financial, business, legislative, regulatory and other factors beyond
the Company’s control, including the market prices of lithium. The Company may be unable to achieve cash flow from operating activities
sufficient to permit it to pay the principal, premium, if any, and interest on the Company’s indebtedness, or maintain its debt
covenants. If the Company’s cash flows and capital resources are insufficient to fund its debt service obligations, or there is
a contravention of its debt covenants, the Company could face substantial liquidity problems and could be forced to reduce or delay investments
and capital expenditures or to dispose of material assets or operations, seek additional debt or equity capital or restructure or refinance
its indebtedness. The Company may not be able to affect any such alternative measures, if necessary, on commercially reasonable terms
or at all and, even if successful, those alternative actions may not allow it to meet its scheduled debt service obligations. The Company’s
inability to generate sufficient cash flows to satisfy its debt obligations, or to refinance its indebtedness on commercially reasonable
terms or at all, would materially and adversely affect its financial position and results of operations and its ability to satisfy its
obligations.


 


The Company has not declared or paid dividends
in the past and may not declare or pay dividends in the future.


 


The Company has not paid dividends since incorporation
and presently has no ability to generate earnings as its mineral properties are in the exploration and development stage. If the Project
is successfully developed, the Company anticipates that it will retain future earnings and other cash resources for the future operation
and development of its business. The Company does not intend to declare or pay any cash dividends in the foreseeable future. Payment of
any future dividends is solely at the discretion of the Board, which will take into account many factors, including the Company’s
operating results, financial condition and anticipated cash needs. The Company may never pay dividends.


 


The Company will incur increased costs as a
result of being a public company both in Canada listed on the TSXV and in the United States listed on the Nasdaq, and its management will
be required to devote substantial further time to United States public company compliance efforts.


 


As a public company in the United States, the
Company will incur additional legal, accounting, Nasdaq, reporting and other expenses. The additional demands associated with being a
U.S. public company may disrupt regular operations of the Company’s business by diverting the attention of some of its senior management
team away from revenue-producing activities to additional management and administrative oversight, adversely affecting the Company’s
ability to attract and complete business opportunities and increasing the difficulty in both retaining professionals and managing and
growing its business. Any of these effects could harm the Company’s business, results of operations and financial condition.


 






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If the Company’s efforts to comply with
new United States laws, regulations and standards differ from the activities intended by regulatory or governing bodies, such regulatory
bodies or third parties may initiate legal proceedings against the Company and its business may be adversely affected. As a public company
in the United States, it is more expensive for the Company to obtain director and officer liability insurance, and it will be required
to accept reduced coverage or incur substantially higher costs to continue its coverage. These factors could also make it more difficult
for the Company to attract and retain qualified directors.


 


In addition to the Canadian securities laws requirements
to which the Company has already been subject, U.S. Sarbanes-Oxley Act 2002, as amended (the “U.S. Sarbanes-Oxley Act”) requires
that the Company maintain effective disclosure controls and procedures and internal control over financial reporting. Pursuant to Section 404
of the U.S. Sarbanes-Oxley Act (“Section 404”), the Company will be required to furnish a report by its management on
its internal control over financial reporting (“ICFR”), which, if or when the Company is no longer an emerging growth company,
must be accompanied by an attestation report on ICFR issued by the Company’s independent registered public accounting firm.


 


To achieve compliance with Section 404 within
the prescribed period, the Company will document and evaluate its ICFR, which is both costly and challenging. In this regard, the Company
will need to continue to dedicate internal resources, potentially engage outside consultants and adopt a detailed work plan to assess
and document the adequacy of its ICFR, continue steps to improve control processes as appropriate, validate through testing that controls
are functioning as documented and implement a continuous reporting and improvement process for ICFR. Despite the Company’s efforts,
there is a risk that neither the Company nor its independent registered public accounting firm will be able to conclude within the prescribed
timeframe that the Company’s ICFR is effective as required by Section 404. This could result in a determination that there
are one or more material weaknesses in the Company’s ICFR, which could cause an adverse reaction in the financial markets due to
a loss of confidence in the reliability of the Company’s consolidated financial statements. In addition, in the event that the Company
is not able to demonstrate compliance with the Sarbanes-Oxley Act, that its internal control over financial reporting is perceived as
inadequate, or that it is unable to produce timely or accurate financial statements, investors may lose confidence in the Company’s
operating results and the price of its Common Shares may decline. In addition, if the Company is unable to continue to meet these requirements,
it may not be able to remain listed on the Nasdaq.


 


If the Company does not maintain adequate and
appropriate internal controls over financial reporting as outlined in accordance with NI 52-109 or the Rules and Regulations of the
SEC, the Company will have to report a material weakness and disclose that the Company has not maintained appropriate internal controls
over financial reporting.


 


Internal controls over financial reporting are
procedures designed to provide reasonable assurance that transactions are properly authorized, recorded and reported and assets are safeguarded
against unauthorized or improper use. A control system, no matter how well designed and operated, can provide only reasonable, and not
absolute, assurance with respect to the reliability of financial reporting and financial statement preparation.


 


As a foreign private issuer, the Company is
subject to different U.S. securities laws and rules than a domestic U.S. issuer, which may limit the information publicly available
to its shareholders.


 


The Company is a “foreign private
issuer” as such term is defined in Rule 405 under the U.S. Securities Act, and is permitted, under a multijurisdictional
disclosure system adopted by the United States and Canada, to prepare its disclosure documents filed under the Exchange Act in
accordance with Canadian disclosure requirements. Under the Exchange Act, the Company is subject to reporting obligations that, in
certain respects, are less detailed and less frequent than those of U.S. domestic reporting companies. As a result, the Company will
not file the same reports that a U.S. domestic issuer would file with the SEC, although it will be required to file or furnish to
the SEC the continuous disclosure documents that it is required to file in Canada under Canadian securities laws. In addition, the
Company’s officers, directors, and principal shareholders are exempt from the reporting and “short swing” profit
recovery provisions of Section 16 of the Exchange Act. Therefore, the Company’s shareholders may not know on as timely a
basis when its officers, directors and principal shareholders purchase or sell shares, as the reporting deadlines under the
corresponding Canadian insider reporting requirements are longer.


 


As a foreign private issuer, the Company is exempt
from the rules and regulations under the Exchange Act related to the furnishing and content of proxy statements. The Company is also
exempt from Regulation FD, which prohibits issuers from making selective disclosures of material non-public information. While the Company
expects to comply with the corresponding requirements relating to proxy statements and disclosure of material non-public information under
Canadian securities laws, these requirements differ from those under the Exchange Act and Regulation FD and shareholders should not expect
to receive in every case the same information at the same time as such information is provided by U.S. domestic companies.


 






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In addition, as a foreign private issuer, the
Company has the option to follow certain Canadian corporate governance practices, except to the extent that such laws would be contrary
to U.S. securities laws, and provided that the Company discloses the requirements the Company is not following and describe the Canadian
practices it follows instead. As a result, the Company’s shareholders may not have the same protections afforded to shareholders
of U.S. domestic companies that are subject to all U.S. corporate governance requirements. If the Company ceases to qualify as a foreign
private issuer, it will be subject to the same reporting requirements and corporate governance requirements as a U.S. domestic issuer
which may increase its costs of being a public company in the United States.


 


Failure to retain key officers, consultants
and employees or to attract, and, if attracted, retain additional key individuals with necessary skills could have a materially adverse
impact upon the Company’s success.


 


The success of the Company will be largely dependent
upon the performance of its key officers, consultants and employees. Failure to retain key individuals or to attract, and, if attracted,
retain additional key individuals with necessary skills could have a materially adverse impact upon the Company’s success. The Company
has not purchased any “key-man” insurance with respect to any of its directors, officers or key employees and has no current
plans to do so.


 


The Company is subject to currency fluctuation
risks.


 


Business is transacted by the Company primarily
in Brazilian, U.S. and Canadian currencies. The majority of the Project’s operating costs are denominated in the Brazilian currency.
Certain costs associated with imported equipment and international supplies and consultants and sales prices for product are denominated
in U.S. dollars. Fluctuations in exchange rates may have a significant effect on the cash flows of the Company. Future changes in exchange
rates could materially affect the Company’s results in either a positive or negative direction. The Company has not hedged its exposure
to any exchange rate fluctuations applicable to its business and is therefore exposed to currency fluctuation risks.


 


Currently, the Brazilian Real is permitted to
float against the US Dollar and allows the purchase and sale of foreign currency and the international transfer of Reais There can be
no assurance that the Brazilian Central Bank or the Brazilian government will continue to permit the Real to float freely and not intervene
in the exchange rate market through the return of a currency band system or otherwise.


 


From time to time, the Company may become involved
in litigation, which may have a material adverse effect on its business, financial condition, and prospects.


 


Due to the nature of the Company’s business
and status as a publicly traded entity, it may be subject to a variety of regulatory investigations, claims, lawsuits and other proceedings
in the ordinary course of its business. The results of these legal proceedings cannot be predicted with certainty due to the uncertainty
inherent in litigation, including the effects of discovery of new evidence or advancement of new legal theories, the difficulty of predicting
decisions of judges and juries and the possibility that decisions may be reversed on appeal. Defense and settlement costs of legal claims
can be substantial, even with respect to claims that have no merit.


 


Litigation may be costly and time-consuming
and can divert the attention of management and key personnel from business operations. If the Company is unsuccessful in its defense
of claims or unable to settle claims in a manner satisfactory to it, it may be faced with significant monetary damages or injunctive
relief against it that could have a material adverse effect on its business and financial condition. To the extent the Company is
involved in any active litigation, the outcome of such matters may not be currently determinable nor is it possible to accurately
predict the outcome or quantum of any such proceedings at this time.


 






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Certain directors and officers of the Company
are, or may become, associated with other natural resource companies which may give rise to conflicts of interest.


 


Certain directors and officers of the Company
are, or may become, associated with other natural resource companies which may give rise to conflicts of interest. In accordance with
the Canada Business Corporations Act, directors who have a material interest in any person who is a party to a material contract,
or a proposed material contract, with the Company are required, subject to certain exceptions, to disclose that interest and generally
abstain from voting on any resolution to approve the contract.


 


The market price for the Company’s shares
may be volatile and subject to wide fluctuations in response to numerous factors beyond its control and the Company may be subject to
securities litigation as a result.


 


The market price of publicly traded shares,
especially of a resource issuer such as the Company, is affected by many variables outside of the Company’s control and are
not necessarily related to exploration or operational successes or failures of the Company. Factors such as general market
conditions for resource issuers, the strength of the economy generally, the availability and attractiveness of alternative
investments, and analysts’ recommendations may all contribute to volatility in the price of the Company’s shares, which
are not necessarily related to the operating performance, underlying asset values or prospects of the Company. Investors could
suffer significant losses if the Common Shares are depressed or illiquid when an investor seeks liquidity. Securities class action
litigation has often been brought against companies following periods of volatility in the market price of their securities. The
Company may be the target of similar litigation in the future. Securities litigation could result in substantial costs and damages
and divert management's attention and resources.


 


If securities or industry analysts do not publish
research or reports about the Company’s business, or if they downgrade the Common Shares, the price of the Common Shares could decline.


 


The trading market for the Company’s Common
Shares depends, in part, on the research and reports that securities or industry analysts publish about the Company or its business. The
Company does not have any control over these analysts. If one or more of the analysts who cover the Company downgrade its stock or publish
inaccurate or unfavorable research about its business, the price of the Company’s Common Shares would likely decline. In addition,
if the Company’s results of operations fail to meet the forecast of analysts, the price of its Common Shares would likely decline.
If one or more of these analysts cease coverage of the Company or fail to publish reports on the Company regularly, demand for Common
Shares could decrease, which might cause the price and trading volume of Common Shares to decline.


 


The Company will have broad discretion over
the use of the net proceeds from offerings of securities.


 


While information regarding the use of proceeds
from the sale of Common Shares or other securities will be described in the applicable prospectus supplement, the Company will have broad
discretion over the use of the net proceeds from offerings of its securities. Because of the number and variability of factors that will
determine the use of such proceeds, the Company’s ultimate use might vary substantially from its planned use. Purchasers may not
agree with how the Company allocates or spends the proceeds from an offering of its securities. The Company may pursue acquisitions, collaborations
or other opportunities that do not result in an increase in the market value of the Common Shares, including the market value of the Common
Shares, and that may increase losses.


 


There is no guarantee that the Common Shares
will earn any positive return in the short term or long term.


 


A holding of Common Shares is speculative and
involves a high degree of risk and should be undertaken only by holders whose financial resources are sufficient to enable them to assume
such risks and who have no need for immediate liquidity in their investment. A holding of Common Shares is appropriate only for holders
who have the capacity to absorb a loss of some or all of their holdings.


 


The Company has a major shareholder which owns
55.5% of the outstanding Common Shares and, as such, for as long as such shareholder directly or indirectly maintains a significant interest
in the Company, it may be in a position to affect the Company’s governance, operations and the market price of the Common Shares.


 


To the Company’s knowledge, as of the
date hereof, A10 FIA holds approximately 55.5% of the outstanding Common Shares. For as long as it directly or indirectly maintains
a significant interest in the Company, A10 FIA may be in a position to affect the Company’s governance and operations. As a
result of its shareholdings, A10 FIA has the ability, among other things, to approve significant corporate transactions and delay or
prevent a change of control of the Company that could otherwise be beneficial to minority shareholders. A10 FIA generally will have
the ability to control the outcome of any matter submitted for the vote or consent of the Company’s shareholders. In some
cases, the interests of A10 FIA may not be the same as those of the other minority shareholders, and conflicts of interest may arise
from time to time that may be resolved in a manner detrimental to the Company or minority shareholders. The effect of this influence
may be to limit the price that investors are willing to pay for Common Shares.


 






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In addition, the potential that A10 FIA may sell
Common Shares in the public market, as well as any actual sales of Common Shares in the public market, could adversely affect the market
price of the Common Shares.


 


As the Company is a Canadian corporation but
most of its directors and officers are not citizens or residents of Canada or the U.S., it may be difficult or impossible for an investor
to enforce judgements against the Company and its directors and officers outside of Canada and the U.S. which may have been obtained in
Canadian or U.S. courts or initiate court action outside Canada or the U.S. against the Company and its directors and officers in respect
of an alleged breach of securities laws or otherwise. Similarly, it may be difficult for U.S. shareholders to effect service on the Company
to realize on judgments obtained in the United States.


 


The Company is incorporated under the laws of
Canada and headquartered in British Columbia, Canada, but a majority of its directors and officers are not citizens or residents of Canada.
In addition, a substantial part of the Company’s assets is located outside Canada. As a result, it may be difficult or impossible
for an investor to (i) enforce judgments against the Company and its directors and officers outside of Canada which may have been
obtained in Canadian courts or (ii) initiate court action outside Canada against the Company and its directors and officers in respect
of an alleged breach of securities laws or otherwise.


 


The majority of the Company’s assets and
all or a substantial portion of the assets of its directors and officers may be located outside the United States. Consequently, it may
be difficult for investors who reside in the United States to effect service of process in the United States upon the Company or upon
such persons who are not residents of the United States, or to realize upon judgments of courts of the United States predicated upon the
civil liability provisions of the U.S. federal securities laws. A judgment of a U.S. court predicated solely upon such civil liabilities
may be enforceable in Canada by a Canadian court if the U.S. court in which the judgment was obtained had jurisdiction, as determined
by the Canadian court, in the matter. Investors should not assume that Canadian courts: (i) would enforce judgments of U.S. courts
obtained in actions against the Company or such persons predicated upon the civil liability provisions of the U.S. federal securities
laws or the securities or blue sky laws of any state within the United States, or (ii) would enforce, in original actions, liabilities
against the Company or such persons predicated upon the U.S. federal securities laws or any such state securities or blue sky laws.


 


In addition, in the event of a dispute involving
the foreign operations of the Company, the Company may be subject to the exclusive jurisdiction of foreign courts. The Company's ability
to enforce its rights in Canada or locally of judgments from foreign courts could have an adverse effect on its future cash flows, earnings,
results of operations and financial condition.


 


The Company is governed by the corporate and
securities laws of the Province of British Columbia and gof Canada, which in some cases have a different effect on shareholders than the
U.S. corporate laws and U.S. securities laws.


 


The Company is governed by the Canada Business
Corporations Act and other relevant laws, which may affect the rights of shareholders differently than those of a company governed
by the laws of a U.S. jurisdiction, and may, together with the Company’s constating documents, have the effect of delaying, deferring
or discouraging another party from acquiring control of the Company by means of a tender offer, a proxy contest or otherwise, or may affect
the price an acquiring party would be willing to offer in such an instance. For example, the material differences between the CBCA and
the Delaware General Corporation Law (the “DGCL”), the applicable statutory regime for many U.S. companies, that may have
the greatest such effect include, but are not limited to, the following: (i) for material corporate transactions (such as mergers
and amalgamations, other extraordinary corporate transactions or amendments to the Company’s articles) the CBCA generally requires
a two-thirds majority vote by shareholders, whereas the DGCL generally requires only a majority vote; and (ii) under the CBCA, holders
of 5% or more of the Company’s shares that carry the right to vote at a meeting of shareholders can requisition a special meeting
of shareholders, whereas such right does not exist under the DGCL.


 






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The Company is subject to risks associated
with its information technology systems and cyber-security.


 


Threats to information technology systems
associated with cyber-security risks and cyber incidents or attacks continue to grow. It is possible that the business, financial
and other systems of the Company or other companies with which it does business could be compromised, which might not be noticed for
some period of time. Risks associated with these threats include, among other things, loss of intellectual property, disruption of
business operations and safety procedures, loss or damage to worksite data delivery systems, and increased costs to prevent, respond
to or mitigate cyber-security events.


 


The Company may be a Passive Foreign Investment
Company, which may result in adverse U.S. federal income tax consequences for U.S. holders of Common Shares.


 


Generally, if for any taxable year 75% or more
of the Company’s gross income is passive income, or at least 50% of the average quarterly value of the Company’s assets are
held for the production of, or produce, passive income, the Company would be characterized as a passive foreign investment company (“PFIC”)
for U.S. federal income tax purposes. Based on the current profile of the Company’s gross income, gross assets, the nature of its
business, and its anticipated market capitalization, the Company believes that it was likely a PFIC for the 2020 taxable year. While it
has not made a determination of expected PFIC status for the current taxable year, there is a risk that it may be a PFIC in the current
taxable year and in the foreseeable future. Because PFIC status is determined on an annual basis and generally cannot be determined until
the end of the taxable year, there can be no assurance that the Company will not be a PFIC for the current or future taxable years.
If the Company is characterized as a PFIC, the Company’s shareholders who are U.S. holders may suffer adverse tax consequences,
including the treatment of gains realized on the sale of the Common Shares as ordinary income, rather than as capital gain.


 


DESCRIPTION OF CAPITAL STRUCTURE


 


Common Shares


 





The Company is authorized to issue an unlimited
number of Common Shares without par value of which, as of the date of this AIF, 87,368,212 Common Shares are issued and outstanding. All
rights and restrictions in respect of the Common Shares are set out in the Company’s articles and the CBCA and its regulations.
The Common Shares have no pre-emptive, redemption, purchase or conversion rights. Neither the CBCA nor the constating documents of the
Company impose restrictions on the transfer of Common Shares on the register of the Company, provided that the Company receives the certificate(s) representing
the Common Shares to be transferred together with a duly endorsed instrument of transfer and payment of any fees and taxes which may be
prescribed by the Board from time to time. There are no sinking fund provisions in relation to the Common Shares and they are not liable
to further calls or assessment by the Company. The CBCA and the Company’s articles provides that the rights and restrictions attached
to any class of shares may not be modified, amended or varied unless consented to by special resolution passed by not less than two-thirds
of the votes cast in person or by proxy by holders of shares of that class.


 


The Common Shares entitle the holders to: (i) notice
of and to attend any meetings of shareholders and one vote per Common Share at any meeting of shareholders; (ii) dividends, if as
and when declared by the Board; and (iii) upon liquidation, dissolution or winding up of the Company, on a pro rata basis,
the net assets of the Company after payment of debts and other liabilities.


 


DIVIDENDS AND DISTRIBUTIONS


 


The Company has no fixed dividend policy and the
Company has not declared any dividends on its Common Shares since its incorporation. The Company anticipates that all available funds
will be used to undertake exploration and development programs on its mineral properties as well as for the acquisition of additional
mineral properties. The payment of dividends in the future will depend, among other things, upon the Company’s earnings, capital
requirements and operating and financial condition. Generally, dividends can only be paid if a corporation has retained earnings. There
can be no assurance that the Company will generate sufficient earnings to allow it to pay dividends.


 






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MARKET FOR SECURITIES


 


Market


 


The Common Shares are traded on the TSXV and the
Nasdaq under the symbol “SGML”. On November 30, 2021, the closing price of the Common Shares on the TSXV was Cdn$12.07 and
on the Nasdaq was US$9.35.


 


Trading Price and Volume


 


The table below sets forth the high and low market
prices and the volume of the Common Shares traded on the TSXV during the financial year ended December 31, 2020. The Common Shares
did not trade on the Nasdaq during the financial year ended December 31, 2020.


 


	Month
    (2020)	High
    (Cdn$)	Low
    (Cdn$)	Volume
	January	1.960	1.800	11,837
	February	2.010	1.700	216,179
	March	2.080	1.400	76,280
	April	1.890	1.600	169,620
	May	1.890	1.600	7,350
	June	1.850	1.300	111,267
	July	3.000	1.600	155,812
	August	2.700	2.150	91,601
	September	2.600	2.050	124,652
	October	2.900	2.490	163,885
	November	2.950	2.400	166,122
	December	3.020	2.400	1,629,926


 






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PRIOR SALES


 


The Company did not issue any unlisted
securities during the financial year ended December 31, 2020.


 


DIRECTORS AND
OFFICERS


 


Name and Occupation


 


The name, province
or state of residence, position with and principal occupation within the five preceding years for each of the directors and executive
officers of the Company as at the date hereof are set out in the following table:


 


	Calvyn
Gardner

São Paulo, Brazil 

    58 years

      

    Director Since:

    May 2018

     
	Position(s) Held
    at the Company
	Co-Chair,
    Co-Chief Executive Officer and also a member of the Technical Committee of the Board.
	Principal
    Occupation for the Past Five Years
	Chief
    Executive Officer of the Company since May 1, 2018; Chief Executive Officer of Sigma Holdings since June 2017
	Biography
	For
    nearly 20 years, Mr. Gardner has held executive positions at global and junior mining companies such as Anglo American Group
    and Trans Hex Group. Mr. Gardner also was a co-founder and managing partner of Hardac Investments, a private equity firm focused
    on investing in junior mining companies in Africa. Hardac’s major co-investors included Lazare Kaplan International in New
    York (one of DeBeers’ largest customers in the US) and Mvelaphanda Holdings (South Africa’s largest Black Economic Empowerment
    Group) in Johannesburg. Mr. Gardner’s extensive global career also includes positions such as General Manager of Operations
    at Highveld Steel and CEO at Trans Hex Group. Mr. Gardner has an MBA from the University of South Africa as well as a Bachelor
    of Science Degree in Electrical Engineering from the University of the Witwatersrand.
	Common
    Shares Held
	Nil
    (1)
	 	RSUs Granted(2)
	 	3,000,000



 


	Ana
                                            Cristina Cabral-Gardner

                                            São Paulo, Brazil

                                            51 years

      

    Director Since:

    June 2018

     
	Position(s) Held
    at the Company
	Co-Chair,
    Co-Chief Executive Officer, and Chair of the ESG Committee, and also a member of the Finance and Corporate Governance, Nomination
    and Compensation Committees of the Board.
	Principal
    Occupation for the Past Five Years
	Managing
    Partner at A10 Investimentos
	Biography
	Mrs. Cabral-Gardner
    has over 20 years of experience as a senior banker at global investment banks in New York, London and São Paulo. Mrs. Cabral-Gardner
    is a former Head of Lat. Am. Capital Markets at Goldman Sachs in New York and a former Managing Director at the firm. Mrs. Cabral-Gardner
    has been involved in a large number of transactions over her career, totaling more than US$100 billion, five of which won the prestigious
    IFR “Deal of the Year” award, including the privatization of Vale in 1996 and the acquisition of Inco by Vale in 2006.
    Mrs. Cabral-Gardner has an MBA degree from Columbia Business School and a Master in Finance degree from London Business School.
    Mrs. Cabral-Gardner serves on the Advisory Board of Columbia University Global Centers and is a board member of The American
    School of São Paulo.
	Common
    Shares Held
	Nil
    (1)
	 	RSUs Granted(2)
	 	3,000,000




 


Note:


 


(1) Mr. Gardner and Ms.
Cabral are quota holders in A10 FIA. A10 Investimentos Ltda., which is the portfolio manager of A10 FIA, has the sole and independent
voting decision regarding the holdings of the A10 FIA.


 


(2) Out of the total 3,000,000
RSUs granted to each co-CEO, 2,500,000 RSUs will vest in four tranches upon the achievement of specified market capitalization targets
as follows:


 


	Tranche	No.RSUs	Marketing Condition Vesting Milestone
	 	 	 
	I	1,000,000	Increase of market cap to C$ 1.3 billion
	II	1,000,000	Increase of market cap to C$ 1.55 billion
	III	1,000,000	Increase of market cap to C$ 1.8 billion
	IV	1,000,000	Increase of market cap to C$ 2 billion
	 	5,000,000	 



 


The remaining aggregate 1,000,000 RSUs
granted (500,000 RSUs per Co-CEO) will vest upon successful execution of a plan to achieve a net zero carbon target.


 






    
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	Gary
                                            Litwack

                                            Toronto, Canada

                                            61 years

      

    Director Since:

    May 2018

     
	Position(s) Held
    at the Company
	Director
    (Lead Independent Director) and also the chairman of the Audit Committee of the Board.
	Principal
    Occupation for the Past Five Years
	Counsel
    at McCarthy Tétrault LLP.
	Biography
	Gary
    Litwack has over 30 years of experience advising public and private companies on financing, mergers & acquisitions, governance
    and commercial matters, with a focus on the mining industry. Mr. Litwack is a Canadian lawyer, Counsel at McCarthy Tétrault
    LLP in Toronto, Canada. Mr. Litwack received his LL.B. from the University of Ottawa, his LL.M. (International Business Transactions)
    from Osgoode Hall Law School in 1992, and was called to the Ontario bar in 1990. Mr. Litwack is a member of the Canadian Bar
    Association and the Law Society of Ontario. Mr. Litwack has been an Adjunct Professor of Advanced Securities Law at Osgoode
    Hall Law School.
	Common
    Shares Held
	50,000
	 	RSUs
    Granted
	 	400,000


 


	Frederico
                                            Marques

                                            Toronto, Canada

                                            48 years

      

    Director Since:

    June 2018

     
	Position(s) Held
    at the Company
	Director,
    Chair of the Corporate Governance, Nomination and Compensation Committee and also a member of the Audit and Finance Committees of
    the Board.
	Principal
    Occupation for the Past Five Years
	Founder
    and Director of 4B Mining Corp; Head Canada’s Office of Cescon, Barrieu, Flesch e Barreto Advogados; Partner at S4G –
    Strategy for Growth since September 2020; prior thereto, Partner and foreign legal consultant at McCarthy Tétrault LLP
    from February 2014 until August 2020.
	Biography
	Frederico
    Marques has over 25 years of experience in structuring and implementing international transactions, including going public transactions,
    international joint ventures and strategic alliances, public and private M&A transactions, debt and equity capital raisings.
    Throughout his career, Frederico was involved in over US$30 Billion in M&A, financings, joint ventures and other sophisticated
    transactions. Frederico is a Founding Partner of 4B Mining Corp. and S4G - Strategy for Growth and a Director and former Chairman
    of the BOD of the Brazil-Canada Chamber. Frederico combines 15 years of professional experience in Brazil, working for some of the
    leading and largest Brazilian companies, with 14+ years of experience working in Canada, including as a Partner of two of the largest
    Canadian law firms, leading their Latin America practice. Frederico is a lawyer with LLM and PhD degrees in International Law and
    Head  Canada’s Office of Cescon, Barrieu, Flesch e Barreto Advogados.
	Common
    Shares Held
	60,000
	 	RSUs
    Granted
	 	406,500


 


	Marcelo
                                            Paiva

                                            São Paulo, Brazil

     

    48 years

      

    Director Since:

    January 2019

     
	Position(s) Held
    at the Company
	Director,
    Chair of the Finance Committee, and also member of the Audit, ESG and the Corporate Governance, Nomination and Compensation Committees
    of the Board.
	Principal
    Occupation for the Past Five Years
	Managing
    Partner at A10 Investimentos.
	Biography
	Mr. Paiva
    is the Managing Partner and Co-Founder of A10 Investimentos. He is the portfolio manager of A10 FIA, the Company’s largest
    shareholder. Mr. Paiva has over 20 years of experience in asset management and investment banking in New York, London and São
    Paulo. Prior to A10 Investimentos, Mr. Paiva was a Portfolio Manager at the Mittal Family Office in São Paulo. Previously,
    he was a Vice-President at the U.K. asset manager Millennium Global in London, which, at the time, had over US$15 billion in assets
    under management and was one of the largest hedge funds in Europe. Mr. Paiva also held investment banking positions at Credit
    Suisse in London and UBS in New York. He has a Master in Business Administration from INSEAD in France and is a CFA Charterholder.
	Common
    Shares Held
	406,550
	 	RSUs
    Granted
	670,500


 






    
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	Felipe
                                            Peres

                                            Morges, Switzerland

                                            46 years

      

    Officer Since: 

    September 2021

     
	Position(s) Held
    at the Company
	Chief
    Financial Officer
	Principal
    Occupation for the Past Five Years
	Internal
    Controls & Accounting at Sigma Lithium Corporation; prior to thereto, Budgeting & Accounting Manager at Vale
	Biography
	Mr. Peres
    has over twenty-four years of experience working in corporate positions and large multinational companies in the oil, steel, and
    mining sectors, in a global environment in Brazil and Switzerland. Mr. Peres is a former leader of consolidation and reporting
    at Vale, where he worked for fourteen years and participated in the IFRS adoption of this company. Prior to Vale, Mr. Peres
    worked for Shell and CSN being in both companies in USGAAP reporting key positions. His main areas of expertise are USA and International
    accounting, finance performance management, internal controls, process design, and systems design and implementation. Mr. Peres
    graduated in accounting with honors from Universidade Federal do Rio de Janeiro and has specializations in merger and acquisitions
    from Chicago Booth University and analytics for business from IMD – Switzerland. Mr. Peres serves as an advisor to the
    board of the Brazil-Switzerland Chamber of Commerce.
	Common
    Shares Held
	Nil


 


Each director’s
term of office expires at the next annual general meeting of the Company.


 


Shareholdings of Directors
and Officers


 


As of the date
of this AIF, the directors and executive officers of the Company, as a group, beneficially owned, directly or indirectly, or exercised
control or direction over an aggregate of 49,309,659 Common Shares, representing approximately 56.4% of the issued and outstanding Common
Shares (on a non-diluted basis).


 


Cease Trade Orders, Bankruptcies, Penalties
or Sanctions


 


No director or
executive officer of the Company is, as at the date of this AIF, or was, within ten years before the date of this AIF, a director, chief
executive officer or chief financial officer of any company (including the Company), that (a) was subject to a cease trade or similar
order or an order that denied the relevant company access to any exemption under the securities legislation, for a period of more than
30 consecutive days, or (b) was subject to an order that was issued after the director or executive officer ceased to be a director,
chief executive officer or chief financial officer and which resulted from an event that occurred while that person was acting in the
capacity as director, chief executive officer or chief financial officer.


 


No director or
executive officer of the Company, or a shareholder holding a sufficient number of securities of the Company to affect materially the
control of the Company (a) is, as at the date of this AIF, or has been within the 10 years before the date of this AIF, a director
or executive officer of any company (including the Company) that, while that person was acting in that capacity, or within a year of
that person ceasing to act in that capacity, became bankrupt, made a proposal under any legislation relating to bankruptcy or insolvency
or was subject to or instituted any proceedings, arrangement or compromise with creditors or had a receiver, receiver manager or trustee
appointed to hold its assets, or (b) has, within the 10 years before the date of this AIF, become bankrupt, made a proposal under
any legislation relating to bankruptcy or insolvency, or become subject to or instituted any proceedings, arrangement or compromise with
creditors, or had a receiver, receiver manager or trustee appointed to hold the assets of the director, executive officer or shareholder.


 






    
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No director, or
executive officer of the Company, or a shareholder holding a sufficient number of securities of the Company to affect materially the
control of the Company, has been subject to (a) any penalties or sanctions imposed by a court relating to securities legislation
or by a securities regulatory authority or has entered into a settlement agreement with a securities regulatory authority; or (b) any
other penalties or sanctions imposed by a court or regulatory body that would likely be considered important to a reasonable investor
in making an investment decision.


 


Committees of the Board


 


	Audit
    Committee	Gary
                                            Litwack, Chair

     

    Frederico Marques

     

    Marcelo Paiva

     

	Corporate
    Governance, Nomination and Compensation Committee	Frederico
                                            Marques, Chair

     

    Marcelo Paiva

     

    Ana Cristina
    Cabral-Gardner

     

	Technical
    Committee	Vicente
                                            Lobo, Co-Chair

     

    Wes Roberts,
    Co-Chair

     

    Calvyn Gardner

     

	Finance
    Committee	Marcelo
                                            Paiva, Chair

     

    Ana Cristina
    Cabral-Gardner

     

    Frederico Marques

     

	ESG
    Committee	Ana
                                            Cristina Cabral-Gardner, Chair

     

    Marcelo Paiva

     

    Maria José
    Gazzi Salum, Senior Advisor

     



 


Information concerning
the Audit Committee is provided under “Audit Committee Information” below.


 


Conflicts of Interest


 


To the best of
the Company’s knowledge, except as otherwise noted in the Company’s public disclosure documents, there are no existing or
potential conflicts of interest among the Company, its directors, officers, or other members of management of the Company except that
certain of the directors, officers and other members of management serve as directors, officers and members of management of other public
companies and therefore it is possible that a conflict may arise between their duties as a director, officer or member of management
of such other companies and their duties as a director, officer or member of management of the Company.


 


The directors and
officers of the Company are aware of the existence of laws governing accountability of directors and officers for corporate opportunity
and requiring disclosure by directors of conflicts of interest. The Company relies upon its directors and officers to disclose any such
conflicts or other aspects of accountability in accordance with the CBCA.


 






    
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The Company has
adopted a Code of Business Conduct and Ethics that applies to all directors, officers, employees and consultants of the Company and its
subsidiaries. A copy of the Company’s Code of Business Conduct and Ethics may be found on SEDAR at www.sedar.com.


 


AUDIT COMMITTEE
INFORMATION


 


Audit Committee Charter


 


The Company must,
pursuant to NI 52-110, have a written charter which sets out the duties and responsibilities of its Audit Committee. The terms of reference
of the Audit Committee are substantially reproduced at Schedule “A” hereto.


 


Composition of the Audit Committee


 


As of the date
hereof, the Audit Committee is comprised of:


 


	Name
    of Director	Independent
    (Yes/No)
	Gary
    Litwack	YES
	Frederico
    Marques	YES
	Marcelo
    Freire de Paiva	NO


 


Notes:


 


(1) Pursuant
to Section 6.1.1. of NI 52-110, independence for the purposes of the Audit Committee means the director is not an executive officer,
employee or control person of the Company or an affiliate of the Company.


 


Relevant Education and Experience


 


Collectively, the
Audit Committee has the education and experience to fulfill the responsibilities outlined in the Audit Committee Charter.


 


Mr. Litwack
has more than 25 years of experience advising boards and management of public companies on their financial and other reporting obligations,
and has worked extensively in reviewing and assisting in the preparation of MD&A and other financial reporting. He has extensive
experience with both commercial industry and capital markets arrangements entered into by resource companies.


 


Mr. Marques
has more than 25 years of experience on global transactions, particularly in the natural resources, renewable energy, agribusiness, and
construction sectors. He has previously worked as an in-house counsel for some of the leading and largest Brazilian public companies
and was a former member of the executive committee and co-head of the mining committee of the Brazil-Canada Chamber of Commerce.


 


Mr. Paiva
has more than 20 years of experience in asset management and investment banking at leading global institutions. His education includes
an MBA and a Masters in International Securities, Investment and Banking, and he is a CFA Charterholder.


 


Each member of
the Audit Committee has:


 


		(a)	an
                                            understanding of the accounting principles used by the Company to prepare its financial statements



 


		(b)	the
                                            ability to assess the general application of those principles in connection with the estimates,
                                            accruals and reserves



 


		(c)	experience
                                            in preparing, auditing, analyzing or evaluating financial statements that present a breadth
                                            and level of complexity of accounting issues that are generally comparable to the breadth
                                            and complexity of issues that can reasonably be expected to be raised by the issuer’s
                                            financial statements, or experience actively supervising individuals engaged in such activities



 


		(d)	an
                                            understanding of internal controls and procedures for financial reporting



 






    
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Audit Committee Oversight


 


Since the commencement
of the Company’s most recently completed financial year, the Audit Committee has not made any recommendations to nominate or compensate
an external auditor which were not adopted by the Board.


  


Reliance on Certain Exemptions


 


At no time since
the commencement of the Company’s most recently completed financial year has it relied on an exemption from NI 52-110, in whole
or in part, granted under Part 8 of NI 52 110 (securities regulatory authority exemption).


 


The Company is
relying on the exemption in Section 6.1 of NI 52-110 from the requirements of Part 3 (Composition of the Audit Committee)
although in any event a majority of the members of the Audit Committee are independent.


 


Pre-Approval Policies and Procedures


 


The Audit Committee
is authorized by the Board to review the performance of the Company’s external auditors, and approve in advance the provision of
services other than audit services and to consider the independence of the external auditors, including reviewing the range of services
provided in the context of all consulting services bought by the Company. The Audit Committee is authorized to approve any non-audit
services or additional work, which the Chairman of the Audit Committee deems as necessary.


 


Audit Fees


 


The fees for auditor
services billed by the Company’s external auditors for the last two fiscal years are as follows:


 


	Financial Year(1) (2)	 	Audit Fees	 	 	Audit-related Fees	 	 	Tax Fees	 	 	All Other Fees	 
	2019	 	$	189,754	 	 	$	                   -	 	 	$	15,000	 	 	$	            -	 
	2020	 	$	199,070	 	 	$	-	 	 	$	16,240	 	 	$	-	 



 


LEGAL PROCEEDINGS
AND REGULATORY ACTIONS


 


The Company is
not a party to, nor are any of the Company’s properties subject to, any pending legal proceedings or regulatory actions the
outcome of which would have a material adverse effect on the Company. Management of the Company is not aware of any material legal
proceedings or regulatory actions in which the Company may be a party which are contemplated by governmental authorities or
otherwise.


 


INTEREST OF MANAGEMENT
AND OTHERS IN MATERIAL TRANSACTIONS


 


Other than as disclosed
in documents filed by the Company on SEDAR, management of the Company is not aware of any material interest, direct or indirect, of any
insider of the Company, or any associate or affiliate of any such person, in any transaction within the Company’s three most recently
completed financial years, or during the current financial year that has materially affected or is reasonably expected to materially
affect the Company.


 


TRANSFER AGENT
AND REGISTRAR


 


The Company’s
registrar and transfer agent of the Common Shares is Computershare Investor Services Inc. located at its principal offices in Toronto,
Ontario.


 


MATERIAL CONTRACTS


 


Other than contracts
entered into in the ordinary course of business, and except as noted below (the material terms of which are further described herein),
the Company has not entered into any material contracts within the most recently completed financial year or previous to the most recently
completed financial year, that are still in effect.


 






    
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		1.	Amilcar
                                            Royalty Agreement dated December 11, 2017



 


		2.	Share
                                            Exchange Agreement dated December 22, 2017



 


		3.	Amended
                                            and Restated Royalty dated February 11, 2019



 


INTERESTS OF
EXPERTS


 


As at the date
of this AIF, each of the FS Qualified Persons holds less than one percent of the Company’s outstanding securities of the Company
or of any of the Company’s associates or affiliates.


 


The Company’s
auditors are KPMG LLP, Chartered Professional Accountants, who have prepared an independent auditor’s report dated May 3,
2021 in respect of the Company’s consolidated financial statements as at December 31, 2020. KPMG LLP has advised that they
are independent with respect to the Company within the meaning of the Chartered Professional Accountants of Ontario Code of Professional
Conduct.


 


ADDITIONAL INFORMATION


 


Additional information
including corporate governance policies of the Company, directors’ and officers’ remuneration and indebtedness, principal
holders of the Company’s securities and options to purchase Common Shares, and securities authorized for issuance under equity
compensation plans is contained in the management proxy circular dated May 28th, 2021 for the annual and special meeting
of the Company held on June 29th, 2021, which is available on SEDAR. Additional financial information is contained in
the Company’s comparative financial statements and MD&A and the Company’s most recently filed financial statements and
MD&A for a subsequent interim period, as at and for the years ended December 31, 2020 and 2019, which are available on SEDAR.


 






    
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                                                                                                                                    SCHEDULE
    “A”

    Audit Committee Charter

     

    8 September 2021



   

		

                                                    1.
	THE
                                            BOARD OF DIRECTORS’ MANDATE FOR THE AUDIT COMMITTEE



 


The Board of Directors (the “Board”)
has responsibility for the stewardship of Sigma Lithium Corporation (together with its subsidiaries, as applicable, the “Corporation”).
To discharge that responsibility, the Board is obligated by the Canada Business Corporations Act to supervise the management of
the business and affairs of the Corporation. The Board’s supervisory function involves Board oversight or monitoring of all significant
aspects of the management of the Corporation’s business and affairs.


 


Public financial reporting and disclosure
by the Corporation are fundamental to the Corporation’s business and affairs. The objective of the Board’s monitoring of
the Corporation’s financial reporting and disclosure is to gain reasonable assurance of the following:


 


	(a)	that
                                            the Corporation complies with all applicable laws, regulations, rules, policies and other
                                            requirement of governments, regulatory agencies and stock exchanges, if applicable, relating
                                            to financial reporting and disclosure;
	 	 
	(b)	that
                                            the accounting principles, significant judgements and disclosures which underlie or are incorporated
                                            in the Corporation’s financial statements are appropriate in the prevailing circumstances;
	 	 
	(c)	that
                                            the Corporation’s quarterly and annual financial statements are accurate within a reasonable
                                            level of materiality and present fairly the Corporation’s financial position and performance
                                            in accordance with generally accepted accounting principles; and
	 	 
	(d)	that
                                            appropriate information concerning the financial position and performance of the Corporation
                                            is disseminated to the public, to the extent required by applicable securities laws, in a
                                            timely manner in accordance with corporate and securities law and with stock exchange regulations,
                                            if applicable.



 


The Board is of the view that monitoring
of the Corporation’s financial reporting and disclosure policies and procedures cannot be reliably met unless the following activities
(the “Fundamental Activities”) are, in all material respects, conducted effectively:


 


	(a)	the
                                            Corporation’s accounting functions are performed in accordance with a system of internal
                                            financial controls designed to capture and record properly and accurately all of the Corporation’s
                                            financial transactions and consistent with internal financial controls implemented by companies
                                            of similar size and peer group as the Corporation;



 


	(b)	the
                                            internal financial controls are regularly assessed for effectiveness and efficiency consistent
                                            with assessments performed by company’s of similar size and peer group as the Corporation;



 


	(c)	the
                                            Corporation’s quarterly and annual financial statements are properly prepared by management
                                            to comply with International Financial Reporting Standards (“IFRS”); and



 


	(d)	the
                                            Corporation’s annual financial statements (and, if determined necessary by the Board,
                                            its quarterly financial statements) are reported on by an external auditor appointed by the
                                            shareholders of the Corporation.



 


To assist the Board in its monitoring
of the Corporation’s financial reporting and disclosure, and to conform to applicable corporate and securities law, the Board has
established the Audit Committee (the “Committee”) of the Board.


 


The role of the Committee is to assist
the Board in its oversight of the integrity of the financial and related information of the Corporation, including its consolidated financial
statements, the internal controls and procedures for financial reporting and the processes for monitoring compliance with legal and regulatory
requirements and to review the independence, qualifications and performance of the external auditor of the Corporation. Management is
responsible for establishing and maintaining those controls, procedures and processes and the Committee is appointed by the Board to
review and monitor them.


 


		2.	COMPOSITION
                                            OF COMMITTEE



 


The Committee shall be appointed annually
by the Board and consist of at least three members from among the directors of the Corporation, at least a majority of whom (or, if required
by applicable law or stock exchange rules, each of whom) shall be an independent director, subject to applicable grace periods provided
by The Nasdaq Stock Market, and must not have participated in the preparation of the financial statements of the Corporation or any current
subsidiary of the Corporation at any time during the past three years. Officers of the Corporation who are also directors may not serve
as members of the Committee. In accordance with National Instrument 58-101, a director is considered “independent” to the
Corporation if he or she has no direct or indirect “material relationship” with the Corporation or any of its subsidiaries
which could, in the view of the Board, reasonably interfere with the exercise of his or her independent judgment. Notwithstanding the
foregoing, a director will be deemed to have a “material relationship” with the Corporation (and therefore be considered
as not independent) if he or she falls in one of the categories listed in Schedule “A” attached hereto. All members of the
Committee must also be “financially literate” (meaning that he or she has the ability to read and understand a set of financial
statements that present a breadth and level of complexity of accounting issues that are generally comparable to the breadth and complexity
of the issues that can reasonably be expected and be raised by the Corporation’s financial statements).


 


The Board shall designate a chairperson
of the Committee (the “Chair”).


 






    
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In the event of a vacancy arising
in the Committee or a loss of independence of any member (if previously independent and as a result the composition of the Committee
no longer meets applicable independence requirements), the Committee will fill the vacancy within six months or by the following annual
shareholders’ meeting if sooner.


 


		3.	RELIANCE
                                            ON EXPERTS



 


In contributing to the Committee’s
discharging of its duties under this Charter, each member of the Committee shall be entitled to rely in good faith upon:


 


	(a)	financial statements
                                            of the Corporation represented to him by an officer of the Corporation or in a written report
                                            of the external auditors to present fairly the financial position of the Corporation in accordance
                                            with generally accepted accounting principles; and
	 	 
	(b)	any report of a lawyer,
                                            accountant, engineer, appraiser or other person whose profession lends credibility to a statement
                                            made by any such person.



 


		4.	LIMITATIONS
                                            ON COMMITTEE’S DUTIES



 


In contributing to the Committee’s
discharging of its duties under this Charter, each member of the Committee shall be obliged only to exercise the care, diligence and
skill that a reasonably prudent person would exercise in comparable circumstances. Nothing in this Charter is intended, or may be construed,
to impose on any member of the Committee a standard of care or diligence that is in any way more onerous or extensive than the standard
to which all Board members are subject. The essence of the Committee’s duties is monitoring and reviewing to endeavor to gain reasonable
assurance (but not to ensure) that the Fundamental Activities are being conducted effectively and that the objectives of the Corporation’s
financial reporting are being met and to enable the Committee to report thereon to the Board.


 


		5.	AUDIT
COMMITTEE RESPONSIBILITIES (GENERAL)



 


This Charter outlines how the Committee
will satisfy the requirements set forth by the Board in its mandate, reflecting the following:


 


		§	Operating
                                            principles;



		§	Operating
                                            procedures; and



		§	Specific
                                            responsibilities and duties.



 


While
the Committee has the responsibilities set forth in this Charter, it is not the duty of the Committee to prepare the financial statements,
plan or conduct audits or to determine that the Corporation’s financial statements and disclosures are complete and accurate and
are in accordance with IFRS and applicable rules and regulations. Primary responsibility for the financial reporting, information systems,
risk management, and disclosure controls and internal controls of the Corporation is vested in management.


 


		(a)	Operating
                                            Principles



 


The
Committee shall fulfill its responsibilities within the context of the following principles:


 


		(i)	Committee
                                            Values



 


The
Committee expects management of the Corporation to operate in compliance with corporate policies; reflecting laws and regulations governing
the Corporation; and to maintain strong financial reporting and control processes.


 


		(ii)	Communications



 


The
Committee, and its members, expect to have direct, open and frank communications throughout the year with management, other committee
chairs, the external auditors, and other key Committee advisors or Corporation staff members, as applicable.


 


		(iii)	Delegation



 


The
Committee may delegate from time to time to any person or committee of persons any of the Committee’s responsibilities that may
be lawfully delegated.


 


		(iv)	Financial
                                            Literacy



 


All
Committee members should be sufficiently versed in financial matters to read and understand the Corporation’s financial statements
and also to understand the Corporation’s accounting practices and policies and the major judgements involved in preparing the financial
statements.


 


		(v)	Annual
                                            Committee Work Plan



 


The
Committee, in consultation with management and the external auditors, shall develop an annual Committee work plan responsive to the Committee’s
responsibilities as set out in this Charter. In addition, the Committee, in consultation with management and the external auditors, shall
participate in a process for review of important financial topics that have the potential to impact the Corporation’s financial
disclosure.


 






    
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The work
plan will be focused primarily on the annual and interim financial statements of the Corporation; however, the Committee may at its sole
discretion, or the discretion of the Board, review such other matters as may be necessary to satisfy the obligations set out in this
Charter.


 


		(vi)	Meeting
                                            Agenda



 


Committee
meeting agendas shall be the responsibility of the Chair of the Committee in consultation with other Committee members, senior management
and the external auditors.


 


		(vii)	Committee
                                            Expectations and Information Needs



 


The
Committee shall communicate its expectations to management and the external auditors with respect to the nature, timing and extent of
its information needs. The Committee expects that written materials will be received from management and the external auditors at a reasonable
time in advance of meeting dates.


 


		(viii)	Access
                                            to Committee



 


Representatives
of the external auditor and management of the Corporation shall have access to the Committee each in the absence of the other.


 


		(ix)	External
                                            Resources



 


To assist
the Committee in discharging its responsibilities, the Committee may at its discretion, in addition to the external auditors, at the
expense of the Corporation, retain one or more persons having special expertise, including independent counsel.


 


		(x)	In
                                            Camera Meetings



 


At the
discretion of the Committee, the members of the Committee shall meet in private session with the external auditors. In addition, at the
discretion of the Committee, the members of the Committee shall meet in private with management of the Corporation, without the auditors
being present at such meeting.


 


		(xi)	Reporting
                                            to the Board



 


The
Committee, through its Chair, shall report after each Committee meeting to the Board at the Board’s next regular meeting.


 


		(xii)	The
                                            External Auditors



 


The
Committee expects that, in discharging their responsibilities to the shareholders, the external auditors shall report directly to and
be accountable to the Committee. The external auditors shall report all material issues or potentially material issues, either specific
to the Corporation or to the financial reporting environment in general, to the Committee.


 


		(xiii)	Funding



 


The
Corporation shall provide for appropriate funding, as determined by the Committee, in its capacity as a committee of the board of directors,
for payment of:


 


		(A)	Compensation
                                            to any registered public accounting firm engaged for the purpose of preparing or issuing
                                            an audit report or performing other audit, review or attest services for the listed issuer;
	 	 	 
		(B)	Compensation to any advisers
                     employed by the Committee; and
	 	 	 
		(C)	Ordinary administrative expenses
                     of the Committee that are necessary or appropriate in carrying out its duties.



 


		(b)	Operating
                                            Procedures



 


		(i)	The
                                            Committee shall meet at least four times annually, or more frequently as circumstances dictate.
                                            Meetings shall be held at the call of the Chair, upon the request of two members of the Committee
                                            or at the request of the external auditors.



 


		(ii)	A
                                            quorum shall be a majority of the members.



 


		(iii)	Unless
                                            the Committee otherwise specifies, the Corporate Secretary (or her or his deputy) of the
                                            Corporation shall act as Corporate Secretary of all meetings of the Committee.



 


		(iv)	In
                                            the absence of the Chair of the Committee, the members shall appoint an acting Chair.



 


		(v)	A
                                            copy of the minutes of each meeting of the Committee shall be provided to each member of
                                            the Committee and to each director of the Corporation in a timely fashion.



 


		(vi)	Notice
                                            of the time and place of every meeting shall be given in writing by any means of transmitted
                                            or recorded communication, including facsimile, email or other electronic means that produces
                                            a written copy, to each member of the Committee at least 24 hours prior to the time fixed
                                            for such meeting; provided, however, that a member of the Committee may in any manner waive
                                            a notice of the meeting. Attendance of a member of the Committee at a meeting constitutes
                                            waiver of notice of the meeting, except where the member attends the meeting for the express
                                            purpose of objecting to the transaction of any business on the grounds that the meeting has
                                            not been lawfully called.



 


		(vii)	Subject
                                            to any law or the articles and by-laws of the Corporation, the Committee shall fix its own
                                            procedures at meetings, keep records of its proceedings and report to the Board when the
                                            Committee may deem appropriate (but not later than the next regularly scheduled meeting of
                                            the Board).


 






    
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		6.	SPECIFIC
                                            RESPONSIBILITIES AND DUTIES OF AUDIT COMMITTEE



 


To fulfill
its responsibilities and duties, the Committee shall:


 


		(a)	Financial
                                            Reporting



 


		(i)	Review,
                                            prior to public release, the Corporation’s annual and quarterly financial statements
                                            with management and the external auditors (with respect to quarterly financial statements,
                                            if they are to be reviewed by the external auditors) with a view to gaining reasonable assurance
                                            that the statements (A) are accurate within reasonable levels of materiality, (B) complete,
                                            and (C) represent fairly the Corporation’s financial position and performance in accordance
                                            with IFRS. The Committee shall report thereon to the Board before such financial statements
                                            are approved by the Board (with respect to quarterly financial statements, if they are to
                                            be prepared and approved by the Board, and not just the Committee).



 


		(ii)	Receive
                                            from the external auditors reports of their review of the annual and quarterly financial
                                            statements (with respect to quarterly financial statements, if they are to be reviewed by
                                            the external auditors) and any management letters issued to the management of the Corporation.



 


		(iii)	Receive
                                            from management a copy of any representation letter provided to the external auditors and
                                            receive from management any additional representations required by the Committee.



 


		(iv)	Review,
                                            prior to public release, to the extent required pursuant to applicable securities laws, and,
                                            if appropriate, recommend approval to the Board, of news releases, to the extent required
                                            pursuant to applicable securities laws, and reports to shareholders issued by the Corporation
                                            with respect to the Corporation’s annual and quarterly financial statements.



 


		(v)	Review
                                            and, if appropriate, recommend approval to the Board of financial statements included in
                                            prospectuses, material change disclosures of a financial nature, management discussion and
                                            analysis, annual information forms and similar components of disclosure documents that may
                                            be issued by the Corporation.



 


		(vi)	Establish
                                            procedures for the receipt, retention and treatment of complaints received by the Corporation
                                            from any party regarding accounting, auditing or internal controls and the confidential,
                                            anonymous submission by employees of the Corporation of concerns regarding questionable accounting
                                            or auditing matters. For greater certainty, the Committee’s responsibilities in this
                                            area will not include complaints about minor operational issues. Examples of minor operational
                                            issues include late payment of invoices, minor disputes over accounts owing or receivable,
                                            revenue and expense allocations and other similar items characteristic of the normal daily
                                            operations of the accounting department of a mining company.



 


		(b)	Accounting
                                            Policies



 


		(i)	Review
                                            with management and the external auditors the appropriateness of the Corporation’s
                                            accounting policies, disclosures, reserves, key estimates and judgements, including changes
                                            or variations thereto.



 


		(ii)	Obtain
                                            reasonable assurance that they are in compliance with IFRS from management and external auditors
                                            and report thereon to the Board.



 


		(iii)	Review
                                            with management and the external auditors the degree of conservatism of the Corporation’s
                                            underlying accounting policies, key estimates and judgements and provisions along with quality
                                            of financial reporting.



 


		(iv)	Participate,
                                            if requested, in the resolution of disagreements, between management and the external auditors.



 


		(v)	If
                                            applicable, review with management the policies and procedures used for the categorization
                                            of flow-through expenditures and the qualification of such expenditures to satisfy the Corporation’s
                                            existing obligations.



 


		(c)	Risk
                                            and Uncertainty



 


		(i)	Acknowledging
                                            that it is the responsibility of the Board, in consultation with management, to identify
                                            the principal business risks facing the Corporation, determine the Corporation’s tolerance
                                            for risk and approve risk management policies. The Committee shall focus on financial risk
                                            and gain reasonable assurance that financial risk is being effectively managed or controlled
                                            by:



 


		(A)	reviewing
                                            with management the Corporation’s tolerance for financial risks;



 


		(B)	reviewing
                                            with management its assessment of the significant financial risks facing the Corporation;



 


		(C)	reviewing
                                            with management the Corporation’s policies and any proposed changes thereto for managing
                                            those significant financial risks; and



 


		(D)	reviewing
                                            with management its plans, processes and programs to manage and control such risks.



 






    
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		(ii)	Review
                                            policies and compliance therewith that require significant actual or potential liabilities,
                                            contingent or otherwise, to be reported to the Board in a timely fashion.



 


		(iii)	Review
                                            foreign currency, interest rate and commodity price risk mitigation strategies, including
                                            the use of derivative financial instruments.



 


		(iv)	Review
                                            the adequacy of insurance coverages maintained by the Corporation.



 


		(v)	Review
                                            regularly with management, the external auditors and the Corporation’s legal counsel,
                                            any legal claims or other contingencies, including tax assessments, that could have a material
                                            effect upon the financial position or operating results of the Corporation and the manner
                                            in which these matters have been disclosed in the financial statements.



 


		(d)	Financial
                                            Controls and Control Deviations



 


		(i)	Review
                                            the plans of the external auditors to gain reasonable assurance that the evaluation and testing
                                            of applicable internal financial controls is comprehensive, coordinated and cost-effective.



 


		(ii)	Receive
                                            regular reports from management and the external auditors on all significant deviations or
                                            indications/detection of fraud and the corrective activity undertaken in respect thereof.



 


		(iii)	Institute
                                            a procedure that will permit any employee of the Corporation, including management employees,
                                            to bring to the attention of the Chair, under conditions of confidentiality, concerns relating
                                            to financial controls and reporting which are material in scope and which cannot be addressed,
                                            in the employee’s judgement, through existing reporting structures in the Corporation.



 


		(iv)	Receive
                                            and periodically assess reports from management on the policies and procedures used to asses
                                            and ensure the adequacy of controls over financial information disclosed to the public, which
                                            is extracted or derived from the Corporation’s financial statements.



 


		(e)	Compliance
                                            with Laws and Regulations



 


		(i)	Review
                                            regular reports from management and others (e.g. external auditors) with respect to the Corporation’s
                                            compliance with laws and regulations having a material impact on the financial statements
                                            including:



 


		(A)	tax
                                            and financial reporting laws and regulations;



 


		(B)	legal
                                            withholding requirements; and



 


		(C)	other
                                            laws and regulations which expose directors to liability.



 


		(ii)	Review
                                            the filing status of the Corporation’s tax returns, (if applicable) flow-through share
                                            renunciation filings and those of its subsidiaries.



 


		(f)	Relationship
                                            with External Auditors



 


		(i)	Be
                                            directly responsible for the appointment and retention any external auditors engaged.



 


		(ii)	Approve
                                            the remuneration and the terms of engagement of the external auditors as set forth in the
                                            relevant engagement letter. The Chair has the authority to pre-approve non-audit services
                                            which may be required from time to time.



 


		(iii)	Review
                                            the performance of the external auditors annually or more frequently as required (including
                                            resolution of disagreements between management and the auditors regarding financial reporting).



 


		(iv)	Receive
                                            annually from the external auditors an acknowledgement in writing that the shareholders,
                                            as represented by the Board and the Committee, are their primary client.



 


		(v)	Receive
                                            a report annually from the external auditors with respect to their independence, such report
                                            to include a disclosure of all engagements (and fees related thereto) for non-audit services
                                            by the Corporation.



 


		(vi)	Review
                                            with the external auditors the scope of the audit, the areas of special emphasis to be addressed
                                            in the audit, and the materiality levels which the external auditors propose to employ.



 


		(vii)	Meet
                                            with the external auditors in the absence of management to determine, inter alia, that no
                                            management restrictions have been placed on the scope and extent of the audit examinations
                                            by the external auditors or the reporting of their findings to the Committee.



 


		(viii)	Establish
                                            effective communication processes with management and the Corporation’s external auditors
                                            to assist the Committee to monitor objectively the quality and effectiveness of the relationship
                                            among the external auditors, management and the Committee.



 


		(ix)	Establish
                                            a reporting relationship between the external auditors and the Committee such that the external
                                            auditors can bring directly to the Committee matters that, in the judgement of the external
                                            auditors, merit the Committee’s attention. In particular, the external auditors will
                                            advise the Committee as to disagreements between management and the external auditors regarding
                                            financial reporting and how such disagreements were resolved.



 


		(x)	Receive
                                            a formal written statement delineating all relationships between the external auditors and
                                            the Corporation, actively engage in a dialogue with the external auditors with respect to
                                            any disclosed services or relationships that might impact their objectivity and independence,
                                            and as needed, take or recommend the Board take appropriate action to oversee the independence
                                            of the external auditors.



 






    
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		(g)	Other Responsibilities



 


		(i)	After
                                            consultation with the Chief Financial Officer and the external auditors, consider at least
                                            annually, the quality and sufficiency of the Corporation’s accounting and financial
                                            personnel and other resources.



 


		(ii)	Approve
                                            in advance non-audit services, including tax advisory and compliance services, provided by
                                            the external auditors. However, the Committee can establish a threshold amount for fees for
                                            non-audit services to be provided by the external auditors without advance approval of the
                                            Committee. The nature of such services and the associated cost will be provided to the Committee
                                            at the next following meeting.



 


		(iii)	Investigate
                                            any matters that, in the Committee’s discretion, fall within the Committee’s
                                            duties.



 


		(iv)	Perform
                                            such other functions as may from time to time be assigned to the Committee by the Board.



 


		(v)	Review
                                            this Charter on a regular basis and prepare any appropriate updates for approval by the Board.



 


		(vi)	Review
                                            disclosures regarding the organization and duties of the Committee to be included in any
                                            public document, including quarterly and annual reports to shareholders, information circulars
                                            and annual information forms.



 


		(vii)	Review and reassess
                                            the adequacy of this Charter on an annual basis.



 


		(viii)	Conduct an appropriate
                                            review and oversight of all related party transactions for potential conflict of interest
                                            situations on an ongoing basis.



 


EXHIBIT
 “A” TO THE AUDIT COMMITTEE CHARTER


 


Meaning of “material relationship”


 


A “material relationship”
is a relationship that could, in the view of the issuer’s board of directors, be reasonably expected to interfere with the exercise
of a member’s independent judgment.


 


The following individuals are considered
to have a material relationship with the issuer:


 


		(A)	an individual who
                                            is, or has been within the last three years, an employee or executive officer of the issuer;



 


		(B)	an individual whose
                                            immediate family member is, or has been within the last three years, an executive officer
                                            of the issuer;



 


		(C)	an individual who:
                                            (i) is a partner of a firm that is the issuer’s internal or external auditor,



 


		(D)	(ii) is an employee
                                            of that firm, or (iii) was within the last three years a partner or employee of that firm
                                            and personally worked on the issuer’s audit within that time;



 


		(E)	an individual whose
                                            spouse, minor child or stepchild, or child or stepchild who shares a home with the individual:
                                            (i) is a partner of a firm that is the issuer’s internal or external auditor; (ii)
                                            is an employee of that firm and participates in its audit, assurance or tax compliance (but
                                            not tax planning) practice, or (iii) was within the last three years a partner or employee
                                            of that firm and personally worked on the issuer’s audit within that time;



 


		(F)	an individual who,
                                            or whose immediate family member, is or has been within the last three years, an executive
                                            officer of an entity if any of the issuer’s current executive officers serves or served
                                            at that same time on the entity’s compensation committee; and



 


		(G)	an individual who
                                            received, or whose immediate family member who is employed as an executive officer of the
                                            issuer received, more than $75,000 in direct compensation from the issuer during any 12 month
                                            period within the last three years.



 


An individual will not be considered
to have a material relationship with the issuer solely because (a) he or she had a relationship identified above if that relationship
ended before March 30, 2004; or (b) he or she had a relationship identified above by virtue of such relationship being with a subsidiary
entity or a parent of that issuer, if that relationship ended before June 30, 2005.


 


An individual will not be considered
to have a material relationship with the issuer solely because the individual or his or her immediate family member (a) has previously
acted as an interim chief executive officer of the issuer, or (b) acts, or has previously acted, as a chair or vice-chair of the board
of directors or of any board committee of the issuer on a part-time basis.


 


For the purposes of “C”
and “D” above, a partner does not include a fixed income partner whose interest in the firm that is the internal or external
auditor is limited to the receipt of fixed amounts of compensation (including deferred compensation) for prior service with that firm
if the compensation is not contingent in any way on continued service.


 






    
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For the purposes of “F”
above, direct compensation does not include: (a) remuneration for acting as a member of the board of directors or of any board committee
of the issuer, and (b) the receipt of fixed amounts of compensation under a retirement plan (including deferred compensation) for prior
service with the issuer if the compensation is not contingent in any way on continued service.


 


Despite any determination made whether
an individual has a material relationship with an issuer, an individual who (a) accepts directly or indirectly, any consulting, advisory
or other compensatory fee from the issuer or any subsidiary entity of the issuer, other than as remuneration for acting in his or her
capacity as a member of the board of directors or any board committee, or as a part-time chair or vice-chair of the board or any board
committee; or (b) is an affiliated entity of the issuer or any of its subsidiary entities, is considered to have a material relationship
with the issuer. The indirect acceptance by an individual of any such consulting, advisory or other compensatory fee includes acceptance
of a fee by (a) an individual’s spouse, minor child or stepchild, or a child or stepchild who shares the individual’s home;
or (b) an entity in which such individual is a partner, member, an officer such as a managing director occupying a comparable position
or executive officer, or occupies a similar position (except limited partners, non-managing members and those occupying similar positions
who, in each case, have no active role in providing services to the entity) and which provides accounting, consulting, legal, investment
banking or financial advisory services to the issuer or any subsidiary entity of the issuer. Compensatory fees do not include the receipt
of fixed amounts of compensation under a retirement plan (including deferred compensation) for prior service with the issuer if the compensation
is not contingent in any way on continued service.


 


“company” - any
corporation, incorporated association, incorporated syndicate or other incorporated organization;


 


“control” - the direct
or indirect power to direct or cause the direction of the management and policies of a person or company, whether through ownership
of voting securities or otherwise;


 


“executive officer” of
an entity – means an individual who is (a) a chair of the entity; (b) a vice- chair of the entity; (c) the president of the entity;
(d) a vice-president of the entity in charge of a principal business unit, division or function including sales, finance or production;
(e) an officer of the entity or any of its subsidiary entities who performs a policy-making function in respect of the entity; or (f)
any other individual who performs a policy-making function in respect of the entity;


 


“issuer” includes a subsidiary
entity of the issuer and a parent of the issuer;


 


“person” - an individual
partnership, unincorporated association, unincorporated syndicate, unincorporated organization, trust, trustee, executor, administrator,
or other legal representative; and


 


“subsidiary entity” -
a person or company is considered to be a subsidiary entity of another person or company if (a) it is controlled by (i) that other, or
(ii) that other and one or more persons or companies each of which is controlled by that other, or (iii) two or more persons or companies,
each of which is controlled by that other; or (b) it is a subsidiary entity of a person or company that is the other's subsidiary entity.


 


Approved by the Board on September
8, 2021


 









    
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	SCHEDULE
    “B”

    DEFINITIONS


 


The following is a glossary of certain defined
terms used in this AIF. Where the context requires, (i) words importing the singular include the plural and vice versa and (ii)
words importing any gender include all genders.


 


	“A10 FIA”    	means A10 Investimentos Fundo de Investimento de Ações – Investimento no Exterior.    
	“A10 Group”	means a group of companies owned by certain directors of the Company
	“Board”	means the board of directors of the Company.
	“Capex”	means the capital expenditure defined in the Updated Feasibility Study Report.
	“CBCA”	means the Canada Business Corporations Act.
	“CIM Definition Standards”	means the Canadian Institute of Mining, Metallurgy and Petroleum (CIM) Definition Standards for Mineral Resources and Mineral Reserves.
	“cm”	means centimeters.
	“Common Shares”	means common shares in the capital of the Company.
	“Company” or “Sigma”	means Sigma Lithium Corporation (formerly named Sigma Lithium Resources Corporation) and, as the context requires, its subsidiaries.
	“DMS”	means dense media separation.
	“Feasibility Study Report”	means the technical report titled “Grota do Cirilo Lithium Project, Araçuaí and Itinga Regions, Minas Gerais, Brazil, NI 43-101 Technical Report on Feasibility Study, Final Report” dated October 18, 2019, with an effective date of September 16, 2019.
	“First Mine”	means the Xuxa deposit located in the Project.
	“FS Qualified Persons”	has the meaning given under “Description of the Business - Summary of Updated Feasibility Study Report”.
	“GAAP”	means Generally Accepted Accounting Principles.
	“IFRS”	means International Financial Reporting Standards.
	“kg”	means kilograms.
	“km”	means kilometers.
	“km2”	means square kilometers.
	“Kv”	means kilovolts.
	“LCE”	means lithium carbonate equivalent. Lithium is converted to lithium carbonate (Li2CO3) by multiplying lithium metal mass by 5.323.
	“Li2O”	means lithium oxide.
	“m”	means meters.
	“m3”	means cubic meters.
	“MD&A” 	means management discussion and analysis.
	“mm”	means millimeters.
	“mg/L”	means milligrams per liter.
	“NI 43-101”	means National Instrument 43-101 Standards of Disclosure for Mineral Projects of the Canadian Securities Administrators.
	“NI 52-110”	means National Instrument 52-110 Audit Committees of the Canadian Securities Administrators.
	“ppm”	means parts per million.
	“Production Phase 1”	means the first phase of production that will produce 220,000 tonnes per year of Battery Grade Green and Sustainable Lithium (33,000 tonnes per year of LCE) in the First Mine



 






    
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	“Production Phase 2”	means the second phase of production that, if warranted after the ongoing feasibility study, will increase production to 440,000 tonnes per year of Battery Grade Green and Sustainable Lithium (66,000 tonnes per year of LCE) in the Second Mine
	“Production Plant”	means the commercial production plant as described in the Updated Feasibility Study Report.
	“Qualified Person”	means a qualified person for purposes of NI 43-101.
	“SEC”	means the U.S. Securities and Exchange Commission.
	“Second Mine”	means the Barreiro deposit located in the Project.
	“SEDAR”	means the System for Electronic Document Analysis and Retrieval developed for the Canadian Securities Administrators (www.sedar.com).
	“Sigma Holdings”	means Sigma Lithium Resources Inc., the wholly-owned British Columbia subsidiary of the Company through which Sigma Brazil is held.
	“Sigma Brazil”	means Sigma Mineração S.A., the indirect wholly-owned Brazilian subsidiary of the Company.
	“t”	means tonnes.
	“TSXV”	means the TSX Venture Exchange.
	“Updated Feasibility Study Report”	means the technical report titled “Grota do Cirilo
Lithium Project Araçuaí and Itinga Regions, Minas Gerais, Brazil, Amended and Restated Phase 2 (Barreiro) Update of the
NI 43-101 Technical Report on Feasibility Study”, dated November 22, 2021, and with an effective date of June 2, 2021, prepared
by the FS Qualified Persons.
	“Var”	means variability.      
	 	 



Certain Other Definitions


 


	“material relationship”	A “material relationship” is a relationship that could, in the view of the issuer’s board of directors, be reasonably expected to interfere with the exercise of a member’s independent judgment. The following individuals are considered to have a material relationship with the issuer:
	 	 
	 	A.	an
    individual who is, or has been within the last three years, an employee or executive officer of the issuer;
	 	 	 
	 	B.	an
    individual whose immediate family member is, or has been within the last three years, an executive officer of the issuer;
	 	 	 
	 	C.	an
    individual who: (i) is a partner of a firm that is the issuer’s internal or external auditor, (ii) is an employee of that firm,
    or (iii) was within the last three years a partner or employee of that firm and personally worked on the issuer’s audit within
    that time;
	 	 	 
	 	D.	an
    individual whose spouse, minor child or stepchild, or child or stepchild who shares a home with the individual: (i) is a partner
    of a firm that is the issuer’s internal or external auditor; (ii) is an employee of that firm and participates in its audit,
    assurance or tax compliance (but not tax planning) practice, or (iii) was within the last three years a partner or employee of that
    firm and personally worked on the issuer’s audit within that time;
	 	 	 
	 	E.	an
    individual who, or whose immediate family member, is or has been within the last three years, an executive officer of an entity if
    any of the issuer’s current executive officers serves or served at that same time on the entity’s compensation committee;
    and
	 	 	 
	 	F.	an
    individual who received, or whose immediate family member who is employed as an executive officer of the issuer received, more than
    $75,000 in direct compensation from the issuer during any 12-month period within the last three years.
	 	An individual will not be considered to have a material relationship with the issuer solely because (a) he or she had a relationship identified above if that relationship ended before March 30, 2004; or (b) he or she had a relationship identified above by virtue of such relationship being with a subsidiary entity or a parent of that issuer, if that relationship ended before June 30, 2005.
	 	 
	 	An individual will not be considered to have a material relationship with the issuer solely because the individual or his or her immediate family member (a) has previously acted as an interim chief executive officer of the issuer, or (b) acts, or has previously acted, as a chair or vice-chair of the board of directors or of any board committee of the issuer on a part-time basis.
	 	 
	 	For the purposes of “C” and “D” above, a partner does not include a fixed income partner whose interest in the firm that is the internal or external auditor is limited to the receipt of fixed amounts of compensation (including deferred compensation) for prior service with that firm if the compensation is not contingent in any way on continued service.



 






    
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	 	For the purposes of “F” above,
    direct compensation does not include: (a) remuneration for acting as a member of the board of directors or of any board committee
    of the issuer, and (b) the receipt of fixed amounts of compensation under a retirement plan (including deferred compensation) for
    prior service with the issuer if the compensation is not contingent in any way on continued service.
	 	 
	 	Despite any determination made whether an
    individual has a material relationship with an issuer, an individual who (a) accepts directly or indirectly, any consulting, advisory
    or other compensatory fee from the issuer or any subsidiary entity of the issuer, other than as remuneration for acting in his or
    her capacity as a member of the board of directors or any board committee, or as a part-time chair or vice-chair of the board or
    any board committee; or (b) is an affiliated entity of the issuer or any of its subsidiary entities, is considered to have a material
    relationship with the issuer. The indirect acceptance by an individual of any such consulting, advisory or other compensatory fee
    includes acceptance of a fee by (a) an individual’s spouse, minor child or stepchild, or a child or stepchild who shares the
    individual’s home; or (b) an entity in which such individual is a partner, member, an officer such as a managing director occupying
    a comparable position or executive officer, or occupies a similar position (except limited partners, non-managing members and those
    occupying similar positions who, in each case, have no active role in providing services to the entity) and which provides accounting,
    consulting, legal, investment banking or financial advisory services to the issuer or any subsidiary entity of the issuer. Compensatory
    fees do not include the receipt of fixed amounts of compensation under a retirement plan (including deferred compensation) for prior
    service with the issuer if the compensation is not contingent in any way on continued service.
	 	 
	“company”	any corporation, incorporated
    association, incorporated syndicate or other incorporated organization.
	 	 
	“control”	the direct or indirect power
    to direct or cause the direction of the management and policies of a person or company, whether through ownership of voting securities
    or otherwise.
	 	 
	“executive officer”	of an entity – means
    an individual who is (a) a chair of the entity; (b) a vice-chair of the entity; (c) the president of the entity; (d) a vice-president
    of the entity in charge of a principal business unit, division or function including sales, finance or production; (e) an officer
    of the entity or any of its subsidiary entities who performs a policy-making function in respect of the entity; or (f) any other
    individual who performs a policy-making function in respect of the entity.
	 	 
	“issuer”	includes a subsidiary entity
    of the issuer and a parent of the issuer.
	 	 
	“person”	an individual, partnership,
    unincorporated association, unincorporated syndicate, unincorporated organization, trust, trustee, executor, administrator, or other
    legal representative.
	 	 
	“subsidiary entity”	a person or company is considered
    to be a subsidiary entity of another person or company if (a) it is controlled by (i) that other, or (ii) that other and one or more
    persons or companies each of which is controlled by that other, or (iii) two or more persons or companies, each of which is controlled
    by that other; or (b) it is a subsidiary entity of a person or company that is the other's subsidiary entity.


 






    
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