Austral Gold Limited has signed a letter of intent (LOI) with Colossus Resources Corp. (Colossus) pursuant to which Austral, together with its subsidiaries Revelo Resources Corp. and Minera Mena Chile Ltda.

(collectively, the "Austral Group"), proposed to grant an option to Colossus to purchase the Austral Group's non-core Calvario and Mirador copper projects in northern Chile (collectively, the "Projects"). The Projects are early-stage copper exploration projects located approximately 80 km northeast of the coastal city of La Serena in the Coquimbo Region of central-northern Chile in South America, approximately 700 km from the Austral Group's Guanaco-Amancaya mine complex. Grant of the Option is subject to conditions, including the negotiation and execution of a definitive agreement, the necessary approval of the transaction by the regulatory authorities, and certain undertakings from Colossus, including the requirement that Colossus complete an equity financing in which it raises net proceeds of at least USD 1.5 million.

The LOI provides for the execution of a definitive agreement on or before May 30, 2023 (Agreement Deadline) that would include: Work Commitment: USD 2.5 million in exploration expenditures on the Calvario and Mirador projects (Projects) over a period of two years, of which at least USD 1.5 million must be incurred in the first 18 months and inclusive of the USD 100,000 payment to the Austral Group on the execution date of the LOI. Dhares: Upon signing the definitive agreement, issuance from treasury of such number of Colossus shares equivalent to 19.9% shareholding in Colossus on a non-diluted basis. Colossus will agree to seek shareholder approval to the constitution of Austral as a 'control person' of Colossus.

Options: One million options, each exercisable for one ordinary share of Colossus at an exercise price of CAD 0.50 until the third anniversary of the date of the definitive agreement. The options can only be exercised to the extent Austral Group will not exceed voting power in Colossus of 19.9% unless and until Colossus obtains shareholder approval for the constitution of the Austral Group as a control person, and Colossus will agree to seek such approval. Contingent Payment: If a pre-feasibility study is prepared in respect of the Projects, Colossus shall issue to Austral Group 2 million common shares of Colossus, provided that if as a result of such issuance the percentage interest of the Austral Group would exceed 19.9% Colossus will seek the approval for the constitution of Austral Group as a control person and until such date the parties shall defer a portion of the share issuance such that they maintain the Austral Group's percentage interest in Colossus at or below 19.9%.

Anti-Dilution Rights and Participation Rights: Colossus will grant to the Austral Group an anti-dilution right so that Austral Group's interest in Colossus remains at 19.9% through the raising of USD 3.8 million, inclusive of the USD 2.5 million exploration expenditures on the Projects above mentioned, as well as pre-emptive rights to participate, pro rata, in future financings of Colossus until the third anniversary of the closing date. Cash: USD 100,000 on executing the letter of intent as consideration for Austral granting Colossus the exclusive right to receive the Option until May 30, 2023. If the definitive agreement is not entered into by the parties by May 30, 2023, or such later date as is agreed upon by the parties, Austral Group has agreed to refund USD 37,500 to Colossus.

Board Representation and Technical Committee: Austral is to have the right to appoint one person to the Colossus Board for as long as it holds at least 10% of Colossus's outstanding shares. Austral is also to have the right to appoint 2 out of 4 members of the Colossus Technical Committee. Royalties: Austral is to retain its option to purchase half of the existing net smelter return royalties over base and precious metals in respect of the Calvario and Mirador projects.

The parties expect to enter into a definitive agreement and grant the Option on or before the Agreement Deadline, at which time the Austral Group would become the largest individual shareholder of Colossus.