Dawson Permitting Response Received From Colorado Division Of Reclamation Mine And Safety

HALIFAX, NS - Zephyr Minerals Ltd. has received a response from the Colorado Division of Reclamation Mining and Safety (DRMS) to the Company's response to the DRMS preliminary adequacy review received for the Dawson Gold Mine 112d-2 Reclamation Permit Application (Mining Permit Application" filed with DRMS. The DRMS response has listed approximately 35 items out of 102 to which Zephyr had responded on February 9, 2022 that required additional information and clarification. The principal issues required to be further addressed by Zephyr pertain to water monitoring wells and related sampling methodology, mine pool water, reagent storage, Grape Creek potential impacts, environmental protection facilities and technical matters pertaining to certain design details. Zephyr is required to drill five groundwater monitoring wells over and above those previously drilled and monitored for five quarters by Zephyr, as well as one compliance well. DRMS requires that the additional wells also have five quarters of monitoring data before they can consider approving the Mining Permit Application, thereby pushing out the potential approval of the mining permit to late 2023. Under current regulations DRMS must respond, by approving or denying the Mining Permit Application, within one year from the date on which DRMS considered the application to be complete, July 15, 2021. It is not possible for DRMS to respond in four quarters on a requirement that under their own regulations requires five quarters to complete. Therefore, Zephyr plans to extend its Mining Permit Application decision date for two additional months to May 31, 2022 to receive clarification on some of the remaining outstanding adequacy questions. Subsequent to this, the Mining Permit Application will be withdrawn to provide the necessary time window for data collection of the additional required groundwater monitoring wells as well as other technical data with the goal of resubmitting an updated application for a mining permit late in 2023.

Loren Komperdo, President and CEO, said, "It is unfortunate that the current Colorado mine permitting regulations not only do not provide guidelines for water monitoring well locations but also do not allow an applicant to query DRMS as to water monitoring well requirements until after a mine permit application has been submitted. Whilst Zephyr and its environmental consultants, EAI and Bishop-Brogden Associates, were of the view Zephyr's water well monitoring program was adequate, unfortunately DRMS did not concur. Zephyr has spent considerable time and effort on the permitting process to this point, and will continue to forge ahead in its effort to gain this mining permit on a project that can be described as essentially environmentally benign. Understandably, this delay is disappointing for our shareholders, however, we remain optimistic the remaining issues can be addressed to the satisfaction of DRMS"