What changed in this filing

/stocks — the workspaceLOADING

Item 2. Properties

2023-04-17 compared with 2022-03-24 · 230 added, 94 removed, 25 unchanged (93% of the section changed)

4 unchanged sentences

The Company makes tiered lease payments on the 1st of each month.

We classify our mineral property as an "Exploration Property".

We do not suggest that we have proven or probable reserves at our property as defined by the SEC.

standards, as set forth in SEC Industry Guide 7, mineralization may not be classified as a “reserve” unless a determination has been made that the mineralization could be economically and legally produced or extracted at the time the reserve determination is made.

The SJG Property as described in this Annual Report on Form 10-K is without known reserves.

Mineral resources which are not classified as mineral reserves do not have “demonstrated economic viability.” The quantity of resources and the quality (grade) of resources reported as “Indicated” and “Inferred” mineral resources in the mineral resource estimate compiled for DynaMéxico, under and filed by the Company on SEDAR, are not disclosed in this Form 10K .

There has been insufficient exploration to define any mineral reserves on the SJG Property, and it is not certain if further exploration will result in the definition of mineral reserves.

San Jose de Gracia Mineral Property

San Jose de Gracía Property (“SJG”) is a high-grade mineralized system which reports historical production of 1,000,000 Oz.

gold (“Au”), from a series of underground workings and is located in the state of Sinaloa, México.

The Company is focused on the exploration and future exploitation of this vein-hosted, near surface, and over 400 meters down dip gold potential, that occurs within fault breccia veins;

and has been traced on surface and underground over a 15 Sq.

kilometer area.

DynaMéxico owns 100% of the mineral concessions at the SJG Property, and all mineral concessions are contiguous.

The SJG Property is comprised of 33 concessions covering approximately 9,920 hectares (24,513 acres).

Current Mining Concessions - San José de Gracía

We classify our mineral property as an exploration property and our Company as being in the exploration stage.

The Registrant is an exploration stage company and has started extraction without determining mineral reserves.

SAN JOSE DE GRACIA - PROPERTY DESCRIPTION

The San Jose de Gracia mining project (“SJG Project”) is located on map sheet G13-A81 in the Culiacan mining district of Sinaloa State, Mexico, at Latitude 26 ̊ , 9’ N, Longitude 107 ̊, 53’ W, approximately 120 kilometers east northeast of the coastal city of Los Mochis.

The property on which the SJG Project resides, straddles the border separating the Mexican States of Sinaloa and Chihuahua.

The SJG Project is located in the south-western portion of the property, and is located entirely within the State of Sinaloa (see Figure 1).

The property is without known reserves.

The Company is an exploration stage company and the Company has started extraction without determining mineral reserves.

San Jose de Gracia, Location Map

DynaResource de Mexico S.A.

(“DynaMexico”), the Company’s 100% owned subsidiary, owns the San Jose de Gracia mineral concessions, which are comprised of 33 distinct concessions covering an aggregate of approximately 9,920 hectares.

The concessions are held 100% by DynaMexico with no royalty or other interests clouding them.

By way of further reference, the property on which the SJG Project resides is located in and around the village of San Jose de Gracia, approximately 100 km northeast of Guamuchil, on the west side of Mexico.

The village of San Jose de Gracia has a small airstrip and can be accessed by a small airplane, or alternatively, by a dirt mountain road.

There are roads providing access to the property on which the SJG Project resides.

These roads are accessible throughout the year, with the possible exception of June and July when the rainy season sometimes causes flooding and runoff to make the roads too muddy to navigate.

Local Resources and Infrastructure

Accommodations

The Village of San Jose de Gracia maintains few stores which offer only minimal goods.

The camp site area maintains facilities of twelve rooms with additional lodging available in the

town which can accommodate a total of about 225 persons.

A power line to the San José de Gracia Project has been installed by the Comisión Federal de Electricidad, the only authorized power producer in Mexico.

The power line was installed in March 2012 from the La Estancia area of the municipality of Sinaloa de Leyva, a distance of approximately 75 kilometers.

The power line is currently 220 volts maximum capacity, which supports domestic use only, including the office and camp facilities at SJG, such as water pump, air conditioning, refrigeration, lights, internet, and fans, as well as local residential use.

The SJG Project can produces its own diesel-generated power as a backup to the power grid.

Offices – Camp Facilities

DynaMexico maintains an administrative and logistics office in Guamuchil.

The SJG Project sources many of its supplies from Guamuchil, from Los Mochis and from Culiacan.

There is a satellite dish installed at the SJG Property, providing communications from the SJG Property to Guamuchil.

At the SJG Project, DynaMexico maintains a camp staff, including geologists, field helpers, consultants, security, cooks and cleaners.

Most of these employees come from outside of the local community.

Mining Concessions

The San José de Gracia Property consists of 33 contiguous mining concessions and covers an area of approximately 9,920 hectares (24,513 acres) as illustrated in Figure 2.

Current Mining Concessions - San José de Gracia

Taxes / ha (pesos)

9 unchanged sentences

PIEDRAS DE LUMBRE UNO

SAN MIGUEL (1)

SAN SEBASTIAN

1 unchanged sentence

FRANCISCO ARTURO

Surface Lease Rights

In addition to the surface rights held by DynaMéxico pursuant to the Mining Act of México and its Regulations ( Ley Minera y su Reglamento ), DynaMineras maintains access and surface rights to the SJG Project pursuant to the 20-year Land Lease Agreement (above).

The 20 Year Land Lease Agreement with the Santa Maria Ejido Community surrounding San Jose de Gracía is dated January 6, 2014 and continues through 2033.

It covers an area of 4,399 hectares surrounding the main mineral resource areas of SJG and provides for annual lease payments by DynaMineras of $1,359,443 Pesos adjusted for inflation based on the Mexico minimum wage, commencing in 2014.

Title to 32 of the 33 mining concessions is registered in the sole name of DynaMexico.

The one exception is the San Miguel concession.

For the San Miguel concession, DynaMexico has entered into transfer agreements with the registered owners of 50% of the concession title, and DynaMexico has also entered into promise to sell and purchase agreements with registered owners of the balance of the concession title.

Under Mexican law, such agreements require the consent or relinquishment of first rights of refusal from the registered owners of 100% of the concession title, in order to have legal effect and be eligible for registration before the Mines Recorders’ Office.

Under amendments to the Mining Act of Mexico that came into effect in December 2006, the classifications of Mining Exploration Concessions and Mining Exploitation Concessions were replaced by a single classification of Mining Concessions valid for a renewable term of 50 years, commencing from the initial issuance date.

To be converted into Mining Concessions at the time these amendments came into effect, former mining exploration and mining exploitation concessions had to be in good standing at the time of conversion.

All of the SJG concessions were in good standing and consequently were converted to 50-year Mining Concessions in December 2006, at the time the amendments to the Mining Act came into effect.

To renew the 50-year term, Mining Concessions must be in good standing at the time an application for renewal is filed, and an application for renewal must be filed within 5 years prior to expiration of the term.

To maintain Mining Concessions in good standing, the registered owner must (a) pay bi-annual mining duties in advance, by January 31 and July 31 each year, (b) file assessment work reports by May 30 each year, for the preceding year (some exceptions apply), and (c) by January 31 each year, file statistical reports on exploration / exploitation work conducted for the preceding year.

Notice of Commencement of Production Activities and Annual Production Reports must be filed annually by January 31 each year for those concessions where mineral ore extraction is taking place.

As a general provision, registered owners of Mining Concessions must follow environmental and labor laws and regulations in order to maintain their Mining Concessions in good standing.

Figure 2 – Claim location map

Surface Rights

In addition to the surface rights held by DynaMéxico pursuant to the Mining Act of México and its Regulations ( Ley Minera y su Reglamento ), the Company maintains access and surface rights for the SJG Project pursuant to a 20-year Land Lease Agreement.

This lease agreement with the Santa Maria Ejido Community (the owners of the surface rights) is dated January 6s, 2014 and continues through 2033.

The lease agreement covers an area of 4,399 hectares surrounding the main mineral resource areas of SJG and provides for annual lease payments of $1,359,443 Pesos (adjusted for inflation).

The 2022 payment was $3,678,437 pesos (approx.

$183,000 USD).

Additionally, under the description of the 20 Year Land Lease, DynaMineras constructed a Medical Facility at SJG in year 2017.

The Land Lease Agreement provides DynaMineras with surface access to the core resource areas of SJG (4,399 hectares), and allows for all permitted mining, pilot production and exploration activities from the owners of the surface rights (Santa Maria Ejido community).

The Company expects DynaMineras will be successful in expanding the size and scope of the resources at SJG through continued drilling and development programs at San Pablo, Tres Amigos, La Ceceña, Palos Chinos, San Pablo East, La Purisima, and La Prieta.

The Company expects extensions to mineralization in all directions and down dip from the main target areas.

Mineral Reserves / No Known Reserves

The SJG property is without known reserves.

There has been insufficient exploration to define any mineral reserves on the property, and it is not certain if further exploration will result in the definition of mineral reserves.

Technical Report and Resource Estimate According to Canadian National Instrument 43-101 (2012)

In 2012, DynaMéxico commissioned Servicios y Proyectos Mineros (“SPM”) for the production of Technical Report 43-101 (“43-101”) at San Jose de Gracía.

Additionally, DynaMéxico commissioned Mr.

Robert Sandefur, a senior reserve analyst for Chlumsky, Armbrust & Meyer LLC, Lakewood, CO (“CAM”) to produce a mineral resource estimate for the 4 main vein systems at the property.

Parameters Used to Estimate the Mineral Resource Estimate-- The data base for the San Jose de Gracía Project consists of 372 drill holes of which 361 are diamond drill holes (“DDH”) and the remaining 11 were reverse circulation holes “(RC”), with a total drilling of 75,878 meters.

The NI 43-101 Mineral Resource Estimate, prepared in 2012, concentrates on four main mineralized vein systems at SJG:

Tres Amigos, San Pablo, La Union, and La Purisima.

Of the 372 drill holes, 368 were drilled to test these four main vein systems and the remaining four holes tested the Argillic Zone.

Technical personnel of Minop S.A.

(“Minop”), a subsidiary (or affiliate) of Goldgroup Mining Inc., built three dimensional solids to constrain estimation to the interpreted veins in each swarm.

The 172 holes most recently drilled (2009-2011), were allocated as follows:

Tres Amigos (64 holes), San Pablo (49 holes), La Union (24 holes), La Purisima (32 holes) and Argillic Zone (3 holes).

The data base also includes rock and chip sampling, regional stream sediment sampling, and IP Surveys.

Density-- A total of 5,540 pieces of core were measured for specific gravity using the weight in air vs.

weight in water method.

This represents an additional 3,897 measurements taken in the 2009-11 drill seasons with density measurements taken from all mineral zones.

Dried samples were coated with paraffin wax before being measured.

The results tabulated have been sorted by lithology and mineralized veins.

The average specific gravity of 5,051 wall rock samples was 2.59 while the average specific gravity for 489 samples of vein material is 2.68.

CAM and Servicios y Proyectos Mineros have reviewed the procedures and results and opine that the results are suitable for use in mineral resource estimation.

Mineral Resource Estimate - Construction of Wireframes-- Mineral Resources were estimated by Mr.

Sandefur within wireframes constructed by technical personnel of Minop.

Minop was contracted by Mineras de DynaResource S.A.

(“DynaMineras”).

Mineral Resource Estimate - Explanation of Resource Estimation-- Resource estimation was done in MineSight and MicroModel computer systems with only those composites that were inside the wireframe used in the estimate.

Estimation was done using kriging with the omni-directional variogram derived from all the data in each area for gold using the relative variogram derived from the log variogram.

High grades were restricted by capping the assays at a breakpoint based on the cumulative frequency curves.

Estimation was done using search radii of 100 x 100 x 50 m “blocks” oriented subparallel to the general strike and dip of the vein system in each area.

A sector search, corresponding to the faces of the search box with a maximum of two points per sector was used in estimation.

A density of 2.68 based on within ‘vein density’ samples was used in the resource estimate.

Within each of the four areas there are approximately 20 to 40 veins in the vein swarm.

Resources were estimated by kriging using data from all veins in the swarm.

In general, gold accounts for at least 80% of the value of contained metal at the project, so the variograms for gold were used in estimation of the four other metals.

The veins at San Jose de Gracía have been historically mined for many years and historic mined volumes are not available.

The one exception is the approximate 42,000 tonnes of ore processed by DynaMéxico during its pilot production activities in 2003-2006.

The resource table is not adjusted for any historic mining.

To validate that historic mining had not significantly reduced the resource, CAM reviewed the database for all assays greater than 1 gram per ton gold that were next to missing values at the bottom of drill holes.

Only four assays satisfying this criterion were found, and on the basis of this review, Mr.

Sandefur does not believe that significant mining has occurred within the volumes defined by the wireframes.

Servicios y Proyectos Mineros performed a database review and considers that a reasonable level of verification has been completed, and that no material issues have been left unidentified from the drilling programs undertaken.

M ineral Resource Estimate and 43-101 Technical Report - Data Verification-- Mr.

Ramon Luna Espinoza (“Mr.

Luna”) initially visited the San Jose de Gracía Project in November 2010 and conducted site inspections at SJG in November 2011 and January 2012.

Sandefur conducted a site inspection of the SJG Project in January 2012.

While at the Property in November 2011, Mr.

Luna inspected the areas of Tres Amigos, La Prieta, Gossan Cap, San Pablo, La Union, and La Purisima, and historic mining sites.

In January 2012, Mr.

Sandefur and Mr.

Luna inspected the areas of Tres Amigos, San Pablo, La Union, and La Purisima.

Pictures of the areas were taken.

Many of the drill pads for the drilling programs of 2007 to 2011 were clearly located and identified.

Luna also inspected at San José de Gracía, the core logging and storage facilities, the geology offices, the meteorological station, the plant nursery, and the mill.

Sandefur also inspected the core logging and storage facilities.

The Company received from DynaMéxico on February 14, 2012, a National Instrument 43-101 Mineral Resource Estimate for San Jose de Gracía.

The NI 43-101 Resource Estimate was prepared by Mr.

Robert Sandefur, BS, MSc, P.E., a Qualified Person as defined under NI 43-101, and a senior reserve analyst for Chlumsky, Armbrust & Meyer LLC, Lakewood, CO (“CAM”).

The Resource Estimate concentrates on four separate main vein systems at SJG:

Tres Amigos, San Pablo, La Union, and La Purisima.

The mineral resource estimates prepared by Mr.

Robert Sandefur for this Technical Report included Indicated Resources at Tres Amigos and San Pablo.

Table summaries of Indicated and Inferred Resources are contained in the 2012 DynaMéxico-CAM Mineral Resource Estimate.

The Resource Estimate has been filed, along with the Technical Report on SEDAR;

but is not disclosed in this Form 10-K .

Additionally, under the lease agreement, the Company met its obligation to construct a Medical Facility at SJG in year 2017.

The lease agreement provides the Company with surface access to the core resource areas of SJG (4,399 hectares), and allows for all permitted mining, pilot production and exploration activities.

Water Concession

The Company has secured the Water Rights Concession for the area surrounding SJG.

The Director of Water Administration of the National Water Commission of México (CONAGUA) formally certified in writing the rights of DynaResource de México, S.A.

to legally “use”, exploit and extract 1,000,000 cubic meters of water per year from the DynaMéxico extraction infrastructure located within the perimeter of the mining concessions comprising the San Jose de Gracía Mining Property in Sinaloa State, México.

The Director of Water Administration of the National Water Commission of México (CONAGUA) formally certified in writing the rights of DynaMéxico to legally “use”, exploit and extract 1,000,000 cubic meters of water per year from the DynaMéxico extraction infrastructure located within the perimeter of the mining concessions.

CONAGUA determined that the DynaMéxico water rights are not subject to any water rights concession or any other water extraction restriction.

Water extracted by DynaMéxico will be subject to applicable levies imposed by the Mexican tax authorities in accordance with current Mexican tax laws.

The water concession provides sufficient water for current operations, and for the anticipated future needs of the project.

Royalties, Encumbrances and Environmental Liabilities

The SJG Property is not subject to any royalties, encumbrances or environmental liabilities.

Required Permits for Exploration, Drilling and Mining

In respect of permit requirements for mineral exploration and mining in Mexico, the most relevant applicable laws, regulations and official technical norms are the Federal Mining Act (plus its regulations), the Federal Environmental Protection and Ecological Equilibrium Act (plus its regulations), the Federal Sustainable Forestry Development Act (plus its regulations), the Federal Explosives and Firearms Act, the National Waters Act and the Mexican Official Norm 120.

To carry out mineral exploration activities, holders of mining concessions in Mexico are required to file at the offices of the Federal Secretariat of the Environment and Natural Resources (“SEMARNAT”) a “Notice of Commencement of Exploration Activities” or “Preventive Exploration Notice” in accordance with the guidelines of the Mexican Official Norm 120 (“NOM- 120”).

If contemplated mineral exploration activities fall outside of the guidelines of the NOM-120 (e.g.

exploration activities on rain forest areas), a “Change of Soil Use Permit Application” (“CSUP”) is required to be filed at SEMARNAT under the guidelines of the Federal Sustainable Forestry Development Act and its Regulations.

To meet the requirements for issuance of a change of soil use permit, the applicant must file (together with the CSUP) a Technical Study (“Technical Justification Study”) to justify the change of soil use from forestry to mining, in order to demonstrate that biodiversity will not be compromised and that there will be no soil erosion or water quality deterioration on completion of the mineral exploration activities.

To carry out mining activities in Mexico, holders of mining concessions are required to file an “Environmental Impact Assessment Study” under the guidelines of the Federal Environmental Protection and Ecological Equilibrium Act and its Regulations, in order to evaluate the environmental impact of the contemplated mining activities.

If the use of explosives materials is required for execution of mineral exploration or mining activities, an Application for General Permit for Use, Consumption and Storage of Explosive (“GPCSE”) is required to be filed at the offices of the Secretariat of National Defense (“SEDENA”) under the guidelines of the Federal Explosives and Firearms Act.

Under the Federal Mining Act, holders of mining concessions in Mexico have the right to the use of the water coming from the mining works.

Certification of water rights and/or issuance of water rights concessions are required from the National Water Commission (“CONAGUA”) under the guidelines of the National Waters Act.

Fees or bonding requirements necessary to explore or mine

As a pre-requisite for issuance of a CSUP, Article 118 of the Federal Sustainable Forestry Development Act provides the posting of a bond to the Mexican Forestry Fund for remediation, restoration and reforestation of the areas impacted by the mineral exploration activities.

As a pre-requisite for approval of Preventive Exploration Notice and Environmental Impact Assessment Study, the Federal Environmental Protection and Ecological Equilibrium Act and its Regulations require the posting of a bond to guarantee remediation and rehabilitation of the areas impacted by the mining activities.

Government agencies responsible for any applicable permits

SEMARNAT is the office of the Federal Government of Mexico responsible for the review and issuance of a CSUP, the review of a Technical Justification Study and the filing of NOM-

The Federal Attorney’s Office for the protection of the Environment is the enforcement branch of SEMARNAT responsible for the monitoring and enforcement of environmental laws and regulations.

SEDENA is the office responsible for issuance of a GPCSE.

CONAGUA is the office responsible for certification of water rights and issuance of water rights concessions.

Time frame to obtain any permit or approval to explore or mine

NOM-120 is a notice to SEMARNAT only and has no prescribed processing time.

Processing time for review and approval of a CSUP Application and Technical Justification Study varies depending on the workload of the SEMARNAT regional office where application is filed, but a processing time of Four (4) months is typical.

Processing time for review and approval of a Environmental Impact Assessment Study varies depending on workload of SEMARNAT regional office where application is filed, but a processing time of Six (6) months is typical.

Processing time for issuance of a GPCSE by SEDENA is approximately 6 months.

Processing time for issuance of a Water Rights Concession by CONAGUA is approximately 6 months.

DynaMexico Permits and Bonding Requirements

Exploration Permit:

On June 28, 2010, DynaMexico filed a Preventive Exploration Notice (Preventive Exploration Notice) at the office of SEMARNAT in connection with contemplated mineral exploration activities at the La Prieta, San Pablo, La Purísima, La Unión, Tres Amigos and La Ceceña areas of the SJG Project.

On July 21, 2010, SEMARNAT approved, for a term of 36 months, the execution of the mineral exploration activities at SJG set out in the Preventive Exploration Notice, as it determined that such activities fall within the framework of the NOM-120, subject to the following conditions:

(a) filing and approval by SEMARNAT of a CSUP with respect to SJG (see below), and (b) posting of a bond in the amount of $134,487 Pesos to guarantee remediation and rehabilitation measures following the conclusion of the mineral exploration activities.

Change of Soil Use Permit

On August 9, 2010, DynaMexico filed at the offices of SEMARNAT a CSUP Application and Technical Justification Study to carry out certain mineral exploration activities set out in the Preventive Exploration Notice approved by SEMARNAT on July 21, 2010 (see above) at the La Prieta, San Pablo, La Purísima, La Unión, Tres Amigos and La Ceceña areas of SJG).

On December 20, 2010, SEMARNAT approved the CSUP Application filed by DynaMexico with respect to SJG and authorized DynaMexico the execution of mineral exploration activities on

5.463 hectares of SJG for a term of 36 months, and it is continually renewed as required.

Water Rights Certification

On March 8, 2012 the Director of Water Administration of CONAGUA certified in writing the rights of DynaMexico to use, exploit and extract 1,000,000 m3 of water per year from the Company’s extraction infrastructure located in SJG.

CONAGUA determined that DynaMexico’s water rights are not subject to any other water rights concession or any other water extraction restriction.

Bonding Requirements

Under the CSUP issued to DynaMexico on December 20, 2010, SEMARNAT imposed upon DynaMexico the obligation to post a bond in the amount of $116,911 Pesos for reforestation and remediation measures in SJG.

The Bond was timely posted by DynaMexico.

Under Preventive Exploration Notice (Preventive Exploration Notice) approved by SEMARNAT on July 21, 2010, SEMARNAT imposed upon DynaMexico the obligation to post a bond in the amount of $134,487 Pesos, to guarantee remediation and rehabilitation measures following the conclusion of the mineral exploration activities.

The Bond was timely posted by DynaMexico.

DynaMexico has sought and obtained all required environmental permits, temporary land occupation rights and consent letters from the regulatory agencies, local municipalities and the State of Sinaloa, in order to conduct its mining, production, exploration and drilling activities on the four main deposit areas at SJG.

DynaMexico will be required to obtain further permits in order to conduct drilling in these four areas and the other areas, and in order to carry out future mining, milling, and production activities, and will timely obtain such permits, as and when required.

HISTORY OF SAN JOSE DE GRACIA

Production at San José de Gracia dates from the 1800’s and totals approximately one million ounces of gold mined from high-grade quartz veins.

Large-scale mining in the camp began in 1870 and ended in 1910 with the onset of the Mexican Revolution.

The majority of the production came from the Anglo, Rosario and La Cruz Mines on the Purisima Ridge trend, and from the La Prieta Mine on the La Prieta trend (reference Fig.

The remainder of the production was derived from as many as 60 smaller mines throughout the 12 square kilometer area, including the Palos Chinos, San Pablo, Tres Amigos, La Ceceña, Los Hilos, Santa Rosa, Veta Tierra, La Union, Santa Eduwiges, Mochemara and La Parilla Mines.

Table 3 – Historic gold production – San Jose de Gracia – pre 1970’s

Gold Production (oz)

Gold Grade (g/t)

Mined Width (m)

Purisma Ridge Trend (includes the Anglo, Rosario, Jesus Maria and Laz Cruz Mines)

471,000 67.0 Unknown

La Prieta Trend (La Prieta Mine)

215,000 28.0 1.5 – 3 m

300,000 Unknown

It was not until the 1970’s when mining could resume at San José de Gracia, when the first road to SJG was opened, allowing Compaňia Rosarito to begin producing gold from the Palos Chinos, San Pablo, Tres Amigos and La Union mines.

Recent Ownership of the Property

By 1977 the underlying owners of the mining concessions and subsequent vendors to Minera Finisterre SA de CV.

(“Finesterre”) succeeded in acquiring control of most of the district, and installed a 70 ton per day flotation concentrator.

Finisterre subsequently acquired the property through option agreements with the underlying vendors and continued some exploration work, although most of its financial resources were expended in erecting a larger, 200 ton per day concentrator.

Golden Hemlock Explorations Ltd., a Canadian company, obtained an option to acquire majority control of Finisterre and commenced work on the property in 1997.

The actual exploration and development work was performed by Perforaciónes Quest de Mexico (“PQM”), which was under contract to Finesterre, and whose efforts consisted primarily of core drilling, trenching and mapping.

PQM completed a 63-hole, 6,000-meter core drilling program in 1997.

In 1998-1999, Pamicon Developments Ltd., a Canadian company, examined the results of the 1997 drilling program, including PQM’s technical work, in order to calculate possible mineral reserves, and to review the general status of the property.

Results of this examination were presented in a report dated September 1999.

During the first half of 1999, DynaResource, Inc.

and its agents arranged to collect samples for metallurgical testing.

In June of 2000, DynaResource formed its subsidiary DynaMexico, in order to acquire and consolidate ownership of the San Jose de Gracia Project.

By December 2003, DynaMexico had completed the acquisition of and consolidation of 100% of the San Jose de Gracia Project from Golden Hemlock and Finisterre -- with the sole exception of the San Miguel mining concession.

Test Mining Operations

The property is without known reserves and the test mining program is exploratory in nature and the Company has started extraction without determining mineral reserves.

All mines are underground and the ore is hard rock that needs to be crushed and ground before gold concentrate can be extracted.

The Company is an exploration stage company and has a test mining facility and produces precious metal concentrates for sale to third parties.

Summary of Test Mining and Pilot Mill Operations for 2018 to 2022:

Reported Mill Feed Grade (g/t

Gross Gold Concentrates

Test pilot operations in 2022 yielded 137,740 Tonnes of material, mined and processed from underground test mining activity and pilot milling operations.

These test pilot operations also yielded approximately 31,905 gross ounces of gold, and net of dry weight adjustments at the buyer’s facilities, the approximately 25,554 ounces of gold.

Infrastructure Improvements, Expansion and Increased Output (2017 To 2022)

The Registrant is an exploration stage company and the registrant has started extraction without determining mineral reserves.

As part of the Company’s test mining operations, it continues to upgrade the camp facilities and the mill.

Significant improvements have been made such that the condition of the equipment is new, relatively new or in good condition.

The Company has developed a total of five mills of which three are currently running which can process approximately 700 tons of mined material per day.

The Companies two oldest Mills were taken offline in 2022 as the two newest ball mills were brought on line and the old mills will be refitted.

The Company continues its exploration at San Jose de Gracía, in order to increase production of gold ounces.

Since January 2015 startup of the test mining and milling activities, the Company has increased daily output from an initial 75 tons per 24-hour operating day, to a current 700 tons per 24-hour operating day.

Since January 2017, the Company has expended funds to improve the mine, the mill and the facilities in order to increase the production at San Jose de Gracia.as follows:

Mill Expansion

Tailings Pond Expansion

Machinery and Equipment

Mining Camp Expansion

The Company is currently in the middle of exploration drilling to further define mineralization and in 2022 expended $2,484,072 for this drilling.

The Company is currently an exploration stage issuer and is reporting all costs of mine operations, improvements, and expansion as expenses in accordance with section 1300 of Regulation S-K and United States General Accepted Accounting Principal (GAAP) requirements, and therefore the above costs are not reflected as capitalized expenses (assets) on the Company’s balance sheet.

ACCESSIBILITY, CLIMATE, LOCAL RESOURCES, INFRASTRUCTURE AND PHYSIOGRAPHY

Topography, Physiography, and Vegetation

The topography of the San José de Gracia district is generally rugged with elevations varying from 400 meters in the valley bottoms to over 1600 meters in the higher Sierra.

A network of small roads and tracks winds around areas nearer the old workings at San José de Gracia.

Access to the remainder of the large property at the current stage of development is difficult without the use of horse or helicopter.

The SJG Project can be accessed by road, from either the City of Culiacan or the City of Guamuchil.

Either route goes through the small town of Sinaloa de Leyva, then from Sinaloa de Leyva by gravel mountainous road to the village of San José de Gracia (population 250), which covers approximately 90 kilometers and is roughly a five hour trip.

The SJG Project can also be accessed by air.

A gravel airstrip is located adjacent to the San Jose de Gracia Village.

The airstrip is suitable for light aircraft and charter flights of 45 minutes duration are available from the cities of Los Mochis or Culiacan.

Much of the labor for the recent mining and production activities of DynaMexico was provided by the village residents.

Although the village provided approximately 75 employees to DynaMexico, it currently has limited services.

Climate and Operating Season

The climate is semi-tropical with a rainy season dominating from late June / early July through September.

For some activities on the SDJ project, operations may be suspended during the rainy season.

MINERAL PROCESSING AND METALLURGICAL TESTING

Bulk Sample, Hazen Process Development Metallurgical Report

Ore and existing mill tailings samples were collected prior to DynaMexico’s acquisition and consolidation of San Jose de Gracia.

The ore samples consisted of a bulk (about 500 kg) of stockpiled ore from the lower adit of the Tres Amigos mine (intercept of the Tres Amigos and Orange Tree veins).

In addition, approximately 100 kg of ore as a bulk sample was taken from the surface at the Gossan Cap area.

Three additional ore samples (approximately 5-15 kg each) were assembled from splits of the cores from several of the 1997 drilling program core holes to develop samples representing different ore types for testing.

These included:

1) composite drill cores from Palos Chinos, 2) massive sulfide from the Tres Amigos vein and 3) disseminated, nonsurprise mineralized zones at the bottom of several Tres Amigos core holes.

The logic was that major exploratory test work to define a metallurgical process would be done on the bulk sample from the adit at Tres Amigos and the other samples would have limited testing done at the selected metallurgical process conditions to verify the performance of the selected metallurgical process circuit on other types of San José mineralization.

Finally, several bulk samples (50-100 kg) of existing tailings from the Rosarito mill and the old Rosarito mill were collected and used to conduct flotation, gravity, and limited leachability test work on the tailings.” Samples were shipped to the laboratory of Carbonyx Carbon Technologies in Plano, Texas where in 2000 and 2001 two separate preliminary test programs were conducted, one for the tailings, and the other for a portion of the bulk Tres Amigos ore.The Company developed a concept for the metallurgical processing to produce both gravity and flotation concentrates (rougher and cleaner).

The tests confirmed a metallurgical flow sheet to be utilized at San José to recover up to 90% of the feed gold into the concentrates.

The above “in-house” testing established a preliminary flowsheet for a mill circuit for processing either primary ore or for reprocessing the existing tailings.

Subsequently Hazen Research Laboratories of Golden, Colorado (“Hazen”) was engaged to provide independent verification of the in-house work and carry out additional optimization test work.

Lockwood Greene/ Mr.

Henderson prepared and verified completion of the scope of work.

In summary, various interim reports and the final metallurgical report, the "Official Hazen Test Report, (“Hazen Report”)” provided results as follows:

The initial gravity beneficiation/flotation test work on the Tres Amigos and Gossan Cap bulk ore samples were very encouraging with up to 80 % recovery of the feed gold into the gravity concentrates while maintaining a minimum concentrate grade of 100 g Au/t ;

The existing tailings samples (feed grades of 3 -8 g Au/t) returned similar recovery results, but had to be cleaned to produce a final concentrate with > 100 g Au/t ;

The overall gold recoveries into the gravity cleaner concentrate still were in excess of 50% of the total feed gold;

Flotation tests on primary ore samples resulted in recoveries of 85 - 90 % of the feed gold into the rougher concentrates, however, recoveries after cleaning (to get > 100 g Au/t grade) dropped to the 65-75 % range; and

A combination circuit of a gravity pre-concentration stage with flotation on the gravity tailings indicated the potential to recover > 90% of the feed gold into the gravity concentrate, the rougher flotation and the cleaner flotation concentrates while maintaining a 100 g Au/t grade in all of the concentrates.

EXPLORATION UPDATE

DynaResource uses a multiple phase method of exploration.

The initial activity consists of surface mapping and sampling to identify areas of interest.

The next phase is detailed mapping and systematic sampling.

Mapping and sampling of mine workings are also performed to define potential areas for future work.

Geological mapping and samples have been collected in the past and sent for laboratory analysis by the Company.

The prospects are then catalogued and prioritized for drilling.

Since January 2022, six (6) areas have been drill-tested.

Tres Amigos, La Union, San Pablo, Tepehuaje, La Ceceña and Palos Chinos.

In 2022, 166 holes for approximately 24,500 m of diamond drilling was completed and approximately 16,000 core samples were collected of which approximately 500 QA/QC samples were shipped for laboratory analysis.

EXPLORATION PLANS FOR 2023

The Company plans to continue its drilling program with two to six rigs on site.

During this period management will make decisions based on the drill results, corporate strategies and market conditions, surface mapping, sampling and target generation.

These activities will continue until any increase is approved by the Board of Directors.

The Company plans to contract with a consultant to interpret the data collected for a formal Mineral Resource update in the latter part of 2023 or early 2024.

TECHNICAL DISCLOSURE

All technical disclosures and resource estimate covering the Company's mineral property was prepared under the supervision of Mr.

Francisco M Carranza Sr, CPG-11933, Consulting Geologist for the Company and a "Qualified Person" within the meaning of subpart 1300 of Regulation S-K.

The following resource information at Tres Amigos and San Pablo were classified as indicated as follows:

block they are within 25 m of the nearest sample point and the block was estimated by at least 2 drill holes to be considered the indicated category.

The remaining blocks that were interpolated are classified as inferred, La Purisima inferred estimate is provided by DynaResource de Mexico SA de CV.

However, for the purpose to elaborate for an official technical report with all the data process and verifications it is essential to validate the QA/QC protocols, field verification of drill sites, drill core, specific gravity procedures, rejects and pulps storage for re-assays if it is required.

The following table summarizes the estimated bulk tonnage resource at San Jose de Gracia after the drilling results in 2022:

Tres Amigos Indicated

Au Cut off g/t

Tres Amigos Inferred

Au Cut off g/t

San Pablo - La Union Indicated

Au Cut off g/t Tonnes

San Pablo - La Union Inferred

Au Cut off g/t Tonnes

La Purisma Inferred

Au Cut off g/t Tonnes

The above resource estimate has been prepared using industry standard methods and software in accordance with the necessary requirements in order to calculate a reliable resource estimate.

There can be no assurance that a full Technical Report commissioned under Canadian Standard NI 43-101 will reflect the same results.

There can be no assurance that the Company will be able to extract the value of the resources indicated in the table above.

In addition to the recent resource estimate described above, in 2012, the Company commissioned a Technical report under Canadian standards NI-43-101 to define resource at San Jose de Gracia which can be viewed in more detail in the Technical report dated December 31, 2012 at http://dynaresource.com/2012/12/30/december-31-2012-2012-dynamexico-luna-cam-42-101-technical-report-updated/ .

The following tables summarizes (1) the underground resource reflected in the 2012 Technical report referred to in the preceding paragraph, (2) the amount mining through December 2022, and (3) and the amount of that resource remaining at December 31, 2022:

43-101 UNDERGROUND RESOURCES 2011

TOTAL MINING UNTIL DECEMBER 2022

The above resource estimate has been prepared using industry standard methods and software in accordance with the necessary requirements in order to calculate a reliable resource estimate.

There can be no assurance that a full Technical Report commissioned under Canadian Standard NI 43-101 will reflect the same results.

There can be no assurance that the Company will be able to extract the value of the resources indicated in the table(s) above.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 2. Properties