The holding-cost question

1. Executive summary

A recurring justification for Emerita's surrender of the Falcon Litio MG lithium project, advanced most explicitly in the release letter that Hélio Diniz's spokesperson attributes to Emerita (dated 5 February 2020, per O Globo, 14 April 2026), is that Emerita could not afford the costs of keeping the asset: it was closing its Brazilian office, could not finance or monetize the project, and could not pay the fees owed to the DNPM/ANM to keep the mineral rights in good standing. This memorandum quantifies those costs from the primary record and tests the justification.

The quantification is stark. The mandatory cash cost of holding the seven-processo, 1,354.89-hectare Falcon title was the Taxa Anual por Hectare (TAH), Brazil's annual per-hectare fee. On the ANM's own open payment data, the TAH for the entire block never reached R$ 10,000 (about CAD 2,300) in any single TAH year, and the total recorded TAH across all seven claims for 2017 through 2022 was approximately R$ 23,124, roughly CAD 5,500 (ANM open-data TAH dataset, retrieved 2026-05-22; rate acts Resolução ANM nº 3/2019 through nº 93/2022). At the 2020 statutory rate of R$ 3.55 per hectare (Resolução ANM nº 23/2020, DOU 2020-01-31), a full year of TAH on the whole package was about R$ 4,810, on the order of CAD 1,100. That is the sum that was needed to keep the title current: a four-figure CAD amount per year.

Emerita's own audited financial statements corroborate the picture from the spend side. The Brazilian segment cost the company $2,448,620 in FY2018, of which $2,272,408 was the one-time write-off of the unrelated Salobro zinc option (Vale S.A.), then $66,754 in FY2019 and $791 in FY2020, before the Brazilian subsidiary was dissolved on 2021-09-27 (EMO audited annual financial statements FY2018, filed 2019-01-29, Note 5 and segment note; FY2020, filed 2021-01-28, Note 13; FY2021, filed 2022-01-28, Note 1). A company whose entire Brazilian cost base was $791 for the year ended 2020-09-30 was not, on its own books, being crushed by Brazilian carrying costs in the period in which the relinquishment is variously dated.

The statutory work obligations, the other genuine pressure on an exploration-phase title, were suspended or extended across the relevant window: ANM suspended procedural and material deadlines from 2020-03-20 (Resolução ANM nº 28/2020), and Resolução ANM nº 76/2021 (DOU 2021-06-30) then granted every research permit an automatic extension of up to 559 days from 2021-10-01. The two most advanced Falcon permits had in fact just been extended, in April and May 2020, for three and two years respectively (Schedule "A" to Emerita's 2020-12-11 agency agreement, filed on SEDAR 2021-01-13). And the company that assertedly could not pay a four-figure annual fee closed a $5,175,000 private placement on 2020-12-11 (the same agreement whose schedule lists the Falcon claims as "the Corporation's Mining Properties") and a $20,000,750 bought-deal placement on 2021-07-15 (EMO news release 2021-07-15), eleven days before the TAH on the whole block was brought current, on 2021-07-26, by or for the new holder MGLIT (ANM TAH dataset).

The conclusion this record supports: the holding-cost justification for relinquishment is not corroborated by any of the actual cost figures on the public record. The mandatory fees were trivial against any measure of the company's finances; the work deadlines were suspended; and Emerita's own contemporaneous filings continued to describe the project as a 100% interest and an opportunity to "add value at a low cost" (EMO FY2020 audited financial statements, filed 2021-01-28, Note 7(b); EMO annual MD&A filed 2021-01-28). The OSC alleges, consistent with but independently of this analysis, that the relinquishment disclosures gave "the misleading impression that the Falcon Project was abandoned because it had no value when, in fact, Gower, Guy, Lopez, and/or Duras considered it to have potential value" (OSC AEP, 2026-04-09, ¶32(d), an allegation, unproven).

2. The Brazilian entity and its two projects

Emerita's Brazilian operations ran through two subsidiaries, both incorporated in 2017 and consolidated into Emerita Resources Corp. (EMO audited annual financial statements FY2017, filed 2018-01-22, Note 1):

2.1 Project one: Falcon Litio MG (lithium)

Under a binding letter agreement announced 13 June 2016, Falcon Metais Ltda. granted Emerita an option to acquire a 100% interest in the Falcon Litio MG Project in Minas Gerais for three tranches of 500,000 EMO common shares, with Falcon retaining a transferable 2% net smelter royalty and a contingent CAD 5 million payment if a NI 43-101 resource of at least 20 million tonnes at 1.3% lithium oxide were delineated. The agreement provided: "Falcon will hold the Project in trust for Emerita until Emerita exercises the Option and the Project is assigned and transferred to Emerita" (EMO FY2016 audited financial statements, filed 2017-01-27, Note 4; the same trust term is recited in the OSC AEP ¶10). The three tranches were booked at $77,500 (June 2016, at $0.155), $60,000 (issued August 2017, at $0.12) and $20,000 (September 2018, at $0.04), a cumulative acquisition cost of $157,500 carried as the Falcon exploration and evaluation asset at 2018-09-30 (EMO FY2016 audited financial statements, Note 4; FY2017, filed 2018-01-22, E&E continuity, $137,500; FY2018, filed 2019-01-29, Note 5 and segment note, $157,500). Emerita announced exercise of the option on 12 September 2018; the OSC alleges the third tranche was directed to HFX Consultoria Empresarial Ltda. rather than to Falcon Metais (OSC AEP ¶11), and that "title to the Falcon Project was never transferred to Emerita or its nominee" (OSC AEP ¶12).

On the Brazilian register, the seven ANM processos (832.439/2009, the later Bandeira flagship, plus 831.116, 831.117, 831.118, 831.119, 831.684 and 831.703, all /2016) remained registered to Falcon Metais Ltda. until the cessão total to MGLIT Empreendimentos Ltda. received anuência prévia and averbação published in the DOU on 2021-02-01 (processo 831.119/2016), with all seven listed in cessão compliance to MGLIT in Despacho Relação nº 51/2021 (DOU 2021-03-08). Note one descriptive variance: Emerita's financial statements describe the project as "five exploration permits and one application for exploration permits" (FY2020 audited financial statements, filed 2021-01-28, Note 7(b)), six rights, whereas Schedule "A" to the 2020-12-11 agency agreement, the ANM datasets, and LTH's disclosures treat the package as seven processos totalling 1,354.89 ha.

The structural consequence for holding costs: because registered title sat with Falcon Metais throughout Emerita's tenure, the statutory carrying cost of the title (the TAH) was, on the ANM record, never paid in Emerita's name. What Emerita booked was its Brazilian operating spend, examined in §4. Both layers are quantified below, and both are small.

2.2 Project two: Salobro (zinc)

Salobro was the expensive Brazilian project, and it was not Falcon. Under a definitive agreement of 14 July 2017 with Vale S.A. and IMS Engenharia Mineral Ltda., Emerita agreed to acquire the Salobro zinc project, two mining applications covering 1,209.75 hectares at Porteirinha, Minas Gerais, for staged cash payments totalling US$6.5 million (US$350,000, then US$1,650,000, US$1,500,000 by 2020-07-14 and US$3,000,000 by 2024-07-14) plus 1,000,000 EMO shares to IMS (EMO FY2017 audited financial statements, filed 2018-01-22, Note on Salobro; FY2018, filed 2019-01-29, Note 5). Emerita paid $449,260 (the US$350,000 instalment) in 2018, drilled the property, and could not make the US$1.65 million payment (approximately CAD 2.13 million) required to keep the option in good standing; renegotiation failed and the option was terminated, announced 3 October 2018 (EMO material change report 2018-10-04; EMO annual MD&A FY2018, filed 2019-01-29). The full capitalized cost of $2,272,408 was written off in FY2018 (EMO FY2018 audited financial statements, Note 5).

Salobro matters to the holding-cost analysis for two reasons. First, it is the source of nearly all Brazilian spend ever booked: the FY2018 write-off is about 90% of the entire six-year Brazilian expense. Any narrative that generalizes "Brazil was expensive" is generalizing from Salobro, a zinc option terminated in October 2018, not from Falcon. Second, it calibrates what a real affordability constraint looks like on this record: a hard US$1.65 million contractual instalment. The Falcon carrying costs, quantified next, were three orders of magnitude smaller.

3. What it cost to keep the title alive

3.1 The TAH: statutory rates and actual payments

The TAH (Taxa Anual por Hectare) is the annual per-hectare fee owed on exploration-phase mineral rights under art. 20 of the Código de Mineração (Decreto-Lei nº 227/1967, regulated by Decreto nº 9.406/2018). The ANM's published per-hectare rates for the relevant years:

(2017 and 2018 rates were set by DNPM acts before the ANM's first price resolution; the payments recorded in those years imply roughly R$ 3.21 to 3.29 per hectare.)

Applied to the whole 1,354.89-hectare Falcon package, a full year of TAH was approximately R$ 4,634 at the 2019 rate, R$ 4,810 at the 2020 rate, and R$ 7,533 at the 2021 prorrogação rate: in Canadian terms, roughly CAD 1,100 to CAD 1,800 per year for all seven claims combined (at the ~BRL 4.4 per CAD implicit in LTH's own disclosure that BRL 999 equalled CAD 227; POCML 6 filing statement, 2022-05-12).

The ANM's open TAH payment dataset (Taxa Anual por Hectare dataset, dadosabertos.anm.gov.br, custodian GEREC/SAR/ANM, retrieved 2026-05-22) records 23 payment events on the seven processos for 2017 through 2022, totalling approximately R$ 23,124:

Attribution caveat: the dataset attributes all payments to the current titleholder (MGLIT, CNPJ 31.931.255/0001-00), including payments predating MGLIT's incorporation (2018-10-29, per the POCML 6 filing statement 2022-05-12), so pre-2021 payments were in fact made by the then-holder, on the DOU record Falcon Metais. What the dataset does establish without qualification is that no Emerita entity appears as a TAH payer in any year, and that the amounts at stake were trivial.

Two features of this record bear directly on the holding-cost justification. First, the missing 2020 payment and the 26 July 2021 catch-up: the fee was brought current across the whole block only after the cessão to MGLIT (DOU 2021-02-01) and after Emerita's first relinquishment statement (2021-05-27), and eleven days after Emerita closed a $20,000,750 placement (EMO news release 2021-07-15). Second, LTH's own Bandeira technical report narrates the arrears and their size. On processo 832.439/2009 it records that the holder "requested the installment payment of the TAH due in July/2020," which the ANM granted; that upon the assignment MGLIT "presented a Term of Assumption of Debt referring to the 2 (two) current installments of TAH," a requirement "fulfilled on 05/04/2021"; and that "the TAHs of July 2021 and 2022 were paid, and the installments were considered paid on 02/02/2022" (LTH NI 43-101 technical report, filed 2024-05-27, §4.1). The debt whose assumption regularized the flagship Bandeira claim was two installments of a single year's fee on 156.77 hectares, several hundred reais.

3.2 Work obligations, and the COVID-era relief that covered the window

The other carrying obligation on an exploration permit (Autorização de Pesquisa) is work and reporting: carry out the approved exploration program and file a Final Exploration Report within the permit term, with prolonged default exposing the title to caducidade (Código de Mineração, Decreto-Lei nº 227/1967; Decreto nº 9.406/2018). There is no fixed statutory minimum cash spend; the binding obligation is genuine work and timely reporting.

Three public facts remove this as a plausible December-2020 (or February-2020) cost pressure:

1. The key permits had just been extended. Schedule "A" to Emerita's 2020-12-11 agency agreement records Alvará 3785 (processo 832.439/09, Bandeira, 156.77 ha) receiving a three-year permit extension on 2020-04-28 (to 2023-04-28), and Alvará 994 (processo 831.116/16) a two-year extension on 2020-05-26 (EMO agency agreement and Schedule "A", filed on SEDAR 2021-01-13). Whoever was administering the titles was extending them through 2020, not letting them lapse.
2. Deadlines were suspended. ANM suspended its administrados' procedural and material deadlines from 2020-03-20, extended in steps to 2021-09-30 (Resolução ANM nº 28/2020, as amended by Resoluções nº 46/2020 and nº 76/2021).
3. Then every permit got a free extension. Resolução ANM nº 76/2021 (DOU 2021-06-30) automatically extended Alvarás de Pesquisa by up to 559 days from 2021-10-01, no application required, with §12 confirming the TAH remained payable. The permits were, as a class, neither at deadline-driven forfeiture risk nor plausibly believed to be lapsing at any point between March 2020 and the 2021-10-21 sale of MGLIT into the Lithium Ionic structure.

Of the various dates assigned to the relinquishment (5 February 2020 per the Diniz-side letter; "early March 2020" per the OSC's account of what Gower and Diniz told its investigators, OSC AEP ¶34; "December 2020" per EMO's later MD&As), only the 5 February 2020 letter date precedes the 2020-03-20 start of the ANM relief.

4. The year-over-year financials: what Emerita actually spent on Brazil

The audited consolidated financial statements disclose a Brazilian geographic segment from FY2018. The segment note allocates the entire consolidated loss across Spain, Canada and Brazil, so any Brazilian office, bookkeeping, or subsidiary administration cost booked to Brazil is inside these figures.

Brazilian segment, as reported in EMO's audited annual financial statements (CAD; fiscal year ended September 30):

Notes to the table. (a) FY2016 and FY2017: the segment notes state all exploration and evaluation assets were located in Spain; the Falcon option cost was capitalized at the consolidated level ($77,500, then $137,500). The two Brazilian subsidiaries were incorporated only in August and December 2017. (b) FY2018: the "Land management fees, taxes and permits" of $374,108 sits inside the Salobro acquisition-and-exploration continuity that was capitalized and then written off in full; it is dominated by land access, permitting and legal costs of the Salobro transaction, not by any recurring annual fee (a full year of TAH on Salobro's 1,209.75 ha would have been on the order of R$ 4,000, and as mining applications rather than granted exploration permits the Salobro rights attracted no annual fee at all: "Annual fees only apply to Exploration Permits after the publication of this permit in the Brazilian Official Gazette," EMO NI 43-101 technical report, Salobro Project, filed 2018-03-15). (c) From FY2019 Emerita changed accounting policy to expense exploration costs, derecognizing the $397,494 of capitalized E&E (including the $157,500 Falcon asset) through restatement (EMO FY2019 audited financial statements, filed 2020-01-28); the "Land management fees" caption is thereafter disclosed only on a consolidated basis, so the Brazil-only cost is captured by the segment loss column. (d) FY2021: the segment tables report Brazil as nil in every line and describe the business as "a single operating segment, being mineral exploration and evaluation in Spain"; Note 1 records the dissolution of Emerita do Brazil Mineracao Ltda. on 2021-09-27. (e) The FY2019 audited statements carry a "Material uncertainty related to going concern" paragraph in the auditor's report (AFS filed 2020-01-28), relevant context for the company's overall finances in that period, addressed in §6.

4.1 Inferences about activity from the spend (reasonable inferences, flagged as such)

The following are reasonable inferences from the financial record, and are flagged as inferences rather than documented facts.

FY2018 (loss $2,448,620; recurring ~$176,212; AP $413,370). The recurring spend and payables are consistent with a functioning in-country operation: the Salobro drill program, local staff or contractors, land and permitting work, and an office. This is the only year in which "a couple hundred grand" of Brazilian operating cost is visible, and it coincides with Salobro, not with any Falcon work program.

FY2019 (loss $66,754). Consistent with wind-down administration of the terminated Salobro option and caretaker-level attention to Falcon: bookkeeping, filings, perhaps modest field or desk work. Not consistent with any drill program or systematic exploration on the Falcon claims.

FY2020 (loss $791). Seven hundred and ninety-one dollars for the entire fiscal year is consistent only with a dormant file: no exploration, no office of any consequence, no material professional fees booked to Brazil. Two inferences follow. First, Brazilian costs cannot have been a burden motivating surrender in this period; the burden had already fallen to effectively zero a full fiscal year before the "December 2020" relinquishment date later adopted in the MD&A. Second, and cutting the other way, Emerita was performing no exploration work on Falcon; the genuine title-preserving obligation (work and reporting) was not being discharged by Emerita's spend. That obligation, however, was exactly what ANM suspended from 2020-03-20 (§3.2), and the ANM record shows the permits being extended, not forfeited, through 2020.

FY2021 (nil; subsidiary dissolved 2021-09-27). The wind-down completed. The only Brazilian residue in the accounts is R$ 8,361,000 (~$1,946,000) of Brazilian non-capital tax losses carried forward indefinitely (EMO FY2020 audited financial statements, filed 2021-01-28, income tax note), an asset that itself evidences the cumulative Brazilian spend having been overwhelmingly Salobro-era.

4.2 The "cost of the Brazilian office" variant of the defense

A version of the holding-cost defense shifts from the mandatory fees to overhead: that up to 2018 Emerita was spending a couple of hundred thousand dollars a year maintaining a Brazilian office, and that this recurring cost justified exit. The audited segment record answers this directly. Any office cost booked to Brazil is already inside the segment loss: $66,754 in FY2019 and $791 in FY2020. A cost that had already ended by FY2019 cannot necessitate a surrender dated December 2020 (still less February 2020, on the Diniz-side dating). The only "project office" named in the FY2018 statements is in Sevilla, Spain ("Overhead - Project office Sevilla", $21,679; EMO FY2018 audited financial statements, Note 5), and Brazilian equipment peaked at $5,369. Closing an office explains why work stopped; it does not explain why title to a retained-value asset would be surrendered for nil consideration, because title was preserved by paying a fee of under R$ 10,000 a year for the whole block and meeting work obligations that stood suspended. If anything, moving the defense from "the fees and obligations were too heavy" to "the office was expensive" concedes that the mandatory carrying cost was immaterial.

5. The affordability cross-check: what Emerita could pay, when

The holding-cost justification is an affordability claim, so the company's actual financing record across the window is the control:

Against these, the annual cost of keeping the Falcon title current was roughly CAD 1,100 to 1,800 (§3.1), about 0.02% to 0.04% of the December 2020 raise alone. Even on 5 February 2020, the date of the claimed release letter reciting that "Emerita não tem condições de efetuar esses pagamentos" (Emerita is not in a position to make those payments, per the letter text as rendered by the Diniz spokesperson in O Globo, 2026-04-14), the payments in question were of this four-figure order, and the July/2020 TAH on the flagship Bandeira claim was in fact handled that year by an ANM-granted installment plan (LTH technical report 2024-05-27, §4.1). It is fair to note the FY2019 statements carried a going-concern material uncertainty (AFS filed 2020-01-28) and that a cash-strapped junior may rationally cut discretionary spend; but the record distinguishes sharply between stopping discretionary exploration spend (which happened, visibly, in FY2019-FY2020) and being unable to carry a fee of a few thousand reais on a title the same company was simultaneously listing among its material mining properties in a financing agreement (2020-12-11) and describing in audited statements as a "100% interest" (FY2020 AFS, filed 2021-01-28, Note 7(b)).

6. The stated rationales, side by side against the cost record

Emerita's own stated reasons never mention holding costs. The three MD&A relinquishment statements give two grounds: failure to liquidate, and refocus on Spain. The first: "After having not been successful in liquidating the project in some form, the Company has now relinquished the Falcon project. Going forward, the Company will not have any costs associated with its legacy assets in Brazil other than costs associated with winding down its subsidiaries in Brazil" (EMO interim MD&A filed 2021-05-27). The second and third re-date the act: "As of December 2020, the Company has relinquished its property in Brazil in favour of focusing on projects in Spain" (EMO interim MD&A filed 2021-08-26; repeated verbatim in the annual MD&A filed 2022-01-28). The forward-looking cost reference ("will not have any costs...") is the closest Emerita's own disclosure comes to a cost rationale, and it is prospective and incidental. Notably, the same annual MD&A cycle that preceded the relinquishment still described Falcon as "an opportunity for the Company to add value at a low cost" (EMO annual MD&A filed 2021-01-28; identical language in the interim MD&A filed 2021-02-25, both after the December 2020 date later assigned to the relinquishment). No EMO news release in 2021 or 2022 announced the relinquishment; it appears only in MD&A property sections (review of EMO's SEDAR news-release record, 2021-2022).

The holding-cost rationale enters the record from the vendor side. The release letter text published by the Diniz spokesperson (in "livre tradução") states: "A Emerita Resources está encerrando seu escritório no Brasil e cessando todas as operações no país. A Emerita Resources não tem condições de avançar com o projeto Falcon Lítio e esgotou todas as alternativas para financiar ou monetizar o projeto. Reconhecemos que determinadas taxas devem ser pagas ao DNPM para manter os direitos minerários em situação regular; no entanto, a Emerita não tem condições de efetuar esses pagamentos" (O Globo, Lauro Jardim column, 2026-04-14). Fairness requires noting the vendor side's broader position from the same statement: that Emerita never held Brazilian title at all because no cessão to Emerita was ever registered at the ANM, that the rights remained with Falcon Metais until the December 2020 cessão to MGLIT, and that the OSC allegations are contested in full. Those are positions, not findings, and they are for the tribunal. This memorandum addresses only the cost claim, which is testable: the fees the letter says Emerita could not pay were, on the ANM's own data and rate acts, a four-figure CAD amount per year for the entire package (§3.1), payable by installment in practice (LTH technical report 2024-05-27, §4.1), against a company that raised $5,175,000 in the very month of the claimed December-2020 relinquishment. The OSC, for its part, alleges the letter itself "was not signed by Gower in March 2020" but "was created at some later time" (OSC AEP ¶¶33-35, unproven).

What the asset was worth telling the market, eighteen months later. After Lithium Ionic's May 2022 listing, the same roughly 1,354-hectare package was marketed under the headline "A Ground Floor Lithium Opportunity in a Prolific Lithium District," with LTH's CEO Blake Hylands crediting the team "led by Helio Diniz," with "Dave Gower, as well": "the reason we even have this ground, is that six years ago they recognized that this was a unique opportunity to pick up ground on lithium... and be able to hold that understanding where the world was going," and noting neighbour Sigma Lithium had gone "from about 15 million to roughly 2 billion" (The Market Online / The Market Herald, sponsored interview, 2022-06-02). Six years before June 2022 is 2016, the year of Emerita's option agreement. The vehicle holding the claims had been acquired into the Lithium Ionic structure on 2021-10-21 for BRL 999, about CAD 227 (POCML 6 filing statement, 2022-05-12, MGLIT acquisition note), and the Lithium Ionic (PrivateCo) MD&A within the same filing statement dates MGLIT's acquisition of the seven licences from Falcon Metais to "December 23, 2020". The OSC's allegation that the relinquishment disclosures were misleading because the project was in fact "considered... to have potential value" (OSC AEP ¶32(d)) is an allegation; the pricing ladder from CAD 227 for the holding vehicle to a TSXV listing marketed as a ground-floor lithium opportunity is documentary.

7. Findings

1. The mandatory holding cost of the Falcon title was trivial and quantifiable. Statutory TAH on the full 1,354.89-ha block: about R$ 4,600 to 7,600 per year in 2019-2021 (roughly CAD 1,100 to 1,800), never reaching R$ 10,000 in any TAH year; aggregate recorded TAH 2017-2022: about R$ 23,124 (~CAD 5,500). Sources: ANM TAH open dataset (retrieved 2026-05-22); Resoluções ANM nº 3/2019, 23/2020, 58/2021, 93/2022.
2. Emerita's booked Brazilian cost base collapsed to near zero before the relinquishment window. $66,754 (FY2019), $791 (FY2020), nil (FY2021), per the audited segment notes. The one material year, FY2018 ($2,448,620), was ~93% the write-off of the unrelated Salobro zinc option.
3. The work-obligation pressure was suspended. ANM deadlines suspended from 2020-03-20 (Res. 28/2020) and permits automatically extended up to 559 days (Res. 76/2021), with the two lead Falcon permits individually extended in April-May 2020 (agency agreement Schedule "A", SEDAR 2021-01-13).
4. The affordability claim is contradicted by the financing record. $5,175,000 closed 2020-12-11; $20,000,750 closed 2021-07-15; TAH on the whole block brought current for R$ 7,533 on 2021-07-26, after the asset had left.
5. Emerita's own disclosures never advanced a holding-cost rationale; they said "not successful in liquidating" and "focusing on projects in Spain," while contemporaneously calling Falcon a low-cost value opportunity and a 100% interest. The holding-cost justification appears only in the vendor-side release letter whose date and provenance the OSC disputes (¶¶33-35, unproven).
6. Residual open items (for Brazilian counsel / formal ANM record): the at-payment-date payer identity for the pre-2021 TAH events; per-processo caducidade or non-payment proceedings, if any, during 2018-2021; and the original 2017-2018 DNPM rate acts. None of these could plausibly move the quantum by more than a rounding error.

8. Timeline

Sources

Emerita Resources Corp., SEDAR/SEDAR+ filings (all "AFS" are audited annual financial statements, expressed in CAD, fiscal year ended September 30): AFS FY2016, filed 2017-01-27 (Note 4, Falcon option and trust language, $77,500; land management fees $24,816, Spain). AFS FY2017, filed 2018-01-22 (Note 1 subsidiaries; Falcon at $137,500; Salobro agreement; segment note). AFS FY2018, filed 2019-01-29 (Note 5 Salobro continuity, $374,108 land/taxes/permits, $2,272,408 write-off; $157,500 Falcon E&E; segment note: Brazil loss $2,448,620, assets $164,439, AP $413,370, project evaluation $176,212; "Overhead - Project office Sevilla" $21,679; Vale US$6.5M schedule, $449,260 paid). Annual MD&A FY2018, filed 2019-01-29 (Salobro termination; US$1.65M ≈ CAD 2.13M). Material change report 2018-10-04 (Salobro termination announced 2018-10-03). AFS FY2019, filed 2020-01-28 (segment note: Brazil loss $66,754, assets $4,912, AP $196,078, equipment $3,553; E&E policy change, $397,494 derecognized; going-concern material uncertainty; land management fees $20,113). AFS FY2020, filed 2021-01-28 (Note 7(b) "Emerita acquired a 100% interest..."; 2% NSR; Note 13 segment: Brazil loss $791, assets $4,142, AP $121,480, equipment $3,133; Brazilian tax losses R$8,361,000 (~$1,946,000); land management fees $28,809). Annual MD&A filed 2021-01-28 and interim MD&A filed 2021-02-25 ("add value at a low cost"). Agency agreement dated 2020-12-11 with Schedule "A", filed 2021-01-13 (seven processos as "the Corporation's Mining Properties"; mining-claims representation §(oo); Alvará 3785 and 994 extensions). News release 2020-12-11 ($5,175,000 placement). Interim MD&A 2021-05-27, interim MD&A 2021-08-26, annual MD&A 2022-01-28 (the three Relinquishment Statements). News release 2021-07-15 ($20,000,750 bought deal). AFS FY2021, filed 2022-01-28 (Note 1 dissolution 2021-09-27; Note 13 Brazil nil; land management fees $47,799).

Lithium Ionic Corp. / POCML 6 Inc., SEDAR/SEDAR+ filings: POCML 6 Inc. filing statement, 2022-05-12 (MGLIT incorporated 2018-10-29; 99.9% of MGLIT acquired 2021-10-21 for BRL 999.00 / CAD 227.00 from a related party; MGLIT MD&A: "On December 23, 2020, MGLIT acquired seven mineral licenses from Falcon Metais Ltda."; package "more than 1,300 hectares"). LTH NI 43-101 technical report, filed 2024-05-27, §4.1 (history of ANM case 832.439/2009: July/2020 TAH installment plan; 2020-12-28 assignment request; Term of Assumption of Debt for two current TAH installments, fulfilled "05/04/2021"; July 2021 and 2022 TAHs paid; installments considered paid 2022-02-02). LTH news release 2022-05-24 (trading).

Brazilian public record: DOU Seção 1, 2021-02-01 (anuência prévia and averbação, cessão total Falcon Metais → MGLIT, processo 831.119/2016) and 2021-03-08 (Despacho Relação nº 51/2021, all seven processos). ANM open-data Taxa Anual por Hectare (TAH) dataset, https://dadosabertos.anm.gov.br/TAH/Tah.csv (custodian GEREC/SAR/ANM; retrieved 2026-05-22; 23 payment records on the seven Falcon/Bandeira processos, 2017-2022, totalling ~R$ 23,124; figures recomputed from the dataset 2026-07-07). Código de Mineração, Decreto-Lei nº 227/1967, art. 20; Decreto nº 9.406/2018, art. 80. Resolução ANM nº 3/2019 (DOU 2019-01-31), nº 23/2020 (DOU 2020-01-31), nº 58/2021 (DOU 2021-02-12), nº 93/2022 (DOU 2022-02-04) (TAH rates). Resolução ANM nº 28/2020 (deadline suspension from 2020-03-20), nº 46/2020, nº 76/2021 (DOU 2021-06-30; 559-day automatic extension; §12 TAH still due).

Media: O Globo, Lauro Jardim column, 2026-04-14, "Executivo brasileiro é acusado de comandar fraude no Projeto Bandeira..." including the Diniz spokesperson statement and the release-letter text in "livre tradução" (https://oglobo.globo.com/blogs/lauro-jardim/post/2026/04/executivo-brasileiro-e-acusado-de-comandar-fraude-no-projeto-bandeira-vitrine-do-litio-em-minas.ghtml). The Market Online (The Market Herald), "A Ground Floor Lithium Opportunity in a Prolific Lithium District," sponsored interview with Blake Hylands, 2022-06-02 (https://themarketonline.ca/a-ground-floor-lithium-opportunity-in-a-prolific-lithium-district-2022-06-02/).

Regulatory application (secondary; allegations, unproven): Ontario Securities Commission, Application for Enforcement Proceeding, 2026-04-09: ¶2 (overview), ¶10 (trust language), ¶11 (HFX third tranche), ¶12 (title never transferred), ¶16 (the three Relinquishment Statements), ¶25 (MGLIT acquisition), ¶32(a)-(d) (why allegedly misleading), ¶¶33-35 (Purported Release Letter).

Prepared by the investigation arm, Operation Arms Length parallel investigation, 2026-07-07. Figures verified against the cited filings and datasets on 2026-07-07. This memorandum will be superseded by v2 upon receipt of the ANM per-processo record (at-payment-date TAH payer; any caducidade proceedings) or the 2017-2018 DNPM rate acts.