Red Metal Provides Farellon Mining Update

Red Metal reports US$6,440 in royalties from improved copper grades at Farellon, Chile.

What the company is saying

Red Metal Resources Ltd. (CSE:RMES, OTC:RMESF, FSE:I660) is highlighting realised royalty revenue from its Farellon Project in Chile, reporting US$6,440 in royalties for August and September 2026 based on ENAMI settlements. The company frames the narrative around operational progress, specifically the advancement from Level 7 to Level 9 in the north portal and the associated improvement in ore grades. The announcement emphasizes the nearly doubled copper and gold grades in September as mining advanced deeper, supporting management’s claim of improving project economics. President and CEO Caitlin Jeffs, P.Geo., is the named spokesperson, stating that Farellon is now providing 'steady, non-dilutive royalty revenue.' The company also stresses its hands-on oversight through bi-weekly site visits and its role as royalty holder rather than operator. The tone is confident but measured, with transparency about the calculation of royalties and the pending status of the October shipment.

What the data suggests

ENAMI settlements for August and September 2026 covered 1,042 tonnes of Farellon ore, with 597 tonnes delivered in August and 471 tonnes in September. August ore averaged 0.66% insoluble copper and 0.19 g/t gold, while September ore averaged 1.26% insoluble copper and 0.31 g/t gold, nearly doubling the grades month-over-month as mining advanced from Level 7 to Level 9. Contained copper totaled 3,818 kg in August and 5,785 kg in September, with total contained gold of 253 g over both months. The settlement value before VAT was US$75,750 (US$19,950 for August, US$55,800 for September), resulting in royalties to Red Metal of US$6,440 (US$1,700 for August, US$4,740 for September), based on an 8.5% net effective royalty. Underground development totaled approximately 115 metres in the north tunnel and 10 metres in the south tunnel, with Level 9 now established about 110 metres below surface. The October 8, 2026, shipment of roughly 300 tonnes from Level 9 has not yet been settled. The data is specific and complete for the reported period, but does not provide historical context or cost information, limiting trend analysis.

Analysis

The announcement is factual and proportionate, providing detailed realised operational and royalty data for August and September 2026, including ore tonnage, grades, settlement values, and royalty receipts. Nearly all claims are supported by specific, recent figures, with only a minor forward-looking element regarding the October shipment (settlement results pending). There is no exaggerated language or narrative inflation; the CEO's statement about 'improving grades' is consistent with the reported data. No large capital outlay or long-dated, uncertain returns are discussed—development activities are described as completed or ongoing, with immediate royalty revenue already realised. The only forward-looking claim is the pending settlement for the October shipment, which is transparently disclosed as awaiting results. The gap between narrative and evidence is minimal, and the tone is appropriate for the operational progress reported.

Risk flags

• ●Royalty revenue is entirely dependent on the operator, Minera KMT SpA, maintaining production and ore quality. Any operational setbacks or grade variability could reduce future royalty income, as Red Metal is not the operator and has limited control over mining activities.
• ●The reported grades and tonnes are based solely on ENAMI's settlement assays, which Red Metal has not independently verified. This reliance on third-party data introduces potential for discrepancies or disputes in reported figures.
• ●There is no current mineral resource or reserve estimate for the Farellon 1/8 concession under NI 43-101, and mining is not based on a feasibility or pre-feasibility study. This means the long-term economic viability of the project is unproven, and royalty revenue may not be sustainable.
• ●The company discloses that all ore shipped to date has come largely from development headings, not from established stopes, which may not reflect steady-state production potential. Future shipments could see grade or tonnage variability as mining transitions from development to production.

Bottom line

Red Metal Resources has begun to realise tangible, non-dilutive royalty income from the Farellon Project, with US$6,440 received for August and September 2026 as copper and gold grades improved with deeper mining. The operational update is credible and data-rich for the period, but lacks broader financial or cost context and does not provide a resource estimate or long-term production outlook. The company's royalty income is exposed to operational and geological risks at Farellon, and all reported figures are based on third-party settlement data. The next material event will be the settlement results from the October 8, 2026, shipment, which could confirm whether higher grades and production are sustainable. The most important takeaway is that Red Metal is now generating cash flow from its royalty interest, but the scale and durability of this income remain unproven until more production and settlement data are available.

Announcement summary

(CSE:RMES) (OTC:RMESF) (FSE:I660) Red Metal Resources Ltd. provided a mining update for the Farellon Project at its Carrizal Copper-Gold-Cobalt Property near Vallenar, Chile. The lessee and operator, Minera KMT SpA, received final settlements from Empresa Nacional de Minería (ENAMI) for August and September 2026 deliveries of copper sulphide and gold ore to ENAMI's Vallenar plant. A total of 1,042 tonnes of Farellon ore were settled for these two months. In August 2026, 16 lots totaling 597 tonnes were delivered, and in September 2026, 13 lots totaling 471 tonnes were delivered. ENAMI's settlement value for the two months, before Chilean value-added tax (IVA), was approximately US$75,750, with US$19,950 for August and US$55,800 for September. Royalties attributable to Red Metal totaled approximately US$6,440, with US$1,700 for August and US$4,740 for September. The royalty is calculated as a 10% net sales royalty (NSR) on all minerals sold to ENAMI from the Farellon 1/8 concession, less a pre-existing 1.5% royalty payable to the original vendor, resulting in a net effective royalty of 8.5% to Red Metal. The August deliveries had a weighted average grade of 0.66% insoluble copper and 0.19 g/t gold, while September deliveries had 1.26% insoluble copper and 0.31 g/t gold. Contained copper was 3,818 kg in August and 5,785 kg in September, with contained gold of 111 g and 141 g, respectively. Total contained copper for both months was 9,603 kg and total contained gold was 253 g. Underground development advanced from Level 7 to Level 9 of the north portal, with approximately 115 metres of development completed in the north tunnel and an additional 10 metres in the south tunnel. Level 7 advanced 16.6 metres, Level 8 advanced 10 metres (on standby), and Level 9 advanced 73.6 metres as of October 8, 2026, approximately 110 metres below surface. On October 8, 2026, KMT hauled a third lot of approximately 300 tonnes of run-of-mine ore from Level 9 to ENAMI's Vallenar plant in 14 truckloads, with settlement results pending. Nine samples from Level 9 face and stockpiles have been or will be submitted to Laboratorio Químico San Lorenzo in Vallenar, with results to be reported when received. Since signing the lease in May 2026, KMT has focused on dewatering, rehabilitating existing workings, and driving access to Level 9, with ore shipped to date coming largely from development headings. Red Metal monitors KMT's operations through bi-weekly site visits by its in-country field technician. President and CEO Caitlin Jeffs, P.Geo., stated that with two months of ENAMI settlements and improving grades as mining advances to Level 9, Farellon is providing steady, non-dilutive royalty revenue to the company. The technical content of the news release was reviewed and approved by Caitlin Jeffs, P.Geo., President and CEO, as a Qualified Person under NI 43-101. Data verification included reconciling lot weights, moisture, grades, and contained metal reported on ENAMI settlements M 36296 and L 36425 against the lot register and field reports.

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