Chris Thompson | Head of Research | Ubika ResearchChris@UbikaResearch.com | 1 (416) 574-0469

Patrick Smith | Analyst | Ubika ResearchPatrick@UbikaResearch.com | 1 (647) 444-5506

Price Performance

Market Data (TSXV:CSR)Price (November 28, 2017 close) $0.19552 Week Range $0.02 - $0.29Market Cap (M) $10.9Shares Outstanding (basic, M) 56.0Current Shares Outstanding (fully diluted, M) 79.5Free Float 93%Average Daily Volume (3 month) 210,100

Total Debt (M) $0.0Cash & Short-Term Investments (M, pro-forma) $1.1Total Assets (M, pro-forma) $1.1

Headquarters Coquitlam, B.C., CanadaWebsite http://castlesilverresources.com/

Top ShareholdersElaine Basa 5%Frank Basa 1%

ManagementFrank J. Basa Preisdent, CEO & DirectorThomas P. Devlin CFORobert Setter DirectorAnnemette Jorgensen DirectorDianne Tookenay Director Jacques F. Monette DirectorTina Whyte Corporate Secretary

All figures in CAD unless otherwise stated.Source: Thomson Reuters

Figure 2: Longitudinal Section of the Castle 2 and 3 Shafts

Castle Silver Resources Inc.(TSXV:CSR | OTC:TAKRF | Frankfurt:4T9B)

Site Visit Highlights High-Grade Potential of Historic Silver-Cobalt Mine

Company Description Castle Silver Resources Inc. (TSXV:CSR) is a Canada-based junior natural resource company focusing on the exploration and redevelopment of former silver and cobalt mine properties in northern Ontario near the town of Cobalt. The projects include the 2,855-hectare Castle Silver Mine property near Gowganda and, the Beaver and Violet historical-producing mines near Cobalt, Ontario.

Site Visit HighlightsIn September 2017, we visited the Company’s 100%-owned Castle Silver Mine property, hosted by CSR CEO Frank Basa. The property is south of Timmins and Matachewan, and 85km northwest of Cobalt, Ontario (Figures 1). Access to the Castle Silver Mine property is 36km west of Elk Lake via Hwy 560 and 3km east of the village of Gowganda. The old mine site and adit access is located less than 3km north of Highway 560, which connects Elk Lake to Gowganda.

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Equity ResearchMetals & Mining, Exploration | Canadian Small Cap

November 29, 2017

Figure 1: Project Location Map

Source: Company Reports

Source: Company Presentation

The Castle Silver Mine property is an old Ag-Co discovery with historic mining since the early 1900’s with excellent infrastructure. The 28 km2 property lies within the Greater Cobalt Camp, acknowledged for its rich production history, delivering over 500 million oz. of silver and 30 million lbs. of cobalt in the 1900’s. The property was later leased by Agnico Eagle Mines Ltd in 1979, and production continued while the shaft was rehabilitated. At the time, ore was trucked to Agnico’s Cobalt mill while an aggressive underground campaign continued to discover new reserves. However, operations ceased in June 1988, driven by low silver prices, which were US$6.53/oz. The Castle Silver property consists of a total of 34 mining leases and 2 licenses of occupation totalling 519 hectares, as well as 19 claims totalling 2,336 hectares, for a combined project size of 2,855 hectares (Figure 3). There are three mine shafts with respective depths of 149, 140 and 259 metres, with mine infrastructure and access to nearby power. The main power grid in the area crosses the property and a power substation was previously on the property, potentially providing an option for low-cost power for the project.

Castle Silver Resources Inc. (TSXV:CSR)

November 29, 2017 2

We visited various areas of the Castle Silver Mine project. As shown below, Figures 4 & 5 illustrate the adit entrance to the historic Castle Silver Mine. As we entered the first level of the past-producing mine, we could identify bright crimson-pink erythrite in the rock, commonly known as “cobalt bloom,” a weathering product of cobalt mineralization (Figures 6 & 7). Also illustrated in Figure 6 & 7 are a series of continuous, closely-spaced silver veins of varying widths. Historically, previous mining focused on the high-grade silver deposits and the cobalt was often discarded as a low-value by-product as prices during the early 1930’s were US$1.29/lb, whereas now the price of Cobalt is more than US$27/lb. The Castle Mine complex features 11 levels of previous mining, totaling approximately 18km of underground workings. The first level of the mine is 2.7km long with multiple visible showings of erythrite. Figures 9 & 10 show the previous mine workings that are still in place. In June 2017, CSR released results from chip sampling from multiple target areas on the first level of the Castle Silver mine. The first five chip samples (CSR-17-S01 through CSR-17-S05), obtained near the adit entrance, averaged 1.06% cobalt, 5.3% nickel and 17.5 g/t silver. The samples were taken along a 4m length of a vein that was as wide as 30cm and an estimated 90m in length. Of note, chip samples are selective samples and should not be considered representative of the mineralization hosted within a target area as cobalt mineralization can be identified by erythrite in the rock.

Figure 3: Regional Location Map

Source: Company Reports

Figures 4 & 5: Adit Entrance

Source: Ubika Research Source: Ubika Research

Castle Silver Resources Inc. (TSXV:CSR)

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In July 2017, the Company released results from an 82‐kg sample of vein material from the first level of the Castle Mine that returned results of 1.48% cobalt, 5.7 g/t gold and 46.3 g/t Ag (US$1,130/t in-situ value at spot). According to the 2015 43-101 Technical Report, silver mineralization is found in quartz-calcite veins. According to the USGS, cobalt grades greater than 0.3% Co are considered high-grade. The Company continues to believe the cobalt and gold values from the underground bulk sample supports their thesis that there is more mineralization than just silver.CSR completed various exploration programs from 2011 to 2014, highlighted by Hole CA1108, which returned 40,944 Ag g/t, 0.91% Co, 0.12% Ni over 0.45m. During the summer drill program, CSR completed 22 drill holes for 2,405 meters from surface. CSR focused its exploration efforts on gaining a greater understanding of structures carrying the potential mineralization in underground portions of the Castle Mine and drilled at shallow levels within 200 meters of the main adit. The aim was to drill historical targets, continue to map out the underground, and to improve interpretation of the structures and grades of the silver-cobalt veins. During the site visit, we also visited the core shack (Figures 8 & 9) and Frank Basa showed mineralized intersections in some of the core samples (Figure 11).On November 17, CSR reported that the drill program within 200m of the adit resulted in mineralization in every hole. The program was highlighted by Hole CA-17-16, which returned 1.55% cobalt, 0.65% nickel, 0.61 g/t Au and 8.8 g/t Ag over 0.65m a shallow depth of between 3.85-4.50m below surface.

Figures 6 & 7: Cobalt Mineralization in the Pinkish

Source: Ubika Research (Figures 6, 7, 8 & 9)

Figures 8 & 9: Core Shack

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Figure 10 & 11: Historical Mine Workings

Source: Ubika Research (Figures 10 & 11)

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Moving forward, the Company expects to carry out trenching to follow up on new, near-surface targets identified by the recent drilling, but the priority is to complete trenching and drilling of untested structures on the first level of the Castle Mine. After completing some mine rehabilitation, Castle Silver expects to start with its next drill program in 2018. The Company believes that the nature of the vein structures in the Cobalt Camp is that multiple high-grade zones can exist within a single structure. As shown in Figure 11, historic mining drifted along mineralized areas, then the operators mined high-grade zones when discovered along the way. This figure shows a high-grade silver zone that was completely mined out, appearing three stories high.The general directions of the veins were located to the NE and NW and had varying strike and dip along the zones. These zones occurred as shoots along the veins that dipped steeply, extending horizontally up to 1,000m, vertically up to 120m and as wide as 1.2m. The ore shoots varied in length up to 91m, with veins that averaged 0.05m-0.13m in width. For example, the No. 3 shaft workings are located 122m of contact of the vein at an average angle of 30 degrees.Consequently, the Company’s strategy is to drill for structure and mine for grade.CSR is well-funded to carry out its exploration plans for the remainder of 2017. As of June 30, 2017, the Company had $1.1M in cash and no debt. Post Q2/2017, the Company closed two financings on June 15 and July 14 for proceeds of $1.2M and $883K, respectively.

Figure 12: Core Sample

Source: Ubika Research

Castle Silver Resources Inc. (TSXV:CSR)

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Figure 13: Amount of Cobalt in Different Types of Machines

Source: Darton Commodities, Visual Capitalist

Cobalt is starting to receive mass-market attraction due to its irreplaceable use within Lithium-ion (Li-ion) batteries.Batteries are becoming the single most important way of energy storage, an economic shift created to steer away from fossil-fuel-based energy production, to the environmentally-friendly renewable energy production (and ultimately the need for storage). A rising demand for batteries is being ‘driven’ by increasing advancement and production of electric-powered vehicles (EVs). Although many common electronics use Li-ion batteries (laptops, cellphones, power-tools, drones, etc.), most of the demand is driven by Electric Vehicles (EVs), due to the sheer size of the batteries.Cobalt continues to trade in high demand, driven by growing demand of li-ion batteries, compounded by limited supply. Of note, Darton Commodities predicts the industry supply projection of Cobalt will be at a deficit over the next four years. Over the last year, the price of cobalt has increased from a low of US$13.49/lb to a high of US$27.90/lb, leveling out to a range of US$26.00-US$29.00/lb, where it stands today at US$27.90/lb. Prices this high are sparking significant interest in the equity markets. For example, the Global X Lithium ETF, which holds 35 battery-large cap levered companies (~$200B-$500M), is up 69% Y/Y. In our analysis, battery metals stocks should continue to support higher prices at least up to the medium-term, as it will take time for cobalt miners to ramp up production/build new mines to support rising global demand.

Why We Still Believe in a Strong Cobalt Market

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