Blue Lagoon Resources Achieves Production Milestone and Expands Operations at Dome Mountain Mine

Blue Lagoon Resources Inc. has achieved consistent underground production of 100 tonnes per day at its Dome Mountain gold and silver mine, marking a significant operational milestone as outlined in the company's January operational update. This production level reflects the resolution of early-stage commissioning constraints and the establishment of consistent underground production cycles, positioning the company for continued expansion toward its next target of 150 tonnes per day.

The company has engaged a second mining contractor, effectively doubling the underground production crew from two to four shifts, with additional mobile equipment being deployed to the mine site. With multiple working spaces now operational across the mine, the increased crew capacity and equipment will enable Blue Lagoon to advance toward the 150 tonnes per day target in the coming weeks. This expansion comes as the company has completed three sales of Dome Mountain gold and silver concentrates to Ocean Partners U.K. Ltd., generating approximately US$4.1 million in revenue, with additional mineralized material processed by milling partner Nicola Mining awaiting delivery and final settlement.

Operational enhancements include the establishment of a fully operational local fire assay laboratory near Smithers, which accelerates grade-control assay turnaround and directly supports mine planning and operational decision-making. The laboratory now conducts mill production and settlement assays for Dome Mountain material processed at Nicola, a function previously performed externally, bringing meaningful improvement to the speed and efficiency of the reconciliation and invoicing process. This development is expected to materially reduce the time between milling and final settlement with Ocean Partners going forward, addressing timing challenges experienced during the start-up phase.

Blue Lagoon has made additional operational hires as the company continues to grow its team in line with expanding underground activities. Planning is underway for an exploration drill program at Dome Mountain expected to commence in late Q3 2026, funded from internally generated cash flow. The drilling campaign will include both infill drilling and work targeting new areas along Dome Mountain's largely unexplored 18-kilometre strike length. To support ongoing production with an expanded workforce alongside an active drill program, a site infrastructure upgrade plan is being scoped and will be advanced in the coming months.

The company also announced the grant of 3,850,000 stock options to certain directors, officers, employees and consultants pursuant to its omnibus equity incentive plan, exercisable at $0.77 per share and expiring five years from issuance, subject to approval by the Canadian Securities Exchange. Additionally, Blue Lagoon received a $500,000 unsecured, interest-free bridge loan from its President & CEO to support short-term working capital requirements while awaiting concentrates settlement, addressing the extended cash settlement cycle experienced during mining operations start-up. The loan agreement includes the issuance of 129,870 bonus common shares and 129,870 warrants to the lender at $0.77 per share for two years, with the transaction constituting a related party transaction under Multilateral Instrument 61-101.