TSXV: BMET
/NOT FOR DISTRIBUTION TO UNITED STATES NEWSWIRE SERVICES OR FOR
DISSEMINATION IN THE UNITED
STATES/
VANCOUVER, Feb. 28, 2019 /CNW/ - BeMetals Corp. (TSXV:
BMET) ("BeMetals" or the "Company") is pleased to
announce that it has entered into an option agreement (the "Option
Agreement") with Thunder Mountain Gold, Inc. (OTCQB: THMG, TSXV:
THM) ("Thunder Mountain") and certain of its wholly-owned
subsidiaries, to acquire up to a 100% interest in the South
Mountain Project ("South Mountain" or the "Project" or the
"Property") in southwest Idaho,
U.S.A. (see Principal Terms of the Option Agreement below).
South Mountain is a zinc-silver
focused polymetallic development project located primarily on
private property, which was the subject of high-grade historic
mining up until the 1960's.
John Wilton, President and CEO of
BeMetals, stated, "We believe South
Mountain has the potential to become an exceptionally
high-grade zinc-silver polymetallic mine, subject to successful
completion of resource expansion studies and final permitting, and
we look forward to advancing this Project aggressively with key
members of the Thunder Mountain management team. Over the
coming months, we intend to establish drill platforms from the
existing underground development, and conduct an approximately
4,500 metre underground drill program to better assess the
continuity and expansion potential of the currently identified
mineral resource. Upon a successful acquisition of this Project,
which would include the delivery of a preliminary economic
assessment, BeMetals will have secured its first cornerstone base
metal development project. BeMetals will continue to seek
further value-accretive acquisitions in the base metal sector for
our portfolio, that comply with our robust project selection
criteria."
Transaction Benefits to BeMetals Shareholders:
- The acquisition of South
Mountain, through a two year Option Agreement, provides the
next significant step in our growth strategy focused on becoming a
significant base metal developer. The board and management believe
this Project has the potential to develop into a high-grade mining
operation, and possesses substantial upside to significantly expand
the existing high-grade resource base.
- South Mountain's current
mineral resource* is comprised of:
-
- Measured & Indicated: 169,900 tons@ 17.66% zinc
equivalent grade ("ZnEq"), which is comprised of 10.66% zinc
("Zn"), 4.783 ounces per ton ("o.p.t") (164 grams per tonne
("g/t") silver ("Ag"), 0.065 o.p.t. (2.22 g/t) gold ("Au"),
0.80% lead ("Pb") and 0.69% copper ("Cu").
- Inferred: 363,200 tons @ 16.63% ZnEq Grade, which is
comprised of 9.70% Zn, 5.585 o.p.t. (191 g/t) Ag, 0.045
o.p.t. (1.54 g/t) Au, 1.20% Pb and 0.67% Cu.
*Mineral resources are calculated at a 6.04% ZnEq
cut-off grade. See Table 1 below for details of mineral resources
and equivalent grade calculations.
- Between 2008 and 2010, THMG drilled three holes (DMEA2, LO-06
and LO-07) outside of the known resource area to test for
extensions of mineralization below the previously-mined Sonneman
development level (see Figure 2). All three holes returned positive
intersections with hole LO-06 extending a known sulphide zone's
(named DMEA) mineralization some 137 metres below the Sonneman
level, demonstrating the potential for significant expansion of the
current resource base at depth and within modest distance of the
Sonneman level.
- Idaho is ranked 7th
in the U.S.A. by the Fraser
Institute (2017) in terms of investment attractiveness,
representing a favourable mining region with low geopolitical risk.
BeMetals also benefits from having key directors and advisors with
historical operating experience in Idaho through the development and operation of
Bema Gold Corp.'s Champagne Mine in the late 1980's.
- The addition of South Mountain
diversifies BeMetals' portfolio in terms of both commodity and
exploration stage by complementing encouraging results returned
from its early-stage, tier one targeted Pangeni copper exploration
project located in the Zambian Copperbelt.
The South Mountain Project
South Mountain is a
polymetallic development project focused on high-grade zinc and is
located approximately 70 miles southwest of Boise, Idaho (see Figure 1). The Project
was intermittently mined from the late 1800s to the late 1960's and
its existing underground workings remain intact and well
maintained. Historic production at the Project has largely
come from skarn-hosted and high-grade massive sulfide bodies that
remain open at depth and along strike (see Figure 2). These
high-grade bodies comprise South
Mountain's current mineral resource (see Table 1 below).
According to historical smelter records approximately 53,642
tons of ore have been mined to date. These records also indicate
average grades; 14.5% Zn, 10.6 o.p.t Ag, 0.058 o.p.t Au, 2.4% Pb,
and 1.4% Cu were realised.
The Project is largely on and surrounded by private surface
land, and as such, the permitting and environmental aspects of the
Project are expected to be straightforward. Permits are in
place for exploration and BeMetals does not anticipate barriers to
any future development at the Project.
Since 2008, Thunder Mountain has completed 27 drill holes for a
total of 5,500 metres on the Property. Thus far, drill
results have been encouraging and significant potential exists to
increase the known mineral resource with additional drilling, as
well as to expand the existing measured and indicated mineral
resource classifications with in-fill drilling. Last year a
technical report for the South Mountain Project was completed by
Hard Rock Consulting, LLC, entitled, "National Instrument 43-101
Technical Report: Updated Mineral Resource Estimate for the South
Mountain Project, Owyhee County,
Idaho USA".
Notes:
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1.
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The effective date of
the mineral resource estimate is April 7, 2018. The QP for the
estimate is Mr. Randall K. Martin, SME-RM, of Hard Rock Consulting,
LLC. who is independent of Thunder Mountain.
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2.
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Mineral resources
that are not mineral reserves do not have demonstrated economic
viability. Inferred mineral resources that are part of the mineral
resource for which quantity and grade or quality are estimated on
the basis of limited geologic evidence and sampling, which is
sufficient to imply but not verify grade or quality continuity.
Inferred mineral resources may not be converted to mineral
reserves. It is reasonably expected, though not guaranteed, that
the majority of Inferred mineral resources could be upgraded to
Indicated mineral resources with continued exploration.
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3.
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The mineral resource
is reported at an underground mining cutoff of 6.04% ZnEq within
coherent wireframe models. The ZnEq calculation and cutoff is based
on the following assumptions: an Au price of $1,231/oz, Ag price of
$16.62/oz, Pb price of $0.93/lb., Zn price of $1.10/lb. and Cu
price of $2.54/lb.; metallurgical recoveries of 75% for Au, 70% for
Ag, 87% for Pb, 96% for Zn and 56% for Cu, assumed mining cost of
$70/ton, process costs of $25/ton, general and administrative costs
of $7.5/ton, smelting and refining costs of $25/ton. Based on the
stated prices and recoveries the ZnEq formula is calculated as
follows; ZnEq = (Au grade * 43.71) + (Ag grade * 0.55) + (Pb grade
* 0.77) + (Cu grade * 1.35) + (Zn grade).
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4.
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Rounding may result
in apparent differences when summing tons, grade and contained
metal content. Tonnage and grade measurements are in imperial
units.
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Principal Terms of the Option Agreement
The transaction structure was designed to mitigate near-term
share dilution, while allowing sufficient time to de-risk the
Project prior to acquisition. Under the terms of the Option
Agreement, a subsidiary of BeMetals has the right to acquire all of
Thunder Mountain's interest in the South Mountain Project by way of
acquiring 100% of the outstanding shares of South Mountain Mines
Inc. ("SMMI"), a wholly owned subsidiary of Thunder Mountain (the
"Acquisition"). SMMI currently holds a 75% interest in the Project
and has the right to acquire the remaining 25% subject to a 5% Net
Returns Royalty capped at US$5
million on or before November 3,
2026.
In order to complete the Acquisition, BeMetals must:
1.
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Make an initial cash
payment of US$100,000 upon Thunder Mountain delivering voting
support agreements from shareholders controlling over 50% of
outstanding Thunder Mountain shares;
|
2.
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Upon satisfaction of
certain conditions precedent, including receipt of TSX Venture
Exchange acceptance and all requisite THMG shareholder
approvals:
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a.
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purchase 2.5 million
shares of common stock of Thunder Mountain at US$0.10 per share by
way of private placement; and
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b.
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issue 10 million
common shares of BeMetals to Thunder Mountain
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3.
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Make four cash
payments of US$250,000 each on or before the 6, 12, 18 and 24 month
anniversary dates, respectively, from when Thunder Mountain has
satisfied certain conditions precedent and items 1 and 2 above have
been completed;
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4.
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Complete a PEA for
the Project; and
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5.
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Make a final value
payment to Thunder Mountain consisting of cash, common shares of
BeMetals, or a combination of both at the discretion of BeMetals.
The final payment will be the greater of either US$10 million or
20% of the after-tax net present value of the Property as
calculated in a PEA study completed by an agreed independent
author. The final payment will be decreased by US$850,000 to
account for certain cash payments previously made under items 1 and
2 above, the value of the 10 million BeMetals shares issued
under item 2 above, as well as certain liabilities of SMMI to be
assumed on Acquisition. The final value payment shall be
capped at a maximum of 50% of the market capitalization of
BeMetals' as of the completion date of the Acquisition.
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Pursuant to the Option Agreement, BeMetals will have two years
to complete the Acquisition (subject to extension in certain
limited circumstances). BeMetals' wholly owned subsidiary
will become the operator of the Project upon the completion of
certain conditions precedent and will solely fund the exploration
programs and completion of the PEA at South Mountain.
Advisors and Counsel
Haywood Securities Inc. acted as financial advisor, DuMoulin
Black LLP acted as Canadian legal counsel, and Dorsey & Whitney
LLP acted as U.S. legal counsel for BeMetals.
Qualified/Competent Persons
The technical information in this news release for BeMetals, has
been reviewed and approved by John
Wilton, Pr. Sci. Nat., CEO and President of BeMetals, and a
"Qualified Person" as defined under National Instrument 43-101.
ABOUT BEMETALS CORP.
BeMetals' founding Directors include Clive Johnson, Roger
Richer, Tom Garagan and
John Wilton. BeMetals is a new base
metal mining company focused on becoming a significant base metal
producer through the acquisition of quality exploration,
development and production stage base metals projects. The
Company's growth strategy is led by a strong Board, key members of
which have an extensive proven record of accomplishment in
delivering considerable value in the mining sector through the
discovery, construction and operation of mines around the world.
The Board, its Advisors, and senior management also provide
outstanding deal flow of projects to BeMetals based upon their
extensive network of contacts in the international minerals
business.
ON BEHALF OF BEMETALS
CORP.
"John
Wilton"
John Wilton
President, CEO and
Director
Neither the TSX Venture Exchange nor its Regulation
Services Provider (as that term is defined in the policies of the
TSX Venture Exchange) accepts responsibility for the adequacy or
accuracy of this release.
This news release shall not constitute an offer to sell or
the solicitation of an offer to buy, the BeMetals common shares in
the United States. The BeMetals common shares have not been
registered under the U.S. Securities Act of 1933, as amended, and
may not be offered or sold in the United
States absent registration or an applicable exemption from
the registration requirements.
Cautionary Note Regarding Forward-Looking
Statements
This news release contains "forward-looking statements" and
"forward looking information" (as defined under applicable
securities laws), based on management's best estimates, assumptions
and current expectations. Such statements include but are not
limited to, statements with respect to the plans for future
exploration and development of the South Mountain Project and the
acquisition of additional base metal projects. Generally,
these forward-looking statements can be identified by the use of
forward-looking terminology such as "expects", "expected",
"budgeted", "forecasts" , "anticipates" "plans", "anticipates",
"believes", "intends", "estimates", "projects", "aims",
"potential", "goal", "objective", "prospective", and similar
expressions, or that events or conditions "will", "would", "may",
"can", "could" or "should" occur. These statements should not
be read as guarantees of future performance or results. Such
statements involve known and unknown risks, uncertainties and other
factors that may cause actual results, performance or achievements
to be materially different from those expressed or implied by such
statements, including but not limited to: risks related to the
South Mountain Project; risks related to general economic
conditions, actual results of current exploration activities,
unanticipated reclamation expenses; fluctuations in prices of
metals including copper and other base metals; fluctuations in
foreign currency exchange rates, increases in market prices of
mining consumables, possible variations in resource estimates,
grade or recovery rates; title disputes, claims and limitations on
insurance coverage and other risks of the mining industry; delays
in the completion of exploration activities, changes in applicable
government regulation of mining operations, tax rules and
regulations; risks and uncertainties relating to the Acquisition
not being completed in the event that the conditions precedent
thereto are not satisfied; uncertainties around raising sufficient
financing in a timely manner and on acceptable terms; and political
and economic developments in countries in which the Company
operates. In making the forward-looking statements in this news
release, BeMetals has applied several material assumptions,
including the assumptions that (1) the conditions precedent to
completion of the contemplated transactions with Thunder Mountain
will be fulfilled so as to permit the contemplated transactions to
be completed within the times described above; (2) all necessary
approvals and consents, including shareholder approval, in respect
of the contemplated transactions with Thunder Mountain will be
obtained in a timely manner and on acceptable terms; (3) that
BeMetals will be able to raise additional capital such that the
transaction and proposed exploration program will proceed as
planned; and (4) general business and economic conditions will not
change in a materially adverse manner. Although the Company has
attempted to identify important factors that could cause actual
results to differ materially from those contained in
forward-looking statements, there may be other factors that cause
results not to be as anticipated, estimated or intended. There can
be no assurance that such statements will prove to be accurate, as
actual results and future events could differ materially from those
anticipated in such statements. The forward-looking statements and
forward looking information are made as of the date hereof and are
qualified in their entirety by this cautionary statement. The
Company disclaims any obligation to revise or update any such
factors or to publicly announce the result of any revisions to any
forward-looking statements or forward looking information contained
herein to reflect future results, events or developments, except as
require by law. Accordingly, readers should not place undue
reliance on forward-looking statements and information. Please
refer to the Company's most recent filings under its profile at
www.sedar.com for further information respecting the risks
affecting the Company and its business.
Cautionary note to United States investors
concerning estimates of measured, indicated and inferred mineral
resources.
This news release contains certain disclosure that has been
prepared in accordance with the requirements of Canadian securities
laws, including Canadian National Instrument 43-101 ("NI 43-101"),
which differ from the current requirements of the U.S. Securities
and Exchange Commission ("SEC") set out in Industry Guide 7.
In particular, this news release refers to "mineral resources,"
"measured mineral resources," "indicated mineral resources," and
"inferred mineral resources." While these categories of
mineralization are recognized and required by Canadian securities
laws, they are not recognized by Industry Guide 7 and are not
normally permitted to be disclosed in SEC
filings. United States investors are
cautioned not to assume that all or any of measured, indicated or
inferred mineral resources will ever be converted into mineral
reserves. Under Industry Guide 7, mineralization may
not be classified as a "reserve" unless the mineralization can be
economically or legally extracted at the time the "reserve"
determination is made. "Inferred mineral resources"
have a great amount of uncertainty as to their existence and
economic and legal feasibility. It cannot be assumed that all or
any part of an inferred mineral resource will ever be upgraded to a
higher category. Disclosure of "contained ounces" in a resource is
permitted disclosure under Canadian reporting standards; however,
Industry Guide 7 normally only permits issuers to report
mineralization that does not constitute "reserves" by Industry
Guide 7 standards as in-place tonnage and grade without reference
to unit measures. Accordingly, information contained in this
news release containing descriptions of South Mountain's mineral deposits may not be
comparable to similar information made public by U.S. companies
subject to the reporting and disclosure requirements of Industry
Guide 7.
SOURCE BeMetals Corp.