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Silver Mountain Mines Inc (2)
Symbol SMM
Shares Issued 4,008,764
Close 2021-01-18 C$ 0.305
Recent Sedar Documents

Silver Mountain firms up acquisition of Nevgold

2021-02-23 14:25 ET - News Release

Also News Release (C-MUX) McEwen Mining Inc

Mr. Steve Konopelky reports

SILVER MOUNTAIN MINES EXECUTES DEFINITIVE AGREEMENT WITH NEVGOLD TO CREATE A STRONG DIVERSIFIED EXPLORATION AND DEVELOPMENT COMPANY

Silver Mountain Mines Inc., further to its news release dated Jan. 19, 2021, in connection with signing a letter of intent, has executed a binding definitive agreement dated Feb. 17, 2021, with Nevgold Corp. with respect to a proposed transaction whereby Silver Mountain will acquire all of the issued and outstanding common shares in the capital of Nevgold. Nevgold is a private British Columbia company, which holds the right to acquire the Limousine Butte and Cedar Wash projects in Nevada from McEwen Mining Inc.

The proposed transaction has been unanimously approved by the board of directors of Silver Mountain and Nevgold, and is expected to close in Q2 2021. Trading in common shares of the company will remain halted until the resumption of trading is approved by the TSX Venture Exchange in connection with the completion of the proposed transaction. The proposed transaction will constitute an arm's-length reverse takeover pursuant to the policies of the TSX-V and, following the proposed transaction, it is anticipated that the company will be a Tier 2 mining issuer on the TSX-V.

"The combination of the Silver Mountain Mines and Nevgold assets will add value for all shareholders and expand our assets across North America in well-established mining camps. With the new leadership team, asset portfolio and recapitalization plan, the company should be in a great position for success as the market for commodities continues to grow," says Steve Konopelky, director of the company.

Brandon Bonifacio, incoming president, chief executive officer and director of Nevgold: "We are very excited to form a new North American focused precious metals exploration and development company with assets in Nevada and British Columbia that will attract a premium market valuation. Our leadership group will leverage our strong operational track record of project development success to deliver value for all of our stakeholders. We look forward to updating our current and future investor base on the transaction close and our planned 2021 work programs."

Transaction summary

Nevgold is a private company incorporated under the Business Corporations Act (B.C.).

Nevgold entered into an asset purchase and sale agreement dated Dec. 14, 2020, with McEwen and certain of McEwen's affiliates pursuant to which Nevgold has agreed to acquire the properties from the vendors immediately prior to or concurrently with the proposed transaction on the terms as previously outlined in the Jan. 19, 2021, news release.

It is anticipated that prior to the closing of the proposed transaction, Nevgold will complete a private placement of subscription receipts of Nevgold for aggregate gross proceeds of up to $5-million or such greater amount up to $10-million, at a price per subscription receipt to be determined in the context of the market.

The proposed transaction is subject to several terms and conditions, including, but not limited to:

  1. Nevgold having prepared a technical report at Limousine Butte in accordance with the requirements of National Instrument 43-101;
  2. All financial statements of Nevgold having been prepared;
  3. As at the closing of the proposed transaction, the company will have no payables (less cash) other than ordinary course trade payables;
  4. Any change of control obligations of the company associated with the proposed transaction shall have been settled;
  5. Completion of the concurrent financing and receipt of proceeds thereunder;
  6. The approval of the TSX-V in respect of the proposed transaction and the resulting issuer meeting the applicable minimum listing requirements of the TSX-V;
  7. Approval of the shareholders of Nevgold and the company to the proposed transaction;
  8. Receipt of any required third party consents.

In connection with completion of the proposed transaction, it is anticipated that the company will change its name to Nevgold Corp. and will adopt the ticker symbol NAU.

Proposed management and board of directors composition

Upon closing of the proposed transaction, the management and board of directors of the resulting issuer is expected to consist of Giulio Bonifacio, Mr. Bonifacio, Vic Bradley, Greg French, Tim Dyhr, Mr. Konopelky and Morgan Hay.

Mr. Bonifacio -- non-executive chairman

Mr. Bonifacio is a chartered professional accountant with over 35 years of experience in senior executive roles in the mining industry. Mr. Bonifacio is the founder and former director, president and CEO of Nevada Copper Corp. since its inception in 2005 until his retirement in 2018. Among his many accomplishments, Mr. Bonifacio has raised over $700-million through equity and project debt financings as well as being involved in corporate transactions aggregating in excess of $1-billion. Mr. Bonifacio has led and directed efforts at every stage of development including exploration, engineering, permitting and construction.

Mr. Bonifacio -- president, CEO and director

Mr. Bonifacio is a mining executive with over 10 years of experience in project development, mergers and acquisitions, and project evaluations. Mr. Bonifacio was most recently the finance director of the Norte Abierto joint venture (Cerro Casale/Caspiche) in Maricunga, Chile, and a member of the corporate development team at Goldcorp Inc. (now Newmont Corp.). Mr. Bonifacio holds an MASc in mining engineering and MBA from the University of Nevada, Reno, and a bachelor of commerce in finance from the University of British Columbia.

Mr. Bradley -- independent director

Mr. Bradley is a chartered professional accountant with more than 50 years of experience in the mining industry. Over the past 30 years, he has founded, financed and operated several mining and advanced-stage exploration and development companies including the original Yamana Gold Inc., Aura Minerals Inc. and Nevoro Inc. (sold to Starfield Resources). Mr. Bradley founded the original Yamana in 1994 and served as president and CEO, and subsequently chairman of the board and lead director until 2008. He served as chairman of Osisko Mining Corp. from 2006 until its sale for $4.1-billion to Agnico Eagle and Yamana in 2014. He served as a director of Osisko Gold Royalties Ltd. from 2014 to 2018 and as chairman of Nevada Copper Corp. from 2012 to 2017. He now serves as chairman of Osisko Bermuda Ltd., chairman of BTU Metals Corp. and director of PJX Resources Inc.

Mr. French -- independent director

Mr. French is a geologist with over 35 years of exploration experience in the Western United States and Canada. His current role is Nevada Copper's vice-president, head of exploration, where he has been responsible for every stage of development from exploration to production since 2006. His prior roles include various capacities for Homestake Mining Inc., Atlas Precious Metals and Cornerstone Industrial Minerals. Mr. French has a Nevada gold discovery to his credit and extensive project development experience including two projects taken through feasibility and into production.

Mr. Dyhr -- independent director

Mr. Dyhr has over 35 years of experience in mining with expertise in environmental, permitting and government relations in the U.S. His most recent success was directing the successful permitting of Nevada Copper's Pumpkin Hollow project in Yerington, Nev., which is now in production. His prior roles include directing the initial permitting of Magma Copper's Robinson mine near Ely, Nev., chairman of the Nevada Mining Association from 2017 to 2018, and other various senior capacities with multinational mining companies including Magma Copper and BHP Copper.

Mr. Konopelky -- independent director

Mr. Konopelky has spent the last 25 years developing a broad range of experience in building start-up companies, effectively streamlining financials, raising capital and leading operational initiatives across various industries. He is currently the president and CEO of ELM Inc., a leading environment liability management company that supports the mining, oil and gas, and industrial industries. He is also the founder, and current director, president and CEO of Silver Mountain.

Mr. Hay -- independent director

Mr. Hay is a partner of Maxis Law Corp., a Vancouver-based securities and corporate finance law firm. Since 2007, he has been advising companies listed on Canadian stock exchanges, principally in the natural resources sector, and has expertise in corporate finance, mergers and acquisitions, and corporate governance.

Asset information -- Limousine Butte -- drill-ready resource expansion in Nevada

Limousine Butte is a past-producing, Carlin-type gold district in Ely, Nev., consisting of 821 unpatented mining claims on federal Bureau of Land Management land covering approximately 66.5 square kilometres. The property covers a large hydrothermal gold system that exhibits alteration features indicative of sediment and structurally hosted gold deposits found on the Carlin trend and elsewhere in Nevada. Gold is predominately associated with hydrothermal alteration of carbonate host rocks including extensive jasperoid development. Gold mineralization is known to occur along the roughly 20 km northeast-trending fault structure with cross-cutting northwest-trending fault intersections also acting as favourable controls for mineralization.

Historical production from 1987 to 1989 by Alta Gold Corp. was approximately 91,000 ounces of near-surface oxide gold at the Golden Butte mine. Historical work that would cost over $45-million (U.S.) to replicate today includes over 900 drill holes and 120,000 metres of both reverse circulation and core drilled by previous operators, and other geophysical and geochemical studies. The project has a mineral resource estimate stated by McEwen of measured and indicated of 241,000 ounces of gold at 0.78 gram per tonne gold (9.6 million tonnes) (measured of 168,000 ounces of gold at 0.89 g/t gold (5.9 million tonnes), indicated of 73,000 ounces of gold at 0.61 g/t gold (3.7 million tonnes)), and inferred of 51,000 ounces of gold at 0.7 g/t gold (2.2 million tonnes).

The foregoing categories comply with the Canadian mineral resource and reserve definitions as published by the Canadian Institute of Mining Metallurgy and Petroleum, in effect as at the date of the McEwen estimate. The McEwen estimate incorporated three of the more advanced gold targets within the large land package, and was disclosed in the National Instrument 43-101 technical report for the Limousine Butte project, White Pine county, Nevada, prepared by Telesto Nevada Inc. as of July 1, 2009, for U.S. Gold Corp. A qualified person has not done sufficient work to classify the McEwen estimate as current and the company is not treating the McEwen estimate as current mineral resources. Nevgold has completed an updated NI 43-101 technical report to reinterpret the historical data and programs completed on Limousine Butte.

            HISTORICAL DRILL INTERCEPTS  

Hole ID          From (m)  To (m)  Length (m)  Au (g/t)

BPD-2               35.05   86.87       51.82      3.31 
BPD-2 including     38.10   41.15        3.05      6.62 
BPD-2 including     47.24   54.86        7.62      4.16 
BPD-2 including     60.96   86.87       25.91      4.01 
BDD-4                9.14   24.08       14.94      4.78 
BDD-4 including     12.19   22.25       10.06      6.63 
BDD-5               37.95   53.95       16.00      1.13 
BDD-5               58.83   87.17       28.35      1.34 
BDD-5 including     65.23   71.93        6.71      1.95 
BDD-5 including     73.46   76.20        2.74      1.63 
BDD-5 including     80.77   87.17        6.40      1.70 
BDR-9               28.96   85.34       56.39      5.02 
BDR-9 including     35.05   54.86       19.81     12.70 
BDR-9 including     73.15   83.82       10.67      2.15 
LB023               44.20   56.39       12.19      6.79 
LB023 including     44.20   48.77        4.57      8.04 
LB023 including     50.29   54.86        4.57      9.53 
LB080              228.60  274.32       45.72      2.06 
LB080 including    252.98  274.32       21.34      2.77 
LB084              224.03  251.46       27.43      1.49 
LB084 including    236.22  242.32        6.10      1.87 
LB084              245.36  251.46        6.10      2.00 
LB119              170.69  204.22       33.53      1.67 
LB119 including    170.69  182.88       12.19      2.44 
LB119 including    192.02  202.69       10.67      2.23 
LB120              216.41  230.12       13.72      2.01 
LB120 including    217.93  222.50        4.57      4.50 
LB120              236.22  254.51       18.29      2.10 
LB120 including    240.79  246.89        6.10      2.97 
LB120 including    249.94  252.98        3.05      4.95 
LB121              249.94  275.84       25.91      3.86 
LB121 including    249.94  259.08        9.14      4.08 
LB121 including    263.65  275.84       12.19      5.00  
LB122              249.94  262.13       12.19      4.85 
LB122 including    251.46  259.08        7.62      7.72 
LIM-45              22.86   36.58       13.72      3.24 

Averages are calculated on intervals greater than one g/t Au. These assays are from the assay database provided by McEwen.

Asset information -- Cedar Wash -- untapped exploration potential in Nevada

Cedar Wash consists of 239 unpatented mining claims on federal BLM land covering approximately 19.3 square km located in Lincoln county, Nevada. The project was a grassroots exploration discovery made by the McEwen's exploration group in 2016. Surface reconnaissance geology has been completed on parts of the land package including soil and rock chip sampling, which identified an extensive gold soil trend spanning over two km. The project was drilled in 2017 with approximately 7,000 m of RC drilling completed. Drill results in the shallow RC holes showed positive signs of mineralization and will be further tested by Nevgold.

The project is located approximately 20 km from Liberty Gold's Goldstrike project in Utah and has similar geological characteristics.

Initial work at Cedar Wash will focus on completing all surface reconnaissance geology in the first half of 2021, followed by drill testing the identified targets within the large, consolidated land package in the second half of the year.

Asset information -- Ptarmigan mine -- high-grade exploration in B.C.

Ptarmigan is a 100-per-cent-owned property covering 93 square km (9,300 hectares) centred on the historical silver-rich Ptarmigan mine located approximately 50 km from Radium in southeast B.C. The property hosts silver-rich, high-grade polymetallic epithermal veins and manto-style massive and semi-massive sulphide mineralization. Ptarmigan had historical results reported of 1,171 g/t silver (34 ounces per ton Ag), 0.96 g/t of gold, 0.3 per cent copper and 29.7 per cent lead. The project is situated in a high-grade area of historical mining camps including Bluebell, Mineral King and Paradise mines.

Ptarmigan past production of 645 tonnes included 89,000 ounces Ag with average mined grade of 4,215 g/t Ag, 5.4 g/t Au, 0.58 per cent Cu, 0.54 per cent Pb, 0.13 per cent Zn including 32 tonnes mined from adit No. 1 averaging 2,638 g/t Ag and 1.7 g/t Au.

Previously reported drill intercepts include:

  • PT14-118 released Oct. 7, 2014: 1,949 g/t Ag over 4.6 m, including 5,919 g/t Ag over 1.49 m and 22,945 g/t Ag over 0.33 m;
  • PT14-128 released Oct. 15, 2014: 37.3 g/t Au over 0.77 m;
  • PT14-108 released Sept. 9, 2014: 2,315 g/t Ag, 1.64 g/t Au and 1.1 per cent Cu over 1.16 m.

Nevgold continues to review the historical work completed at the project by SMM including surface and soil mapping, geophysics, geochemical analysis and approximately 14,000 m of diamond drilling. The historical data compilation will form the basis of the 2021 summer exploration program.

Shareholder approvals

The company and Nevgold intend to seek shareholder approval for the proposed transaction and related matters as, and to the extent required, in accordance with the policies of the TSX-V and applicable corporate and securities laws.

About Silver Mountain Mines Inc.

Silver Mountain Mines is a Canadian-based exploration and development company with 100-per-cent ownership of a 9,300-hectare property centered on the historical silver-rich Ptarmigan mine in southeastern B.C. The property hosts two styles of mineralization: silver rich, high-grade polymetallic epithermal veins and manto-style massive/semi-massive sulphide mineralization.

Bill Fleshman, FAusIMM(CP) 107342, consulting geologist, a qualified person as defined by NI 43-101 has reviewed and approved the scientific and technical disclosure in this press release related to the Limousine Butte and Cedar Wash projects.

We seek Safe Harbor.

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