Mr. Lawrence Page reports
SOUTHERN SILVER CLOSES TRANSACTION TO ACQUIRE 100% INTEREST IN THE CERRO LAS MINITAS SILVER PROJECT; CLOSES THREE PRIVATE PLACEMENTS FOR PROCEEDS OF $14.456 MILLION
Southern Silver Exploration Corp. has closed the transaction with Electrum Global Holdings LP to acquire Electrum's 60-per-cent indirect working interest (for a total 100-per-cent interest) in the Cerro Las Minitas (CLM) project located in Durango, Mexico. As consideration for the acquisition, Southern Silver must pay Electrum an aggregate $15-million (U.S.) in a combination of cash and common shares, of which $5-million (U.S.) and 2,336,590 common shares (valued at $1,006,403 (U.S.), which, together with a credit of $1.35-million deposit paid, represents the $2-million (U.S.) share-equivalent payment) have now been paid. The remaining consideration must be paid on or before:
- March 15, 2021: $2-million (U.S.) and common shares equal to $2-million (U.S.) (based on the greater of the 20-day volume-weighted average trading price of Southern Silver's shares on the TSX Venture Exchange and the discounted market price (as that term is defined in the policies of the TSX-V) of the shares;
- Sept. 15, 2021: $2-million (U.S.) and common shares equal to $2-million (U.S.) (based on the greater of the prior 20-day volume-weighted average trading price and the discounted market price).
The company has the option to pay all cash in lieu of shares. To secure the aforementioned payments, the company has pledged to Electrum the shares representing Electrum's 60-per-cent indirect working interest in the CLM project. Southern Silver has received both shareholder and TSX-V approval of the transaction.
Benefits to Southern Silver shareholders:
- Simplifies ownership structure of the CLM project;
- Establishes full control over project timeline and removes perceived joint venture discount;
- Provides 100-per-cent ownership of a premier, polymetallic deposit in Mexico with substantial resource growth potential (with a focus on targeting high-grade silver targets);
- 150-per-cent increase in attributable resources to current resource of 134 million ounces silver indicated and 138 million ounces silver equivalent inferred;
- Highly accretive to Southern Silver shareholders;
- Electrum remains a supportive cornerstone investor;
- Southern Silver becomes a more attractive takeover target;
- Enhances the market profile of the company relative to its peer group.
Through the transaction, Southern Silver will acquire an additional 49.9 million ounces silver and 1.35 billion pounds of combined lead and zinc to its account based on the current National Instrument 43-101 mineral resource estimate of the CLM project. Additionally, Southern Silver will become more attractive on a corporate level with the company's market profile being enhanced by having ownership of one of the larger and highest-grade undeveloped silver projects in the world.
Lawrence Page, Southern Silver's president and director, stated: "Sole ownership of the CLM project inclusive of the significant resources developed to date allows us great latitude in developing the project for substantial resource growth. The transaction also provides a 150-per-cent increase in attributable resources which is highly accretive to Southern Silver shareholders. An extensive diamond drill program will begin within the next two weeks designed to develop previously identified mineralization east of the intrusion for ultimate inclusion into the existing resource calculation."
Private placements recently closed:
- Brokered offering of 50 million subscription receipts at a price of 20 cents per subscription receipt for gross proceeds of $10-million: Each subscription receipt has now been exchanged, for no additional consideration, into one unit of the company. Each unit consists of one common share and one-half of one share purchase warrant, with each full warrant exercisable to purchase one additional common share at a price of 25 cents during the first year, increasing to 30 cents in year 2 and to 35 cents in year 3.
- Non-brokered offering of 19,047,620 subscription receipts at a price of 21 cents per subscription receipt for gross proceeds of $4-million: Each subscription receipt has now been exchanged, for no additional consideration, into one unit of the company. Each unit consists of one common share and one-half of one share purchase warrant, with each full warrant exercisable to purchase one additional common share at a price of 28 cents during the first year, increasing to 33 cents in year 2 and to 38 cents in year 3.
- Non-brokered private placement of 1.2 million units at a price of 38 cents per unit for gross proceeds of $456,000: Each unit consists of one common share and one share purchase warrant, with each warrant exercisable to purchase one additional common share at an exercise price of 50 cents per share for a period of three years.
Cerro Las Minitas project
The CLM project is an advanced-exploration-stage polymetallic silver-lead-zinc-copper skarn/carbonate replacement deposit project located in southern Durango, Mexico.
The CLM project, as of May 9, 2019, contains a mineral resource estimate, at a 175-gram-per-tonne-silver-equivalent cut-off, of:
- Indicated -- 134 million ounces silver equivalent: 37.5 million ounces silver, 40 million pounds copper, 303 million pounds lead and 897 million pounds zinc;
- Inferred -- 138 million ounces silver equivalent: 45.7 million ounces silver, 76 million pounds copper, 253 million pounds lead and 796 million pounds zinc.
A total of 133 drill holes for 59,000 metres have now been completed on the CLM project with exploration expenditures of approximately $18.5-million (U.S.), equating to exploration discovery costs of approximately seven cents per silver equivalent ounce to the end of 2019.
Southern Silver has identified a further 10,000 metres in exploration drilling for 2020, targeting specific stepouts from strongly silver-enriched mineral intercepts in the Las Victorias, South Skarn and Mina La Bocona targets. The targeting is designed to increase the current mineral resource estimate by approximately 30 per cent. The CLM project remains one of the larger undeveloped silver-lead-zinc projects in the world. It is fully permitted.
About Southern Silver Exploration Corp.
Southern Silver Exploration is an exploration and development company with a focus on the discovery of world-class mineral deposits. The company's specific emphasis is the 100-per-cent-owned Cerro Las Minitas silver-lead-zinc project located in the heart of Mexico's Faja de Plata, which hosts multiple world-class mineral deposits such as Penasquito, San Martin, Naica and Pitarrilla. The company has assembled a team of highly experienced technical, operational and transactional professionals to support its exploration efforts in developing the Cerro Las Minitas project into a premier, high-grade silver-lead-zinc mine. The company engages in the acquisition, exploration and development either directly or through joint venture relationships in mineral properties in major jurisdictions. The company's property portfolio also includes the Oro porphyry copper-gold project located in southern New Mexico, United States.
Robert Macdonald, MSc, PGeo, is a qualified person as defined by NI 43-101 and supervised directly the collection of the data from the CLM project that are reported in this disclosure and is responsible for the presentation of the technical information in this disclosure.
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