Discovery Metals Corp. (TSX-V: DSV, OTCQX: DSVMF)
(“Discovery” or the “Company”) is pleased to announce its financial
results for the three months ended September 30, 2020, and to
provide a summary of key events for the quarter and subsequent to
quarter end. All amounts are presented in Canadian dollars (“C$”)
unless otherwise stated.
Discovery’s flagship project is our 100%-owned
Cordero project (“Cordero” or the “Project”) located in Chihuahua
State, Mexico. We are aggressively advancing the Project through a
55,000 metre (“m”) Phase 1 drill program focused on delineating a
high-margin silver project with size and scaleability.
CORPORATE
HIGHLIGHTS:
On August 7, 2020, we closed a $35 million
private placement that included a $15 million investment from Mr.
Eric Sprott. The placement consisted of 25.9 million units at a
price of $1.35 per unit. Each unit was comprised of one common
share of Discovery and one-half of one common share purchase
warrant, with each full warrant exercisable at $1.75 until August
7, 2022 (refer to the press release dated August 11, 2020, for
further details).
As at September 30, 2020, and following the
completion of this financing, we had a cash balance of $84 million
to drive value through aggressive exploration, resource growth and
future development.
EXPLORATION HIGHLIGHTS:
We have now completed 43,640 m (111 holes) as
part of our expanded 55,000 m Phase 1 drill program. There are
currently four drill rigs operational on site. Additional drill
rigs may be added when the Company is confident that the health and
safety risks related to COVID-19 can be managed effectively. Based
on our current level of activity we anticipate completing the
expanded Phase 1 drill program by the end of Q1 2021.
Drilling is focused on two key concepts: (1)
targeting of bulk-tonnage mineralization within and to the east and
northeast of both mineralized corridors; and (2) testing of the
width, grade and continuity of extensive high-grade vein systems
that transect the deposit.
Bulk-tonnage targets
At our bulk-tonnage targets our recent focus has
shifted to the South Corridor, an area of the deposit that has seen
significantly less drilling than the North Corridor. As our drill
results from the South Corridor indicate, we have been successful
in intercepting broad zones of mineralization in areas where there
were significant gaps in previous drilling, which indicates
potential for the conversion of waste to ore in this part of the
deposit.
Drill highlights during Q3 2020 and subsequent
to quarter end from our bulk-tonnage targets include:
• 401.7 m averaging
134 grams per
tonne silver equivalent (“g/t
AgEq1”) in hole C20-343 from 66.9 m (49 g/t Ag,
0.07 g/t Au, 1.0% Pb and 1.1% Zn) including:
- 30.3
m averaging 182 g/t
AgEq1 (57 g/t Ag, 0.10 g/t Au, 0.8% Pb,
2.2% Zn) and;
- 112.3
m averaging 247 g/t
AgEq1 (96 g/t Ag, 0.08 g/t Au, 2.0% Pb,
1.8% Zn) and;
-
44.2 m averaging 241 g/t
AgEq1 (84 g/t Ag, 0.10 g/t Au, 1.8% Pb,
2.0% Zn)
• 139.1 m
averaging 138
g/t AgEq1 in
hole C20-348 from 196.2 m (47 g/t Ag, 0.07 g/t Au, 0.6% Pb and 1.6%
Zn) including:
- 19.0
m averaging 357 g/t
AgEq1 (112 g/t Ag, 0.17 g/t Au, 1.8% Pb, 4.0% Zn)
• 120.4 m
averaging 114
g/t AgEq1 in
hole C20-333 from 206.8 m (30 g/t Ag, 0.11 g/t Au, 0.4% Pb and 1.5%
Zn)
• 26.6 m averaging
108 g/t AgEq1 in hole C20-353
from 99.5 m (56 g/t Ag, 0.09 g/t Au, 0.4% Pb and 0.7% Zn) and
29.6 m averaging 119 g/t AgEq1 from 278.1 m (52
g/t Ag, 0.07 g/t Au, 0.8% Pb, 0.8% Zn)
High-grade vein targets
We continued to advance high-grade sulphide
veins as a separate exploration target. At the Todos Santos Vein
trend we have now demonstrated a minimum strike extent of 1.5 km
based on historic underground workings and recent drilling while at
the Parcionera Vein trend we have now confirmed a minimum strike
extent of 350 m. These vein trends along with other known vein
trends at the Project are a new and exciting component of our story
that we look forward to drill testing for the remainder of the year
and through 2021. Drill highlights during Q3 2020 and subsequent to
quarter end from the vein targets include:
• Todos Santos Vein
- 1.4
m averaging
1,907 g/t
AgEq1 in hole C20-342 from 147.0 m (700 g/t Ag,
0.74 g/t Au, 16.1% Pb and 14.0% Zn)
- 1.9 m averaging
2,007 g/t AgEq1
in hole C20-344 from 171.1 m (1,035 g/t Ag, 0.06 g/t Au, 20.0% Pb
and 6.4% Zn)
- 3.4 m
averaging 1,150 g/t
AgEq1” in hole C20-349 from 145.6 m (412 g/t Ag,
0.42 g/t Au, 8.0% Pb and 10.0% Zn) within a 5.0 m interval
averaging 962 g/t AgEq1 (331 g/t Ag, 0.35
g/t Au, 6.3% Pb, 9.2% Zn)
- 2.0 m averaging 1,207 g/t
AgEq1 in hole C20-351 from 224.8 m (532 g/t Ag, 0.38 g/t
Au, 8.8% Pb and 8.1% Zn)
• Parcionera Vein
- 1.5 m
averaging 1,119 g/t AgEq1 in hole C20-338 from 149.8 m
(489 g/t Ag, 0.82 g/t Au, 2.9% Pb and 11.1% Zn)
-
1.3 m averaging
1,073 g/t AgEq1 in hole
C20-340 from 69.6 m (587 g/t Ag, 0.67 g/t Au, 9.4% Pb and 2.4%
Zn)
For all drill results refer to press releases
dated July 20, August 19, September 14, October 14 and November 12,
2020, for further details.
COVID-19 UPDATE
As with much of Mexico this past fall, Chihuahua
State saw a significant increase in the community spread of
COVID-19. During the month of October, the Company isolated and
quarantined several employees and contractors who had tested
positive for COVID-19 during routine testing at site. These tests
were followed-up with subsequent PCR testing with anyone testing
positive being isolated immediately. The Company is continually
enhancing its testing protocols, social-distancing measures and
travel restrictions and saw a noticeable reduction in positive
cases during the month of November.
The Company continues to be proactive regarding
COVID-19 and continually monitors employees and contractors and
remains committed to being engaged with our local stakeholders
during this uncertain period. The Company will continue to closely
monitor the directives of all levels of government in both Mexico
and Canada as well as the relevant health authorities.
Q3
2020 FINANCIAL
HIGHLIGHTS:
The following selected financial data is
summarized from our Company’s unaudited interim condensed
consolidated financial statements and related notes thereto (the
“Financial Statements”) for the three months ended September 30,
2020. A copy of the Financial Statements and MD&A is available
on our website at www.dsvmetals.com or on SEDAR
at www.sedar.com.
Net loss |
|
Q3 2020 |
|
|
Q3 2019 |
|
(a) Total(A) |
$ |
(5,127,665 |
) |
$ |
(3,876,582 |
) |
(b) basic and diluted per share |
$ |
(0.02 |
) |
$ |
(0.03 |
) |
Net loss & total comprehensive loss |
$ |
(4,914,927 |
) |
$ |
(4,017,681 |
) |
Total weighted average shares outstanding |
|
282,624,020 |
|
|
134,258,418 |
|
- Net loss for Q3
2020 includes non-cash share-based compensation expense of $232,528
(Q3 2019: $1,614,616) and a 100% provision for IVA receivable
additions of $581,405 (Q3 2019: $1,000,710).
|
September 30,
2020 |
December 31, 2019 |
Cash, cash equivalents & short-term investments |
$ |
84,210,491 |
$ |
23,950,737 |
Total assets |
$ |
112,664,894 |
$ |
53,518,599 |
Total current liabilities |
$ |
1,825,541 |
$ |
716,596 |
Total liabilities |
$ |
1,878,499 |
$ |
804,466 |
Total Shareholders’ equity |
$ |
110,786,396 |
$ |
52,714,133 |
RSU & DSU
PLAN:
Discovery also announces that its shareholders
and its board of directors have approved the implementation of a
restricted share unit plan (the “RSU Plan”) and a
deferred share unit plan (the “DSU Plan”).
The RSU Plan and the DSU Plan have been
implemented to further align the interests of the Company’s senior
management, consultants, and directors with those of Discovery’s
shareholders. Both plans were approved by Discovery’s board of
directors on May 12, 2020, and by the Company’s shareholders at its
annual general meeting on June 26, 2020. The Company has received
conditional approval of the TSX Venture Exchange for both the RSU
Plan and the DSU Plan.
To date, no restricted share units
(“RSUs”) or deferred share units
(“DSUs”) have been granted by Discovery under the
respective plan. Discovery’s board of directors (or its
Compensation Committee, as delegated by the board) will determine
the grant of RSUs and DSUs to any eligible persons, and will
determine the terms of any vesting conditions for RSUs or DSUs
granted.
Participation in the RSU Plan is restricted to
Discovery’s employees, officers, and consultants. Upon vesting,
RSUs entitle their holders to receive either the number of common
shares of the Company (“Shares”) equal to the
number of RSUs vested, or a cash payment equal to the value of such
Shares, or a combination of cash and Shares, in each case at the
Company’s option.
Participation in the DSU Plan is restricted to
Discovery’s non-employee directors, or other directors otherwise
designated by the Company’s board of directors to be eligible for
participation in the DSU Plan. DSUs vest upon the date that their
holder ceases to be a director of the Company and is not otherwise
an employee or officer of the Company. Upon vesting, each DSU
entitles their holder to receive, on a deferred payment basis and
subject to adjustment, either a Share or a cash payment equal to
the fair market value of a Share, at the Company’s option.
Neither RSUs nor DSUs may be sold, transferred,
assigned, pledged, or otherwise encumbered or disposed of during
the vesting period. The maximum number of Shares available for
issuance upon the vesting of RSUs and DSUs, in the aggregate, is
the lower of 7,000,000 Shares or 5% of the issued and outstanding
Shares at the time of grant. In combination with all security-based
compensation arrangements of the Company, including the Company’s
stock option plan, the number of RSUs and DSUs issuable may not
exceed 10% of the issued and outstanding Shares.
Further details regarding the RSU Plan and DSU
Plan are set out in the management information circular of the
Company dated May 12, 2020, available under Discovery’s profile on
SEDAR (www.sedar.com).
LOOKING
AHEAD:
Firstly, we would like to take this opportunity
to thank all of our local employees and contractors for their
diligent efforts and hard work through the course of 2020 under
what are unprecedented and challenging circumstances as a result of
the COVID-19 pandemic. As we head in to 2021, we are very excited
for what we expect will be a transformative year for the Company.
Since acquiring Cordero in mid-2019 we have been aggressive yet
disciplined in how we have deployed capital at the Project. We are
now coming to the tail end of our Phase 1 drill program which has
yielded exceptional results on a consistent basis across a large
number of different targets. This drill program, along with
metallurgical testwork that recently commenced, will culminate in a
brand-new resource estimate and completely revamped preliminary
economic assessment (“PEA”) in the second half of 2021. We are
confident that our original thesis at the time of acquisition, that
Cordero is one of the rare deposits in the silver space that offers
the combination of margin, size and scaleability, will come to
fruition through these major milestones.
In addition to this work we will continue to
drive value and de-risk the project across other areas. Our
systematic assessment of the extensive vein trends flanking the
Cordero deposit will continue along with the advancement and
initial drill testing of other large interpreted intrusive centres
on our sizeable land package. We have recently commenced
socio-economic and environmental baseline studies at Cordero. This
work will be ongoing through 2021 and will form a critical part of
the feasibility level studies we envisage we will pursue following
the completion of the PEA.
We look forward to providing further details on
these work items, all of which are underpinned by an exceptionally
strong balance sheet with a current cash balance of more than $80
million, through the remainder of the year and on an ongoing basis
through 2021.
About DiscoveryDiscovery’s
flagship project is its 100%-owned Cordero silver project in
Chihuahua State, Mexico. Our drill results to date show that
Cordero is developing all the attributes of a tier 1 project –
grade, scale, significant organic growth opportunities and well
located in one of Mexico’s premier mining belts. The project is
supported by an industry leading balance sheet with over C$80
million of cash allocated for aggressive exploration, resource
expansion and future development.
On Behalf of the Board of Directors,
Taj Singh,
M.Eng,
P.Eng, CPA, President, Chief
Executive Officer, and Director
For further information contact:
Forbes Gemmell, CFAVP Corporate
Development & Investor
Relationsforbes.gemmell@dsvmetals.com
TECHNICAL NOTES & REFERENCES:
1All results in this news release are rounded.
Assays are uncut and undiluted. Widths are drilled widths, not true
widths, as a full interpretation of the actual orientation of
mineralization is not complete. Intervals were chosen based on a 20
g/t AgEq cutoff with no more than 10 m of dilution. AgEq
calculations are used as the basis for total metal content
calculations given Ag is the dominant metal constituent as a
percentage of AgEq value in approximately 70% of the Company’s
mineralized intercepts. AgEq calculations for reported drill
results are based on USD $16.50/oz Ag, $1,350/oz Au, $0.85/lb Pb,
$1.00/lb Zn. The calculations assume 100% metallurgical recovery
and are indicative of gross in-situ metal value at the indicated
metal prices. Refer to notes below for metallurgical recoveries
assumed in the 2018 PEA completed on Cordero.
The most recent technical report for the Cordero
Project is the 2018 Preliminary Economic Assessment (PEA) authored
by M3 Engineering and Technology Corp and includes the most recent
resource estimate, completed by Independent Mining Consultants,
Inc. It is available on Discovery’s website and on SEDAR under
Levon Resources Ltd, a wholly owned subsidiary of Discovery. The
PEA assumes metallurgical recoveries of 89% for Ag, 84% for Pb, 72%
for Zn and 40% for Au.
Sample
analysis and
QA/QC Program: True widths of
reported drill intercepts have not been determined. Assays are
uncut except where indicated. All core assays are from HQ drill
core unless stated otherwise. Drill core is logged and sampled in a
secure core storage facility located at the project site 40km north
of the city of Parral. Core samples from the program are cut in
half, using a diamond cutting saw, and are sent to ALS
Geochemistry-Mexico for preparation in Chihuahua City, Mexico, and
subsequently pulps are sent to ALS Vancouver, Canada, which is an
accredited mineral analysis laboratory, for analysis. All samples
are prepared using a method whereby the entire sample is crushed to
70% passing -2mm, a split of 250g is taken and pulverized to better
than 85% passing 75 microns. Samples are analyzed for gold using
standard Fire Assay-AAS techniques (Au-AA24) from a 50g pulp. Over
limits are analyzed by fire assay and gravimetric finish. Samples
are also analyzed using thirty three-element inductively coupled
plasma method (“ME-ICP61”). Over limit sample values are re-assayed
for: (1) values of zinc > 1%; (2) values of lead > 1%; and
(3) values of silver > 100 g/t. Samples are re-assayed using the
ME-OG62 (high-grade material ICP-AES) analytical package. For
values of silver greater than 1,500 g/t, samples are re-assayed
using the Ag-CON01 analytical method, a standard 30 g fire assay
with gravimetric finish. Certified standards and blanks are
routinely inserted into all sample shipments to ensure integrity of
the assay process. Selected samples are chosen for duplicate assay
from the coarse reject and pulps of the original sample. No QAQC
issues were noted with the results reported herein.
Qualified
Person: Gernot Wober, P.Geo, VP Exploration,
Discovery Metals Corp., is the Company's designated Qualified
Person for this news release within the meaning of National
Instrument 43-101 Standards of Disclosure for Mineral Projects (“NI
43-101”) and has reviewed and validated that the information
contained in this news release is accurate.
Neither TSX Venture Exchange nor its Regulation Services
Provider (as that term is defined in policies of the TSX Venture
Exchange) accepts responsibility for the adequacy or accuracy of
this release.
This news release is not for distribution to United States
newswire services or for dissemination in the United States.
This news release does not constitute an offer
to sell or a solicitation of an offer to buy nor shall there be any
sale of any of the securities in any jurisdiction in which such
offer, solicitation or sale would be unlawful, including any of the
securities in the United States of America. The securities have not
been and will not be registered under the United States Securities
Act of 1933, as amended (the “1933 Act”) or any state securities
laws and may not be offered or sold within the United States or to,
or for account or benefit of, U.S. Persons (as defined in
Regulation S under the 1933 Act) unless registered under the 1933
Act and applicable state securities laws, or an exemption from such
registration requirements is available.
Cautionary Note Regarding Forward-Looking
Statements
This news release may include forward-looking
statements that are subject to inherent risks and uncertainties.
All statements within this news release, other than statements of
historical fact, are to be considered forward looking. Although
Discovery believes the expectations expressed in such
forward-looking statements are based on reasonable assumptions,
such statements are not guarantees of future performance and actual
results or developments may differ materially from those described
in forward-looking statements. Factors that could cause actual
results to differ materially from those described in
forward-looking statements include fluctuations in market prices,
including metal prices, continued availability of capital and
financing, and general economic, market or business conditions.
There can be no assurances that such statements will prove accurate
and, therefore, readers are advised to rely on their own evaluation
of such uncertainties. There can be no assurance that the Private
Placement will close on the announced terms. Discovery does not
assume any obligation to update any forward-looking statements
except as required under applicable laws. For a detailed discussion
on the risks faced by the Company, refer to the documents
incorporated by reference herein, the Company’s MD&A for the
year ended December 31, 2019 and the Company’s 2019 Annual
Information Form available on the Company’s website at
www.dsvmetals.com or under Discovery’s profile on SEDAR at
www.sedar.com.
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