VANCOUVER, BC, Dec. 6, 2021
/CNW/ - Dolly Varden Silver Corporation ("Dolly
Varden") (TSXV: DV) (OTCQX: DOLLF) and Fury Gold Mines
Ltd ("Fury") (TSX: FURY) (NYSE American: FURY) are
pleased to announce that the companies have entered into a
definitive agreement dated December 6,
2021 (the "Purchase Agreement") pursuant to which
Dolly Varden will acquire from Fury, through the acquisition of
Fury's wholly-owned subsidiary, a 100% interest in the Homestake
Ridge gold-silver project ("Homestake
Project"), located adjacent to the Dolly Varden Project
("DV Project" and together with the Homestake Project, the
"Kitsault Valley Project") in the Golden Triangle,
British Columbia (the
"Transaction").
The Homestake Project hosts a resource estimated to contain
165,993 ounces of gold and 1.8 million ounces of silver in the
Indicated category and 816,719 ounces of gold and 17.8 million
ounces of silver in the Inferred category (refer to further
resource disclosure at the end of this release) within a 7,500
hectare land package located contiguous to and northwest of the DV
Project. The close proximity of the deposits that make up the
current mineral resource estimates, combined with common
infrastructure in the region, is expected to generate substantial
co-development synergies as these deposits are advanced in
combination. The Transaction values the Homestake Project at
CAD$50 million for which Dolly Varden
will pay $5 million in cash and issue
76,504,590 Dolly Varden common shares to Fury, as further described
below.
Transaction Highlights
- Combined mineral resource base of 34.7 million ounces of silver
and 166 thousand ounces of gold in the Indicated category and 29.3
million ounces of silver and 817 thousand ounces of gold in the
Inferred category, solidifying the Kitsault Valley Project as among
the largest high-grade, undeveloped precious metal assets
in Western Canada.
- Consolidation of two adjacent projects, allowing for numerous
potential co-development opportunities with capital and operating
synergies.
- Exposure to a large and highly prospective land package, with
potential to further expand resources through additional
exploration along a combined 15 km strike-length within a
163 km2 consolidated land package.
- Transformative scale to enhance investor visibility and peer
group positioning.
- Previous stand-alone Homestake Project preliminary economic
assessment produced an after-tax net present value of USD$173 million and an internal rate of return of
32% at US$1,620 per ounce gold price
and US$14.40 per ounce silver price.
The study estimated a total of 590,040 ounces of gold equivalent
production over a 13 years initial mine life at an all-in
sustaining costs per ounce gold of US$670.
- Fury to have board representation in Dolly Varden and agrees to
voluntary share sale restrictions.
Shawn Khunkhun, CEO &
Director of Dolly Varden, commented "We are excited to combine two
adjacent precious metals projects located in one of the world's top
mining jurisdictions. We expect that this combination will result
in significant synergies in the areas of exploration, development,
permitting and production. Upon completion of the Transaction, we
look forward to continued engagement with Indigenous and community
partners to ensure the responsible development of this compelling
new project."
Tim Clark, CEO & Director of
Fury, further added "The commercial logic behind the combination of
these two adjacent assets is very strong. We are delighted to
cooperate with the Dolly Varden team and are very excited to be
part of this regional consolidation in British Columbia.
Combining our Homestake Project with the DV Project creates an
attractive opportunity to immediately establish shareholder value
through the potential synergies that result from their regional
proximity. We look forward to having our shareholders benefit from
the exciting growth and development of the Kitsault Valley Project,
and to Fury becoming a partner and significant shareholder of Dolly
Varden."
Ivan Bebek, Chair and Director of
Fury commented "The decision to vend Homestake is a difficult one
given the exploration upside and our positive outlook for the
commodity markets. However, we feel that bringing the two projects
together is clearly the best path forward and are very excited to
be partnering with the team at Dolly Varden. This transaction also
simplifies Fury's portfolio which coincides with recent positive
drill results from both of Fury's Quebec and Nunavut assets."
Transaction Details
Under to the Purchase Agreement, Dolly Varden has agreed to
acquire Fury's wholly-owned subsidiary, Homestake Resource
Corporation, which owns a 100% interest in the Homestake Project in
exchange for a $5 million cash
payment and the issuance of 76,504,590 common shares of Dolly
Varden. Upon completion of the Transaction, Fury will own
approximately 36.9% of Dolly Varden on an outstanding basis. The
Transaction is subject to a number of closing conditions, including
the receipt of TSX Venture Exchange ("TSXV") approval and
the satisfaction of certain other closing conditions customary for
a transaction of this nature. The Transaction is also subject to
approval by a simple majority of the votes cast by Dolly Varden
shareholders at a Dolly Varden shareholders meeting. Dolly
Varden expects to hold a special meeting of shareholders in
February 2022 to consider the
Transaction. The Transaction is an arm's-length transaction under
the rules of the TSXV.
Dolly Varden and Fury will enter into an investor rights
agreement (the "Investor Rights Agreement") on completion of
the Transaction pursuant to which Fury shall have the right to
appoint two nominees to the Dolly Varden board so long as Fury owns
greater than 20% of the Dolly Varden shares outstanding. Should
Fury own greater than 10% of the Dolly Varden shares outstanding,
Fury shall have the right to appoint one nominee to the Dolly
Varden board. Additionally, the shares issued to Fury shall be
subject to a one-year hold period. The Investor Rights Agreement
shall also contain certain customary re-sale restrictions, voting
and standstill conditions, and participation rights as agreed
between Dolly Varden and Fury.
The Purchase Agreement also includes certain representations,
warranties, covenants, indemnities and conditions that are
customary for a transaction of this nature. A termination fee of
$2 million may be payable by Dolly
Varden to Fury if the Transaction is not approved by Dolly Varden
shareholders due to a competing proposal being made or announced
before the Dolly Varden shareholder meeting and Dolly Varden is
subsequently acquired by the third party under such competing
proposal.
Further information regarding the Transaction will be contained
in a management information circular to be prepared by Dolly Varden
and mailed to shareholders of Dolly Varden in connection with the
special meeting of shareholders to be held by Dolly Varden to
consider the Transaction and related matters. All shareholders of
Dolly Varden are urged to read the information circular once
available, as it will contain important additional information
concerning the Transaction.
Dolly Varden Board Recommendations and Voting Support
The Purchase Agreement has been unanimously approved by the
board of directors of both Dolly Varden and Fury. The Dolly Varden
board of directors recommend that Dolly Varden shareholders vote in
favour of the Transaction.
All of the directors and officers of Dolly Varden and certain
shareholders of Dolly Varden, including Eric Sprott, holding in aggregate 18.2% of
the issued and outstanding common shares of Dolly Varden, have
entered into customary voting support agreements agreeing to vote
in favour of the Transaction.
Haywood Securities Inc. has provided a fairness opinion to the
board of directors of Dolly Varden that, as of the date thereof,
and based upon and subject to the assumptions, limitations and
qualifications stated therein, the consideration to be paid by
Dolly Varden to Fury under the Agreement is fair, from a financial
point of view, to Dolly Varden.
Conference Call and Webcast
A joint webcast will be held by management of both Dolly Varden
and Fury to discuss the Transaction on Monday, December 6th,
2021 at 10 a.m. Pacific time / 1 p.m. Eastern
time. Shareholders, analysts, investors and media are invited to
join the live webcast by registering using the following
link: http://services.choruscall.ca/links/dollyvardensilver20211206.html
A presentation to accompany the conference call and webcast can
be accessed via either the Dolly Varden or Fury websites at
www.dollyvardensilver.com or www.furygoldmines.com. A replay
of the joint webcast will be available on both websites following
the conclusion of the call.
Advisors and Counsel
Haywood Securities Inc. is acting as financial advisor to Dolly
Varden. Stikeman Elliott LLP is acting as legal counsel to Dolly
Varden.
Minvisory Corp. is acting as financial advisor to Fury. McMillan
LLP is acting as legal counsel to Fury.
Qualified Persons
The technical information contained in this news release
relating to Dolly Varden has been approved by [Rob van Egmond, P. Geo, Chief Geologist for
Dolly Varden], who is a "qualified person" within the meaning
of National Instrument 43-101 - Standards of Disclosure for
Mineral Projects.
The technical information contained in this news release
relating to Fury has been approved by [Michael Henrichsen, P. Geo, SVP of Exploration
at Fury], who is a "qualified person" within the meaning of
National Instrument 43-101 - Standards of Disclosure for
Mineral Projects.
About Dolly Varden Silver Corporation
Dolly Varden Silver Corporation is a mineral exploration company
focused on exploration in northwestern British Columbia. Dolly Varden has two
projects, the namesake Dolly Varden silver property and the nearby
Big Bulk copper-gold property. The Dolly Varden property is
considered to be highly prospective for hosting high-grade precious
metal deposits, since it comprises the same structural and
stratigraphic setting that host numerous other high-grade deposits
(Eskay Creek, Brucejack). The Big
Bulk property is prospective for porphyry and skarn style copper
and gold mineralization similar to other such deposits in the
region (Red Mountain, KSM, Red
Chris).
Technical Disclosure
Homestake Resource Estimate:
The Homestake resource estimate is based on the technical report
with an effective date of May 29,
2020, as amended and restated June
24, 2020 and titled, "Technical Report, Updated Mineral
Resource Estimate and Preliminary Economic Assessment on the
Homestake Ridge Gold Project, Skeena Mining Division, British Columbia" which was filed and is
available on Fury's SEDAR profile at www.sedar.com. The report has
been prepared in accordance with NI 43-101, Companion Policy
43-101CP to NI 43-101, and Form 43-101F of NI 43-101.
Mineral resources are estimated at a cut-off grade of 2.0 g/t
gold equivalent.
Gold equivalent values were calculated using a long-term gold
price of US$1,300 per ounce, silver
price at US$20 per ounce and copper
price at US$2.50 per pound and an
exchange rate of US$1.00=C$1.20. The gold equivalent calculation included
provisions for metallurgical recoveries, treatment charges,
refining costs and transportation.
Dolly Varden Resource Estimate:
The Dolly Varden resource estimate is based on the technical
report with an effective date of May 8,
2019, and titled, "Technical Report and Mineral Resource
Update for the Dolly Varden Property, British Columbia, Canada" which was filed and
is available on Dolly Varden's SEDAR profile at www.sedar.com. The
report has been prepared in accordance with NI 43-101, Companion
Policy 43-101CP to NI 43-101, and Form 43-101F of NI 43-101.
A 150 g/t silver cut-off was chosen to reflect conceptual
underground mining and processing cut-off grade.
Mineral Resources are not Mineral Reserves. Mineral resources
which are not mineral reserves do not have demonstrated economic
viability. There has been insufficient exploration to define the
inferred resource as an indicated or measured mineral resource, and
it is uncertain if further exploration will result in upgrading the
resource to a measured resource category. There is no guarantee
that any part of the mineral resource discussed herein will be
converted into a mineral reserve in the future.
About Fury Gold Mines Limited
Fury Gold Mines Limited is a Canadian-focused exploration and
development company positioned in three prolific mining regions
across the country. Led by a management team and board of directors
with proven success in financing and developing mining assets, Fury
will aggressively grow and advance its multi-million-ounce gold
platform through careful project assessment and exploration
excellence. Fury is committed to upholding the highest industry
standards for corporate governance, environmental stewardship,
community engagement and sustainable mining. For more information
on Fury Gold Mines, visit www.furygoldmines.com.
Forward-Looking Statements
This release includes certain statements that may be deemed to
be "forward-looking statements". All statements in this release,
other than statements of historical facts, that address events or
developments that management of Dolly Varden and Fury expect, are
forward-looking statements. Actual results or developments may
differ materially from those in forward-looking statements. Dolly
Varden and Fury disclaim any intention or obligation to update or
revise any forward-looking statements, whether as a result of new
information, future events or otherwise, save and except as may be
required by applicable securities laws.
These statements in this release include: the anticipated
benefits of the Transaction to Dolly Varden, Fury and their
shareholders; the timing and anticipated receipt of required
regulatory and shareholder approvals for the Transaction; the
ability of Dolly Varden and Fury to satisfy the conditions to, and
to complete, the Transaction as proposed;the holding of the Dolly
Varden shareholder meeting; the anticipated timing of the mailing
of the information circular regarding the Transaction and of the
closing of the Transaction; the ability to achieve synergies, the
quantity and grade of the gold and silver resources and the ability
to expand resources through the exploration of a combined
projects.
In respect of the forward-looking information concerning the
anticipated completion of the proposed Transaction and the
anticipated timing thereof, Dolly Varden and Fury have provided
them in reliance on certain assumptions that they believe are
reasonable at this time, including assumptions as to the time
required to prepare and mail shareholder meeting materials,
including the required information circular; the ability of the
parties to receive, in a timely manner, the necessary regulatory
and shareholder approvals; and the ability of the parties to
satisfy, in a timely manner, the other conditions to the closing of
the Transaction. These dates may change for a number of reasons,
including unforeseen delays in preparing meeting materials,
inability to secure necessary shareholder, regulatory or other
approvals in the time assumed or the need for additional time to
satisfy the other conditions to the completion of the Transaction.
Accordingly, readers should not place undue reliance on the
forward-looking information contained in this news release
concerning these times.
Since forward-looking information address future events and
conditions, by their very nature they involve inherent risks and
uncertainties. Actual results could differ materially from those
currently anticipated due to a number of factors and risks. These
include, but are not limited to, the risk that the Transaction may
not close when planned or at all or on the terms and conditions set
forth in the Purchase Agreement; the failure to obtain the
necessary shareholder and regulatory approvals required in order to
proceed with the Transaction; the synergies expected from the
Transaction not being realized; business integration risks;
operational risks in development, exploration and production for
precious metals; delays or changes in plans with respect to
exploration or development projects or capital expenditures; the
uncertainty of resource estimates; health, safety and environmental
risks; gold price and other commodity price and exchange rate
fluctuations; environmental risks; competition; incorrect
assessment of the value of acquisitions; ability to access
sufficient capital from internal and external sources; and changes
in legislation, including but not limited to tax laws, royalties
and environmental regulations.
Actual results, performance or achievement could differ
materially from those expressed in, or implied by, the
forward-looking information and, accordingly, no assurance can be
given that any of the events anticipated by the forward looking
information will transpire or occur, or if any of them do so, what
benefits may be derived therefrom and accordingly, readers are
cautioned not to place undue reliance on the forward looking
information.
Neither the TSX Venture Exchange nor its Regulation Services
Provider (as that term is defined in the policies of the TSX-V)
accepts responsibility for the adequacy or accuracy of this news
release.
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SOURCE Dolly Varden Silver Corp.