Honey Badger Silver Inc. (TSX-V: TUF) (“Honey Badger” or the
“Company”) is pleased to announce that it has entered into a
non-binding term sheet (the “Term Sheet”) to acquire from Aftermath
Silver Ltd. (“Aftermath”) its 100% interest in the Cachinal De La
Sierra Silver-Gold Project (the “Cachinal Project” or “Cachinal”),
located in the Cachinal de la Sierra area in Chile's Antofagasta
region (Region II). The proposed transaction includes an
exclusivity period that ends on August 15, 2022. Honey Badger and
Aftermath are working diligently to finalize a definitive agreement
on or before this date.
Cachinal Project Highlights
- Open-pit
Indicated Resource of 15.03 Moz of silver grading 97 g/t of silver
and 20.05Koz of gold grading 0.13 g/t gold;
- Open-pit
Inferred Resource of 0.41 Moz of silver grading 73 g/t of silver
and 0.43Koz of gold grading 0.07 g/t gold;
- Underground
Indicated Resource of 1.29 Moz of silver grading 182 g/t of silver
and 1.65Koz of gold grading 0.22 g/t gold;
- Underground
Inferred Resource of 2.07 Moz of silver grading 180 g/t of silver
and 2.18Koz of gold grading 0.19 g/t gold;
- Proximity to
Austral Gold Limited’s (“Austral Gold”) operating Guanaco Mine and
Mill complex, located just 16 km to the south;
- Good potential
to confirm and incrementally expand existing resources and discover
additional mineralization on the property and in the region.
The mineral resource was independently prepared
by SRK Consulting (Canada) Inc. in a technical report filed on
Aftermath’s SEDAR profile at www.sedar.com, with an effective date
of August 10, 2020 and prepared in accordance with National
Instrument 43-101 – Standards of Disclosure for Mineral Projects of
the Canadian Securities Administrators ("NI 43-101").
Chad Williams, Director and Non-Executive Chair
of Honey Badger stated, “We are very pleased to announce a further
accretive addition to our growing portfolio of silver assets.
Cachinal is a significant known silver resource located in a
favorable jurisdiction. Moreover, its proximity to Austral’s
Guanaco mine and mill complex may offer substantial synergies to
advancing Cachinal to production in a timely manner. We believe
Cachinal will be transformational for Honey Badger.
We were also greatly encouraged and inspired by
a recent speech delivered by H.E. Gabriel Boric, President of the
Republic of Chile, at an event hosted by the Canadian Council for
the Americas. During this event, Mr. Boric strongly signalled his
commitment to property rights, and the rule of law in addition to
welcoming direct foreign investment. Chile’s long-standing
partnership with Canada to generate economic growth and jobs for
all was reiterated in meetings with Prime Minister Trudeau during
his visit.”
Transaction Summary
The Term Sheet contemplates that Honey Badger or
an affiliate will acquire all of the issued and outstanding shares
of Minera Cachinal S.A., a wholly-owned subsidiary of Aftermath,
according to the following terms:
- Share
Payment: C$1,000,000 in shares of Honey Badger payable at
closing and priced at the greater of: (i) the volume weighted
average share price of the Honey Badger common shares on the TSXV
for a period of thirty (30) trading days immediately preceding the
date of announcement of the transaction and (ii) the maximum
discounted price allowed under the policies of the TSXV.
- Cash
Payments: a) C$400,000 payable at closing, b) C$452,000
six months after closing, c) C$400,000 on May 21, 2023 and d)
C$400,000 eighteen months after closing.
-
Royalty: Honey Badger shall grant a 1% Net Smelter
Return Royalty with a complete buyback option at Honey Badger’s
sole discretion for a purchase price of C$8,500,000;
- Production
Payments: Upon commencement of commercial production,
Honey Badger shall pay in cash or shares at Aftermath’s option,
C$0.50 per payable silver ounce produced at the Cachinal Project,
capped at C$2,000,000 in payments.
The detailed terms and conditions of the
proposed transaction will be set out in definitive documentation to
be negotiated between the parties, which will contain customary
representations, warranties and covenants of the parties as well as
customary indemnities and closing conditions. There can be no
assurance that the proposed transaction will be completed on the
terms contemplated, or at all. Readers are referred to the section
below entitled: “Cautionary Note Regarding Forward-Looking
Information”.
While the Term Sheet is non-binding, the parties
have agreed to a mutual break fee of C$250,000 in the event a
definitive agreement is not entered into prior to the expiry of the
exclusivity period due to a party’s action or inaction, subject to
certain exceptions outside the control of the parties. The proposed
transaction will be subject to regulatory approval, including the
approval of the TSX Venture Exchange (the “TSXV”).
Cachinal Asset Overview
Cachinal is a low-sulphidation epithermal
deposit located in the Paleocene Gold Belt of northern Chile, which
hosts several significant gold and silver deposits, including
Yamana Gold’s El Penon Low Sulfidation Epithermal gold–silver mine
and Austral Gold’s Guanaco gold-silver mine-complex, just 16
kilometers to the south. Shallow drilling at Cachinal has defined
the current mineral resources principally to a depth of 150 metres
below surface and provides sufficient evidence to interpret the
presence of high-grade shoots within the vein system extending
below the base of a potential open pit.
Cachinal Location
The Cachinal silver-gold project is located in
Chile's Antofagasta region (Region II). The project is located
about 40 km east of the Pan American Highway, in a nearly flat
plain at an elevation of around 2,700 metres above sea level, 16 km
north of Austral Gold's Guanaco gold-silver mine and mill
complex.
Cachinal NI 43-101 Resource
Estimate
The Cachinal Mineral Resource was documented in
a technical report prepared following the guidelines of NI 43-101
and Form 43-101F1, and in conformity with the generally accepted
CIM “Estimation of Mineral Resources and Mineral Reserves Best
Practice Guidelines (2019) by SRK Consulting (Canada) Inc.,
authored by independent qualified persons Glen Cole, P.Geo of SRK
Consulting, and Sergio Alvarado Casas, CMC of Geoinvest SAC
E.I.R.L. (Chile), on behalf of Aftermath Silver Ltd., with an
effective date of August 10, 2020.
RESOURCECLASSIFICATION |
MATERIAL TYPE |
TONNES(MT) |
SILVER(G/T) |
GOLD(G/T) |
SILVER(MOZ) |
GOLD(KOZ) |
Indicated |
Open Pit |
4.83 |
97 |
0.13 |
15.03 |
20.05 |
|
Underground |
0.22 |
182 |
0.22 |
1.29 |
1.65 |
|
TOTAL |
5.05 |
101 |
0.13 |
16.32 |
21.70 |
Inferred |
Open Pit |
0.17 |
73 |
0.07 |
0.41 |
0.43 |
|
Underground |
0.36 |
180 |
0.19 |
2.07 |
2.18 |
|
TOTAL |
0.53 |
145 |
0.15 |
2.48 |
2.61 |
Notes on the Cachinal Mineral Resource
Estimate:
- For complete
details on the Cachinal Mineral Resource estimate, please refer to
the NI 43-101 technical report titled “Independent Technical Report
for the Cachinal Silver-Gold Project, Region II, Chile”, by
Qualified Persons G. Cole, (P.Geo) of SRK Consulting (Canada) Inc.
and S. Alvarado Casas, of Geoinvest SAC E.I.R.L. (Chile), dated
September 11, 2020 with an effective date of August 10, 2020, filed
on the Aftermath Silver SEDAR profile.
- Cachinal mineral
resources were classified according to the CIM Definition Standards
for Mineral Resources and Mineral Reserves (May 2014).
- Mineral Resources
that are not Mineral Reserves do not have demonstrated economic
viability.
- All figures have
been rounded to reflect the relative accuracy of the
estimates.
- Cut-off grades are
based on metal price assumptions of US$22.00 / ounce of silver and
US$1,550 / ounce of gold, and metallurgical recoveries of 85% for
both silver and gold using milling and cyanide leaching.
- The portion of the
Mineral Resources that has been determined to be amenable to
extraction through open-pit methods was reported to a cut-off of 30
g/t silver equivalent.
- The open-pit
Mineral Resource is constrained within Lerchs-Grossman optimised
pit shells that assume mining dilution & losses of 2.5%,
50-degree overall slope angles, mining costs of $2/t rock, general
and administrative costs of $2/t rock, processing costs of US$15/t
for processing using milling and cyanide leaching.
- The portion of the
Mineral Resources deemed to be amenable to extraction through
underground methods are reported at a cut-off of 150 g/t silver
equivalent. This assumes a mining cost of US$90/t, general and
administrative costs of $2/t and a processing costs of
US$15/t.
Past Work at Cachinal
The Cachinal deposit was mined from underground
workings during the 20th century. Drilling by previous owners of
the project since 2005 has delineated near-surface silver
mineralization associated with a network of steeply dipping,
north-to-northwest trending low-sulphide quartz veins.
The epithermal veins and breccias have been
recognized by trenching and drilling over a strike length of at
least 2 kilometers and are known to have been mined to a depth of
at least 300 meters. They range in thickness from a few centimetres
to 2 meters, reaching up to 20 meters locally at the intersection
of two structures. The main veins trend north-northwest and
northwest with a secondary set trending east-northeast to
east-west, best developed at the southern end of the deposit.
Technical information in this news release has
been approved by Glen Cole, P.Geo., a Principal Consultant
(Resource Geology) with SRK Consulting (Canada) Inc. and qualified
person for the purposes of National Instrument 43-101.
ON BEHALF OF THE BOARDChad WilliamsDirector and
Non-Executive Chair
About Honey Badger Silver
Inc.
Honey Badger Silver is a Canadian Silver company
based in Toronto, Ontario focused on the acquisition, development
and integration of accretive transactions of silver ounces. The
company is led by a highly experienced leadership team with a track
record of value creation backed by a skilled technical team. With a
dominant land position in Ontario’s historic Thunder Bay Silver
District and advanced projects in the southeast and south-central
Yukon including the Plata property 180 kms to the east of the Keno
Hill silver district, Honey Badger Silver is positioning to be a
top-tier silver company.
For more information, please visit our website
above, or contact: Ms. Christina Slater:
cslater@honeybadgersilver.com(647) 848-1009
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.
Cautionary Note Regarding
Forward-Looking Information
This news release contains "forward-looking
information" within the meaning of the applicable Canadian
securities legislation that is based on expectations, estimates,
projections and interpretations as at the date of this news
release. The information in this news release and any other
information herein that is not a historic fact may be
"forward-looking information". Forward-looking information are
often identified by terms such as “may”, “should”, “anticipate”,
“will”, “estimates”, “believes”, “intends”, “expects”, and similar
expressions which are intended to identify forward-looking
information as such. More particularly and without limitation, this
news release contains forward-looking information concerning the
proposed acquisition by the Company of the Cachinal Project, the
proposed consideration and structure of such acquisition (including
the mutual break fee payable in certain circumstances), and the
ability of the parties thereto to complete the proposed transaction
on the terms and timelines agreed. Although the Company believes
that the assumptions and factors used in preparing the
forward-looking information in this news release are reasonable, no
assurance can be given that such events will occur in the disclosed
timeframes or at all. The Company cautions that all forward-looking
information is inherently uncertain, and that actual performance
may be affected by a number of material factors, assumptions and
expectations, many of which are beyond the control of the Company,
including: risks relating to failing to negotiate the definitive
documentation concerning the proposed acquisition of Cachinal on
the terms expected or at all; risks relating to the potential
payment of the break fee in certain circumstances; risks relating
to inability to secure necessary third-party consents or regulatory
or other governmental approvals on a timely basis, or at all;
general political risks and risks relating to changing laws, risks
inherent with uncertain economic conditions, among other risks and
uncertainties. Accordingly, the reader is cautioned not to place
undue reliance on any forward-looking information contained in this
news release. The forward-looking information contained in this
news release are made as of the date hereof, and the Company
disclaims any intention or obligation to update or revise any
forward-looking information, whether as a result of new
information, future events or otherwise, other than as required by
law.
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