Silver Bull Resources, Inc. (TSX:SVB) (OTCQB:SVBL) (“Silver Bull”)
is pleased to announce that it has signed an agreement with a
wholly owned subsidiary of South32 Limited (ASX/JSE/LSE: S32)
(“South32”) whereby Silver Bull has granted South32 an option to
form a 70/30 joint venture with respect to Silver Bull’s Sierra
Mojada project (“Project”). To maintain the option in good
standing, South32 must contribute minimum exploration funding of
US$10 million (“Initial Funding”) during a 4 year option period
with minimum aggregate exploration funding of US$3 million, US$6
million and US$8 million to be made by the end of years 1, 2 and 3
of the option period respectively. South32 may exercise its
option to subscribe for 70% of the shares of Minera Metalin S.A. De
C.V. (“Metalin”), the wholly owned subsidiary of Silver Bull which
holds the claims in respect of the Project, by contributing $US100
million to Metalin for Project funding, less the amount of the
Initial Funding contributed by South32 during the option
period.
Tim Barry, President, CEO and director of Silver
Bull states, “This validates the significant success we have had in
identifying high grade sulphide zones at the Sierra Mojada project.
South32 is a globally diversified metals and mining company that
will bring funding and significant technical expertise to the
project. We believe this agreement recognizes the significant
potential at the Sierra Mojada project.”
Highlights of the Agreement
Silver Bull and South32 have entered into an
agreement whereby Silver Bull has granted South32 an option to
subscribe for a 70% interest in Silver Bull’s Mexican subsidiary
Metalin for a subscription price of US$100 million less the Initial
Funding amount (the “Subscription Amount”). The Subscription Amount
will be used to fund expenditure on exploration and development
costs on the Project. Once the Subscription Amount has been spent
on the Project the parties will each fund their pro rata portion of
all future Project funding. To maintain the option in good standing
South32 must spend a minimum of $US10 million over the next four
years. Should South32 elect not to continue with the Project during
the four year option period, the Project will remain 100% owned by
Silver Bull.
The first year’s exploration program, planned to
start as soon as possible, will involve a regional airborne
electromagnetic survey, followed by a targeted drilling program on
the Project. Initial targets will include extensions of the
sulphide zones recently identified by Silver Bull and the Palomas
Negros area. The exploration program will be initially managed by
Silver Bull.
Option Funding Phase
To keep the option in good standing South32 will
contribute a minimum of US$10 million by way of four annual
tranches during the four year option period to fund exploration at
the Sierra Mojada project. Provided that all the exploration data
and information has been made available 60 days prior to each
anniversary of the option agreement, South32 shall decide 30 days
prior to the relevant anniversary whether or not to fund a further
tranche.
If South32 exercises the option, the
Subscription Amount shall be paid to Metalin in one tranche within
sixty days. Should South32 elect to withdraw the option will lapse
and South32 will have no further interest in or claim against
either the Project or Metalin.
Post Option Exercise
Once the Subscription Amount has been expended
by Metalin, the parties will contribute funding pro rata (70/30),
as contemplated by the shareholders’ agreement which will govern
the period subsequent to the option exercise (the “Shareholders’
Agreement”). The Shareholders’ Agreement provides for a Chief
Executive Officer to be appointed by South32 and a board with a
maximum of seven members, with each of South32 and Silver Bull
appointing a proportionate number of directors.
Other Terms of the Option
Agreement
In the option agreement, the parties provide
representations, warranties and indemnities customary for a
transaction of this nature. Silver Bull and Metalin agree to
certain restrictive and affirmative covenants during the option
period, including to maintain its interest in the Project, not to
transfer or incur encumbrances on the Project or the shares of
Metalin, other than as permitted by the agreement, and to conduct
business in accordance with agreed upon budgets. Metalin will
be the initial operator of the Project and provide annual reports
and budgets to a technical committee formed by Silver Bull and
South32 for the purpose of reviewing and approving each year’s
program.
Upon exercise of the option by South32 the
parties will enter into a shareholders’ agreement which will govern
the affairs of Metalin. Metalin’s board shall consist
of seven members, with each shareholder having an equity interest
of 15% or greater in Metalin nominating a pro rata number of
directors. The shareholders’ agreement sets out certain
matters which require super majority approvals at the board and
shareholder level, as well as certain transfer restrictions and
rights of first refusal with respect to the parties’ interest in
Metalin.
About the Sierra Mojada
deposit: Sierra Mojada is an open pittable oxide deposit,
as disclosed in the NI43-101 "Technical Report on the Resources of
the Sierra Mojada Project Coahuila, Mexico" dated June 8, 2015,
with a NI43-101 compliant measured and indicated "global" resource
of 58.7 million tonnes grading 3.6% zinc and 50g/t silver at a
$13.50 NSR cutoff giving 4.670 billion pounds of zinc and 90.8
million ounces of silver. Included within the "global" resource is
a measured and indicated "high grade zinc zone" within the
Lerchs-Grossman (LG) Optimized Pit of 10.03 million tonnes with an
average grade of 11% zinc at a 6% cutoff, giving 2.426 billion
pounds of zinc, and a measured and indicated "high grade silver
zone" of 19 million tonnes with an average grade of 102.5g/t silver
at a 50g/t cutoff giving 62.6 million ounces of silver.
Mineralization remains open in the east, west, and northerly
directions. Approximately 60% of the current 3.2 kilometer
mineralized body is at or near surface before dipping at around 6
degrees to the east.
About Silver Bull: Silver Bull is a mineral
exploration company whose shares are listed on the Toronto Stock
Exchange and trade on the OTCQB in the United States, and is based
out of Vancouver, Canada. The "Sierra Mojada" project is located
150 kilometers north of the city of Torreon in Coahuila, Mexico,
and is highly prospective for silver and zinc.
About South32: South32 is a globally
diversified metals and mining company with high-quality and well
maintained operations which mine and produce silver, zinc, lead,
nickel, bauxite, alumina, aluminum, energy and metallurgical coal
and manganese in Australia, Southern Africa and South America. More
information is available at www.south32.net.
The technical information of this news release has been reviewed
and approved by Tim Barry, a Chartered Professional Geologist
(CPAusIMM), and a qualified person for the purposes of National
Instrument 43-101.
On behalf of the Board of Directors "Tim Barry" Tim
Barry, CPAusIMM Chief Executive Officer, President and
Director
INVESTOR RELATIONS: +1 604 687 5800
info@silverbullresources.com
Cautionary Note to U.S. Investors concerning estimates
of Measured, Indicated, and Inferred Resources: This press
release uses the terms "measured resources", "indicated resources",
and "inferred resources" which are defined in, and required to be
disclosed by, NI 43-101. We advise U.S. investors that these terms
are not recognized by the United States Securities and Exchange
Commission (the "SEC"). The estimation of measured, indicated and
inferred resources involves greater uncertainty as to their
existence and economic feasibility than the estimation of proven
and probable reserves. U.S. investors are cautioned not to assume
that measured and indicated mineral resources will be converted
into reserves. The estimation of inferred resources involves far
greater uncertainty as to their existence and economic viability
than the estimation of other categories of resources. U.S.
investors are cautioned not to assume that estimates of inferred
mineral resources exist, are economically minable, or will be
upgraded into measured or indicated mineral resources. Under
Canadian securities laws, estimates of inferred mineral resources
may not form the basis of feasibility or other economic studies.
Disclosure of "contained ounces" in a resource is permitted
disclosure under Canadian regulations, however the SEC normally
only permits issuers to report mineralization that does not
constitute "reserves" by SEC standards as in place tonnage and
grade without reference to unit measures. Accordingly, the
information contained in this press release may not be comparable
to similar information made public by U.S. companies that are not
subject NI 43-101. Cautionary note regarding forward
looking statements: This news release contains
forward-looking statements regarding future events and Silver
Bull's future results that are subject to the safe harbors created
under the U.S. Private Securities Litigation Reform Act of 1995,
the Securities Act of 1933, as amended (the "Securities Act"), and
the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), and applicable Canadian securities laws. Forward-looking
statements include, among others, statements regarding the
potential of the Sierra Mojada project and ability of agreement to
provide capital required to further explore the mineral potential
of the property, South32’s ability to fund the Project and the
exercise of the option by South 32 and entry into the shareholders’
agreement. These statements are based on current expectations,
estimates, forecasts, and projections about Silver Bull's
exploration projects, the industry in which Silver Bull operates
and the beliefs and assumptions of Silver Bull's management. Words
such as "expects," "anticipates," "targets," "goals," "projects,"
"intends," "plans," "believes," "seeks," "estimates," "continues,"
"may," variations of such words, and similar expressions and
references to future periods, are intended to identify such
forward-looking statements. Forward-looking statements are subject
to a number of assumptions, risks and uncertainties, many of which
are beyond our control, including such factors as the results of
exploration activities and whether the results continue to support
continued exploration activities, unexpected variations in ore
grade, types and metallurgy, volatility and level of commodity
prices, the availability of sufficient future financing, and other
matters discussed under the caption "Risk Factors" in our Annual
Report on Form 10-K for the fiscal year ended October 31, 2017, as
amended, and our other periodic and current reports filed with the
SEC and available on www.sec.gov and with the Canadian securities
commissions available on www.sedar.com. Readers are cautioned that
forward-looking statements are not guarantees of future performance
and that actual results or developments may differ materially from
those expressed or implied in the forward-looking statements. Any
forward-looking statement made by us in this release is based only
on information currently available to us and speaks only as of the
date on which it is made. We undertake no obligation to publicly
update any forward-looking statement, whether written or oral, that
may be made from time to time, whether as a result of new
information, future developments or otherwise.
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