Discovery Metals Corp. (TSX-V: DSV, OTCQX: DSVMF)
(“Discovery” or the “Company”) is pleased to announce its financial
and operating results for the three and twelve months ended
December 31, 2019. All amounts are presented in Canadian dollars
(“CAD”) unless otherwise stated.
Discovery is focused on advancing a portfolio of
silver projects in historic mining districts in northern Mexico,
including its flagship Cordero project in Chihuahua State, as well
as the Puerto Rico, Minerva and Monclova projects in Coahuila
State.
Q4 2019 OPERATING HIGHLIGHTS:
- Mobilization for the 30,000 to
35,000-meter (‘m”) Phase 1 drill program at the Cordero project
(“Cordero”) commenced on September 10, 2019 with a second drill rig
added on November 7, 2019. Approximately 6,000 m of drilling in
total were completed.
- Completed a non-brokered private
placement of common shares on November 5, 2019, raising $19.0
million, including a $5.0 million investment from Mr. Eric
Sprott.
RECENT DEVELOPMENTS:
- Early results from the Phase 1
drill program at Cordero returned very encouraging intercepts
including 105.9 m of 118 g/t AgEq1, 34.7 m of 617 g/t AgEq1 and
62.8 m of 217 g/t AgEq1. Further details on the Company’s drill
results can be found in the press releases dated January 8, 2020,
February 12, 2020 and April 7, 2020.
- The Company was named to the TSX
Venture Exchange’s 2020 Venture 50™ as announced on February 21,
2020.
- The Company announced on March 31,
2020, that it had temporarily suspended all exploration activities
at its Mexican operations due to the increased health and safety
risks associated with the growing number of COVID-19 cases in the
country. The shutdown is expected to last until at least May 30,
2020, as per the most recent administrative order from the Federal
Government of Mexico suspending all non-essential business
activities until that date. The Company has put in place business
continuity plans so that exploration activity can quickly ramp up
once it is deemed safe to do so.
Prior to the temporary suspension of exploration
drilling activities at Cordero, 48 holes totaling 17,500 m of the
Phase 1 drill program had been completed. Assays from 24 holes are
pending. The goal of this program is to define a high-margin
project with scale that retains excellent leverage to rising metal
prices. All holes have been drilled roughly perpendicular to the
northeast trend of higher-grade blocks outlined in the Levon
Resources Ltd (“Levon”)2 resource model.
Drilling to date has confirmed the presence of
higher-grade breccia-hosted Ag-Au-Pb-Zn mineralization within the
Pozo de Plata zone as well as along the north-east extension of
this zone. Drilling along the southernmost vein trend also
intercepted multiple sulfide veins that returned kilogram per tonne
silver-equivalent intercepts. Follow-up drilling that targets
expansion of higher-grade resources, is planned on both the
north-east extension of Pozo de Plata and the vein targets as soon
as exploration activities resume at Cordero.
Q4 2019 FINANCIAL
HIGHLIGHTS:
The following selected financial data is
summarized from the Company’s audited consolidated financial
statements and related notes thereto (the “Financial Statements”)
for the three and twelve months ended December 31, 2019.
A copy of the Financial Statements is available
on the Company’s website at www.dsvmetals.com or on SEDAR
at www.sedar.com.
Select financial information for the three and
twelve months ended December 31, 2019 is as follows:
Net loss |
Q4 2019 |
Q4 2018 |
Q4 YTD 2019 |
Q4 YTD 2018 |
(a) Total(A) |
$ |
(4,178,391 |
) |
$ |
(1,384,584 |
) |
$ |
(9,656,554 |
) |
$ |
(7,030,627 |
) |
(b) basic and diluted per share |
$ |
(0.02 |
) |
$ |
(0.02 |
) |
$ |
(0.08 |
) |
$ |
(0.10 |
) |
Net loss & total comprehensive loss |
$ |
(3,959,211 |
) |
$ |
(1,179,158 |
) |
$ |
(9,595,837 |
) |
$ |
(6,787,156 |
) |
Total weighted average shares outstanding |
|
193,526,170 |
|
|
65,043,998 |
|
|
114,752,935 |
|
|
65,043,998 |
|
A. Net loss for the
three and twelve months ended December 31, 2019 includes non-cash
share-based compensation expense of $104,813 and $1,823,318,
respectively, and a non-cash impairment charge of $382,080 and
$1,409,637, respectively on IVA receivable.
|
December 31, 2019 |
December 31, 2018 |
Cash and cash equivalents |
$ |
23,950,737 |
$ |
4,691,676 |
Total assets |
$ |
53,518,599 |
$ |
7,216,714 |
Total current liabilities |
$ |
716,596 |
$ |
230,090 |
Total liabilities |
$ |
804,466 |
$ |
230,090 |
Total Shareholders’ equity |
$ |
52,714,133 |
$ |
6,986,625 |
At December 31, 2019, the Company had an
aggregate Mexican value added tax (“IVA”) recoverable balance of
$3,197,997 including $1,743,011 acquired in the Levon transaction.
Due to the current political environment and changes in Mexico
resulting from the government’s ongoing internal restructuring
process, the Company evaluated the balance of IVA receivable for
indicators of impairment. Due to the short period of operation in
Mexico, the Company does not have a history of IVA collection. In
addition, there is a high degree of uncertainty surrounding the
timing of repayment by the Mexican government. As a result of this
assessment, on acquisition of Levon, no value was allocated to the
IVA receivable and at December 31, 2019, the Company recognized a
provision for 100% of the outstanding IVA receivable balance of
$1,409,637.
The Company believes that the total IVA
receivable balance at December 31, 2019 is legally recoverable in
full.
On February 21, 2020, the Company received a
partial IVA refund in the amount of 5,400,430MXP, or approximately
$360,000. Although this is positive news, the Company will continue
to provide for 100% of the IVA recoverable balance until such time
as there are sufficient indicators of recoverability.
STOCK OPTION GRANTS:
The Company announces that it has granted to
certain officers, directors, employees and/or consultants of the
Company an aggregate of 4,835,000 options to acquire common shares
of the Company (“Options”). The Options have an exercise price of
$0.47 per share, have a five-year term from the date of grant, and
vest according to the following schedules: 1) Management, directors
and employees: annually in equal thirds beginning on the date of
grant; and 2) Consultants: quarterly in equal eighths beginning
three months after the date of grant. Any common shares issuable
upon exercises of Options will, in accordance with applicable
securities laws, be subject to a hold period expiring four months
and one day from the date of grant.
About DiscoveryDiscovery Metals
Corp. (TSX-V: DSV, OTCQX: DSVMF) is a Canadian exploration and
development company headquartered in Toronto, Canada, and focused
on historic mining districts in Mexico. Discovery’s flagship is its
100%-owned Cordero silver project in Chihuahua State, Mexico. The
35,000-hectare property covers a large district that hosts the
announced resource as well as numerous exploration targets for bulk
tonnage diatreme-hosted, porphyry-style, and carbonate replacement
deposits. In addition, Discovery is also exploring multiple
high-grade carbonate replacement-style silver-zinc-lead showings in
a land package of approximately 150,000 hectares in Coahuila State,
Mexico. The land holdings contain numerous historical direct-ship
ore workings and significant underground development, but no
drill-testing has ever been carried out on them.
For further information contact:
Forbes Gemmell, CFAVP Corporate Development
& Investor
Relationsforbes.gemmell@dsvmetals.com416-613-9414
On Behalf of the Board of Directors,
Taj Singh, M.Eng, P.Eng, CPA, President, Chief
Executive Officer, and Director
TECHNICAL NOTES & REFERENCES:
1 All 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. Composites for this release were
chosen at a 25 g/t AgEq cutoff, whereby no more than 5m of
below-cutoff material is included in any composite interval. 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, and assume 100%
metallurgical recovery. Refer to note three below for metallurgical
recoveries assumed in the 2018 PEA completed on Cordero.
2 The most recent resource estimate as shown in
the table below was released in 2018 (technical report available on
Discovery’s website and Levon’s SEDAR profile) and was based on a
base case cutoff grade of 15 g/t AgEq (highlighted below). The
table includes a sensitivity analysis that also shows tonnage and
grade estimates at higher AgEq cutoff grades within the resource
shell. Resource commodity prices used for the resource estimate
were (USD): $17.14/oz Ag, $1.11/lb Zn, $0.96/lb Pb, $1,262/oz
Au.
AgEq3 (g/t) Cutoff |
Tonnage & Grade within Mineral Resources Pit
Shell |
Total Contained Ag (Mozs) |
Total Contained AgEq3 (Moz) |
Class |
Tonnes (M) |
AgEq3 (g/t) |
Ag (g/t) |
Au (g/t) |
Pb (%) |
Zn (%) |
15 |
Indicated |
990 |
32 |
13 |
0.04 |
0.2 |
0.4 |
408 |
1,022 |
Inferred |
282 |
56 |
21 |
0.04 |
0.3 |
0.8 |
188 |
513 |
25 |
Indicated |
467 |
46 |
19 |
0.06 |
0.3 |
0.5 |
278 |
686 |
Inferred |
183 |
77 |
28 |
0.05 |
0.4 |
1.0 |
163 |
451 |
50 |
Indicated |
99 |
95 |
40 |
0.11 |
0.6 |
1.0 |
128 |
303 |
Inferred |
100 |
112 |
41 |
0.06 |
0.7 |
1.5 |
131 |
360 |
3 A PEA was completed by M3 Engineering,
Resource by IMC, Mar. 1, 2018 (available on Discovery’s website).
Resource commodity prices used ($US): $17.14/oz Ag, $1.11/lb Zn,
$0.96/lb Pb, $1,262/oz Au; Mine plan uses a subset of Indicated and
Inferred Resources at 15 g/t AgEq cutoff. PEA assumes
metallurgical recoveries of 89% Ag, 84% Pb, 72% Zn, 40% 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.
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