PHT.P Pinehurst Capital I Inc

Pinehurst Capital I Inc. (TSXV: PHT.P) (the “Corporation” or “Pinehurst”), a capital pool company listed on the TSX Venture Exchange (“TSXV”), and Silver Bullet Mines Inc. (“Silver Bullet”, and together with Pinehurst, the “Parties”), a mining company focused on silver exploration at its 100% owned Black Diamond Property located near Globe, Arizona (the “Property”), are pleased to announce that the Parties have entered into a binding definitive agreement effective November 12, 2020 (the “Definitive Agreement”) pursuant to which the Parties intend to complete a business combination transaction, which, subject to certain conditions and applicable shareholder and regulatory approvals, will result in a reverse takeover of Pinehurst by Silver Bullet (the “Transaction”). The combined public company resulting from the Transaction (the “Resulting Issuer”) will carry on the business of Silver Bullet.

Black Diamond Technical Report

Pinehurst and Silver Bullet are also pleased to announce that they are in receipt of a technical report (the “Technical Report”) dated November 3, 2020 titled “Black Diamond Property, Gila County, Arizona” prepared by Robert G. Komarechka, P.Geo. in accordance with National Instrument 43-101 – Standards of Disclosure for Mineral Projects (“NI 43-101”) in respect of the Property. Highlights of the Technical Report Include:

The Property is located in the Globe copper camp of Gila Country in central Arizona, approximately 90 miles (145km) east of Phoenix. The Property is centred on the Richmond Basin, 9 miles (14.5km) north of the city of Globe, and the site of high-grade silver discoveries in the 1870s. Silver discoveries on the Property first brought the mining industry to the Globe copper camp in the 1870s. The first major discovery being the Old Dominion copper mine, started in 1873, that produced over 800 million pounds in its 50-year life. The Globe copper camp is near its 150th year of continuous operation as a major copper mining and production center. The past producing mines of the Richmond Basin included the McMorris, La Platta, Silver Nugget, Seven Sisters, Helene, Chilson Shafts and others based on the silver-copper veins of the area. These past producers provide the initial exploration and development targets for Silver Bullet. These mines are also part of the Arizona silver belt that extends from the famous Silver King mine near Superior, Arizona and is now attracting other silver exploration companies to this prolific area for mineral discovery.

The Property includes 232 Bureau of Land Management (“BLM”) claims in a large block totalling approximately 4,790 acres (1,938 ha) of land within the Tonto National Forest. The Property is road accessible from the city of Globe. The Property is in good standing with BLM fees paid to September 1, 2021.

Silver Bullet also holds a lease on the Buckeye Patent of approximately 16 acres (6.5 ha) and contained within the Property. The lease agreement with the local land-owners is in good standing and is in place for 17 more years from the date of this report with escalating annual payments.

The Property shows various types of mineralization that could be associated with the Laramide-age intrusives and the overall structural trends. The McMorris Mine vein, trending west-northwest and the Buckeye Mine vein, trending northeast, are thought to be epithermal in origin along pre-existing structures. These occurrences lie along the Arizona Silver Belt that extends from the Silver King mine near Superior, Arizona in the west. The Black Copper Prospect shows more characteristics of a skarn and again appears to be associated with a northeast structural feature.

Recent exploration within the last 10 years on the Property is at a modestly advanced stage with no defined resources but includes several programs by previous option holders. Initially, a reconnaissance map of limited extent was undertaken on the claim area at the time to locate the main workings and geology. Of the many historic workings on the Property three main target areas were selected and targeted for further work. The McMorris Vein Area, Black Copper Prospect and the Buckeye Mine. The recent historic work done on the Property is described below.

Work on the McMorris Vein Area by Trueclaim Resources (US) Inc. in 2011 was focussed on six accessible old trenches that were mapped and sampled. The best sampling results of this work included a 15 foot (4.572m) section along the McMorris Vein grading 33 oz/ton Ag (1,138.29 g/t Ag). Note that these assay values may not be representative of the average grade for the entire vein as they represent the average of spot samples along the length surveyed within the trenches.

At the Black Copper Prospect (previously known as the Iron Nugget Prospect) the best sample returned a high of 7.45% copper with over 2 g/t (0.058 oz/t) of gold. This prospect is described as a potential skarn target as the mineralization contains massive magnetite and is proximal to limestone. This target is especially interesting as significant silver, copper and gold mineralization was mined in the area from such styles of mineralization outside of the Black Diamond claim group, as illustrated by the historic Old Dominion Mine, located outside of the Property less than 10 km away. The Old Dominion, the first major mine of the Globe copper camp, produced over 850 million pounds of copper, plus silver and gold over its 50 years of operations. This deposit highlights one style of potential target for the Property. An NI 43-101 compliant technical report “Iron Nugget Property Arizona USA” was prepared in 2013 by Nick Barr for Trueclaim Resources (US) Inc.

The third prospective area to see recent localized exploration is the Buckeye Mine located on patented land. This site saw mapping and sampling as a first round of work. This was followed by rehabilitation of the decline tunnel access to the vein. Limited test mining of silver-copper mineralization recovered the heavier silver bearing minerals using gravity separation to yield material for the production of dore bars. Approximately 500 ounces (14.17 kg) in dore bars were produced in 2017 from this operation. Also in 2017, the vein was tested with diamond drilling of 14 holes totaling 8,000 feet (2,438 m) each intersecting the vein at varying depths up to 800 feet (244 m) below the mine workings and for over 1200 ft (366m), along strike, confirming continuity of the vein with it being open along strike and dip. Significant historic anecdotal accounts of production from The Buckeye Mine and historic grades up to 8,970 oz/ton silver (307,542.7 g/t) silver with 30.7% copper in select grab sampling from the vein mineralization were reported.

The Property also saw the start of a soil geochemistry sampling program. This program was initiated by Northern Sphere Mining Inc. in 2017 on three small blocks yielding a total of approximately 800 multi-element assay results. The results of this program highlighted several anomalous areas for copper, silver, zinc, and manganese. The blocks cover, or are adjacent to, the three targeted prospects discussed above, the McMorris Vein, the Black Copper and the Buckeye Mine. The limits of these anomalous areas are not defined. A continuing sampling program will be part of the proposed exploration plans on the Property.

The soil geochemical surveys were later complemented in 2018 by Northern Sphere Mining Inc. with a regional hyperspectral survey which identified areas of rock alteration that appear to be indicative of mineralization coincident with several of the geochemical anomalies. The spectral survey also indicated potential structural corridors, one along the eastern side of the project within the Black Diamond Property, that will be examined in the upcoming exploration program.

The Property is at a near advanced stage exploration but with no resources and a further drill program being planned. Mineralization is identified on the Property at several key prospects. The styles of mineralization are known and have delivered significant assay results. The Property is also advanced in terms of development with the completion of test mining, underground bulk sampling, and proven silver beneficiation work at the Buckeye Mine in 2017. Only limited exploration programs were conducted thus far at the three target areas. The full extent of the mineralization at these prospects and along their hosting structures is to be investigated in the upcoming recommended programs. As well, the evaluation of many past workings and identification of new targets will be undertaken with the expansion of the soil geochemical surveys to the rest of the Property tied in with ground truthing of the hyperspectral anomalies. It is hoped this work will identify additional mineralization corridors for epithermal silver mineralization and vector further exploration activity towards any further skarn or even underlying copper porphyry targets on the Property.

The recommendations and plans also include continuation of the test mining and bulk sampling at the Buckeye Mine. Due to the advanced stage of development on this target and its existing underground workings, further understanding of the continuity of the vein system and the ability to sample, follow and define the existing mineralization will be facilitated using drilling from the underground workings. Silver Bullet plans to process and recover the metals from further bulk sampling from the Buckeye Mine at an offsite mill to be located on private land in the Globe-Miami area. This procedure is recommended due to the access allowed by the private land status of the patent lands at Buckeye. It will also develop operational efficiencies when the exploration program proceeds to the McMorris Mine area. The mineralization at the McMorris Mine area is similar in nature to the Buckeye and underground access for exploration and development are in place as well, however old workings need to be accessed, rehabilitated and then used for future exploration and development.

The recommended exploration and development programs for these programs is approximately $2.5 million in Phase 1. There is significant opportunity to expand the exploration programs in a Phase 2 program once key targets for resource delineation are identified. Phase 2 would require an initial budget of C$2 million. An added 15% contingency would bring the total to approximately $5 million for both programs.

Note that a qualified person has not done sufficient work to classify the historical estimates as current mineral resources or mineral reserves, and Silver Bullet is not treating the historical estimates as current mineral resources or mineral reserves.

The Technical Report can be found on Silver Bullet’s website at www.silverbulletmines.com. Ronald Wortel, President of Silver Bullet states “we are confident the technical report presents the potential for high grade silver on the Property. The report also covers the copper potential as we are in a copper camp. The Old Dominion style of mineralization and its trend is noted, and alteration that suggests we look at the copper porphyry target is there as well. We are pleased that the report is completed and provides the plan for moving this exciting project to discovery and development".

The Transaction

Under the terms of the Definitive Agreement, the Transaction will be completed by way of a three-cornered amalgamation (the “Amalgamation”) among Pinehurst, Silver Bullet, and Pinehurst I Acquisition Corp. (“Subco”), a wholly owned subsidiary of Pinehurst incorporated for the purposes of completing the Transaction, under the Canada Business Corporations Act. The Amalgamation will result in Silver Bullet combining its corporate existence with Subco, and the entity resulting from the Amalgamation will be a wholly-owned subsidiary of Pinehurst. 

Silver Bullet Financing

In connection with the Transaction, Silver Bullet intends on completing a non-brokered private placement (the “Financing”) of aggregate proceeds of not less than C$3,000,000 by the issuance of units (the “Units”) at a price of thirty cents (C$0.30) per Unit (the “Offering Price”). Each Unit will consist of one common share and one-half of one common share purchase warrant, with each whole warrant being exercisable for one common share at an exercise price of fifty cents (C$0.50) for a two-year term. Silver Bullet may engage an agent (the “Agent”) to act on a “commercially reasonable efforts” basis for the Financing and in connection therewith may pay a commission to the Agent in an amount to be determined. The proceeds of the Financing will be used to fund the recommended exploration program on the Property, continuing operating expenses, and for general working capital purposes.

Shareholders Meetings

Prior to the completion of the Transaction, Pinehurst intends to hold an annual, general and special meeting of shareholders to approve certain matters required to be completed in connection with the Transaction pursuant to the Definitive Agreement, including, among other things, (i) a consolidation of the issued and outstanding common shares of Pinehurst (the “Pinehurst Shares”) on the basis of C$700,000 divided by the Offering Price (the “Consolidation”), (ii) the Board and Management Reconstitution (as defined and described below), and (iii) a change in the name of Pinehurst to “Silver Bullet Mines Corp.” or such other name as may be accepted by the relevant regulatory authorities and acceptable to Silver Bullet (the “Name Change”). Silver Bullet also intends to hold a special meeting of its shareholders to approve, among other things, the Transaction and the Amalgamation.

Proposed Directors and Officers of the Resulting Issuer

Upon completion of the Transaction, it is anticipated that the board of directors and management of the Resulting Issuer will be reconstituted such that the directors of the Resulting Issuer will be comprised of John Carter, Ronald Wortel, Peter Clausi and Jon Wiesblatt and two (2) other nominees of Silver Bullet (the “Board and Management Reconstitution”). Further details about the proposed nominee directors and officers of the Resulting Issuers (including biographies) will be provided in a comprehensive press release at such time as the Parties have settled upon all nominees. 

Closing Conditions

Completion of the Transaction is subject to a number of conditions customary to transactions of the nature of the Transaction, including, but not limited to: (i) the receipt of all required regulatory, corporate, shareholder, stock exchange, and third-party approvals, and (ii) the completion of the Financing, the Consolidation, the Name Change and the Board and Management Reconstitution. There can be no assurance that any one or more of the Transaction, the Financing, the Consolidation, the Name Change, the Board and Management Reconstitution, and/or any other matters to be undertaken in connection with the Transaction will be completed as proposed or at all.

Additional details of the Transaction will be available in the disclosure document to be prepared in connection with the Transaction (the “Disclosure Document”). 

The management information circular prepared in respect of the meeting of the shareholders of Pinehurst (the “Pinehurst Circular”), and the Disclosure Document will be filed and be available for viewing on SEDAR under the Corporation’s profile.

For further information, please contact:

David RosenkrantzPinehurst Capital I Inc., CEOe: drosenkrantz@patica.cap: 416-865-0123

Peter M. ClausiSilver Bullet Mines Inc., VP Capital Marketse: pclausi@brantcapital.cap: 416-890-1232

Information concerning Silver Bullet has been provided to the Corporation by Silver Bullet for inclusion in this press release.

Completion of the Transaction is subject to a number of conditions, including but not limited to, TSXV acceptance and if applicable pursuant to Exchange Requirements (as that term is defined in the policies of the TSXV), majority of the minority shareholder approval. Where applicable, the Transaction cannot close until the required shareholder approval is obtained. There can be no assurance that the Transaction will be completed as proposed or at all.

Readers are cautioned that, except as disclosed in the management information circular or filing statement to be prepared in connection with the Transaction, any information released or received with respect to the Transaction may not be accurate or complete and should not be relied upon. Trading in the securities of a capital pool company should be considered highly speculative.

The TSXV has in no way passed upon the merits of the proposed transaction and has neither approved nor disapproved the contents of this press release. Neither the TSXV nor its Regulation Services Provider (as that term is defined in the policies of the TSXV) accepts responsibility for the adequacy or accuracy of this release.

The securities referenced herein have not been, nor will be, registered under the United States Securities Act of 1933, as amended, and may not be offered or sold within the United States or to, or for the account or benefit of, U.S. persons absent U.S. registration or an applicable exemption from U.S. registration requirements. This release does not constitute an offer for sale of securities in the United States.

Cautionary and Forward-Looking Statements

This news release contains certain statements that constitute forward-looking statements as they relate to Pinehurst, Silver Bullet, their respective leadership teams and the intended Resulting Issuer. Forward-looking statements are not historical facts but represent management's current expectation of future events, and can be identified by words such as “believe”, “expects”, “will”, “intends”, “plans”, “projects”, “anticipates”, “estimates”, “continues” and similar expressions. Although management believes that the expectations represented in such forward-looking statements are reasonable, there can be no assurance that they will prove to be correct.

By their nature, forward-looking statements include assumptions and are subject to inherent risks and uncertainties that could cause actual future results, conditions, actions or events to differ materially from those in the forward-looking statements. If and when forward-looking statements are set out in this new release, Pinehurst will also set out the material risk factors or assumptions used to develop the forward-looking statements. Except as expressly required by applicable securities laws, Pinehurst assumes no obligation to update or revise any forward-looking statements. The future outcomes that relate to forward-looking statements may be influenced by many factors, including but not limited to: closing on the Transaction as described above in a timely manner; SARS CoV-2; reliance on key personnel; shareholder and regulatory approvals; activities and attitudes of communities local to the location of the Property; risks of future legal proceedings; income tax matters; availability and terms of financing; distribution of securities; commodities pricing; currency movements, especially as between the USD and CDN; effect of market interest rates on price of securities; and, potential dilution. SARS CoV-2 creates risks that at this time are immeasurable and impossible to define.

This news release is approved by Ronald J. Wortel, P. Eng, the President of Silver Bullet, who is a Qualified Person in accordance with NI 43-101