Tarachi Enters into LOI FOR Transformative Acquisition of the High-Grade Magistral Del Oro Tailings Project
TARACHI GOLD CORP.
(CSE: TRG)
FOR IMMEDIATE RELEASE October 15, 2020
TARACHI ENTERS INTO LOI FOR TRANSFORMATIVE ACQUISITION
OF THE HIGH-GRADE MAGISTRAL DEL ORO TAILINGS PROJECT
Vancouver, British Columbia ( October 15, 2020) – Tarachi Gold Corp. (C SE:TRG)
(“Tarachi” or the “ Company”) Tarachi is pleased to announce that the Company has entered
into a non-binding letter of intent (the “ LOI”) dated October 9 2020 with Manto Resources S.A.
de C.V. (“ Manto”) pursuant to which the Company may acquire (the “Acquisition”) certain
assets related to the Magistral del Oro tailing processing plant (the “ MDO Plant”) in Durango,
Mexico. The Acquisition is intended to allow Tarachi to potentially enter near term production
and generate free cash flow.
Tarachi President and CEO, Lorne Warner stated “This potential acquisition offers Tarachi an
opportunity to crystalize the value that these high gold prices offer. The Company will now have
both high-grade gold exploration projects in the Mulatos gold belt of Sonora as well as potential
cash flowing tailings operation in Durango. We are fully funded to execute this acquisition and
progress this asset into production. To assist with this process , the Company has retained
Ausenco Engineering to complete an NI -43-101 compl iant Preliminary Economic Assessment
(PEA) report and to act as a consultant to the Company in relation to the project.”
Details on the MDO Plant
• The MDO Plant is a permitted 1,000 TPD tailings processing operation
• Covering 600 hectares, the MDO Plant encompasses the Magistral mill tailing
deposit, processing plant, and a tailing disposal facility
• Historical tailings resources estimates by:
o Corporation Ambiental de Mexico S.A. de C.V. (CAM) in 2011
1.29 million tonnes grading 2.06 g/tonne gold
o Unpublished 2018 PEA report 1.30 million tonnes grading 2.11
grams/tonne gold
A qualified person has not done sufficient work to classify the historical estimate
as current mineral resources or mineral reserves. The issuer is not treating the
historical estimate as current mineral resources or mineral reserves.
• The MDO Plant is accessible by paved highway, 175 km from Parral, Chihuahua
and from local area Santa Maria del Oro, approximately 5 km south of the
property
Manto is credited for consolidating the opportunity at the MDO Plant by resolving all past
contractual disputes and established professional relationships with stakeholders and e ntering
into formal agreements settling all disputes. Manto has also entered a formal agreement with the
local Ejido which has been well received. Tarachi applauds Manto for these accomplishments.
Acquisition Terms
Pursuant to the LOI, Manto agreed to work exclusively with the Company towards a definitive
agreement (the “Definitive Agreement”) with the following indicative terms:
• Consideration for the Acquisition will consist of 4,000,000 common shares (“Common
Shares”) in the capital of Tarachi
• The Company will grant Manto a 15% net profits royalty and reimburse Manto up to
$500,000 for cash outlays
• The Company will satisfy certain obligations of Manto by paying a total of
US$1,653,960 plus any Mexican value added tax (VAT) and issuing a total of 1,685,916
Common Shares over a period of six months
• Manto will be entitled to the following bonus payments after completion of the
Acquisition:
o On commencement of “commercial production” (to be defined in the Definitive
Agreement) at the MDO Plant, the Company will issue Manto an aggregate of
4,000,000 Common Shares
o Following six months of continuous “commercial production” (to be defined in
the Definitive Agreement) at the MDO Plant, the Company will issue Manto an
additional 4,000,000 Common Shares and pay Manto US$500,000
o Following 12 months of continuous “commercial production” (to be defined in
the Definitive Agreement) at the MDO Plant, the Company will issue Manto an
additional 4,000,000 Common Shares and pay Manto an additional US$500,000
o Upon the Company earning US$15,000,000 in revenue from the MDO Plant, the
Company will pay Manto US$1,000,000
Completion of the Acquisition is subject to a number of conditions, including but not limited to
the following key conditions: (a) execution of the Definitive Agreement; (b) completion of
satisfactory due diligence; and (c) receipt of all required regulatory, corporate and third par ty
approvals, including the approval of the CSE and the fulfillment of all applicable regulatory
requirements and conditions necessary to complete the Acquisition.
Update on Exploration Drilling Program
Underground diamond drilling commenced in late Augus t at the historic La Dura mine on the
Jabali concession located approximately 6 kilometres west of the Mulatos mine. Drilling has
been advancing at a slower than expected pace with several drill hole s lost or need ing to be re -
drilled due to poor core recoveries.
In recent sampling, (news release dated August 20, 2020) Tarachi returned high grades of gold
over larger widths. Initial drilling at the project resulted in lower than expected core recovery.
This has now been corrected. The reason for the lower c ore recoveries were the highly fractured
dacitic hosts which are typical to this area of Sonora. The first three holes drilled were rejected
due to poor core recoveries of 25 -50% within the zones. Higher core recoveries of greater than
80% are now beginning to be obtained.
The Company is now con sidering the mobilization of a second drill to commence w ork on the
northern concessions at the same time.
Qualified Person
Lorne Warner, P.Geo, President, CEO and Director of the Company is a qualified person as
defined by National Instrument 43 -101 and h as reviewed and approved the scientific and
technical disclosure in this news release.
Engagements
Tarachi is pleased to announce it has entered into marketing agreements with each of Native Ads
and Peak Investor Marketing for a total of $290,000 and 350,000 options.
In respect to private placement closed by the Company on August 14, 2020 (the “ Private
Placement”), the Company announces that it paid a further finder’s fee of $22,500 in cash and
issued 56,250 finders’ warrants (the “Warrants”). Each Warrant entitles the holder to purchase
one Common Share at a price of $0.70 per s hare for a period of 24 months from the date of
closing of the Private Placement. All securities issued will be subject to a four month hold period
pursuant to securities laws in Canada.
The Company entered into a prospecting agreement with Kelly Cross dated Septemb er 3, 2020
(the “Prospecting Agreement”), whereby Mr. Cross will receive his fees in cash and Common
Shares. The C ommon Shares will be issued under the Prospecting Agreement a t deemed price
per share to be determined after the date that the services have been provided and on the
following schedule:
Effective date: US$6,500 in Common Shares
Three-month anniversary of Effective Date: US$12,500 in Common Shares
Six-month anniversary of Effective Date: US$12,500 in Common Shares
To date, the Company has issued 13,126 Common Shares to Mr. Cross at a deemed price of
$0.65 per share.
Contact Information: For more information and to sign-up to the mailing list, please contact:
Lorne Warner, CEO
Tel: (250) 574-5767
Email: [email protected]
SPECIAL NOTE REGARDING FORWARD LOOKING STATEMENTS
This news release includes certain “Forward‐Looking St atements” within the meaning of the United
States Private Securities Litigation Reform Act of 1995 and “forward‐looking inform ation” under
applicable Canadian securities laws. When used in this news rel ease, the words “anticipate”, “believe”,
“estimate”, “expect”, “target”, “plan”, “forecast”, “may”, “would”, “could”, “schedule” and similar words
or expressions, identify forward‐ looking statements or information. Forward-looking statements include,
but are not limited to, statements with respect to: the ter ms and conditions of the proposed Acquisition;
and the business and operations of the Company after the proposed Acquisition.
Forward‐looking statements and forward‐looking information relating to any f uture mineral production,
liquidity, enhanced value an d capital markets profile of Tarachi, future growth potential for Tarachi and
its business, and future exploration plans are based on management’s reasonable assumptions, estimates,
expectations, analys es and opinions, which are based on management’s exper ience and perception of
trends, current conditions and expected developments, and other factors that management believes are
relevant and reasonable in the circumstances, but which may prove to be incor rect. Assumptions have
been made regarding, among othe r things, the price of silver, gold and other metals; costs of exploration
and development; the estimated costs of development of exploration projects; Tarachi’s ability to operate
in a safe and effective manner and its ability to obtain financing on reasonable terms.
These statements reflect Tarachi’s respective current views with respect to future events and are
necessarily based upon a number of other assumptions and estimates that, while considered r easonable by
management, are inherently subject to sig nificant business, economic, competitive, political and social
uncertainties and contingencies. Many factors, both known and u nknown, could cause actual results,
performance or achievements to be materi ally different from the results, performance or achievements
that are or may be expressed or implied by such forward‐looking statements or forward -looking
information and Tarachi has made assumptions and estimates based on or related to many of these factors.
Such factors include, without limitation: satisfaction or waiver of all applicable conditions to closing
fluctuations in general macro‐economic conditions; fluctuations in securities markets and the market price
of Tarachi’s common shares; and the fact ors identified under the caption “Risk Factors” in Tarachi’s
management discussion and analysis. Readers are cautioned against attributing undue certainty to
forward‐looking statements or forward -looking information. Although Tarachi has attempted to ident ify
important factors that could cause actual results to differ materially, there may be other factors that cause
results not to be anticipated, estimated or intended. Tarachi does not intend, and does not assume any
obligation, to update these forward‐loo king statements or forward -looking information to reflect changes
in assumptions or changes in circumstances or any other events affecting such statements or information,
other than as required by applicable law.