Cirrus to Consolidate the Lordsburg Property in New Mexico from Waterton Global Resource Management and Hudbay Minerals and Announces Private Placement and Management Changes
Cirrus to Consolidate the Lordsburg Property
in New Mexico from Waterton Global Resource
Management and Hudbay Minerals and
Announces Private Placement and
Management Changes
Vancouver, British Columbia--(Newsfile Corp. - January 13, 2022) - Cirrus Gold Corp. (CSE: CI)
("
Cirrus
" or the "
Company
") announces that it has entered into a binding letter agreement (the "
Letter
Agreement
") with Pyramid Peak Mining, LLC. ("
PPM
"), a wholly owned subsidiary of Waterton
Precious Metals Fund II Cayman, LP ("
Waterton
"), and Mason Resources (US) Inc., a wholly owned
subsidiary of Hudbay Minerals Inc. ("
Hudbay
", and collectively with PPM, the "
Vendors
"), whereby
Cirrus would consolidate adjacent mineral property interests, located in the State of New Mexico
(collectively the "
Lordsburg
Property
") from the Vendors for a combination of cash and Cirrus common
shares (the "
Proposed Transaction
").
At the completion of the Proposed Transaction, the board of directors of Cirrus (the “
Board
”) is
expected to consist of five directors being Rick Van Nieuwenhuyse as Chairman, Daniel Schieber,
James Walchuck, Curt Freeman and Stuart Ross. Management is expected to consist of Daniel
Schieber as Chief Executive Officer and Blaine Bailey as Chief Financial Officer.
Rick Van Nieuwenhuyse (Proposed Chairman) comments: "Finalizing this agreement with Waterton and
Hudbay is a huge milestone for Cirrus.
This deal consolidates an
entire past producing high grade
porphyry copper district
located in a safe, mining friendly jurisdiction with excellent infrastructure.
We
are all thrilled about this agreement because we believe there is no better place to explore for and
develop a high-quality copper-gold-silver project.
Plans are already underway to complete district-wide
3D IP and Magnetotelluric surveys to identify large-scale porphyry and skarn related targets with plans to
drill later this year."
Lordsburg Property
The Lordsburg property is located approximately 5 miles south of the town of Lordsburg in southwestern
New Mexico.
The area has abundant infrastructure including interstate, rail, and multiple power plants
located nearby.
The Lordsburg property represents multiple
high quality, district scale porphyry
related copper-gold-silver targets
located immediately adjacent to excellent infrastructure on private
patented mining claims and Bureau of Land Management (BLM) public lands.
Freeport, BHP and Rio
Tinto all have adjacent claim blocks.
Targets include classic porphyry and skarn hosted copper-gold-
silver mineralization and high-grade copper-gold-silver veins.
Historic mining focussed on the high-grade copper-gold-silver veins,
most notably with higher
copper grades mined from the Bonney and Misers Chest areas with grades ranging from 3-9%
Cu (see Figure 1)
.
Historical underground drilling intersected several high-grade zones particularly in
the Bonney and Misers Chest areas (Table 1).
However, deeper-seated porphyry and skarn targets
were never tested except for a small portion of the BB claims where previous owner Entrée Gold drilled
eight holes that intersected low grade copper and gold mineralization over significant widths (see Figure
1 and Table 2) indicating that the potential for more disseminated, bulk mineable targets exist.
Of note
are holes EG-L-09-012 and EG-L-08-02, both of which demonstrate improving grades with depth and
yet still relatively shallow for a porphyry system.
Furthermore, district scale magnetic surveys along with
Aster/Hyperspectral and geologic mapping indicate that multiple deep-seated porphyry and skarn
deposits remain completely untested.
The Company plans to undertake district scale 3D IP and
Magnetotelluric surveys to further identify high quality porphyry, skarn, and vein targets with drilling
expected to take place later this year.
The Lordsburg district sits at the intersection of two major regional structural trends - the northwest
trending Texas Lineament and the northeast trending Santa Rita Lineament (see Figure 2).
Along the
Santa Rita lineament there are two major porphyry districts operated by Freeport - the Tyrone Mine
approximately 70 kilometers (45 mile) to the northeast and the Santa Rita-Chino Mine Complex ~100
kilometers (62 miles) northeast of Lordsburg and on the other side of the Burrow Uplift. The Santa Rita-
Chino complex has mined over a billion tonnes of skarn and porphyry copper related copper ore.
Along
the northwest Texas Lineament are several groups of historic and active copper mines including: the
Chino-Santa Rita-Tyrone cluster; the Morenci-Safford-Sanchez cluster; and the Miami-Superior-
Resolution Cluster.
Of particular interest is the Resolution project owned jointly by Rio Tinto and BHP.
The regional geologic setting (graben structure filled with Mesozoic volcanics and sediments) and
relationship of the porphyry center at the Resolution deposit (1.9 billion tonnes grading 1.5% copper
1
) to
historic high-grade copper veins is very similar to the geologic setting of the Lordsburg district.
The
Company's objective is to find a high-quality porphyry and skarn system similar to the Santa Rita-Chino
or Resolution systems.
Management believes that it is in the right geologic setting and neighborhood.
Figure 1. Lordsburg location map in southwestern New Mexico
To view an enhanced version of Figure 1, please visit:
https://orders.newsfilecorp.com/files/8445/110066_6f59f0c9c4a1395a_001full.jpg
Table 1. Historical drilling on the Lordsburg property
Hole
From (m)
To (m)
Length (m)
Cu%
Ag (ppm)
Au (ppm)
Pb%
Zn%
WO-1
29.75
31.85
2.10
9.20
92.89
0.72
n/a
n/a
WO-2
41.36
43.22
1.71
6.19
42.96
0.18
n/a
n/a
B-DDH70
48.77
50.60
1.83
4.52
8.03
0.05
n/a
n/a
B-DDH-74
19.32
22.65
3.32
5.22
28.91
0.42
n/a
n/a
85-42
51.82
54.86
3.05
15.00
7.89
1.03
0.24
0.13
DDH-320
105.00
107.59
2.59
6.29
40.97
0.17
0.00
0.00
SFP L-35
32.00
33.53
1.52
5.50
350.00
0.02
0.40
1.20
DDH-338
202.08
203.91
1.83
4.38
16.29
0.51
0.00
0.00
SFP L-21
33.53
36.58
3.05
4.20
19.00
1.00
0.12
0.18
L-2
167.70
168.55
0.85
3.33
0.14
17.14
0.05
0.11
SFP L-35
33.53
35.05
1.52
3.20
100.00
0.02
0.23
0.64
DDH-320
116.13
116.28
0.15
3.18
37.71
0.17
0.00
0.00
Hole
From (m)
To (m)
Length (m)
Cu%
Ag (ppm)
Au (ppm)
Pb%
Zn%
Table 2. Entrée Gold drill results (2008-2009), Lordsburg Project
Hole No.
Interval
(m)
Length
(m)
Cu
%
Au
(g/t)
CuEq*
(%)
EG-L-08-002
156.0 - 466.0
310.0
0.14
0.08
0.19
Including
182.0 - 211.3
29.3
0.21
0.12
0.28
Including
240.0 - 254.0
14.0
0.33
0.26
0.49
EG-L-08-005
0.0 - 134.0
134.0
0.13
0.12
0.20
EG-L-08-006
11.2 - 130.0
118.8
0.20
0.20
0.32
EG-L-08-007
6.0 - 152.0
146.0
0.13
0.16
0.23
EG-L-08-008
280.0 - 332.0
52.0
0.18
0.05
0.21
EG-L-09-010A
34.0 - 84.0
50.0
0.18
0.21
0.31
And
216.0 - 256.0
40.0
0.15
0.13
0.23
EG-L-09-011
28.0 - 66.0
38.0
0.15
0.20
0.27
EG-L-08-012
96.0 - 252.0
156.0
0.19
0.12
0.26
Including
118.0 - 212.0
94.0
0.25
0.15
0.34
Including
152.0 - 212.0
60.0
0.31
0.21
0.44
* Copper Equivalent (CuEq) has been calculated using assumed metal prices (US$3.00/pound for copper and US$1,250/ounce for gold) and no
metallurgical factor.
Figure 2. Lordsburg Location map in southwestern New Mexico showing Texas Lineament
and Santa Ria Lineament and large porphyry copper districts along regional trends
To view an enhanced version of Figure 2, please visit:
https://orders.newsfilecorp.com/files/8445/110066_6f59f0c9c4a1395a_002full.jpg
Proposed Transaction
The Letter Agreement sets out the principal terms and conditions upon which Cirrus will acquire the
Lordsburg Property from the Vendors, in consideration for Cirrus common shares, cash and NSR
royalties as described below.
On the closing of the Proposed Transaction (the "
Closing
") Cirrus would
pay to Hudbay, or its designee, the greater of
9,860,000 (pre-Consolidation) common shares of Cirrus
("
Cirrus Shares
") and 12% of the
pro forma
capitalization of Cirrus following the Concurrent Equity
Offering (as described below); and to PPM or its designee, the greater of (i) 18,000,000 (pre-
Consolidation) Cirrus Shares and (ii) 19.99% of the
pro forma
capitalization of Cirrus following the
Concurrent Equity Offering, plus CAD$500,000 in cash.
In connection with the completion of the Proposed Transaction, Cirrus will consolidate its outstanding
Cirrus Shares (the "
Consolidation
") on the basis of two (2) pre-Consolidation common shares for each
one (1) post-Consolidation common share (the "
Post-Consolidation Shares
") (subject to corporate
and regulatory approval). As at the date hereof, Cirrus has 14,375,000 common shares outstanding.
Immediately upon completion of the Consolidation, it is anticipated that Cirrus will have 7,187,500 Post-
Consolidation Shares issued and outstanding (excluding the Cirrus Shares to be issued pursuant to the
Concurrent Equity Offering).
Royalties
At Closing, Cirrus will also enter into royalty agreements with the Vendors, under which Cirrus will grant
Net Smelter Return Royalties (the "
Royalties
") on the Lordsburg Property as follows:
on the lands purchased from PPM (except for certain excluded claims subject to pre-existing
royalties), a 2% NSR will be payable, with PPM to receive a 1.5% NSR and Hudbay 0.5%. Each of
these will be subject to a buyback provision whereby half of each royalty (0.75% and 0.25%
respectively) can be purchased by Cirrus for $5,000,000 ($3,750,000 to PPM and $1,250,000 to
Hudbay);
on the lands purchased from Hudbay, a 2% NSR will be payable, with Hudbay to receive a 1.5%
NSR and PPM 0.5%. Each of these will be subject to a buyback provision whereby half of each
royalty (0.75% and 0.25% respectively) can be purchased by Cirrus for $5,000,000 ($3,750,000 to
Hudbay and $1,250,000 to PPM); and
In each case, the buyback right will be exercisable until the earlier of 10 years from Closing or the
commencement of commercial production on the Lordsburg Property.
Milestone Payments
In addition to the consideration paid at the Closing as described above, Cirrus will make the following
time-dependent payments (the "
Milestone Payments
") to PPM:
the first Milestone Payment due 12 months from Closing (CAD$500,000 cash and $500,000 in
Post-Consolidation Shares);
the second Milestone Payment due 24 months from Closing (CAD$750,000 cash and $750,000 in
Post-Consolidation Shares); and
the final Milestone Payment due 36 months from Closing (CAD$1,250,000 in cash and
$1,250,000 in Post-Consolidation Shares).
Each of the above share issuances is to be calculated using the 20-day volume-weighted average price
as at the issuance date, and if any such share issuance, or portion thereof, would result in PPM owning
more than 19.99% of the issued and outstanding shares of Cirrus, Cirrus will be required to pay such
amount to PPM in cash.
Concurrent Equity Offering
Cirrus intends to complete a best efforts private placement at a price of $0.50 per Post-Consolidation
Share, for gross proceeds of $10,000,000 (the "
Concurrent Equity Offering
"), in order to finance
Cirrus' proposed exploration activities on the Lordsburg Property and for general administrative and
working capital.
Definitive Agreement
The Letter Agreement is to form the basis from which the Parties will negotiate and enter into a Definitive
Agreement for the Proposed Transaction (the "
Definitive Agreement
").
It is anticipated that the
Definitive Agreement will contain standard representations, warranties, covenants and closing
conditions for a transaction of this nature. While the Letter Agreement governs the relationship between
the parties, there can be no assurance that a definitive agreement will be completed or entered into
amongst the parties.
CSE Matters
It is currently expected that the Proposed Transaction would be regarded by the Canadian Securities
Exchange (the "
CSE
"), on which the Cirrus Shares are listed, as a "Fundamental Change" under CSE
Policies.
As a result, Closing will be subject to the approval of the CSE and all related filing, disclosure
and other requirements (including shareholder approval, if applicable).
Directors and Officers
At the completion of the Proposed Transaction, the Board is expected to consist of five directors being
Rick Van Nieuwenhuyse as Chairman, Daniel Schieber, James Walchuck, Curt Freeman and Stuart
Ross. Management is expected to consist of Daniel Schieber as Chief Executive Officer and Blaine
Bailey as Chief Financial Officer. Until such time that each of the Vendors cease to hold more than 10%
of the outstanding Post-Consolidation Shares, or three years following the Closing, whichever is later,
PPM and Hudbay will each have the right to nominate one director nominee to the Board.
Notes:
1. See Rio Tinto Annual Report on Production, Reserves and Operations dated 2020 and
https://www.resolutioncopper.com/about-us.html
Qualified Person
James Walchuk, a director of Cirrus and a Qualified Person as defined by National Instrument 43-101
Standards of Disclosure for Mineral Projects
, has read and approved all technical and scientific
information contained in this news release.
About the Company
Cirrus is engaged in the business of mineral exploration and the acquisition of mineral property assets in
Canada. Its objective is to locate and develop economic precious and base metal properties of merit
and to conduct its exploration program on the Chuchi South Property. The Chuchi South Property
consists of thirteen mineral claims covering an area of 3,118.7 hectares located approximately 185 km
northwest of the City of Prince George, within the Omineca Mining Division, British Columbia.
For more information, please refer to the Company's prospectus dated July 7, 2021, available on
SEDAR (
www.sedar.com
).
Cirrus Gold Corp.
For further information, please contact:
James Walchuck
Chief Executive Officer, President and Director
Phone: (778) 372-9888
Email:
2710 - 200 Granville Street
Vancouver, British Columbia
V6C 1S4
Cautionary Statement Regarding Forward-Looking Information
This news release includes certain "forward-looking information" under applicable Canadian securities
legislation. Forward-looking information involves risks, uncertainties, and other factors that could cause
actual results, performance, prospects, and opportunities to differ materially from those expressed or
implied by such forward-looking information. Forward-looking information in this news release includes,
but is not limited to, statements with respect to: the structure, terms and conditions of the Proposed
Transaction; the Concurrent Equity Offering; the Milestone Payments; the Royalties; the proposed slate
of directors to be appointed to the Board; the Company's objectives, goals or future plans; the requisite
approvals with respect to the Proposed Transaction; and the business, operations, management and
capitalization of Cirrus following closing. Forward-looking information is necessarily based on a number
of estimates and assumptions that, while considered reasonable, are subject to known and unknown
risks, uncertainties and other factors which may cause actual results and future events to differ materially
from those expressed or implied by such forward-looking information. Such factors include, but are not
limited to: general business, economic and social uncertainties; litigation, legislative, environmental and
other judicial, regulatory, political and competitive developments; delay or failure to receive Board,
shareholder or regulatory approvals; those additional risks set out in Cirrus' public documents filed on
SEDAR at
http://www.sedar.com
; and other matters discussed in this news release. Accordingly, the
forward-looking information discussed in this release, including the completion of the Proposed
Transaction and Concurrent Equity Offering, may not occur and could differ materially as a result of these
known and unknown risk factors and uncertainties affecting Cirrus. Although Cirrus believes that the
assumptions and factors used in preparing the forward-looking information are reasonable, undue
reliance should not be placed on this information, which only applies as of the date of this news release,
and no assurance can be given that such events will occur in the disclosed time frames or at all. Except
where required by law, Cirrus disclaims any intention or obligation to update or revise any forward-
looking information, whether as a result of new information, future events, or otherwise.
Reader Advisory
Completion of the Proposed Transaction and Concurrent Equity Offering is subject to a number of
conditions, including but not limited to CSE acceptance. The Proposed Transaction and Concurrent
Equity Offering cannot close until these conditions are satisfied or, if applicable, waived. There can be
no assurance that the Proposed Transaction and Concurrent Equity Offering will be completed as
proposed or at all. Investors are cautioned that, except as disclosed in the listing statement or other
disclosure document to be prepared in connection with the Proposed Transaction and Concurrent
Equity Offering, any information released or received with respect to the Proposed Transaction and
Concurrent Equity Offering may not be accurate or complete and should not be relied upon. Trading
in the securities of Cirrus should be considered highly speculative.
To view the source version of this press release, please visit
https://www.newsfilecorp.com/release/110066