Corporate Update
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8792 Shook Road
Mission, British Columbia
Canada V2V-7N1
TSX-V: SMG
Tel: 604. 410-2277
Fax: 604. 410-2275
NEWS RELEASE
Corporate Update
October 22, 2018
Sierra Madre Developments Inc. (the “Company”) is pleased to provide the following corporate
update:
CTO Revocations
The Company recently filed its financial statements and corresponding MD&A and certifications
for the fiscal year s ended March 31, 201 7 and 201 8. It has also filed its interim financial
statements, MD&A and certifications for the three months ended June 30, 2018.
The Company is pleased to announce it has received revocation orders to the cease trade orders
previously issued by the British Columbi a Securities Commission on August 6, 2014 , by the
Ontario Securities Commission on August 25, 2014, and by the Alberta Securities Commission on
November 5, 2014.
Management
The Company’s current officers and directors are: Carl von Einsiedel – CEO and interim CFO and
Director, and Garth Kirkham - Director. The Company intends to add additional directors so as to
comply with TSX Venture Exchange policies. In that regard, the Company has scheduled an
annual and special shareholders’ meeting for November 9, 2018.
Change of Auditor
The Company recently filed notice that it changed its auditor from De Visser Gray LLP to Wolrige
Mahon LLP. The Company noted that (i) De Visser had not expressed any reservation in its reports
for, and (ii) no “reportable event” as defined in NI 51- 102, had occurred with respect to the most
recently completed fiscal year (2013) for which De Visser issued an audit report in respect of the
Company, nor for the period therefrom to the date of the notice.
Mineral Property Interests
The Company sold its mineral property interests in Mexico in January 2014, in a transaction which
saw the Company’s shareholders receive shares and warrants in Morro Bay Resources Ltd. (now
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Viridium Pacific Group Ltd .). The Company no longer holds any mineral property interests in
Mexico.
The Company’s sole focus is the Harrison Gold Property located near Harrison Lake in south-
western British Columbia. The Harrison Gold Property includes the Company’s option (the
“Omineca Option Agreement”), originally entered into on November 17, 2011, to acquire a 100%
interest in 11 minerals claims comprising 2,426.603 hectares (referred to as the Omineca Property)
from Omineca Mining and Metals Ltd. (“Omineca”).
On February 20, 2017, the Company and Omineca amended the ir option agreement by adding
Bear Mountain Gold Mines Ltd. (“Bear Mountain”, the Company’s wholly owned subsidiary) to
the agreement as a third party and amending the option payments schedule. This amendment also
included a provision whereby Bear Mountain could assume responsibility for the cash and share
consideration payable to Omineca and assume responsibility for the exploration expenditures. As
consideration, Sierra Madre and Bear Mountain agreed to issue an additional 500,000 shares to
Omineca (once the cease trade orders were rescinded) , and Bear Mountain agreed to incur a
minimum of $50,000 in exploration expenditures on the Property on or before December 31, 2017.
Payments, share issuances and expenditures are now due as follows:
Cash
Payments
Share
Payments
Exploration
Expenditures Due Dates
$ $
25,000 - - On execution date (paid)
25,000 66,667 - December 5, 2011 (paid and issued)
50,000 100,000 - December 5, 2012 (paid and issued)
- - 50,000 December 31, 2017 (incurred)
- 666,666 100,000 December 31, 2018
- 500,000 100,000 December 31, 2019
400,000 2,000,000 1,750,000 December 31, 2020
500,000 - - Preferred Advance Royalty payments
1,000,000 3,333,333 2,000,000
As at March 31, 2013 the Company had incurred exploration expenditures of $358,471 on the
Property. As at June 30 , 2018 the Company had incurred a total of $ 710,250 in exploration
expenditures on the Property. In order to maintain the Omineca Option Agreement in good
standing, approximately $25,000 of additional expenditures must be incurred before December 31,
2018.
Bear Mountain Gold Mines Ltd. Mineral Tenures
Based on management’s assessment of the Harrison Gold Property a decision was made to acquire
additional mineral tenures to the south of the mineral tenures owned by Omineca (referred to as
the Harrison South Tenures) and to acquire additional mineral tenures to the north and east of the
Omineca Property (referred to as the Harrison Development Operations Tenures).
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Sierra Madre incorporated Bear Mountain to hold title to all mineral tenures acquired on behalf of
the Company within the Area of Mutual Interest defined in the agreement.
The Harrison Development Operations Tenures are comprised of 12 mineral claims comprising
1,936.4103 hectares (more or less).
The Harrison South Mineral tenures are comprised of five mineral claims comprising 716.3074
hectares (more or less).
The Harrison South Tenures and the Development Operations Tenures are within the Area of
Mutual Interest defined in the Omineca Option Agreement and therefore subject to the terms of
the Omineca Option Agreement. In the event that Sierra Madre and Bear Mountain do not meet
the terms of the Omineca Option Agreement, 100% of Bear Mountain ’s interest in the Harrison
South Tenures and the Harrison Development Operations Tenures will be transferred to Omineca.
Expenditures incurred on the Harrison South Tenures and the Development Operations Tenures
are included as expenditures under the Omineca Option Agreement.
Haro Option Agreement
To further advance the exploration of the Harrison Gold Property, on November 30, 2017, Bear
Mountain entered into an option and joint venture agreement with Haro Metals Corp. whereby
Haro has the right to acquire a 60% interest in the Harrison South Mineral Tenures. To exercise
the option, Haro must pay an aggregate of $100,000, and incur an aggregate of $500,000 of
expenditures on the Property as to:
(i) on or before December 31, 2017 , incur at least $100,000 of expenditures on the Property
(incurred);
(ii) on or before June 30, 2019, incur an additional $100,000 of expenditures on the Property;
and
(iii) on or before December 31, 2020 , incur an additional $300,000 of Expenditures on the
Property, and pay the sum of $100,000 to Bear Mountain (either in cash or shares, at Haro’s
election).
Upon exercise of the option, Haro and Bear Mountain will form a joint venture to further the
exploration and development of the Harrison South Mineral Tenures. Initial interests in the joint
venture will be 60% held by Haro and 40% held by Bear Mountain. Haro will be the operator or
manager of the joint venture, with operational and budget decisions being made by a management
committee comprised of representatives of Haro and Bear Mountain . In the event a party
contributes less than its pro-rata share of any approved budget toward an approved work program,
that party will be subject to having its joint venture interest diluted. Should a party’s interest be
diluted to 10% or less, its interest in the joint venture will automatically terminate and instead it
will receive a 1.0% net smelter return royalty.
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Project Summary
The Harrison Gold Property claims cover several intrusion related gold occurrences that have been
intermittently explored by various operators since the early 1970's. Approximately $4.0 - $7.0
million was expended by Abo Resources, Kerr Addison Mines Ltd., Bema International Resources
Ltd. and Northern Continental Resources over the last 35 years.
Exploration work since 1970 has included a total of 19,490m (64,000') of diamond drilling in 161
drill holes and small-scale underground development work. Most of the historic work was focused
on the northern part of the Property in the area of the Jenner and Portal Zones. Drill results reported
from the Portal Zone include 30 meters averaging 3. 17 g/t gold (EMPR ASS RPT 19584). Drill
results reported from the Jenner Zone include 64m averaging 3.77 g/t (EMPR ASS RPT 20144).
In addition to the Jenner and Portal Zones the Property hosts numerous additional target areas
located within a plateau are a referred to as Bear Mountain. Other gold -bearing zones identified
by previous operators on the Property include the Hill and Lake Stock Zones. These areas have
seen limited exploration in comparison to the Jenner and Portal Zones.
Since it entered into the Omineca Option Agreement , the Company has completed extensive
repairs to the core storage area and the existing underground workings, staked several mineral
claims adjoining the Omineca Property and completed extensive soil geochemical surveys of the
central and southern part of the plateau area on Bear Mountain. Since 2014 the Company has
focused on evaluating potential development options for the project that would minimize the
impact on local communities. On January 30, 2016 the Company submitted an application to the
Ministry of Mines for an amended exploration permit that would allow the Company to complete
a verification drilling program to confirm the historic drill results reported by previous operators
and re-open existing underground workings and extract a mini bulk sample for metallurgical and
environmental test work.
All disclosure of scientific or technical information pertaining to the Property contained herein has
been reviewed and approved by Carl von Einsiedel, a qualified person as defined in NI 43 -101 –
Standards of Disclosure for Mineral Projects.
Assignment of Assets to Bear Mountain
The Company has determined to divest all of its interests in the Omineca Option Agreement to
Bear Mountain , such that Bear Mountain will hold all of the interests in the Harrison Gold
Property, and to then seek alternative business opportunities. Pursuant to a Sale Agreement,
(i) the Company will vend all of its interests in the Omineca Option Agreement to its
subsidiary – Bear Mountain;
(ii) in consideration, Bear Mountain will (A) issue 2,699,041 common shares in its capital to
the Company, calculated on the basis of one Bear Mountain share for every 20 outstanding
shares of the Company, and (B) assume $ 287,822 of debt owed by the Company , which
amount relates primarily to expenditures in curred after the Company disposed of its
Mexican assets.;
(iii) the Company will then distribute the Bear Mountain common shares to the shareholders of
the Company, on a pro -rata basis , as a return of capital; such that the Company’s
shareholders will wholly own Bear Mountain; and
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(iv) Bear Mountain will continue with the development of the Harrison Property.
Annual and Special Meeting of Shareholders
An annual and special meeting of the Company’s shareholders has been scheduled for November
9, 2018 at which, among other thing s, shareholders will be asked to approve the Company’s
disposition of its interests in the Harrison Gold Property, and the distribution of the Bear Mountain
shares as a return of capital (the “Reorganization”). The Reorganization, and other matters, are
described in greater detail in the Information Circular for the November 9, 2018 annual and special
meeting. As the sale by the Company represents the disposition of substantially all of its assets,
shareholders will have the right to dissent to the transaction. A record date of September 26, 2018
has been set for purposes of (i) determining shareholders eligible to vote at the meeting, and (ii)
shareholders eligible to receive shares of Bear Mountain under the Reorganization.
ON BEHALF OF THE BOARD:
“Carl von Einsiedel”
Carl von Einsiedel, CEO
Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the
TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
For further information contact Carl von Einsiedel, CEO at Tel: 604 -649-5793
CAUTIONARY STATEMENT REGARDING FORWARD -LOOKING INFORMATION : This news release
includes certain “forward -looking statements” under applicable Canadian securities legislation. Forward -looking
statements include, but are not limited to, statements with respect to: the terms and conditions of proposed revocation
orders, property options; the business and operations of the Company. Forward -looking statements are necessarily
based upon a number of estimates and assumptions that, while considered reasonable, are subject to known and
unknown risks, uncertainties, and other factors which may cause the actual results and future events to differ materially
from those expressed or implied by such forward -looking statements. Such factors include, but are not limited to:
general business, economic, competitive, political and s ocial uncertainties; delay or failure to receive board,
shareholder or regulatory approvals; and the uncertainties surrounding the mineral exploration industry. There can be
no assurance that the Company will be successful in completing any or all of the anticipated transactions listed above,
or that such statements will prove to be accurate, as actual results and future events could differ materially from those
anticipated in such statements. Accordingly, readers should not place undue reliance on forward -looking statements.
The Company disclaims any intention or obligation to update or revise any forward -looking statements, whether as a
result of new information, future events or otherwise, except as required by law.