District Executes Definitive Agreement on Polymetallic Properties in the Prolific Bergslagen District of Sweden
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Telephone: 604-628-2669
District Executes Definitive Agreement on Polymetallic Properties
in the Prolific Bergslagen District of Sweden
Vancouver, B.C., February 28, 2020
February 28, 2020 – District Metals Corp. (TSX-V: DMX; "District" or the “Company”) is
pleased to announce the Company has executed a definitive purchase agreement dated February
27, 2020 (the "Purchase Agreement") with a wholly-owned subsidiary of EMX Royalty Corp.
(TSX-V:EMX) ("EMX") to acquire 100% ownership of the Tomtebo and Trollberget properties
(together, the "Properties") (Figure 1) in the prolific Bergslagen District of Sweden, which hosts
Lundin’s Zinkgruvan Mine and Boliden’s Garpenberg Mine. Upon completion of the proposed
transaction, the Company's primary focus will be on the advanced exploration stage Tomtebo
Property.
The proposed transaction constitutes a "Fundamental Acquisition" as such term is defined in
Policy 5.3 of the TSX Venture Exchange (the " Exchange" or the " TSXV"). As a result,
completion of the proposed transaction is subject to, among other things, the completion of an
updated technical report prepared in accordance with National Instrument 43-101 – Standards of
Disclosure for Mineral Projects ("NI 43 -101") on the Tomtebo Property, and obtaining all
necessary regulatory approvals, including Exchange acceptance. The common shares of the
Company will remain halted until the Exchange has reviewed the proposed transaction in
accordance with Exchange Policy 5.3.
Garrett Ainsworth, President & CEO of District, commented: “These Swedish properties provide
District with significant opportunities in the prolific Bergslagen District, which is known for its
large tonnage and high grade Volcanogenic Massive Sulphide (VMS ) and Sedimentary
Exhalative (SedEx) deposit types . Tomtebo, in particular, underwent a rigorous due diligence
process, which revealed immense potential. The Bergslagen District has substantial polymetallic
production and endowment that is evidenced by the numerous historical and active mines, which
has seen little modern systematic exploration compared to peer districts. Access and
infrastructure on the properties and in the region are highly accommodative. Sweden is a stable
and supportive jurisdiction for mining that is ranked highly by the Fraser Institute. We are also
excited to partner with EMX Royalty Corp. to advance these properties.”
918-1030 West Georgia, Vancouver, BC, V6E 2Y3
Telephone: 604-628-2669
Tomtebo Property Highlights
• Tomtebo covers an area of 5,144 ha, and is located 175 km northwest from the capital city
of Stockholm in Sweden (Figure 1).
• Boliden’s Garpenberg Mine is located 25 km to the southeast, and the historic Falun Mine
is located 25 km to the northwest. Lundin’s Zinkgruvan Mine is located 175 km to the
southwest.
• Tomtebo contains similar host rocks, structure, alteration, and mineralization styles as the
Garpenberg, Falun, and Zinkgruvan Mines.
• Two historic mines, and numerous mineralized prospects are situated along a 17 km trend
on the property. Mineralization at the historic Tomtebo and Lovas Mines appears to be
open in all directions.
• Historic production at the Tomtebo Mine comprised 120,000 tonnes at 4.4% Cu1. Historic
production at the Lovas Mine comprised 330,000 tonnes at 3.5% Zn, 2.5% Pb, and 30g/t
Ag2.
• Drilling from the 1960’s and 1970’s resulted in a historic mineral resource on the Tomtebo
Mine from surface to 200 m depth that comprises 385,000 tonnes grading 0.67% Cu,
1.84% Pb, 3.72% Zn, 0.66 g/t gold , and 55 g/t Ag 3. This is a historic resource for the
purposes of NI 43-101, and a Qualified Person has not done sufficient work to classify the
historic resource above as current mineral resources or mineral reserves, and District is
not treating the historical estimate as current mineral resources or mineral reserves.
District considers these results as indications of the presence of mineralization on the
property, and will use the information to guide future exploration.
• Development work and mining at the historical Tomtebo and Lovas Mines reached depths
of 200 m and 190 m, respectively. Mining operations at Boliden’s Garpenberg Mine and
Lundin Mining’s Zinkgruvan Mine are currently at depths of 1400 m and 1200 m,
respectively.
• Modern systematic exploration has never been carried out on the Tomtebo Property.
Trollberget Property Highlights
• The Trollberget property covers an area of 333 ha, and is located 15 km n ortheast from
Tomtebo and 17 km east of the historic Falun Mine (Figure 1).
• Trollberget is an early stage property that strategically covers the same host rocks,
structure, alteration, and mineralization as the Garpenberg, Falun and Zinkgruvan Mines.
918-1030 West Georgia, Vancouver, BC, V6E 2Y3
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• Several polymetallic mineralized prospects on the property warrant detailed follow up.
• Two historic channel samples4 located approximately 25 m apart returned:
o 1.5 m at 21.4% Zn, 1.8% Pb, 1.3% Cu, 131 g/t Ag and 2.3 g/ t Au.
o 2.0 m at 9.9% Zn, 1.2% Pb, 0.7% Cu, 85 g/t Ag and 0.2 g/ t Au.
The Purchase Agreement
Pursuant to the Purchase Agreement, District will acquire a 100% interest in the Properties upon
the following principal terms:
• At closing of the proposed transaction DMX will:(i) make a cash payment of $35,000 to
EMX; and (ii) issue EMX approximately 3,688,965 common shares of DMX, representing
a 9.9% equity ownership in DMX (on a non-diluted basis).
• To retain the Properties, DMX must: (i) incur $1,000,000 of eligible expenditures on the
Properties within two years of the closing of the proposed transaction; and (ii) complete a
minimum of 2,000 m of drilling within three years of completion of the proposed
transaction and an aggregate of 5,000 m within five years of completion of the proposed
transaction.
• Upon announcement of each of a mineral resource estimate and preliminary economic
assessment, DMX will pay to EMX a fee of $275,000 and, in the absence of either or both
a mineral resource estimate and/or preliminary economic assessment, an aggregate of
$550,000 upon a development decision, in each case, in either cash or common shares of
DMX (based on the 20 day volume weighted average trading price of DMX's common
shares).
• Until the first to occur of the five-year anniversary of the closing of the transaction and
DMX completing a financing raising gross proceeds of at least $3 million, EMX is entitled
to maintain its shareholding in DMX for no additional consideration.
• DMX will grant EMX a 2.5% NSR royalty on each of the Properties subject to an option
to repurchase up to 0.5% of the royalty for $2,000,000 at any time within six years of the
closing of the proposed transaction and in respect of which DMX will make annual
advance royalty payments of $25,000 commencing on the third anniversary of the closing
of the proposed transaction, with each payment increasing by $10,000 per year subject to
maximum of $75,000 per year.
In addition, upon closing of the proposed transaction EMX and DMX will enter into a shareholder
rights agreement pursuant to which:
918-1030 West Georgia, Vancouver, BC, V6E 2Y3
Telephone: 604-628-2669
(i) for so long as it holds at least 9.9% of the issued and outstanding shares of the
Company (on a non-diluted basis), EMX will be entitled to nominate one director to
the Company's board of directors;
(ii) for so long as it holds at least 5.0% of the issued and outstanding shares of the
Company (on a non -diluted basis), EMX will have a pre-emptive right in respect of
future financings by the Company;
(iii) for so long as it holds at least 9.9% of the issued and outstanding shares of the
Company (on a non-diluted basis), EMX will be subject to a standstill provision; and
(iv) for so long as it holds at least 9.9% of the issued and outstanding shares of the
Company (on a non-diluted basis), EMX may not sell or transfer common shares of
the Company representing 1% or more of the outstanding common shares of the
Company in any 30 day period without advance notice to the Company and if the
Company fails to identify a purchaser for such shares, only sell such shares by way of
a broad distribution, through the facilities of an exchange or trading system.
As consideration for identifying the Tomtebo and Tro llberget properties and facilitating
completion of the proposed transaction, Vector Geological Solutions, a "non-arm's length party"
to the Company will be issued 500,000 common shares in the capital of the Company as a finder’s
fee (the "Finder's Fee Shares "). The issue of the Finder's Fee Shares is subject to Exchange
acceptance and, if so accepted, will be subject to a hold period of four months and one day.
District Metals Corp. is pleased to announce that our corporate website has been updated at
www.districtmetals.com where our new corporate presentation is now available.
918-1030 West Georgia, Vancouver, BC, V6E 2Y3
Telephone: 604-628-2669
Figure 1: Location Map of Tomtebo and Trollberget Properties
Note: The nearby mines provide geologic context for Tomtebo and Trollberget, but this is not
necessarily indicative that the Properties host similar grades or tonnages of mineralization.
References
1 Ed. Eilu, Pasi, 2012, Geological Survey of Finland, Specia l Paper 53, Metallogenic areas in
Sweden, p. 154.
2 Geological Survey of Sweden report grb_097, 1997.
3 Technical Report on Tomtebo Mine, Birger Hellegren, 1983.
918-1030 West Georgia, Vancouver, BC, V6E 2Y3
Telephone: 604-628-2669
4 Tumi Resources Ltd. News Release, September 4, 2007. True widths of the channel samples are
unknown.
5 Allen, R.L., Lundström, I., Ripa, M., and Christofferson, H., 1996, Facies analysis of a 1.9 Ga,
continental margin, back-arc, felsic caldera province with diverse Zn-Pb-Ag-(Cu-Au) sulfide and
Fe oxide deposits, Bergslagen region, Sweden: Economic Geology, v. 91, p. 979–1008.
6 https://www.boliden.com/globalassets/operations/exploration/mineral-resources-and-mineral-
reserves-pdf/2019/resources_and_reserves_garpenberg_2019-12-31.pdf
Technical Information
All scientific and technical information in this news release has been prepared by, or approved by
Garrett Ainsworth, PGeo, President and CEO of the Company. Mr. Ainsworth is a qualified
person for the purposes of National Instrument 43 -101 - Standards of Disclosure for Mineral
Projects.
Mr. Ainsworth has not verified any of the information regarding any of the properties or projects
referred to herein other than the Tomtebo and Trollberget Properties. Mineralization on any other
properties referred to herein is not necessarily indicative of mineralizatio n on the Tomtebo and
Trollberget Properties.
On Behalf of the Board of Directors
“Garrett Ainsworth”
President and Chief Executive Officer
604-628-2669
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.
Cautionary Statement Regarding “Forward-Looking” Information.
This news release contains certain statements that may be considered “forward-looking statements” with respect to
District Metals Corp. (“District Metals” or the “Company”) within the meaning of applicable securities laws. In
some cases, but not necessarily in all cases, forward -looking information can be identified by the use of forward -
looking terminology such as “plans”, “targets”, “expects” or “does not expect”, “is expected”, “an opportunity
exists”, “is positioned”, “estimates”, “intends”, “assumes”, “anticipates” or “does not anticipate” or “believes”,
or variations of such words and phras es or state that certain actions, events or results “may”, “could”, “would”,
“might”, “will” or “will be taken”, “occur” or “be achieved”. In addition, any statements that refer to expectations,
predictions, indications, projections or other characterizati ons of future events or circumstances contain forward -
looking information. Statements containing forward -looking information are not historical facts but instead
represent management’s expectations, estimates and projections regarding future events.
Forward-looking statements relating to District Metals include, among other things, statements relating to: timing
of the closing of the proposed acquisition of the Tomtebo Project including receipt of all regulatory approvals and
satisfaction of all other con ditions precedent; completion of the expenditure requirements thereunder, future
commodity prices; District Metals’ planned exploration activities including costs, timing and results thereof; the
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Telephone: 604-628-2669
adequacy of the Company’s financial resources and ability to raise additional funds as and when required and on
reasonable terms; and timing, receipt and maintenance of all required approvals, consents and permits under
applicable legislation.
These statements and other forward-looking information are based on opinions, assumptions and estimates made by
District Metals in light of its experience and perception of historical trends, current conditions and expected future
developments, as well as other factors that the Company believes are appropriate and reasonable in the
circumstances, as of the date of this news release, including, without limitation, assumptions about the receipt of all
regulatory approvals to the completion of the proposed transaction ; satisfaction of all conditions precedent to
completion of the acquisition of the Properties; the Company’s ability to raise sufficient capital to fund planned
exploration activities, maintain corporate capacity and satisfy the exploration expenditure requirements required
by the Purchase Agreement by the times specified therein (failing which the Properties will be forfeited without any
repayment to the Company); and stability in financial and capital markets.
Forward-looking information is necessarily based on a number of opinions, assumptions and estimates that, while
considered reasonable by District Metals as of the date such statements are made, are subject to known and unknown
risks, uncertainties, assumptions and other factors that may cause the actual results, level of activity, performance
or achievements to be materially different from those expressed or implied by such forward -looking information,
including but not limited to the following factors: a number of conditions precedent must be satisfied for the
acquisition of the Properties to be completed (including regulatory approval); the risk that the Company will be
unable to raise sufficient capital to maintain its mineral tenures and concessions in good standing, finance planned
exploration (including incurring prescribed exploration expenditures required by the Purchase Agreement) and for
general corporate purposes, the risk that the Company will not be able to explore and develop the Properties; the
risk that if the required exploration expenditures are not incurred by the time specified therefor the Properties will
be forfeited without any repayment of the purchase price; management and conflicts of interest; fluctuations in
demand for, and prices of gold, silver and copper; inherent risks of exploration for mineral deposits, including that
commercial quantities or grades of minerals may not be discovered; risks associated with the uncertainty of estimates
of mineral resources governmental regulatio ns, particularly those applicable to the mineral exploration and
development industry; environmental laws and regulations and associated risks, including climate change
legislation; land reclamation requirements; the ability to obtain and maintain necessar y rights, concessions and
permits; risks of operating in a foreign jurisdiction and through foreign subsidiaries; a dependence on ability to
attract and retain qualified management; limitations of insurance and uninsured risks; public social activism against
companies undertaking natural resource development; risks associated with First Nations relations; competition;
legal proceedings and the enforceability of judgments; anti -corruption and bribery regulations;; market events and
general economic conditions globally; currency exchange rate risks; These factors and assumptions are not intended
to represent a complete list of the factors and assumptions that could affect District Metals. These factors and
assumptions, however, should be considered carefully.
Although the Company has attempted to identify factors that would cause actual actions, events or results to differ
materially from those disclosed in the forward -looking statements or information, there may be other factors that
cause actions, events or results not to be as anticipated, estimated or intended. Also, many of such factors are beyond
the control of the Company. Accordingly, readers should not place undue reliance on forward-looking statements or
information. The forward-looking information is made as of the date of this news release, and the Company assumes
no obligation to publicly update or revise such forward-looking information