Discovery Reports Q3 2020 Financial Results & Update
Discovery Reports Q3 2020 Financial Results & Update
November 25, 2020, Toronto, Ontario - Discovery Metals Corp. (TSX-V: DSV, OTCQX: DSVMF)
(“Discovery” or the “Company”) is pleased to announce its financial results for the three months ended
September 30, 2020, and to provide a summary of key events for the quarter and subsequent to quarter
end. All amounts are presented in Canadian dollars (“C$”) unless otherwise stated.
Discovery’s flagship project is our 100% -owned Cordero project (“Cordero” or the “Project”) located in
Chihuahua State, Mexico. We are aggressively advancing the Project through a 55,000 metre (“m”)
Phase 1 drill program focused on delineating a high-margin silver project with size and scaleability.
CORPORATE HIGHLIGHTS:
On August 7, 2020, we closed a $35 million private placement that included a $15 million investment
from Mr. Eric Sprott. The placement consisted of 25.9 million units at a price of $1.35 per unit. Each unit
was comprised of one common share of Discovery and one- half of one com mon share purchase
warrant, with each full warrant exercisable at $1.75 until August 7, 2022 (refer to the press release dated
August 11, 2020, for further details).
As at September 30, 2020, and following the completion of this financing, we had a cash balance of $84
million to drive value through aggressive exploration, resource growth and future development.
EXPLORATION HIGHLIGHTS:
We have now completed 43,640 m (111 holes) as part of our expanded 55,000 m Phase 1 drill program.
There are currently four drill rigs operational on site. Additional drill rigs may be added when the
Company is confident that the health and safety risks related to COVID-19 can be managed effectively.
Based on our current level of activity we anticipate completing the expanded Phase 1 drill program by
the end of Q1 2021.
Drilling is focused on two key concepts: (1) targeting of bulk -tonnage mineralization within and to the
east and northeast of both mineralized corridors; and (2) testing of the width, grade and continuity of
extensive high-grade vein systems that transect the deposit.
Bulk-tonnage targets
At our bulk-tonnage targets our recent focus has shifted to the South Corridor, an area of the deposit
that has seen significantly less drilling than the North Corridor. As our drill results from the South Corridor
indicate, we have been successful in intercepting broad zones of mineralization in areas where there
were significant gaps in previous drilling, which indicates potential for the conversion of waste to ore in
this part of the deposit.
NEWS RELEASE
Drill highlights during Q3 2020 and subsequent to quarter end from our bulk-tonnage targets include:
- 401.7 m averaging 134 grams per tonne silver equivalent (“g/t AgEq1”) in hole C20-343 from
66.9 m (49 g/t Ag, 0.07 g/t Au, 1.0% Pb and 1.1% Zn) including:
o 30.3 m averaging 182 g/t AgEq1 (57 g/t Ag, 0.10 g/t Au, 0.8% Pb, 2.2% Zn) and;
o 112.3 m averaging 247 g/t AgEq1 (96 g/t Ag, 0.08 g/t Au, 2.0% Pb, 1.8% Zn) and;
o 44.2 m averaging 241 g/t AgEq1 (84 g/t Ag, 0.10 g/t Au, 1.8% Pb, 2.0% Zn)
- 139.1 m averaging 138 g/t AgEq1 in hole C20-348 from 196.2 m (47 g/t Ag, 0.07 g/t Au, 0.6% Pb
and 1.6% Zn) including:
o 19.0 m averaging 357 g/t AgEq1 (112 g/t Ag, 0.17 g/t Au, 1.8% Pb, 4.0% Zn)
- 120.4 m averaging 114 g/t AgEq1 in hole C20-333 from 206.8 m (30 g/t Ag, 0.11 g/t Au, 0.4% Pb
and 1.5% Zn)
- 26.6 m averaging 108 g/t AgEq1 in hole C20-353 from 99.5 m (56 g/t Ag, 0.09 g/t Au, 0.4% Pb and
0.7% Zn) and 29.6 m averaging 119 g/t AgEq 1 from 278.1 m (52 g/t Ag, 0.0 7 g/t Au, 0. 8% Pb,
0.8% Zn)
High-grade vein targets
We continued to advance high- grade sulphide veins as a separate exploration target . At the Todos
Santos Vein trend we have now demonstrated a minimum strike extent of 1.5 km based on historic
underground workings and recent drilling while at the Parcionera Vein trend we have now confirmed a
minimum strike extent of 350 m. These vein trends along with other known vein trends at the Project are
a new and exciting component of our story that we look forward to drill testing for the remainder of the
year and through 2021. Drill highlights during Q3 2020 and subsequent to quarter end from the vein
targets include:
• Todos Santos Vein
- 1.4 m averaging 1,907 g/t AgEq1 in hole C20-342 from 147.0 m (700 g/t Ag, 0.74 g/t Au,
16.1% Pb and 14.0% Zn)
- 1.9 m averaging 2,007 g/t AgEq1 in hole C20-344 from 171.1 m (1,035 g/t Ag, 0.06 g/t Au,
20.0% Pb and 6.4% Zn)
- 3.4 m averaging 1,150 g/t AgEq1” in hole C20-349 from 145.6 m (412 g/t Ag, 0.42 g/t Au, 8.0%
Pb and 10.0% Zn) within a 5.0 m interval averaging 962 g/t AgEq 1 (331 g/t Ag, 0.35 g/t Au,
6.3% Pb, 9.2% Zn)
- 2.0 m averaging 1,207 g/t AgEq1 in hole C20-351 from 224.8 m (532 g/t Ag, 0.38 g/t Au, 8.8%
Pb and 8.1% Zn)
• Parcionera Vein
- 1.5 m averaging 1,119 g/t AgEq1 in hole C20-338 from 149.8 m (489 g/t Ag, 0.82 g/t Au, 2.9%
Pb and 11.1% Zn)
- 1.3 m averaging 1,073 g/t AgEq1 in hole C20-340 from 69.6 m (587 g/t Ag, 0.67 g/t Au, 9.4%
Pb and 2.4% Zn)
For all drill results r efer to press releases dated July 20, August 19, September 14, October 14 and
November 12, 2020, for further details.
COVID-19 UPDATE
As with much of Mexico this past fall, Chihuahua State saw a significant increase in the community
spread of COVID -19. During the month of October, the Company isolated and quarantined several
employees and contractors who had tested positive for COVID -19 during routine testing at site. These
tests were followed- up with subsequent PCR testing with anyone testing positive being isolated
immediately. The Company is continually enhancing its testing protocols, social -distancing measures
and travel restrictions and saw a noticeable reduction in positive cases during the month of November.
The Company continues to be proactive regarding COVID-19 and continually monitors employees and
contractors and remains committed to being engaged with our local stakeholders during this uncertain
period. The Company will continue to closely monitor the directives of all levels of government in both
Mexico and Canada as well as the relevant health authorities.
Q3 2020 FINANCIAL HIGHLIGHTS:
The following selected financial data is summarized from our Company’s unaudited interim condensed
consolidated financial statements and related notes thereto (the “Financial Statements”) for the three
months ended September 30, 2020. A copy of the Financial Statements and MD&A is available on our
website at www.dsvmetals.com or on SEDAR at www.sedar.com.
Net loss Q3 2020 Q3 2019
(a) Total(A) $ (5,127,665) $ (3,876,582)
(b) basic and diluted per share $ (0.02) $ (0.03)
Net loss & total comprehensive loss $ (4,914,927) $ (4,017,681)
Total weighted average shares outstanding 282,624,020 134,258,418
A. Net loss for Q3 2020 includes non-cash share-based compensation expense of $232,528 (Q3 2019: $1,614,616) and a 100% provision
for IVA receivable additions of $581,405 (Q3 2019: $1,000,710).
September 30, 2020 December 31, 2019
Cash, cash equivalents & short-term investments $ 84,210,491 $ 23,950,737
Total assets $ 112,664,894 $ 53,518,599
Total current liabilities $ 1,825,541 $ 716,596
Total liabilities $ 1,878,499 $ 804,466
Total Shareholders’ equity $ 110,786,396 $ 52,714,133
RSU & DSU PLAN:
Discovery also announces that its shareholders and its board of directors have approved the
implementation of a restricted share unit plan (the “RSU Plan”) and a deferred share unit plan (the “DSU
Plan”).
The RSU Plan and the DSU Plan have been implemented to further align the interests of the Company’s
senior management, consultants, and directors with those of Discovery’s shareholders. Both plans were
approved by Discovery’s board of directors on May 12, 2020, and by the Company’s shareholders at its
annual general meeting on June 26, 2020. The Company has received conditional approval of the TSX
Venture Exchange for both the RSU Plan and the DSU Plan.
To date, no restricted share units (“ RSUs”) or deferred share units (“ DSUs”) have been granted by
Discovery under the respective plan. Discovery’s board of directors (or its Compensation Committee, as
delegated by the board) will determine the grant of RSUs and DSUs to any eligible persons, and will
determine the terms of any vesting conditions for RSUs or DSUs granted.
Participation in the RSU Plan is restricted to Discovery’s employees, officers, and consultants . Upon
vesting, RSUs entitle their holders to receive either the number of common shares of the Company
(“Shares”) equal to the number of RSUs vested, or a cash payment equal to the value of such Shares,
or a combination of cash and Shares, in each case at the Company’s option.
Participation in the DSU Plan is restricted to Discovery’s non-employee directors, or other d irectors
otherwise designated by the Company’s board of directors to be eligible for participation in the DSU
Plan. DSUs vest upon the date t hat their holder ceases to be a director of the Company and is not
otherwise an employee or officer of the Company. Upon vesting, each DSU entitles their holder to
receive, on a deferred payment basis and subject to adjustment, either a Share or a cash payment equal
to the fair market value of a Share, at the Company’s option.
Neither RSUs nor DSUs may be sold, transferred, assigned, pledged, or otherwise encumbered or
disposed of during the vesting period. The maximum number of Shares available for issuance upon the
vesting of RSUs and DSUs, in the aggregate, is the lower of 7,000,000 Shares or 5% of the issued and
outstanding Shares at the time of grant. In combination with all security -based compensation
arrangements of the Company , including the Company’s stock option plan, the number of RSUs and
DSUs issuable may not exceed 10% of the issued and outstanding Shares.
Further details regarding the RSU Plan and DSU Plan are set out in the management information circular
of the Company dated May 12, 2020, available under Discovery’s profile on SEDAR (www.sedar.com).
LOOKING AHEAD:
Firstly, we would like to take this opportunity to thank all of our local employees and contractors for their
diligent efforts and hard work through the course of 2020 under what are unprecedented and challenging
circumstances as a result of the COVID -19 pandemic. As we head in to 2021, we are very excited for
what we expect will be a transformative year for the Company. Since acquiring Cordero in mid-2019 we
have been aggressive yet disciplined in how we have deployed capital at the Project. We are now coming
to the tail end of our Phase 1 drill program which has yielded exceptional results on a consistent basis
across a large number of different targets. This drill program, along with metallurgical testwork that
recently commenced, will culm inate in a brand -new resource estimate and completely revamped
preliminary economic assessment (“PEA”) in the second half of 2021. We are confident that our original
thesis at the time of acquisition, that Cordero is one of the rare deposits in the silver space that offers
the combination of margin, size and scaleability, will come to fruition through these major milestones.
In addition to this work we will continue to drive value and d e-risk the project across other areas. Our
systematic assessment of the extensive vein trends flanking the Cordero deposit will continue along with
the advancement and initial drill testing of other large interpreted intrusive centres on our sizeable land
package. We have recently commenced socio -economic and environmental baseline studies at
Cordero. This work will be ongoing through 2021 and will form a critical part of the feasibility level studies
we envisage we will pursue following the completion of the PEA.
We look forward to providing further details on these work items, all of which are underpinned by an
exceptionally strong balance sheet with a current cash balance of more than $80 million, through the
remainder of the year and on an ongoing basis through 2021.
About Discovery
Discovery’s flagship project is its 100%-owned Cordero silver project in Chihuahua State, Mexico. Our
drill results to date show that Cordero is developing all the attributes of a tier 1 project – grade, scale,
significant organic growth opportunities and well located in one of Mexico’s premier mining belts. The
project is supported by an industry leading balance sheet with over C$80 million of cash allocated for
aggressive exploration, resource expansion and future development.
On Behalf of the Board of Directors,
Taj Singh, M.Eng, P.Eng, CPA,
President, Chief Executive Officer, and Director
For further information contact:
Forbes Gemmell, CFA
VP Corporate Development & Investor Relations
TECHNICAL NOTES & REFERENCES:
1All results in this news release are rounded. Assays are uncut and undiluted. Widths are drilled widths,
not true widths, as a full interpretation of the actual orientation of mineralization is not complete. Intervals
were chosen based on a 20 g/t AgEq cut off with no more than 10 m of dilution. AgEq calculations are
used as the basis for total metal content calculations given Ag is the dominant metal constituent as a
percentage of AgEq value in approximately 70% of the Company’s mineralized intercepts. AgEq
calculations for reported drill results are based on USD $16.50/oz Ag, $1,350/oz Au, $0.85/lb Pb,
$1.00/lb Zn. The calculations assume 100% metallurgical recovery and are indicative of gross in- situ
metal value at the indicated metal prices. Refer to notes below for metallurgical recoveries assumed in
the 2018 PEA completed on Cordero.
The most recent technical report for the Cordero Project is the 2018 Preliminary Economic Assessment
(PEA) authored by M3 Engineering and Technology Corp and includes the most recent resource
estimate, completed by Independent Mining Consultants, Inc. It is available on Discovery’s website and
on SEDAR under Levon Resources Ltd , a wholly owned subsidiary of Discovery . The PEA assumes
metallurgical recoveries of 89% for Ag, 84% for Pb, 72% for Zn and 40% for Au.
Sample analysis and QA/QC Program: True widths of reported drill intercepts have not been
determined. Assays are uncut except where indicated. All core assays are from HQ drill core unless
stated otherwise. Drill core is logged and sampled in a secure core storage facility located at the project
site 40km north of the city of Parral. Core samples from the program are cut in half, using a diamond
cutting saw, and are sent to ALS Geochemistry-Mexico for preparation in Chihuahua City, Mexico, and
subsequently pulps are sent to ALS Vancouver, Canada, which is an accredited mineral analysis
laboratory, for analysis. All samples are prepared using a method whereby the entire sample is crushed
to 70% passing -2mm, a split of 250g is taken and pulverized to better than 85% passing 75 microns.
Samples are analyzed for gold using standard Fire Assay-AAS techniques (Au-AA24) from a 50g pulp.
Over limits are analyzed by fire assay and gravimetric finish. Samples are also analyzed using thirty
three-element inductively coupled plasma method (“ME -ICP61”). Over limit sample values are re-
assayed for: (1) values of zinc > 1%; (2) values of lead > 1%; and (3) values of silver > 100 g/t. Samples
are re-assayed using the ME-OG62 (high-grade material ICP-AES) analytical package. For values of
silver greater than 1,500 g/t, samples are re- assayed using the Ag- CON01 analytical method, a
standard 30 g fire assay with gravimetric finish. Certified standards and blanks are routinely inserted
into all sample shipments to ensure integrity of the assay process. Selected s amples are chosen for
duplicate assay from the coarse reject and pulps of the original sample. No QAQC issues were noted
with the results reported herein.
Qualified Person: Gernot Wober, P.Geo, VP Exploration, Discovery Metals Corp., is the Company's
designated Qualified Person for this news release within the meaning of National Instrument 43- 101
Standards of Disclosure for Mineral Projects (“NI 43- 101”) and has reviewed and validated that the
information contained in this news release is accurate.
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.
This news release is not for distribution to United States newswire services or for dissemination in the United States.
This news release does not constitute an offer to sell or a solicitation of an offer to buy nor shall there be any sale of any of the securities in
any jurisdiction in which such offer, solicitation or sale would be unlawful, including any of the securities in the United States of America. The
securities have not been and will not be registered under the United States Securities Act of 1933, as amended (the “1933 Act ”) or any state
securities laws and may not be offered or sold within the United States or to, or for account or benefit of, U.S. Persons (as defined in Regulation
S under the 1933 Act) unless registered under the 1933 Act and applicable state securities laws, or an exem ption from such registration
requirements is available.
Cautionary Note Regarding Forward-Looking Statements
This news release may include forward-looking statements that are subject to inherent risks and uncertainties. All statements within this news
release, other than statements of historical fact, are to be considered forward looking. Although Discovery believes the expectations expressed
in such forward- looking statements are based on reasonable assumptions, such statements are not guarantees of future performance and
actual results or developments may differ materially from those described in forward-looking statements. Factors that could cause actual results
to differ materially from those described in forward-looking statements include fluctuations in market prices, including metal prices, continued
availability of capital and financing, and general economic, market or business conditions. There can be no assurances that such statements
will prove accurate and, therefore, readers are advised to rely on their own evaluation of such uncertainties. There can be no assurance that
the Private Placement will close on the announced terms. Discovery does not assume any obligation to update any forward-looking statements
except as required under applicable laws. For a detailed discussion on the risks faced by the Company, refer to the documents incorporated
by reference herein, the Company’s MD&A for the year ended December 31, 2019 and the Company’s 2019 Annual Information Form available
on the Company’s website at www.dsvmetals.com or under Discovery’s profile on SEDAR at www.sedar.com.