Silver Elephant Announces Execution of Plan of Arrangement and Spin-Out of Nickel and Vanadium Assets
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Silver Elephant Announces Execution of Plan of Arrangement and
Spin-Out of Nickel and Vanadium Assets
Vancouver, British Columbia, August 2 6, 2021 – Silver Elephant Mining Corp.
(“Silver Elephant” or “the Company”) (TSX: ELEF, OTCQX:SILEF, Frankfurt:1P2N)
announces that it has executed a plan of arrangement under the Business Corporations
Act (British Columbia) pursuant to which, it shall (the “Arrangement”): (i) as disclosed in
a Company press release dated August 26, 2021, transfer certain royalties presently held
by the Company in certain projects of the Company to Battery Metals Royalties Corp.
(“Battery Metals Royalties”), a wholly owned subsidiary of the Company; and (ii) spin-out
its Manitoba based Minago Nickel project (“Minago”) , its Nevada based Gibellini
Vanadium project (“Gibellini”), and Battery Metals Royalties each into its own entity (each
a “SpinCo”). In connection with the Arrangement, the Company shall distribute shares of
each SpinCo to the Company’s shareholders (“Shareholders”).
Pursuant to the Arrangement, it is currently expected that each Shareholder will receive
one share of the Minago SpinCo , one share of the Gibellini SpinCo , and two Battery
Metals Royalties SpinCo shares for every share of Silver Elephant held by such
Shareholder on the record date for the Arrangement (the “ Record Date”). Subject to
receipt of required Shareholder, court , regulatory , Toronto Stock Exchange and other
approvals and satisfaction of other closing conditions , the Arrangement is expected to
close in December, 2021.
The share distribution offers Shareholder direct participation in the growth and upside in
each of the four companies’ businesses (silver mining, vanadium mining, nickel mining,
and royalty investments). Following completion of the Arrangement , each SpinCo is
expected to aim to list on a Canadian securities exchange to enhance their respective
share trading liquidity, price discovery and facilitate equity financings to support future
business expansion.
The Company cautions there can be no assurance that the Arrangement will be
completed on the terms described herein or that the proposed public listings of the
SpinCos will be completed.
Further Details on the Plan of Arrangement
Subject to adjustment, i t is presently expected that following completion of the
Arrangement, Silver Elephant securityholders (common share, option, and warrant) on
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the Record Date shall, assuming exercise of all convertible securities (warrants and
options) of Silver Elephant in accordance with their terms, collectively hold approximately
55% of the shares of the Minago SpinCo, 55% of the shares of the Gibellini SpinCo, and
70% of the shares of the Battery Metals Royalties SpinCo.
Upon completion of the Arrangement, subject to adjustment, it is expected that Silver
Elephant convertible securityholders will receive , in addition to each share of Silver
Elephant to be received upon exercise of their convertible security in accordance with
their terms, one share of Minago SpinCo, one share of Gibe llini SpinCo and two shares
of Battery Metals Royalties SpinCo. Such shares of the SpinCos to be issued to the
convertible securityholders of Silver Elephant shall be held in escrow for such convertible
securityholders by Silver Elephant to be issued upon exercise.
The remaining non-escrowed Minago SpinCo shares (approximately 45%), and Gibellini
SpinCo (approximately 45%) held by Silver Elephant will be transferred to Battery Metals
Royalties in connection with the completion of the Arrangement.
All amounts referenced herein are estimates and may be subject to adjustment for
changes to the capitalization of Silver Elephant securities prior to the Record Date. As of
August 25, 2021, Silver Elephant has 209,477,539 shares and 26,300,250 warrants and
options issued and outstanding.
The Company expects to apply for an interim order from the Supreme Court of British
Columbia, authorizing the Company to call a shareholder meeting (“Meeting”) to be held
on or before December 10, 2021 , or such other date as may be determined by the
Company, to approve the Arrangement, which requires a special resolution of the
Shareholders passed by at least two-thirds of the votes cast by Shareholders present in
person or represented by proxy at the Meeting. Shareholders are entitled to one vote for
each Silver Elephant share held.
Further details regarding the Arrangement will be contained in an information circular of
the Company to be mailed to Shareholders in connection with the Meeting (the “Circular”).
After careful consideration, the Board of Directors has unanimously determined that the
Arrangement is in the best in terest of the Company. A description of the various factors
in arriving at this determination will be provided in the Circular.
Business Description
Upon completion of the Arrangement, it is presently expected that:
(1) Silver Elephant will hold the Pulacayo silver and El Triunfo gold -silver projects in
Bolivia, and approximately 30% of the issued and outstanding Battery Metals
Royalty shares as a long-term investment.
(2) Gibellini SpinCo will hold the Gibellini vanadium project in Nevada.
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(3) Minago SpinCo will hold the Minago nickel project at Thompson nickel belt in
Manitoba.
(4) Battery Metals Royalties will hold 2% royalties of all the assets referenced above
and, subject to adjustment, approximately 45% of outstanding Gibellini SpinCo
and Minago SpinCo shares as long-term investments.
Please refer to the Company’s press release dated August 26, 2021, regarding the details
of the Battery Metals Royalties 2% royalties.
Silver Elephant
Following completion of the Arrangement, it is presently expected that Silver Elephant will
be managed by Joaquin Merino P.Geo as VP Exploration, Robert Van Drunen as Interim
COO, and John Lee as CEO . Mr Lee maintains a strong focus on silver and has spent
the majority of his time in Bolivia since 2015 managing all aspects of the Company’s
Pulacayo project.
On October 13, 2020, Silver Elephant announced the Mineral Resource Estimate
prepared by Mercator Geological Services of its 100% controlled Pulacayo project which
includes an Indicated Mineral Resource of 106.7 million oz of silver, 1,384.7 million
pounds of zinc, and 693.9 million pounds of lead, and an Inferred Mineral Resource of
13.1 million oz of silver, 122.8 million pounds of zinc and 61.9 million pounds of lead. The
Indicated Resource is 48 million tonnes grading 69g/t silver, 1.3% zinc, 0.7% lead based
on over 100,000 meters of drilling. Silver Elephant’s wholly owned Bolivian subsidiary has
invested over US$30 million at the Pulacayo Project on exploration, technical studies,
mine development, and environmental permitting since 2006.
Pulacayo Project Resource Estimate Oct 13, 2020
Deposit Category k Tonnes Ag M oz Zn M lbs Pb M lbs
Pulacayo
Indicated 26,350 70.2 903.7 386.0
Inferred 1,670 7.2 71.8 18.4
Paca
Indicated 21,690 37.0 485.8 304.2
Inferred 3,395 6.0 51.1 43.7
Total
Indicated 48,040 106.7 1,384.7 690.2
Inferred 5,065 13.1 122.8 61.9
The Pulacayo Project consists of the Pulacayo Deposit and Paca Deposit (7km north of
Pulacayo deposit). Pulacayo is within driving distance from Sumitomo Corporation’s San
Cristobal silver mine, New Pacific’s Silver Sands discovery, and Pan American Silver
Corp.’s San Vicente silver mine.
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The Pulacayo and Paca Deposits are interpreted to be low -to-intermediate sulphidation
epithermal deposits. The Pulacayo Deposit occurs within the Tertiary age Pulacayo
volcanic dome complex that consists of older sedimentary rocks of the Silurian Quenhua
Formation and the intruding andesitic volcanic rocks of the Rothchild and Megacristal
units. Mineralization hos ted by volcanic rocks can be tens of meters in thickness and
typically consists of discrete veins plus stockworks of narrow veins and veinlets that occur
within argillic alteration host rock envelopes. Veins are commonly banded in texture and
can contain s emi-massive to massive sulphides. The primary minerals of economic
importance at Pulacayo are tetrahedrite, galena and sphalerite. There are also silver
sulfosalts and native silver which contribute to deposit silver grades. Mineralization is
controlled by an east-west oriented normal fault system which links two northeast trending,
steeply dipping, regional strike slip faults.
Pulacayo Drill Hole Highlights
Pulacayo from (m) int (m) Ag (g/t) Pb(%) Zn %
PUD005 96.2 – 108.0 11.9 689 1.9 1.4
PUD007 70.0 – 96.8 26.8 517 2.3 4.2
PUD057 374.0 – 378.0 4.0 1,184 0.8 2.3
PUD069 281.0 – 294.0 13.0 624 2.1 4.2
PUD109 293.6 – 298.4 4.8 3,607 3.8 4.1
PUD118 174.0 – 184.0 10.0 1,248 1.7 2.6
PUD134 128.2 – 151.5 23.3 514 1.3 1.9
PUD150 290.0 – 302.0 11.2 882 0.4 0.6
PUD159 343.0 – 354.0 11.0 790 0.6 0.6
PUD170 237.0 – 239.0 2.0 3,163 0.1 0.9
Reported widths are core -interval widths and not true
widths. True widths have not determined.
Historic Pulacayo mine production was predominantly from the Tajo vein system (TVS)
which extends over a strike length of more than 2.5 km and down dip 1,000 meters.
Resource drilling spans 1.4 km mineralized strike and extends down dip 400 meters from
the surface. It covered an area that’s approximately 30% of TVS. There is the potential of
discovering additional resources by drilling along the strike and at depth.
Silver Elephant is currently carrying out a 2,000 meter drill program at Pulacayo to test
several IP anomalies with assay results expected in September 2021.
On July 13, 2020, the Company acquired the El Triunfo Gold-Silver-Lead-Zinc Project in
La Paz District, Bolivia (“Triunfo Project”). The Triunfo Project area covers approximately
256 hectares which is located 75km to the east of the city of La Paz, Bolivia. On August
19, 2020, Silver Elephant received the assay results from the Company’s first diamond
drill program where TR007 intercepted 48.9 meters of mineralization grading 0.42 g/t gold,
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35.5 g/t silver, 1.17% zinc, and 0.83% lead within 98.9 meters of mineralization grading
0.37 g/t Au, 22.7 g/t Ag, 0.74% zinc, and 0.58% lead starting 13.0 meters downhole. The
company is currently conducting geological mapping and induced polarization surveys
(IP). Triunfo drilling is tentatively scheduled for Q4 of 2021.
Minago SpinCo
Following completion of the Arrangement, it is presently expected that Minago SpinCo
will be managed by Danniel Oosterman P.Geo as interim CEO, and Robert Van Drunen
as COO. Mr. Van Drunen was the senior project manager at Vale’s Thompson operation.
The board of directors of Minago SpinCo will consist of Mark Scott, John Lee, and Ron
Espell. Mr. Scott was former head of Vale’s Manitoba Operations.
The Company announced the results of a new mineral resource estimate (“MRE”) by
Mercator Geotechnic al Services and AGP Mining Consultants for its 100% owned
flagship Minago Nickel Project (“Minago Project”) in Manitoba’s Thompson Nickel Belt
(“TNB”) in Canada on July 6, 2021
The MRE includes a Measured and Indicated mineral resource of 722 million lbs of
contained nickel and an Inferred mineral resource of 319 million lbs of contained nickel
grading 0.74% nickel based on over 70,000 meters of drilling.
Minago Project Mineral Resource Estimate July 2, 2021
Type Category k Tonnes Ni % Ni M lbs
Open Pit
Measured Indicated 23,940 0.71 374.3
Inferred 2,070 0.57 26.0
Underground
Measured Indicated 20,290 0.77 345.0
Inferred 17,480 0.76 292.9
Combined
Measured Indicated 44,230 0.74 721.6
Inferred 19,550 0.74 318.9
All resources occur within a mineral lease that is surrounded by 94 mineral claims plus a
second mineral lease held by the Company, comprising a total area of 197 km2
The Minago Project has been historically the subject of over $40 million in exploration,
feasibility study and environmental permitting expenditures by various previous interests
since early 2000, the most recent of these being by Victory Nickel Inc.
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Minago Drill Hole Highlights
Hole No From (m) To (m) Int (m) Ni%
V-10-11 161.5 353.2 191.7 0.51
V-10-16 176.0 320.3 144.3 0.85
V-08-06 537.7 676.7 139.0 0.73
V-08-06 132.2 265.3 133.1 0.62
V-10-15 109.5 228.0 118.5 0.82
V-08-04B 361.7 471.0 109.2 0.76
N-05-01 143.7 251.0 107.3 0.80
MXB-71-94 177.4 282.2 104.9 0.73
V-10-26 269.2 358.8 89.5 0.86
NM-06-02 293.3 364.2 70.9 1.21
N-05-01 325.3 391.2 65.9 1.08
V-10-18 351.0 409.1 58.1 1.67
B-12A-89 322.2 372.5 50.3 1.23
V-08-01 452.2 490.6 38.4 1.51
Reported widths are core-interval widths and not true
widths. True widths have not determined.
In August 2011, the Minago Project achieved a major milestone when the Environment
Act License (“EAL”) was issued by the Province of Manitoba. The prior operator of the
project subsequently filed a Notice of Alteration ( “NOA”) to the EAL in December 2013,
related to relocation of the tailings management area to address First Nation concerns.
Silver Elephant has re-engaged the Manitoba Government regarding the NOA status for
the 10,0 00 tonne -per-day open -pit mining operation at Minago. The Agriculture and
Resource Development Department (“ARDD”) has confirmed that the NOA can still be
completed and the Company is currently working with ARDD to finalize the NOA approval,
leading to iss uance of an updated Environment Act License, which is expected by the
end of 2021.
A socioeconomic assessment was conducted and the prior operator signed a
Memorandum of Understanding (MOU) with First Nation groups in 2008. The Company
is re-engaging the First Nations with traditional territories that include the project site to
work toward renewal of the MOUs in 2021.
Several initiatives are being considered or taken to minimize the carbon footprint of
potential future mining operation at Minago. For mining, the Company will examine the
use of a fully electric mine fleet. For ore and waste processing, the crushing, milling and
flotation processes would be powered by renewable hydroelectricity, which accounts for
97% of all electricity generation in Manitoba.
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The Agriculture and Resource Development Department (“ARDD”) has expressed
support for the Minago Project, which would supply much needed Class 1 high -purity
nickel to make nickel-lithium batteries used in electric vehicles.
Gibellini SpinCo
Following completion of the Arrangement, it is presently expected that Gibellini SpinCo
will be managed by Ron Espell as CEO. Mr. Espell was the corporate environmental
director of McEwen Mining Inc. where he led his team to obtain the Gold Bar project’s EIS
approval from the United States Bureau of Land Management (“BLM”). Mr . Espell was
former regional environmental director Australia Pacific with Barrick Gold Corp. , where
he spent 17 years of his career.
Silver Elephant ’s 100% owned Gibellini Project is located in Nevada, USA, with a
preliminary economic assessment study (PEA) by Wood Plc announced on May 29, 2018
which demonstrates an after-tax Internal Rate of Return of 36%, and after-tax cumulative
cash flow of $ 333 million, assuming an average vanadium pentoxide price (V 2O5) of
$10.18 per pound (V2O5 price is currently $9.6/lb according to AsianMetals.com) . The
Gibellini Mineral Resource Estimate includes a Measured and Indicated mineral resource
of 131.3 million lbs of contained V2O5 and an Inferred mineral resource of 93.8 million lbs
of contained V2O5. Gibellini has received over $40million in investments since early 2000.
The Gibellini project is designed to be an open pit, heap leach operation in Nevada’s
Battle Mountain region ( 25km south of Eureka) with initial capital cost of $1 17 million,
average annual production is 9.65 million pounds of V 2O5 , at Cash Operating Cost of
$4.77 per pound with strip ratio of 0.17 to 1.
Gibellini Project Mineral Resource Estimate May 29, 2018
Deposit Category k Tons V205 % V205 M lb
Gibellini
Measured
Indicated 22,950 0.29 131.3
Inferred 14,970 0.18 52.3
Louie Hill Inferred 7,520 0.28 41.5
Gibellini Drill Hole Highlights
HoleID From (m) To (m) Meters %V2O5
T-38 3.05 45.72 42.7 0.755
NG-47 28.96 39.62 10.7 1.005
NG-12 24.38 45.72 21.3 0.857
Reported widths are core -interval widths and not true
widths. True widths have not determined.
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Highlights of 2018 PEA (after tax)
Average annual production 9.65 million lbs V2O5
Operating cash cost $4.77 per lb V2O5
Capex including 25% contingency $116.76 million
Strip ratio 0.17 waste to leach material
Mining operating rate 10,000 tpd
V2O5 heap leach recovery rate 62%
Life of mine 13.5 years
V2O5 $/lb After-tax IRR After-tax NPV @7% After-tax cashflow
$12.73 51% $338M $600.4M
$10.18 36% $183M $333M
$8.91 26% $103M $197M
A Notice of Intent (“NOI”) to prepare an Environmental Impact Statement (“EIS”) for the
Gibellini Project was published on July 14, 2020 in the Federal Register. The NOI
commences the 12 -month timeline according to Instructional Memorandum 2021 - 022
based on Secretarial Order 3355, to complete the National Environmental Policy Act
(“NEPA”) review by the BLM. There was a delay due to transition to new administration
and incorporating an additional alternative to the Environmental Impact Statement (EIS).
The project conforms to the current US administrations green energy initiatives and the
EIS Record Of Decisio n (ROD) is expected in early 2022. Operating permits from the
State of Nevada are on track to be received on the same timeline as the ROD. The
renewable energy alternative in the EIS includes 6MW of solar panels and a 10MW
vanadium flow battery to provide 100% of the projects electrical power demand. If
selected by the BLM, Gibellini would be the first mine in the US completely powered by
renewable energy. The Gibellini mine would also be the first primary vanadium mine in
the U.S.
Vanadium was designated a critical material by the U.S. government in 2018 due to its
importance to the defense and energy storage sectors and there being no domestic
production with all supply through imports, mostly from Russia, China, and South Africa.
Vanadium alloy steel is 30% lighter with double the tensile strength of non-alloyed steel.
It’s used extensively in the aerospace and defense sectors, as well as skyscraper
construction. A structural vanadium deficit is expected to occur by 2025 with the r ising
popularity of the Vanadium Redox Flow Battery which is a mature technology featuring
up to an 8 hour duration discharge and is scalable to hundreds of megawatt hours.