Element79 Gold Completes Acquisition of High-Grade Peruvian Gold Portfolio
Element79 Gold Completes Acquisition of
High-Grade Peruvian Gold Portfolio
Historic production averaging up to 19 g/t Au Equivalent, Recent sampling
returned up to 116 g/t Au Equivalent, Includes one of the highest-grade
underground mines in Peru's history
VANCOUVER, BC / ACCESSWIRE / June 29, 2022 – Element79 Gold Corp. (CSE: ELEM) (OTC: ELMGF) (FSE:
7YS) ( "Element79 Gold", the "Company ") announces that pursuant to the definitive share purchase
agreement dated June 19, 2022 (the “ Agreement”), it has closed the acquisition of all of the issued and
outstanding common shares of Calipuy Resources Inc. ( "Calipuy") from the shareholders of Calipuy (the
“Calipuy Shareholders”). Calipuy, through its subsidiaries, holds 100% interest in two past producing gold-
silver mines: the Lucero mine ("Lucero"), one of the highest-grade underground mines in Peru's history(1)
at grades averaging 19.0 g/t Au Equivalent ( "Au Eq") (14.0 g/t gold and 373 g/t silver), (1,2) as well as the
Machacala Project ("Machacala" and, together with Lucero, the “Properties”) which averaged production
grades of 10.5 g/t Au Eq (6.0 g/t gold and 340 g/t silver). (3) Operations were suspended in 2005 at Lucero
and 1991 at Machacala due to the persistence of low gold and silver prices at the time. Element79 Gold
has previously disclosed the terms of the Agreement (see news release dated June 20, 2022, available on
SEDAR).
Highlights of the High-Grade Peruvian Gold Portfolio:
• Recent samples at Lucero returned up to 116.8 g/t Au Eq (78.7g/t Au and 2,856 g/t Ag) (9);
Consistent with historic high grade production of 19.0 g/t Au Eq (14.0 g/t Au and 373 g/t Ag)
between 1998 and 2004 (2); Recent historic prospecting indicates potential for additional bulk -
tonnage high-sulphidation gold-silver deposit
• Most recent drilling at Machacala returned up to 15.7 g/t Au Eq (13.55 g/t AU and 164 g/t Ag)
over 3.15m in the drill hole Ma-04 on the Fragua vein(10); 230,000 tonnes of historical production
averaging 10.5 g/t Au Eq (6.0 g/t Au and 340 g/t Ag) from 1979 to 1991(3);
"The closing of the Calipuy transaction delivers high- grade assets, potentially capable of operating in the
near-term, to Element79 Gold's growing portfolio, offering an expedited route toward cash -flow
generation through these significant production-stage properties," commented James Tworek, President
and CEO of the Company. "With the on -site team being assembled and planning is underway for both
sites, Element79 Gold's focus is to accelerate the timeline to operations at these properties by expanding
on current datasets and exploration at each asset."
Peru has a mining-friendly legislation that allows up to 350 tpd production while larger scale production
permitting is underway. Element79 Gold has previously stated that it intends to pursue the opportunities
aggressively (see news releases dated March 10, 2022, March 17, 2022, and June 20, 2022, available on
SEDAR).
Lucero Project
Formerly operated as the Shila mine from 1989 to 2005, Lucero consists of 10,805 hectares located in the
Shila range of southern Peru, which contains several historic high grade gold -silver mines. (1) Lucero
consistently delivered high grades during 16 years of operations, and between 1998 and 2004 reported
production averaging approximately 18,800 ounces of gold and 435,000 ounces of silver per year at grades
of 19.0 g/t Au Eq (14.0 g/t Au and 373 g/t Ag ),(2) with recoveries at the ore processing facility averaging
94.5% for gold and 85.5% for silver.(1)
A recent NI 43 -101 technical report on Lucer o has been prepared for Calipuy by Min ing Plus. Samples
collected by the technical report’s Qualified Person (the “QP”) returned up to 116.8 g/t Au Eq (78.7g/t Au
and 2,856 g/t Ag) (9). Due to a lack of historical data, the project does not host any resourc es. However,
access to the historic workings is available, and the QP states Lucero is underexplored and has significant
exploration potential for extension of known veins, and to discover additional veins.(9)
Lucero is one of many low -sulphidation epither mal Au -Ag deposits hosted in tertiary volcanics of the
Central Andes Cordillera of southern Peru. The project hosts 74 recognized epithermal veins, 14 of which
have been partially exploited. High grade 'bonanza -style' direct shipping ore was mined in the p ast from
low-to-intermediate-sulphidation quartz -carbonate massive sulphide veins. Prospecting by previous
operator Condor Resources Inc. from 2012 to 2020 identified the high-sulphidation epithermal alteration
zone with structures that returned peak sample values of 80.1 g/t Au Eq (33.4 g/t Au and 3,500 g/t Ag)(11).
This alteration zone, measuring approximately 1,300 metres by 1,400 metres, exhibited no evidence of
prior sampling or drilling and is believed to host potential for a bulk tonnage disseminated gold-silver
deposit.(1)
“Lucero offers a rare opportunity to explore for not only an underground high -grade low sulphidation
system but potentially an open pit -able high sulphidation system as well," stated Neil Pettigrew, M.Sc.,
P.Geo, Director of Eleme nt79 Gold "This project has never experienced modern exploration techniques
and I am very confident that significant gold-silver resources are to be found.”
A 0.5% Net Smelter Returns royalty is retained by Sandstorm Gold Ltd., one of the largest gold roya lty
companies in the world.(2)
Figure. 1 Location Map of the Lucero and Machacala Projects.
Machacala Project
Machacala consists of over 4,000 hectares located in the District of Carabamba, Province of Julcan,
Department of La Libertad. In 2004, Gold Hawk Resources, Inc. (" Gold Hawk") estimated a total inferred
resource of 420,000 Au Eq ounces hosted within 1,560,000 tonnes, which equates to a gold equivalent
grade of 8.4g/t, however individual gold and silver grades were not reported. (4) This historic estimate is
the most recent historic resource estimate relevant to Machacala. In additional Machacala also includes
approximately 200,000 tonnes of tailings, which have historically been estimated in 2004 to grade 1.26
g/t gold and 74 g/t silver(6). This historical tailings estimate is historic in nature, and non-43-101
compliant. Historical metallurgical studies by Gold Hawk show 87% recoveries of gold and 50%+ recovery
of silver in 24 hours of leaching un -milled tailings, with re -milling able to increase recoveries to 90% of
gold and 73% of silver in 24 hours of leaching.(7). A qualified person has not conducted sufficient work
on either the historical Gold Hawk or Tailings estimates required to categorize these resources to the
CIM definition of a current mineral resources, which may include the preparation of a new NI 43 -101
Technical Report. Element79 Gold is not treating these historic estimates as current mineral resources
and a qualified person has not reviewed the work to define the quality of work associated with this
historic estimate. While these historical estimates are considered to be relevant to future exploration
of the Machacala property they should not be relied upon and there can be no assurance that any of
the historical resources, in whole or in part, will ever become economically viable.
Machacala was first commercially mined in the 1950s before being acquired and operated by Minera
Santa Isabel, S.A. from 1979 to 1991 which mined 230,000 metric tonnes averaging 10.5 g/t Au Eq (6.0 g/t
Au and 340 g/t Ag) representing 78,000 Au Eq ounces. (4) Operations were suspended in 1991 due to the
persistence of a low gold ($360/oz) and silver ($3.81/oz) price. Neighboring concessions include those
owned by Fortescue Metals Group (ASX Listed) and by Fresnillo Peru S.A.C., a subsidiary of Fresnillo plc
(LSE Listed).(3,5)
The project was most recently explored by Gold Hawk and Meridian Gold between 1997 and 2004, with a
total of 8,500m in 45 core and RC drill holes completed. Highlights of this drilling include 11.6 g/t Au Eq
(11.32 g/t Au and 23.6 g/t Ag) over 3.7m in the Casa Fuerza vein, and 15.7 g/t Au Eq over 3.15 m (13.55
g/t Au and 164 g/t Ag) in the Fragua vein10). Machacala hosts multiple low-sulphidation epithermal Au-Ag
veins, of which only four have been only modestly exploited.(5)
A 1.5% Net Smelter Returns royalty is retained by previous owners of the property.
“Machacala possesses significant historical data, as well as 8,500 meters of recent drilling, which we hope
will assist in the definition of NI 43 -101 compliant resources," commented Neil Pettigrew, M.Sc., P.Geo,
Director of Element79 Gold. "The project is also at a low elevation and has excellent infrastructure which
will facilitate returning the project to production.”
Terms of the Acquisition
Pursuant to the Agreement, the Company acquired all of the issued and outstanding securities of Calipuy
from the Calipuy Shareholders (the "Acquisition"). As consideration for the Acquisition, the Company paid
USD$15 million by the iss uance, on a pro rata basis to the Calipuy Shareholders, of (i) an aggregate of
19,165,484 common shares of the Company at deemed issue price of CAD$1.00 per share
(the "Consideration Shares") and (ii) performance bonus warrants to acquire an aggregate of 3,833,085
common shares of the Company (the "Performance Bonus Warrants").
Each Performance Bonus Warrant is exercisable into one common share of the Company at an exercise
price of CAD$2.00 per share for a period of three years from Exercise Eligibility Date (as defined herein),
subject to achievement of the Bonus Performance Target (as defined herein), the policies of the Canadian
Securities Exchange (the "Exchange ") and the terms of warrant certificates to be issued to the Calipuy
Shareholders in respect thereof. The Company may accelerate expiry of the Performance Bonus Warrants
if the common shares of the Company have a closing price greater than CAD$3.50 per share for a period
of ten consecutive trading days on the Exchange at any time af ter the closing of the Acquisition
(the “Closing”). The holders of the Performance Bonus Warrants will not have the right to exercise the
Performance Bonus Warrants until projects carried out on the Properties have cumulatively reached a
minimum production target of 9,000 tons of ore yielding a minimum of 1,500 oz Au within a 30-day
production period (the " Bonus Performance Target") and the Company provides notice of achievement
of the Bonus Performance Target via news release (the "Exercise Eligibility Date").
All issuances of Consideration Shares were paid in CAD denominated shares at the agreed exchange rate
of CAD$1.2777 to USD$1.00. An aggregate of 12,971,503 Consideration Shares and 2,594,298
Performance Bonus Warrants are subject to a lock -up agreement, whereby 50% will be released from
lock-up 6 months from Closing and the remaining 50% will be released 12 months from Closing. The
balance of the Consideration Shares and Performance Bonus Warrants , other than those held by U.S.
persons, are not subject to any resale restrictions under applicable securities laws.
The Acquisition is a related party transaction pursuant to Multilateral Instrument 61 -101 Protection of
Minority Shareholders in Special Transactions ("MI 61-101"). Antonios Maragakis, who is the CEO and a
director of Calipuy, is also a director and the COO of the Company. Shane Williams, who was a director of
Calipuy immediately prior to the Closing, was recently elected as a director of the Company at its Annual
General Meeting on June 22, 20 22 (together, the “ Related Parties”). Each of the Related Parties have
disclosed their interest in the Acquisition to the board of directors of each of the Company and Calipuy,
and abstained from voting on approval of the Agreement, the Acquisition and the Closing. Prior to Closing,
neither of the Related Parties held any common shares of the Company, and following Closing their
beneficial direct and indirect shareholdings increased to 97,688 common shares and 292,509 common
shares, respectively. The Acqui sition, the Agreement and the Closing were reviewed and considered by
the disinterested members of the board of directors of the Company with each of the Related Parties
recusing themselves from discussions relating to the same, and the disinterested membe rs of the board
unanimously approved entry into the Agreement and completion of the Acquisition on the terms of the
Agreement. The Company believes that the Acquisition provides an opportunity to advance the Properties
and deliver value to Element79 shareh olders. A special committee was not formed for the purpose of
reviewing the Acquisition and an independent valuation was not obtained in connection with the
Acquisition. On Closing, each of the Related Parties terminated any and all compensation agreement s
they had with Calipuy and waived any entitlement to severance or change of control payments by Calipuy
that would have otherwise been triggered as a result of the Acquisition. In connection with the
Acquisition, the Company relied on (i) the exemption at paragraph 5.5(b) of MI 61-101 from the valuation
requirements since the Company is not listed on any of the markets specified therein; and (ii) the
exemption at paragraph 5.7(a) of MI 61 -101 from the minority approval requirements as the fair market
value of the 97,688 Consideration Shares and 19,537 Performance Bonus Warrants issued to Mr.
Maragakis, and the 292,509 Consideration Shares and 58,501 Performance Bonus Warrants issued to a
company controlled by Mr. Williams, on Closing is less than 25% of the market capitalization of the
Company.
All Au Equivalent calculations were performed using $1,650/oz gold, and $22/oz silver in line with the
Company's Maverick Springs 43-101 resource estimate (see news release January 31st, 2022, available on
SEDAR).
Qualified Person
The technical information in this release has been reviewed and verified by Neil Pettigrew, M.Sc., P. Geo.,
Director of Element79 Gold and a "qualified person" as defined by National Instrument 43-101.
About Element79 Gold
Element79 Gold is a mineral exploration company focused on the acquisition, exploration and
development of mining properties for gold and associated metals. Element79 Gold has acquired its
flagship Maverick Springs Project located in the well -known gold mining district of northeastern Nevada,
USA, between the Elko and White Pine Counties, where it has recently completed a technical report , pit-
constrained mineral resource estimate reflecting an Inferred resource of 3.71 million ounces of gold
equivalent* “AuEq” at a grade of 0.92 g/t AuEq (0.34 g/t Au and 43.4 g/t Ag)) with an effective date of
Feb. 4, 2022. The acquisition of the Maverick Springs Project also included a portfolio of 15 properties
along the Battle Mountain trend in Nevada, which the Company is analyzing for fu rther merit of
exploration, along with the potential for sale or spin-out. In British Columbia, Element79 Gold has
executed a Letter of Intent to acquire a private company which holds the option to 100% interest of the
Snowbird High-Grade Gold Project, which consists of 10 mineral claims located in Central British Columbia,
approximately 20km west of Fort St. James. In Peru, Element79 Gold holds 100% interest in the past
producing Lucero Mine, one of the highest-grade underground mines to be commercially mined in Peru's
history, as well as the past producing Machacala Mine, subject to the royalties and encumbrances detailed
in the Agreement. The Company also has an option to acquire 100% interest in the Dale Property which
consists of 90 unpatented mining cl aims located approximately 100 km southwest of Timmins, Ontario,
Canada in the Timmins Mining Division, Dale Township. For more information about the Company, please
visit www.element79.gold or www.element79gold.com
Contact Information
For corporate matters, please contact:
James C. Tworek, Chief Executive Officer
E-mail: [email protected]
For investor relations inquiries, please contact:
Investor Relations Department
Phone: +1 (604) 200-3608
E-mail: [email protected]
Technical Disclaimer
This news release and related maps contain informa tion about adjacent properties and properties with
similar characteristics on which the Company has no right to explore or mine. Readers are cautioned that
mineral deposits on adjacent properties or properties that share similar characteristics are not indicative
of mineral deposits on the Company’s properties. Readers are also cautioned that this news release
contains historical technical information which is based on prior data prepared by previous property
owners. A qualified person has not done sufficie nt work to confirm such information; significant data
compilation, re-drilling, re-sampling and data verification may be required to do so.
Cautionary Note Regarding Forward Looking Statements
This press contains "forward -looking information" and "forward -looking statements" under applicable
securities laws (collectively, "forward-looking statements"). These statements relate to future events or
the Company's future performance, business prospects or opportunities that are based on forecasts of
future results, estimates of amounts not yet determinable and assumptions of management made in light
of management's experience and perception of historical trends, current conditions and expected future
developments. Forward-looking statements include, but are not limited to, statements with respect to:
the Company’s business strategy; future planning process es; exploration activities; the timing and result
of exploration activities; capital projects and exploration activities and the possible results thereof;
acquisition opportunities; and the impact of acquisitions, if any, on the Company. Assumptions may prove
to be incorrect and actual results may differ materially from those anticipated. Consequently, forward -
looking statements cannot be guaranteed. As such, investors are cautioned not to place undue reliance
upon forward -looking statements as there can be no assurance that the plans, assumptions or
expectations upon which they are placed will occur. All statements other than statements of historical
fact may be forward-looking statements. Any statements that express or involve discussions with respect
to predictions, expectations, beliefs, plans, projections, objectives or future events or performance (often,
but not always, using words or phrases such as "seek", "anticipate", "plan", "continue", "estimate",
"expect", "may", "will", "project", "predict", "f orecast", "potential", "target", "intend", "could", "might",
"should", "believe" and similar expressions) are not statements of historical fact and may be "forward -
looking statements".
Actual results may vary from forward -looking statements. Forward -looking statements are subject to
known and unknown risks, uncertainties and other factors that may cause actual results to materially
differ from those expressed or implied by such forward-looking statements, including but not limited to:
the duration and effects of the coronavirus and COVID-19; risks related to the integration of acquisitions;
actual results of exploration activities; conclusions of economic evaluations; changes in project
parameters as plans continue to be refined; commodity prices; variations in ore reserves, grade or
recovery rates; actual performance of plant, equipment or processes relative to specifications and
expectations; accidents; labour relations; relations with local communities; changes in national or local
governments; changes in applicable legislation or application thereof; delays in obtaining approvals or
financing or in the completion of development or construction activities; exchange rate fluctuations;
requirements for additional capital; government regulation; environmental risks; reclamation expenses;
outcomes of pending litigation; limitations on insurance coverage as well as those factors discussed in the
Company’s other public disclosure documents, available on www.sedar.com. Although the Company has
attempted to identify important factors that could cause actual results to differ materially from those
contained in forward -looking statements, there may be other factors that cause results not to be as
anticipated, estimated or intended. The Company believes that the expectations reflected in these
forward-looking statements are reasonable, but no assurance can be given that these expectations wi ll
prove to be correct and such forward -looking statements included herein should not be unduly relied
upon. These statements speak only as of the date hereof. The Company does not intend, and does not
assume any obligation, to update these forward -looking statements, except as required by applicable
laws.
Sources
Element 79 Gold makes no warranty as to the completeness, accuracy, verifiability, or suitableness of any
of the information contained on the following third- party links and expressly undertakes no obligation to
update the following links.
1. https://web.archive.org/web/20220308020414/https://condorresources.com/portfolio/lucero/
2. https://web.archive.org/web/20220308020532/https://www.sandstormgold.com/our-
royalties/lucero/
3. https://www.bnamericas.com/en/news/Gold_Hawk_Buys_Machala_Project
4. Gold Hawk Resources Inc News Release, 2004-04-26
5. https://web.archive.org/web/20220308020657/https://www.affinitygold.com/machacala-highlights
6. Gold Hawk Resources Inc News Release, 2004-06-28
7. Affinity Gold Corp. Corporate Presentation March 2013
8.https://web.archive.org/web/20220308020649/https://www.sec.gov/Archives/edgar/data/1397970/
000118374013000409/f8k08162013ex99-2.htm
9. Draft NI 43-101 technical Report, Lucero Property, Arequipa Region, Peru, prepared by Esteban
Manrique Zuniga of Mining Plus with and effective date of September 4th 2021. Prepared for Calipuy
Resources Inc.
10. Gold Hawk Resources Inc. News Release, 2000-09-19
11. Condor Resources Inc. December 6, 2012 news release
https://condorresources.com/news/archive/2012/condor-acquires-former-producing-gold-silver-
concessions-near-arequipa-in-southern-peru/
Neither the Canadian Securities Exchange nor the Market Regulator (as that term is defined in the policies
of the Canadian Securities Exchange) accepts responsibility for the adequacy or accuracy of this release.