Bemetals Enters Option Agreement with Thunder Mountain GOLD to Acquire High-Grade South Mountain Project IN Idaho
NOT FOR DISTRIBUTION TO UNITED STATES NEWSWIRE SERVICES OR FOR DISSEMINATION IN THE
UNITED STATES
February 28, 2019 TSXV: BMET
BEMETALS ENTERS OPTION AGREEMENT WITH THUNDER MOUNTAIN GOLD TO ACQUIRE HIGH-GRADE
SOUTH MOUNTAIN PROJECT IN IDAHO
VANCOUVER, CANADA - BeMetals Corp. (TSXV: BMET) (“BeMetals” or the “Company”) is pleased to
announce that it has entered into an option agreement (the “Option Agreement”) with Thunder Mountain
Gold, Inc. (OTCQB: THMG, TSXV: THM) (“Thunder Mountain”) and certain of its wholly-owned subsidiaries,
to acquire up to a 100% interest in the South Mountain Project (“South Mountain” or the “Project” or the
“Property”) in southwest Idaho, U.S.A . (see Principal Terms of the Option Agreement below) . South
Mountain is a zinc-silver focused polymetallic development project located primarily on private property,
which was the subject of high-grade historic mining up until the 1960’s.
John Wilton, President and CEO of BeMetals, stated, “We believe Sou th Mountain has the potential to
become a n exceptionally high-grade zinc -silver polymetallic mine, subject to successful completion of
resource expansion studies and final permitting, and we look forward to advancing this Project
aggressively with key members of the Thunder Mountain management team. Over the coming months ,
we intend to establish drill platforms from the existing underground development, and conduct an
approximately 4,500 metre underground drill program to better assess the continuity and e xpansion
potential of the currently identified mineral resource. Upon a successful acquisition of this Project, which
would include the delivery of a p reliminary economic assessment, BeMetals will have secured its first
cornerstone base metal development p roject. BeMetals will continue to seek further value- accretive
acquisitions in the base metal sector for our portfolio , that comply with our robust project selection
criteria.”
Transaction Benefits to BeMetals Shareholders:
• The acquisition of South Mountain , through a two year Option Agreement, provides the next
significant step in our growth strategy focused on becoming a significant base metal developer.
The board and management believe this Project has the p otential to develop into a high -grade
mining operation, and possesses substantial upside to significantly expand the existing high-grade
resource base.
• South Mountain’s current mineral resource* is comprised of:
o Measured & Indicated: 169,900 tons@ 17.66% zinc equivalent grade (“ZnEq”), which is
comprised of 10.66% zinc (“Zn”), 4.783 ounces per ton (“o.p.t”) (164 grams per tonne
(“g/t”)) silver (“Ag”), 0.065 o.p.t. (2.22 g /t) gold (“Au”), 0.80% lead (“Pb”) and 0.69 %
copper (“Cu”).
o Inferred: 363,200 tons @ 16.63% Z nEq Grade, which is comprised of 9.70% Zn, 5.585
o.p.t. (191 g/t) Ag, 0.045 o.p.t. (1.54 g/t) Au, 1.20% Pb and 0.67% Cu.
*Mineral resources are calculated at a 6.04% ZnEq cut-off grade. See Table 1 below for details of
mineral resources and equivalent grade calculations.
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• Between 2008 and 2010, THMG drilled three holes (DMEA2, LO-06 and LO -07) outside of the
known resource area to test for extensions of mineralization below the previously -mined
Sonneman development level (see Figure 2). All three holes returned positive intersections with
hole LO-06 extending a known sulphide zone ’s (named DMEA) mineralization some 137 metres
below the Sonneman level, demonstrating the potential for significant expansion of the current
resource base at depth and within modest distance of the Sonneman level.
• Idaho is ranked 7 th in the U.S.A . by the Fraser Institute (2017) in terms of investment
attractiveness, representing a favourable mining region with low geopolitical risk. BeMetals also
benefits from having key directors and advisors wit h historical operating experience in Idaho
through the development and operation of Bema Gold Corp.’s Champagne Mine in the late
1980’s.
• The addition of South Mountain d iversifies BeMetals’ portfolio in terms of both commodity and
exploration stage by complementing encouraging results returned from its early-stage, tier one
targeted Pangeni copper exploration project located in the Zambian Copperbelt.
The South Mountain Project
South Mountain is a polymetallic development project focused on high -grade zinc and is located
approximately 70 miles southwest of Boise, Idaho (see Figure 1). The Project was intermittently mined
from the late 1800s to the late 1960’s and its existing underground workings remain intact and well
maintained. Historic production at the Project has largely come from skarn -hosted and high-grade
massive sulfide bodies that remain open at depth and along strike (see Figure 2). These high-grade bodies
comprise South Mountain’s current mineral resource (see Table 1 below). According to historical smelter
records approximately 53,642 tons of ore have been mined to date. These records also indicate average
grades; 14.5% Zn, 10.6 o.p.t Ag, 0.058 o.p.t Au, 2.4% Pb, and 1.4% Cu were realised.
The Project is largely on and surrounded by private surface land, and as such, the permitting and
environmental aspects of the Project are expected to be straightforward. Permits are in place for
exploration and BeMetals does not anticipate barriers to any future development at the Project.
Since 2008, Thunder Mountain has completed 27 drill holes for a total of 5,500 metres on the Property.
Thus far, drill results have been encouraging and significant potential exists to increase the known mineral
resource with additional drilling, as well as to expand the existing measured and indicated mineral
resource classifications with in -fill drilling. L ast year a technical report for the South Mountain Project
was completed by Hard Rock Consulting, LLC , entitled, “National Instrument 43 -101 Technical Report:
Updated Mineral Resource Estimate for the South Mountain Project, Owyhee County, Idaho USA”.
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Figure 1. South Mountain Project Location Map
South Mountain
Project
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Figure 2. South Mountain Project Long Section (Showing mine levels and ore zones)
Table 1: South Mountain Mineral Resource Estimate
Notes:
1. The effective date of the mineral resource estimate is April 7, 2018. The QP for the estimate is Mr. Randall
K. Martin, SME-RM, of Hard Rock Consulting, LLC. who is independent of Thunder Mountain.
2. Mineral resources that are not mineral reserves do not have demonstrated economic viability. Inferred
mineral resources that are part of the mineral resource for which quantity and grade or quality are
estimated on the basis of limited geologic evidence and sampling, which is sufficient to imply but not
verify grade or quality continuity. Inferred mineral resources may not be converted to mineral reserves. It
is reasonably expected, though not guaranteed, that the majority of Inferred mineral resources could be
upgraded to Indicated mineral resources with continued exploration.
3. The mineral resource is reported at an underground mining cutoff of 6.04% ZnEq within coherent
wireframe models. The ZnEq calculation and cutoff is based on the following assumptions: an Au price of
$1,231/oz, Ag price of $16.62/oz, Pb price of $0.93/lb., Zn price of $1.10/lb. and Cu price of $2.54/lb.;
metallurgical recoveries of 75% for Au, 70% for Ag, 87% for Pb, 96% for Zn and 56% for Cu, assumed
mining cost of $70/ton, process costs of $25/ton, general and administrative costs of $7.5/ton, smelting
and refining costs of $25/ton. Based on the stated prices and recoveries the ZnEq
formula is calculated as follows; ZnEq = (Au grade * 43.71) + (Ag grade * 0.55) + (Pb grade * 0.77) + (Cu
grade * 1.35) + (Zn grade).
4. Rounding may result in apparent differences when summing tons, grade and contained metal content.
Tonnage and grade measurements are in imperial units.
Classification
Short tons ZnEq lbs ZnEq% Zn lbs Zn% Ag oz Ag Au oz Au opt Pb lbs Pb% Cu lbs Cu%
x1000 x1000 x1000 x1000 opt x1000 x1000 x1000 x1000
Measured 63.20 22,200 17.57 14,700 11.64 237 3.75 4.0 0.06 600 0.483 700 0.566
Indicated 106.70 37,800 17.72 21,500 10.08 576 5.40 7.0 0.07 2,100 0.983 1,600 0.766
Measured +
Indicated 169.90 60,000 17.66 36,200 10.66 813 4.78 11.0 0.07 2,700 0.797 2,300 0.692
Inferred 363.20 120,800 16.63 70,500 9.70 2,029 5.59 16.3 0.05 8,700 1,202.000 5,200 0.696
Zinc Equivalent Resource Contained Metal
Mineral Resources at 6.04% ZnEq Cut-off
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Principal Terms of the Option Agreement
The transaction structure was designed to mitigate near-term share dilution, while allowing sufficient time
to de -risk the P roject prior to acquisition. Under the terms of the Option Agreement, a subsidiary of
BeMetals has the right to acquire all of Thunder Mountain’s interest in the South Mountain Project by
way of acquiring 100% of the outstanding shares of South Mountain Mines Inc. (“SMMI”), a wholly owned
subsidiary of Thunder Mountain (the “Acquisition”). SMMI currently holds a 75% interest in the Project
and has the right to acquire the remaining 25% subject to a 5% Net Returns Royalty capped at US$5 million
on or before November 3, 2026.
In order to complete the Acquisition, BeMetals must:
1. Make an initial cash payment of US$100,000 upon Thunder Mountain delivering voting support
agreements from shareholders controlling over 50% of outstanding Thunder Mountain shares;
2. Upon satisfaction of certain conditions precedent, including receipt of TSX Venture Exchange
acceptance and all requisite THMG shareholder approvals:
a. purchase 2.5 million shares of common stock of Thunder Mountain at US$0.10 per share by
way of private placement; and
b. issue 10 million common shares of BeMetals to Thunder Mountain
3. Make four cash payments of US$250,000 each on or before the 6, 12, 18 and 24 month
anniversary dates, respectively, from when Thunder Mountain has satisfied certain conditions
precedent and items 1 and 2 above have been completed;
4. Complete a PEA for the Project; and
5. Make a final value payment to Thunder Mountain consisting of cash, common shares of BeMetals,
or a combination of both at the discretion of BeMetals. The final payment will be the greater of
either US$10 million or 20% of the after- tax net present value of the Property as calculated in a
PEA study completed by an agreed independent author. The final payment will be decreased by
US$850,000 to account for certain cash payments previously made under items 1 and 2 above,
the value of the 10 million BeMetals shares issued under item 2 above, as well as certain liabilities
of SMMI to be assumed on Acquisition. The final value payment shall be capped at a maximum
of 50% of the market capitalization of BeMetals’ as of the completion date of the Acquisition.
Pursuant to the Option Agreement, BeMetals will have two years to complete the Acquisition (subject to
extension in certain limited circumstances). BeMetals' wholly owned subsidiary will become the operator
of the Project upon the completion of certain conditions precedent and will solely fund the exploration
programs and completion of the PEA at South Mountain.
Advisors and Counsel
Haywood Securities Inc. acted as financial advisor , DuMoulin Black LLP acted as Canadian legal counsel,
and Dorsey & Whitney LLP acted as U.S. legal counsel for BeMetals.
Qualified/Competent Persons
The technical information in this news release for BeMetals, has been reviewed and approved by John
Wilton, Pr. Sci. Nat., CEO and President of BeMetals, and a “Qualified Person” as defined under National
Instrument 43-101.
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ABOUT BEMETALS CORP.
BeMetals' f ounding Directors include Clive Johnson, Roger Richer, Tom Garagan and John Wilton.
BeMetals is a new base metal mining company focused on becoming a significant base metal producer
through the acquisition of quality exploration, development and production stage base metals projects.
The Company’s growth strategy is led by a strong Board, key members of which have an extensive proven
record of accomplishment in delivering considerable value in the mining sector through the discovery,
construction and operation of mines around the world. The Board, its Advisors, and senior management
also provide outstanding deal flow of projects to BeMetals based upon their extensive network of contacts
in the international minerals business.
ON BEHALF OF BEMETALS CORP.
"John Wilton"
John Wilton
President, CEO and Director
For further information about BeMetals please visit our website at www.bemetalscorp.com and sign-up
to our email list to receive timely updates, or contact:
Derek Iwanaka
Vice President, Investor Relations & Corporate Development
Telephone: 604-609-6141
Email: [email protected]
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.
This news release shall not constitute an offer to sell or the solicitation of an offer to buy, the
BeMetals common shares in the United States. The BeMetals common shares have not been
registered under the U.S. Securities Act of 1933, as amended, and may not be offered or sold in the
United States absent registration or an applicable exemption from the registration requirements.
Cautionary Note Regarding Forward-Looking Statements
This news release contains "forward- looking statements" and “forward looking information” (as defined under
applicable securities laws), based on management’s best estimates, assumptions and current expectations. Such
statements include but are not limited to, statements with respect to the plans for future exploration and
development of the South Mountain Project and the acquisition of additional base metal projects. Generally, these
forward-looking statements can be identified by the use of forward- looking terminology such as "expects",
"expected", "budgeted", "forecasts" , "anticipates" "plans", "anticipates", "believes ", "intends", "estimates",
"projects", "aims", "potential", "goal", "objective", "prospective", and similar expressions, or that events or
conditions "will", "would", "may", "can", "could" or "should" occur. These statements should not be read as
guarantees of future performance or results. Such statements involve known and unknown risks, uncertainties and
other factors that may cause actual results, performance or achievements to be materially different from those
expressed or implied by such statements, including but not limited to: risks related to the South Mountain Project;
risks related to general economic conditions, actual results of current exploration activities, unanticipated
reclamation expenses; fluctuations in prices of metals including copper and other base metals; fluctuations in foreign
currency exchange rates, increases in market prices of mining consumables, possible variations in resource estimates,
grade or recovery rates; title disputes, claims and limitations on insurance coverage and other risks of the mining
industry; delays in the completion of exploration activities, changes in applicable government regulation of mining
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operations, tax rules and regulations ; risks and uncertainties relating to the Acquisition not being completed in the
event that the conditions precedent thereto are not satis fied; uncertainties around raising sufficient financing in a
timely manner and on acceptable terms; and political and economic developments in countries in which the Company
operates. In making the forward -looking statements in this news release, BeMetals has applied several material
assumptions, including the assumptions that (1) the conditions precedent to completion of the contemplated
transactions with Thunder Mountain will be fulfilled so as to permit the contemplated transactions to be completed
within the times described above; (2) all necessary approvals and consents, including shareholder approval, in respect
of the contemplated transactions with Thunder Mountain will be obtained in a timely manner and on acceptable
terms; (3) that BeMetals will be able to raise additional capital such that the transaction and proposed exploration
program will proceed as planned; and (4) general business and economic conditions will not change in a materially
adverse manner. 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. There can be no assurance that such statements will prove to be
accurate, as actual results and future events could differ materially from those anticipated in such statements. The
forward-looking statements and forward looking information are made as of the date hereof and are qualified in
their entirety by this cautionary statement. The Company disclaims any obligation to revise or update any such
factors or to publicly announce the result of any revis ions to any forward -looking statements or forward looking
information contained herein to reflect future results, events or developments, except as require by law. Accordingly,
readers should not place undue reliance on forward- looking statements and infor mation. Please refer to the
Company’s most recent filings under its profile at www.sedar.com for further information respecting the risks
affecting the Company and its business.
Cautionary note to United States investors concerning estimates of measured, i ndicated and inferred mineral
resources.
This news release contains certain disclosure that has been prepared in accordance with the requirements of
Canadian securities laws, including Canadian National Instrument 43-101 (“NI 43-101”), which differ from the current
requirements of the U.S. Securities and Exchange Commission (“SEC”) set out in Industry Guide 7. In particular, this
news release refers to “ mineral resources,” “measured mineral resources,” “indicated mineral resources,” and
“inferred mineral resources.” While these categories of mineralization are recognized and required by Canadian
securities laws, they are not recognized by Industry Guide 7 and are not normally permitted to be disclosed in SEC
filings. United States investors are cautioned not to assume that all or any of measured, indicated or inferred mineral
resources will ever be converted into mineral reserves. Under Industry Guide 7, mineralization may not be classified
as a “reserve” unless the mineralization can be economically or legally extracted at the time the “reserve”
determination is made. "Inferred mineral resources" have a great amount of uncertainty as to their existence and
economic and legal feasibility. It cannot be assumed that all or any part of an inferred mineral resource will ever be
upgraded to a higher category. Disclosure of "contained ounces" in a resource is permitted disclosure under Canadian
reporting standards; however, Industry Guide 7 normally only permits issuers to report mineralization that does not
constitute "reserves" by Industry Guide 7 standards as in -place tonnage and grade without reference to unit
measures. Accordingly, information contained in this news release containing descriptions of South Mountain’s
mineral deposits may not be comparable to similar information made public by U.S. companies subject to the
reporting and disclosure requirements of Industry Guide 7.