Salazar Resources Enters Letter of Intent to Acquire the Los Santos 2.1 Copper / Gold Project, El Oro, Ecuador
December 10, 2020
Salazar Resources Enters Letter of Intent to Acquire the
Los Santos 2.1 Copper / Gold Project, El Oro, Ecuador
VANCOUVER, BRITISH COLUMBIA, December 10th , 2020 -- SALAZAR RESOURCES LIMITED (TSXV: SRL)
(Frankfurt: CCG.F) (“Salazar Resources” or the " Company") is pleased to announce it has significantly
increased its total claim holdings in the Cerro Pelado gold district to 2,444 hectares (“ha”), having entered
into a binding Letter of Intent ( the “LOI”) with Minera Mesaloma S.A. (the “ Vendor” or “ Minera
Mesaloma”) and been granted the option to acquire up to 100% of the Los Santos gold project (comprised
of the Los Santos 2.1 concession) (“Los Santos” or the “Project”) near Salazar Resources’ Osos project, El
Oro, Ecuador, subject to receipt of approval of the TSX Venture Exchange (the “TSXV”). The Company
believes that Los Santos and Osos provide Salazar Resources with all the necessary land that would be
required to facilitate the development of a deposit (see Figure 1).
Highlights
• Los Santos is adjacent to identified mineral resources at Lumina Gold’s 17 million ounce Cangrejos
project (10.4 million oz indicated and 6.6 million oz inferred - see Lumina Gold’s news release
dated June 9, 2020), and in close proximity to Salazar Resources’ Los Osos property;
• Strategic concession in prolific gold-copper-rich porphyry region;
• Abundant quartz -pyrite stockworks, underground workings on fault and vein structures, and
breccia-hosted copper-gold mineralization identified;
• Potential continuation of mineralization and structure from Cangrejos into Los Santos ;
• Location/infrastructure – established mining region – good road access and accessible grid power;
• Existing databases of historical information are currently being reviewed and should enable
accelerated target development; and
• Salazar Resources can potentially earn up to a 100% interest in the Los Santos property via a
staged option payment schedule (see “Transaction Terms” below)
Fredy E. Salazar, President and CEO of Salazar Resources said, “Los Santos contains a large mineralizing
system, similar to that of the adjacent Cangrejos deposit and Salazar Resources’ Los Osos project. Francisco
Soria and I were involved in the exploration of this region in the 1990s and we know that there is fantastic
potential here which has hardly been tested. Despite multiple artisanal workings and widespread
mineralized stockworks and breccias , neither Los Santos nor Los Osos have been drilled before now ,
providing significant upside potential rapidly and at relatively low cost, given our deep understanding of
the geology in the region. With the addition of the 2,215 h ectares at Los Santos, Salazar Resources now
has an important land package in this emerging gold province.”
“The earn-in LOI also reinforces Salazar Resources’ credentials as a partner of choice in Ecuador. The fact
that the Vendor chose to work with Salazar Resources demonstrates that we are being trusted to make
discoveries and to manage the project in a way which has a positive impact on local communities.”
“I look forward to keeping the market informed as we integrate Los Santos into the exploration plans for
2021 and beyond.”
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LOS SANTOS 2.1
Los Santos lies in southwest Ecuador between the towns of Pasaje and Paccha in a district with a well -
established tradition of gold panning and artisanal gold mining. The northwest portion of the concession
area is less than 2 km from the centre of the Cangrejos main mineral resource, held by Lumina Gold. The
project area is accessed via gravel roads , with elevations between 360 m and 1766 m, and there is a
prominent north-south-trending ridge extending through the centre of the concession.
The Los Santos concession was originally held by a private company, Ecuanor, in the early 1990s before
being transferred to Minera Mesaloma in 2005. The area has been subject to surface exploration
(geological mapping, soils and stream sediment geochemistry sampling and analyses, and r egional
magnetic and VLF electromagnetic surveys), principally on the east side of the property. Historic
exploration data generated by Newmont Corporation and Compania Minera Silex Ecuador S.A. have been
integrated into the database.
Figure 1. Location of Los Santos 2.1 in the Cangrejos district
Source: Salazar Resources Ltd.
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Geology
Anomalous gold and copper-gold results are widespread in the area and occur within the intrusions and
adjacent volcanic and metamorphic rocks. Many of the target areas appear to be associated with nested
circular features interpreted to be a collapse structure or caldera margin. Salazar Resources’ geologists
confirm that the geology at Los Santos is similar to that of Cangrejos and Los Osos being gold-copper,
silica-saturated, alkalic porphyry-style mineralization with abundant evident of mineralised hydrothermal
breccias.
Exploration work to date completed by others has identified a number of targets, including the Puntudo,
Reventazon, and Giomar zones , mostly on the eastern portion of the Los Santos concession . Limited
exploration has been carried out on the western portion of the concession . At Puntudo, locally intense
quartz and pyrite veining are present in float and widely scattered outcrop over 500 m x 300 m . Gold
values range from background to 3.2 g/t gold, coincident with pathfinder element anomalies including
arsenic and copper. The Giomar target is a zone of discontinuous quartz and pyrite veining about 250m in
diameter. Gold values from a variety of grab, selective and channel samples range up to 3.3 g/t gold, with
highly anomalous arsenic. Pathfinder element anomalies suggest a potentially larger area of interest.
Historic Work
A program of geochemical soil and rock sampling was conducted on the former Los Santos concession
during the period 1996 to 1999 and which covered the eastern part of the current Los Santos concession.
Flagged and/or cut lines were established at intervals of 100 to 1000 metres. Soil samples were collected
with an auger at 50 metre intervals. Rock samples were collected where any mineralization or alteration
of interest was noted.
Results of historic sampling over the concession and adjacent area are presented as gold, copper and
arsenic symbol plots in Figures 2-4. These plots include all available data including Minera Mesaloma`s
sampling and data which the Company has assumed to be reliable and which has been acquired from
other sources. A few lines of soil sampling conducted by Odin Mining & Exploration Ltd. (now Lumina Gold
Corp.) cross onto the Los Santos concession, as shown on the gold and copper plots. A qualified person
has not yet had the opportunity to verify the historic data for Salazar Resources, and Salazar Resources
intends to test the areas with fresh sampling and work. The figures are included for illustrative purposes
only and to demonstrate the partial extent of historic work on the area.
The gold plot (Fig. 2) shows widespread scattered anomalies (+500 ppb in soil, rock and stream sediment)
throughout the Giomar, Reventazon and Puntudo areas as well as in two additional areas on the western
side of the property. Several anomalous gold values also occur on the historic and unverified Odin lines
on the west side of the concession.
Anomalous copper values (+120 ppm) occur in Reventazon and Giomar, in the area intermediate to these
anomalies and an anomalous zone on the west side coincident with the gold anomalies (Fig. 3). Anomalous
values of 100 to 500 ppm Cu were obtained on several of the historic and unverified Odin lines in the
northwest corner of the concession.
Arsenic, a gold pathfinder element, shows (Fig. 4) a large zone of moderately to highly anomalous values
in soil and rock (+20 ppm As to >1280 ppm As) between Reventazon and Giomar. Antimony and bismuth,
also gold pathfinder elements (if greater than >2 ppm), are anomalous in recent rock sampling carried out
by Minera Mesaloma.
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Figure 2. Los Santos, Gold Geochemistry
Source: Minera Mesaloma S.A.
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Figure 3. Los Santos, Copper Geochemistry
Source: Minera Mesaloma S.A.
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Figure 4. Los Santos, Arsenic Geochemistry
Source: Minera Mesaloma S.A.
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Transaction Terms
The option payments to be made by Salazar Resources to Minera Mesaloma under the LOI are as follows:
Amount (US$)(1) Option Payment Due Date SRL ownership
$25,000 cash Paid
$50,000 Within 2 business days of the later of receipt of TSXV approval
and December 23rd , 2020 (the “ Due Diligence Deadline ”), the
date by which Salazar Resources is to have completed its due
diligence investigation
$150,000 Due on t he l ater of : (a) 1 year from date of execution of the
definitive agreement that shall supersede the LOI; and (b) the
date which falls 12 months after the date when a permit is
granted to enable the conduct of exploration activities on the
Project that includes drilling. This is a committed option
payment.
26%
$250,000 Anniversary of previous payment 51%
$350,000 Anniversary of previous payment 61%
$500,000 Anniversary of previous payment 80%
$700,000 Anniversary of previous payment 90%(2)
Notes:
(1) For payments subsequent to the initial US$ 25,000 cash payment, Minera Mesaloma can choose to receive payment in
units of the Company (“ Units”), with each Unit being comprised of a) one common share of the Company (a “Salazar
Share”) plus b) one-half one of one share purchase warrant (each whole warrant, a “ Warrant”), provided that upon
issuance of the Units, Minera Mesaloma shall not end up owning in excess of 9.9% of the then issued and outstanding
Salazar Shares, calculated on a partially diluted basis assuming exercise of the Warrants. The number of Units deliverable
shall be calculated using a price per Unit equal to a 7.5% discount on the 5 day volume weighted average price of the
Salazar Shares on the TSXV as of the business day prior to the applicable payment date (the “ Current Market Price ”).
Each Warrant will be exercisable for 18 months from the date of issue to purchase one Salazar Share at an exercise price
equal to the greater of the Current Market Price or the market price of the Salazar Shares at the time of issuance of the
Warrants .
(2) The payment schedule set out above may be accelerated by Salazar by paying an additional 30% or 25% premium on the
remaining option payments ahead of the Fourth anniversary (80%) or Fifth anniversary (90%) payments respectively.
(3) (a) On Salazar Resources having paid the fifth anniversary payment and thereby earned a 90% interest in the Los Santo
2.1 property, Salazar Resources has the option to purchase the remaining 10% of the property for US$2,000,000
plus an 1.5% NSR royalty, where eac h 0.5% can be repurchased by Salazar Resources for the cash sum of
US$1,250,000. Once Salazar Resources has paid the fifth anniversary payment, or if the Project has commenced
commercial production prior to Salazar Resources having paid the fifth anniversa ry payment , both Parties will
thereafter fund the project on a pro-rata basis.
(b) If and when Minera Mesaloma is diluted to a 3% interest in the Los Santos 2.1 property, then Minera Mesaloma’s
interest in the property will be converted into a 1.5% NSR royalty where each 0.5% of such royalty can be
repurchased for a cash sum of US$1,500,000; payments under each 0.5% NSR royalty shall be capped at
US$4,500,000 when paid out from production.
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Exploration Programs at Los Santos 2.1
Exploration Activities at Los Santos will be governed by a Steering Committee composed of three
members, two of whom shall be appointed by Salazar Resources and one of whom shall be appointed by
Minera Mesaloma. Salazar Resources shall be the operator, and it is to conduct an initial exploration
program focusing on geochemical sampling, mapping, and target generation. Once Salazar Resources has
completed the first phase of exploration , Salazar Resources will propose furth er work programs to be
carried out in accordance with the plan developed by the Steering Committee.
Salazar Resources will integrate exploration work at Los Santos with exploration at its other projects.
Given that Salazar Resources is intimately knowledgeable about the regional geology and mineralization,
and is currently drilling at Los Osos , the Company anticipates that drill target delineation in the project
area will be completed during the course of 2021.
About Salazar Resources
Salazar Resources (SRL.V) (CCG.F) (SRLZF) is focused on creating value and positive change through
discovery, exploration and development in Ecuador. The team has an unrivalled understanding of the
geology in -country and has played an in tegral role in the discovery of many of the major projects in
Ecuador, including the two newest operating gold and copper mines.
Salazar Resources has a wholly-owned pipeline of copper-gold exploration projects across Ecuador with a
strategy to make anoth er commercial discovery and farm -out non -core assets. The Company actively
engages with Ecuadorian communities and together with the Salazar family it co -founded The Salazar
Foundation, an independent non-profit organisation dedicated to sustainable progress through economic
development.
The Company already has carried interests in three projects. At its maiden discovery, Curipamba, Salazar
Resources has a 25% stake fully carried through to production. A feasibility study is underway and a 2019
preliminary economic assessment generated a base case NPV (8%) of US$288 million. At two copper-gold
porphyry projects, Pijili and Santiago, the Company has a 20% stake fully carried through to a construction
decision.
Neither the TSX Venture Exchange nor its Regul ation Services Provider (as that term is defined in the
policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this news
release.
Qualified Person
Kieran Downes, P. Geo., a Qualified Person as defined by National Instrument 43-101, has reviewed and
approved the scientific and technical disclosure set out in this news release.
Forward-looking Information
This press release contains “forward -looking information” within the meaning of applicable Canadian
securities laws. Any statements that express or involve discussions with respect to predictions,
expectations, beliefs, plans, projections, objectives, assumptions or future events or performance (often,
but not always, identified by words or phrases such as “believes”, “anticipates”, “expects”, “is expected”,