Honey Badger Silver Executes Definitive Agreement for the Acquisition of the Cachinal Silver Deposit in Chile
Honey Badger Silver Executes Definitive
Agreement for the Acquisition of the Cachinal
Silver Deposit in Chile
Toronto, Ontario--(Newsfile Corp. - February 15, 2023) -
Honey Badger Silver Inc.
(TSXV: TUF)
("Honey Badger" or the "Company") is pleased to announce the signing of a definitive agreement dated
February 14, 2023 (on the amended terms previously announced by the Company in its news release
dated
January 11, 2023
), in respect to the acquisition by the Company of the 100% interest in the
Cachinal De La Sierra Silver-Gold Project (the "Cachinal Project" or "Cachinal") from Aftermath Silver
Ltd. ("Aftermath").
Cachinal is in northern Chile, in the mineral-rich Antofagasta region (Region II).
Brian Briggs, Interim CEO of Honey Badger stated,
"The acquisition of Cachinal will be a valuable
addition to our expanding portfolio of silver assets, offering a significant silver resource as well as
exciting exploration potential and the possibility of near-term cash flow.
A presence in this mineral-rich
and mining-friendly jurisdiction is expected to lead to further value-accretive opportunities for our
shareholders."
Rationale for Transaction:
The proposed acquisition of Cachinal by Honey Badger is expected to create significant shareholder
value and deliver multiple benefits for Honey Badger shareholders:
Aftermath has reported a resource estimate of 16.32 million ounces of silver in Indicated Resource
(at 101 g/t silver for 5.05 million ounces of silver) and 2.48 million ounces of silver in Inferred
Resource (at 145 g/t silver for 0.53 million ounces of silver). See below under the heading "
Notes
Regarding NI 43-101
" for further details.
There is the potential to generate near-term cash flow by providing ore to feed possible excess mill
capacity at the nearby Guanaco gold-silver mine complex, 16 kilometers by road to the south of
Cachinal.
The Cachinal acquisition marks an important milestone for Honey Badger, complementing its portfolio of
high-grade, district-scale silver properties in the Yukon, as well as providing the opportunity for short-
term cash flow and gaining the company a toehold in a mineral-rich region where there may be
opportunities to unlock synergies with other industry players.
Transaction Terms:
Consideration:
The consideration payable to Aftermath for the acquisition by Honey Badger of the
Cachinal Project will be comprised of the following: (a) an aggregate of 3,508,771 common shares
of Honey Badger ("Honey Badger Shares"), at a deemed price per share of $0.285 (being
C$1,000,000 in share consideration); (b) C$652,000 in cash payable at closing; and (c) additional
cash payments as described below.
Subsequent Payments:
The additional cash payments will be made in three subsequent payments,
as follows:
C$200,000 on or before by May 31
st
, 2023
C$400,000 on or before March 31
st
, 2024
C$400,000 on or before September 30
th
, 2024
The additional cash payments will be evidenced by a promissory note issued at closing (the
"Promissory Note"), and the obligations thereunder will be secured by a pledge over the shares of
the Chilean entity which holds the Cachinal Project. The Promissory Note will provide Honey
Badger with the option, subject to regulatory approval (including the approval of the TSX Venture
Exchange), to satisfy payments by issuing additional Honey Badger Shares at a deemed price per
share equal to the greater of: (a) the 30 trading-day volume weighted average price of the Honey
Badger Shares on the TSXV (the "VWAP"); or (b) the maximum permitted discount permitted
under the policies of the TSXV; provided that the Company will not be able to issue Honey Badger
Shares in satisfaction of amounts owing if its 30 trading-day VWAP is less than C$0.05).
Hold Period:
In addition to any hold periods imposed by applicable securities laws, the Honey
Badger Shares to be issued to Aftermath (including any additional Honey Badger Shares issued in
satisfaction of amounts owing under the Promissory Note) will be subject to the following
restrictions on transfer, subject to customary exceptions (the "Holding Period"): (i) 50% of the
shares issued will be subject to transfer restrictions expiring six months and one day from the date
of issuance, and (ii) the remaining 50% of the shares issued will be subject to transfer restrictions
expiring on the one-year anniversary of the date of issuance. The foregoing restrictions will be set
out in a lock-up agreement that the parties will enter into as part of closing, which will also include
customary covenants regarding voting support and standstill during the lock-up period as well as
limitations on dispositions following the expiry of the lock-up period.
1% NSR and Production Payments Royalty:
In connection with the acquisition of the Cachinal
Project, Honey Badger has agreed to grant Aftermath with a 1% net smelter returns royalty (with a
complete buy-back option in favour of Honey Badger for C$8,500,000) as well as a production
payments royalty upon commencement of commercial production at Cachinal, (payable, in cash or
shares at Aftermath's option (but subject to required regulatory approvals in respect of share
payments), of C$0.50 per payable silver ounce produced at the Cachinal Project, until an
aggregate of C$2,500,000 has been paid, at which point the production payments royalty will
terminate.
Closing of the acquisition of the Cachinal Project remains subject to customary closing conditions for
transactions of this nature, including approval by the TSX Venture Exchange.
Notes Regarding NI 43-101:
For complete details on the Cachinal Mineral Resource estimate, please refer to the NI 43-101
technical report made pursuant to National Instrument 43-101 ("NI 43-101") and entitled
"Independent Technical Report for the Cachinal Silver-Gold Project, Region II, Chile", by
Qualified Persons G. Cole, (P.Geo) of SRK Consulting (Canada) Inc. and S. Alvarado Casas, of
Geoinvest SAC E.I.R.L. (Chile), dated September 11, 2020 with an effective date of August 10,
2020, filed on the SEDAR profile of Aftermath Silver Ltd. at
www.sedar.com
(the "Cachinal
Technical Report").
Dorian L. (Dusty) Nicol, RG, CG, FAusIMM, the Chief Operating Officer of the Company and a
"Qualified Person" as defined in NI 43-101, has reviewed the Cachinal Technical Report on
behalf of the Company and has approved the technical disclosure contained in this news
release. To the best of the Company's knowledge, information and belief, there is no new
material scientific or technical information that would make the disclosure of the mineral
resources, mineral reserves or results of a preliminary economic assessment in the Cachinal
Technical Report inaccurate or misleading.
Cachinal mineral resources were classified according to the CIM Definition Standards for
Mineral Resources and Mineral Reserves (May 2014).
Mineral Resources that are not Mineral Reserves do not have demonstrated economic viability.
All figures have been rounded to reflect the relative accuracy of the estimates.
Cut-off grades are based on metal price assumptions of US$22.00 / ounce of silver and
US$1,550 / ounce of gold, and metallurgical recoveries of 85% for both silver and gold using
milling and cyanide leaching.
The portion of the Mineral Resources that has been determined to be amenable to extraction
through open-pit methods was reported to a cut-off of 30 g/t silver equivalent.
The silver
equivalent grade was calculated based on metals prices and metallurgical recoveries as noted
above.
The open-pit Mineral Resource is constrained within Lerchs-Grossman optimised pit shells that
assume mining dilution & losses of 2.5%, 50-degree overall slope angles, mining costs of $2/t
rock, general and administrative costs of $2/t rock, processing costs of US$15/t for processing
using milling and cyanide leaching.
The portion of the Mineral Resources deemed to be amenable to extraction through
underground methods are reported at a cut-off of 150 g/t silver equivalent. This assumes a
mining cost of US$90/t, general and administrative costs of $2/t and a processing costs of
US$15/t.
The silver equivalent grade was calculated based on metals prices and metallurgical
recoveries as noted above.
About Honey Badger Silver Inc.
Honey Badger Silver is a Canadian Silver company based in Toronto, Ontario, that is focused on the
acquisition, development, and integration of accretive transactions of silver ounces. The company is led
by a highly experienced leadership team with a track record of value creation backed by a skilled
technical team. With significant land holdings in southeast and south-central Yukon, including the Plata
property 180 kms to the east of the Keno Hill silver district, as well as Ontario's historic Thunder Bay
Silver District, Honey Badger Silver is positioning to be a top-tier silver company.
ON BEHALF OF THE BOARD
Chad Williams, Director and Non-Executive Chair
For more information, please visit our website
www.honeybadgersilver.com
, or contact
Ms. Michelle Savella for Investor Relations |
| (604) 828-5886
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.
Cautionary Note Regarding Forward-Looking Information
This news release contains "forward-looking information" within the meaning of the applicable
Canadian securities legislation that is based on expectations, estimates, projections and
interpretations as at the date of this news release. Forward-looking information in this news release
includes statements regarding: the structure and anticipated benefits of completing the acquisition of
the Cachinal Project (including historical resource estimate and possible positive effects on cash-
flow); the terms and conditions on which the acquisition will be completed; the approval of the TSXV
regarding the acquisition of the Cachinal Project; and any other information herein that is not a
historical fact may be "forward-looking information". Any statement that involves discussions with
respect to predictions, expectations, interpretations, beliefs, plans, projections, objectives,
assumptions, future events or performance (often but not always using phrases such as "expects", or
"does not expect", "is expected", "interpreted", "management's view", "anticipates" or "does not
anticipate", "plans", "budget", "scheduled", "forecasts", "estimates", "believes" or "intends" or
variations of such words and phrases or stating that certain actions, events or results "may" or "could",
"would", "might" or "will" be taken to occur or be achieved) are not statements of historical fact and
may be forward-looking information and are intended to identify forward-looking information. This
forward-looking information is based on reasonable assumptions and estimates of management of
the Company at the time such assumptions and estimates were made, and involves known and
unknown risks, uncertainties and other factors which may cause the actual results, performance or
achievements of Honey Badger to be materially different from any future results, performance or
achievements expressed or implied by such forward-looking information.
Such factors include, but are not limited to, risks that the conditions to completing the acquisition may
not be met or waived; regulatory risks; risks relating to capital and operating costs varying significantly
from estimates; delays in obtaining or failures to obtain required governmental, environmental or
other project approvals; uncertainties relating to the availability and costs of financing needed in the
future; changes in equity markets; inflation; fluctuations in commodity prices; delays in the
development of projects; other risks involved in the mineral exploration and development industry;
and those risks set out in the Company's public documents filed on SEDAR (
www.sedar.com
) under
Honey Badger's issuer profile. Although the Company believes that the assumptions and factors used
in preparing the forward-looking information in this news release are reasonable, undue reliance
should not be placed on such information, which only applies as of the date of this news release, and
no assurance can be given that such events will occur in the disclosed timeframes or at all. The
Company disclaims any intention or obligation to update or revise any forward-looking information,
whether as a result of new information, future events or otherwise, other than as required by law.
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https://www.newsfilecorp.com/release/154917