Metals Update 07/04/2021

Canada Nickel signs Crawford financing MOU with Taykwa

Canada Nickel Company Inc. has signed a memorandum of understanding (MOU) with Taykwa Tagamou Nation (TTN), regarding the financing of the company’s expected mine fleet for the Crawford nickel-cobalt-sulphide project.

“We welcome TTN as our partner in this initiative and acknowledge TTN’s ongoing commitment to protect and enhance the land and resource-based economy within their Traditional Territory. Canada Nickel actively looks for ways to increase involvement in Crawford’s development from the local Indigenous communities through innovative partnerships that provide opportunities for mutually beneficial business ventures,” said Mark Selby, Chair and CEO of Canada Nickel.

“This initiative has the potential to substantially reduce initial capital requirements and improve Canada Nickel’s ability to finance Crawford and advance it to development. Combined with our previously announced MOUs with TTN and Glencore, it also creates the potential for a much lower capital cost startup,” said Selby.

Under the terms of the MOU, TTN will seek favourable financing terms to participate in the financing of all or a portion of the heavy mining equipment fleet required for Crawford’s operation. Training and associated employment opportunities will also be available to TTN where specialized maintenance and operation is required for the equipment and where that equipment is financed or owned in whole or in part by TTN.

“Our community is proud of our continued innovative approach to business development partnerships – and our most recent MOU with Canada Nickel is no exception. TTN has been working diligently to address the financing, capacity, scale, policy limitations, jurisdiction questions, and project timeline challenges to initiate, construct and put into operation development partnerships within our Traditional Territory,” said Chief Bruce Archibald, Taykwa Tagamou Nation. “Canada Nickel continues to set a precedent by ensuring First Nation communities who have the financial backing to reduce capital start-up costs are not just those that need to be consulted with, but rather, are true business partners that will benefit their communities and the Northern Ontario economy writ-large.”

TTN Councillor and Economic Development Officer Derek Archibald added, “This MOU compliments TTN’s Economic Development Strategy. We want to move away from the rigid limitations of Impact Benefit Agreements to having a true seat at the table, where opportunities are continually created. Not only is this the most effective way to see the Crawford project move ahead at a lower capital cost, but it also ensures we are full participants with developments occurring in our Traditional Territory over time. With CNC and this MOU, we are leaving our lands and economy in an even better place for the next seven generations of our Nation”.

This is the second agreement reached between the Company and TTN following the announcement by the Company in December 2020.

Greg Rickford, Minister of Energy, Northern Development and Mines; Minister of Indigenous Affairs for Ontario congratulated both parties on reaching such an agreement.

“Our government is proud to support innovative First Nation-industry partnerships that support economic growth across Northern Ontario. I am pleased to congratulate Canada Nickel and Taykwa Tagamou Nation on their progress on their MOU and partnership,” said Greg Rickford, Minister of Energy, Northern Development and Mines, Minister of Indigenous Affairs. “With TTN’s leadership in the region, the Crawford-Nickel Cobalt partnership is well on its way to produce responsibly-sourced, GHG-emissions free nickel and cobalt and deliver meaningful training and career opportunities for local community members.”

TTN Electrical Transmission Project

Canada Nickel and TTN had previously announced (see Canada Nickel press release dated December 16, 2020) that TTN has arranged access to capital so that it can own and develop the electrical transmission assets that will be necessary to supply Crawford with cost-effective and reliable power. TTN’s operating company, Transmission Infrastructure Partnerships 1 Ltd., has been working with Canada Nickel in discussion with the IESO and Hydro One. Together these organizations have taken the first steps to hooking the Crawford mine up to the power grid by launching a Systems Impact Assessment Study.

Cerro de Pasco arranges $2.5-million private placement

Cerro de Pasco Resources Inc. intends to complete a $2.5-million non-brokered private placement offering issuing up to 7,142,857 units of the corporation, with each unit consisting of one common share and one-half of one share purchase warrant, at a price of 35 cents per unit. Each Warrant will entitle its holder to purchase one additional Share at a price of $0.50 per Share for a period of 24 months from the date of closing of the Offering.

The amount raised under the Offering (further defined below) will be used for general and working capital purposes in advancing the Company’s Quiulacocha tailings retreatment Project in Peru.

Quiulacocha Tailings – Permit to Drill

In line with process requirements, CDPR has received authorization from the Ministry of Energy and Mines to proceed with a workshop with the local community on April 18, 2021. The date has been officially approved by the Rural Community of Quiulacocha and preparations for the workshop are ongoing.

CDPR will submit a completed Environmental Impact Statement (DIA) by the end of April 2021, for review and approval by the Environmental branch of the Ministry (DGAAM).

The DIA provides the details and coordinates for the 40-hole Drilling Program that CDPR intends to carry out across the Quiulacocha Tailings Storage Facility (TSF), within the boundaries of its El Metalurgista Concession. The Quiulacocha TSF is estimated to contain approximately 70 million tonnes of material with recoverable silver, zinc, lead, copper, gold and other strategic metals.

CDPR maintains the Social License with the Quiulacocha Rural Community, and the terms of the surface rights contract signed in 2019 remain fully intact.

GR Silver Mining arranges $8.02-million bought deal

GR Silver Mining Ltd. has entered into an agreement with Beacon Securities Ltd., as lead underwriter and sole bookrunner, on behalf of a syndicate of underwriters, pursuant to which the underwriters have agreed to purchase, on a bought deal private placement basis, 13.6 million units at a price of 59 cents per unit for aggregate gross proceeds to the company of $8,024,000. Each Unit will consist of one common share in the capital of the Company and one-half of one common share purchase warrant (each whole warrant, a “Warrant”). Each Warrant will be exercisable to acquire one common share for a period of 24 months following closing of the Offering at an exercise price of $0.74 per share.

The Warrants may be accelerated by the Company, at its sole option, at any time after the closing date of the Offering provided that the volume-weighted average closing price of the common shares of the Company on the TSX Venture Exchange is greater than or equal to $1.30 for a period of 60 consecutive trading days, by giving notice to the holders thereof and, in such case, the Warrants will expire at 4:00pm (Toronto time) on the earlier of: (i) the 30th day after the date on which such notice is given by the Company in accordance with the terms of the Warrants, and (ii) the actual expiry date of the Warrants.

The Company has granted the Underwriters an option, exercisable by the Lead Underwriter on behalf of the Underwriters, to purchase up to an additional 2,040,000 Units, for additional gross proceeds of up to $1,203,600, exercisable in whole or in part at any time up to 48 hours prior to the closing date of the Offering.

The Company intends to use the net proceeds of the Offering for working capital and general corporate purposes.

The Offering is expected to close on or about April 27, 2021 and is subject to certain conditions including, but not limited to, the receipt of all necessary approvals including the approval of the TSX Venture Exchange and the applicable securities regulatory authorities. All securities issued under the Offering will be subject to a hold period in Canada expiring four months and one day from the closing date of the Offering.

In connection with the Offering, the Underwriters will receive: (i) a cash commission of 7.0% of the gross proceeds of the Offering; and (ii) that number of non-transferable compensation options (the “Compensation Options”) as is equal to 7.0% of the aggregate number of Units sold under the Offering. Each Compensation Option is exercisable into one common share of the Company at the Issue Price for a period of 24 months from the closing date of the Offering.

Metallic drills 4.1 m of 2,536 g/t AgEq at Keno

Metallic Minerals Corp. has provided drill results from the advanced West Keno targets on the company’s 100-per-cent-owned, 166-square-kilometre Keno silver project within the high-grade Keno Hill silver district of Canada’s Yukon. The program consisted of 12 diamond drill holes totalling 2,674 metres (8,772 feet) completed at the Formo and Silver Queen targets along extensions of Alexco Resource’s productive Bermingham and Elsa structural corridors. Drilling at Formo intersected high-grade silver within well-mineralized vein structures along a northeasterly extension of the Bermingham-Calumet system, which is host to the largest historical mine and the largest current resources and reserves in the Keno Hill silver district (1) (2).

Diamond drilling at West Keno was focused on confirming and expanding the areas of known high-grade mineralization within the existing historical resource area at the Formo target area. This work follows up on underground channel sampling, which identified three mineralized shoots grading more than 1,000 grams per tonne silver equivalent (AgEq) that remain open to expansion. These results are an important next step toward developing an initial mineral resource at the Formo target. A single diamond drill hole was also completed at the Silver Queen target to confirm the presence of the Bermingham deposit host stratigraphy along potential parallel extensions of the Bermingham structural corridor.

Highlights

  • FOR-20-003 in the Formo target area intersected 4.1 metres at 2,536 g/t AgEq from 96.0 m to 100.1 m depth, including 3.0 m at 3,425.9 g/t AgEq (1,568 g/t silver, 29.45 per cent lead and 15.35 per cent zinc).
  • FOR-20-006 intersected 2.15 m at 740.6 g/t AgEq from 137.63 m to 139.78 m depth including 0.7 m at 2,255.9 g/t AgEq (1001 g/t Ag, 8.92 per cent Pb and 18.92 per cent Zn).
  • FOR-20-004 intersected 6.1 m at 367.6 g/t AgEq from 89.8 m to 95.9 m depth, including 1.9 m at 698.4 g/t AgEq and 0.5 m of 1,083.6 g/t AgEq (601 g/t Ag, 7.33 per cent Pb and 4.25 per cent Zn).
  • FOR-20-001 intersected 6.1 m at 284.5 g/t AgEq from 50.9 m to 57 m depth, including 3.05 m at 447.5 g/t AgEq (369 g/t Ag, 0.11 per cent Pb and 1.52 per cent Zn).
  • SQ-20-001 in the Silver Queen target area intersected 300 metres of the stratigraphy that hosts the Bermingham and adjacent Silver King deposits, successfully confirming the presence of this prospective unit at moderate to shallow depths.
  • Geophysical and geochemical surveys have identified several new untested kilometric-scale targets for follow-up drilling in 2021 at the Formo and Silver Queen target areas.

Metallic Minerals chief executive officer and chairman Greg Johnson stated: “We are very pleased with the success we have achieved in both phases of our 2020 Keno silver project exploration program. At our advanced-stage Formo target in the West Keno area, 10 of 11 diamond drill holes intercepted significant mineralization, further confirming the presence of high-grade Keno-style mineralization that remains open to expansion. We are particularly encouraged to see these very high-grade intercepts over significant widths at Formo, and follow-up diamond drilling along these identified structures will be a priority in 2021, along with testing of several newly identified, kilometre-scale geophysical and geochemical targets at West Keno. In February, we announced results from East Keno, demonstrating the presence of high-grade mineralization within broad continuous zones of potential bulk-tonnage silver mineralization in a previously untested part of the Keno Hill silver district. This effectively expanded the known extent of drill-defined Keno-style mineralization by 10 kilometres to the east and demonstrated the potential for major new discoveries in this underexplored part of the district. Planning is under way for a significantly expanded exploration program at the Keno silver project in 2021, with field activities anticipated to begin in late Q2. The company is fully funded to meet its 2021 program objectives and also looks forward to providing additional updates on its exploration work at the La Plata silver-gold-copper project in Colorado, USA, as well as 2021 drill plans.”

Live webinar

Metallic Minerals will be hosting a live webinar event on Thursday, April 8, at 9 a.m. PST/12 p.m. EST during which Mr. Johnson will discuss the results from West Keno and plans for the upcoming 2021 exploration season.

Formo target

The Formo target is located at the intersection of a northeasterly structural zone extending from the Hector-Calumet mine, which was the largest producer in the district producing nearly 100 million ounces of silver (1), and the Elsa structural trend, which was the second-largest silver producer in the district. The historic Formo mine produced silver at various times since the 1930s from high-grade vein structures that graded an average of 5,092 g/t silver (1). The majority of this historic production came from an open pit located alongside the Silver Trail highway between the Elsa townsite and Keno City.

Metallic Minerals’ exploration efforts at the Formo target area have integrated recent drilling and surface and underground sampling into a 3-D geologic model, along with multispectral studies and geophysical surveys covering the area. In addition to the mineralization at the known Formo deposit, two new surface targets have been identified along the same structural corridors within parallel greenstone sills. The opportunity to significantly expand the known mineralization defined from underground sampling and historic and recent drilling, as well as the potential to define new high-grade deposits along the main mineralized structural corridor, positions Formo as a top priority target for near-term resource definition at the Keno Silver project.

            SIGNIFICANT DRILL RESULTS FROM FORMO TARGET AT WEST KENO AREA OF KENO SILVER PROJECT

DDH Hole ID      From (m)      To (m)   Width (m)  AgEq (g/t)    Ag (g/t)    Au (g/t)      Pb (%)      Zn (%)

FOR-20-001          50.9          57         6.1       284.5         218       0.001         0.3        1.14
including           50.9       53.95        3.05       447.5         369       0.001        0.11        1.52
FOR-20-002         49.45        52.3        2.85          48          22       0.001        0.18        0.39
FOR-20-003            96       100.1         4.1        2536       1,165       0.012       21.74       11.32
including             96          99           3     3,425.9       1,568       0.017       29.45       15.35
FOR-20-004          89.8        95.9         6.1       367.6         225       0.003        2.04        1.35
including           91.8        93.7         1.9       698.4         454           0        3.48        2.32
including           93.2        93.7         0.5     1,083.6         601           0        7.33        4.25
FOR-20-005        104.76      105.45        0.69         365         146       0.001        1.32        3.52
                  152.17      152.67         0.5        85.5           6       0.421        0.01        0.76
FOR-20-006        137.63      139.78        2.15       740.6         332       0.016        3.06        6.04
including         139.13      139.78        0.65     2,255.9       1,001       0.051        8.92       18.92
FOR-20-007          98.1       98.65        0.55          77          12       0.026        0.12         1.2
                  107.65      108.15         0.5        86.1          46        0.15        0.24        0.34
                  125.55      126.05         0.5        75.5           1       0.151           0        1.23
FOR-20-008        116.45      116.95         0.5       289.2         178       0.059         2.2        0.42
                   168.6      170.83        2.23          51          36       0.001        0.18        0.16
including          168.6       169.6           1        79.2          57       0.001        0.25        0.25
FOR-20-009          69.7       70.14        0.44        67.4          15       0.003        0.21        0.91
                   113.2       113.7         0.5       211.6          26        0.39        0.06           3
                  131.24       132.2        0.96        55.4                   0.008        0.27        0.67
FOR-20-011          55.3        59.7         4.4        75.6           3           0        0.05        0.04
including           57.7        58.6         0.9       307.7         195       0.011        2.79         0.1

Footnote: Drill holes FOR-20-001, -003 and -004 encountered mineralized fault zones with recoveries of 61 per
          cent, 44 per cent and 72 per cent, respectively. Recovery in these highly fractured mineralized 
          zones was improved in later holes with modified drill techniques. Silver equivalent (AgEq) values 
          assume Ag $18 per ounce, Pb $1 per pound, Zn $1.25/lb, Au $1,800/oz and 100-per-cent metallurgical 
          recovery. Sample intervals are based on measured drill intercept lengths.

Silver Queen target

The Silver Queen target area is located at the western end of the Keno Hill silver district and is highly prospective to host high-grade silver mineralization. Drilling by Metallic Minerals at Silver Queen in hole SQ-20-001 intersected 300 metres of the Keno Hill quartzite stratigraphy that hosts Alexco’s adjacent Silver King deposit and the Bermingham mine (3), successfully confirming the presence of this prospective unit for exploration at moderate to shallow depths.

Silver King historically produced 11 million ounces of silver at an average grade of 1,800 g/t and its six mineralized vein structures host a historical resource of 5.3 million ounces of silver at an average grade of 1,373 Ag g/t (1). Production at Silver King came from both underground and open-pit mining operations hosted in Keno Hill quartzite.

The Bermingham deposit includes 33 million ounces of measured and indicated silver along with 11 million ounces of inferred resources that are hosted in the Keno Hill quartzite and that remain open at depth and along trend to the southwest, making it the second-largest silver deposit in the district (2).

Metallic Minerals’ recent drilling has been integrated with surface sampling and geophysics to develop a 3-D geologic model that will aid follow-up exploration targeting the projected down-dip extensions of the high-grade Silver King structures and potential extensions of the western Bermingham system. Both structural corridors represent significant near-term exploration targets at Silver Queen, with follow-up work planned in 2021.

About the Keno silver project

The Keno silver project is located in the historic, high-grade Keno Hill silver district of Canada’s Yukon, directly adjacent to Alexco Resource’s Keno Hill operations, which are one of the world’s highest-grade primary silver districts. Keno Hill hosts nearly 300 million ounces of silver in past production (1) and current measured and indicated resources (2), and features excellent existing infrastructure, including grid power, road access and nearby community services. Metallic Minerals has consolidated the second-largest land position in the district, with its holdings including eight shallow, high-grade past-producing deposits, as well as the eastern portion of the district, which had only seen limited exploration due to previously fragmented land ownership and lack of road access. Six advanced-stage targets along the main productive trends are progressing toward initial mineral resource definition and 12 new multikilometre-scale targets have been identified on the greenfields areas to the east. Recent drilling by Metallic Minerals has confirmed the discovery of both high-grade Keno-style vein structures and potential bulk-tonnage silver mineralization. Reconnaissance drill tests of the first of these very large soil and geophysical targets at East Keno have expanded the Keno Hill silver district by at least 10 kilometres to the east, opening a major new area of prospective terrain controlled 100 per cent by Metallic Minerals in this prolific high-grade silver district. Planning is under way for a significantly expanded exploration program in 2021 at the Keno silver project to drill additional untested targets, as well as to extend the newly discovered zones at East and West Keno through stepout core and RC drilling.

About Metallic Minerals Corp.