Discovery Metals Corp. (TSX-V: DSV, OTCQX: DSVMF)
(“Discovery” or the “Company”) is pleased to announce its financial
and operating results for the three and nine months ended September
30, 2019. All amounts are presented in Canadian dollars (“CAD”)
unless otherwise stated.
Discovery is focused on advancing a portfolio of
silver projects in historic mining districts in northern Mexico,
including the Cordero project in Chihuahua state, and the Puerto
Rico, Minerva and Monclova projects in Coahuila state.
Q3 2019 OPERATING HIGHLIGHTS:
- Announced an arrangement agreement (“the Transaction”) with
Levon Resources Ltd. (“Levon”) on May 30, 2019 and completed the
Transaction on August 2, 2019, acquiring all of the issued and
outstanding common shares of Levon. Levon’s flagship asset was the
Cordero project.
- Completed a non-brokered private placement of common shares
raising $9.0 million, including a $7.7 million investment from Mr.
Eric Sprott, on July 25, 2019.
RECENT DEVELOPMENTS:
- On November 5, 2019, subsequent to the end of the third
quarter, Discovery completed a non-brokered private placement of
common shares raising $19.0 million. Several new European and U.S.
institutional investors participated in this private placement. Mr.
Sprott also committed to invest an additional $5.0 million in the
Company. A portion of Mr. Sprott’s investment remains subject to
approval at a special meeting of shareholders scheduled for
December 11, 2019. The meeting materials, including the proxy form,
are available on the Company’s website.
- The $28.0 million in aggregate gross proceeds from both
non-brokered private placements leave the Company well-funded to
complete its 2020 exploration and development plans.
- On November 18, 2019, Discovery’s common shares commenced
trading on the OTCQX® Best Market (“OTCQX”) in the United States
under the symbol DSVMF. This listing provides the Company with
significant additional market exposure. Companies on the OTCQX must
meet high financial standards, follow best practice corporate
governance and demonstrate compliance with U.S. securities
laws.
Cordero project:
Cordero is an advanced stage exploration project
located in one of Mexico’s premier mining districts. Prior to the
Transaction, Levon had completed a Preliminary Economic Assessment
on Cordero (issued April 18, 2018 and available on Levon’s SEDAR
profile and Discovery’s website)1. Based on more than 132,000
meters of drilling, Levon estimated an Indicated Mineral Resource
of 990 million tonnes grading 32 g/t AgEq1 (13 g/t Ag, 0.37% Zn,
0.17% Pb, and 0.04 g/t gold (“Au”)) and an Inferred Mineral
Resource of 282 million tonnes grading 56 g/t AgEq1 (21 g/t Ag,
0.75% Zn, 0.30% Pb and 0.04 g/t Au).1 With the completion of the
Transaction, advancing Cordero has become the main focus of the
Discovery’s exploration and development spending.
Since completion of the Transaction, Discovery
has:
- Begun re-logging and re-interpretation of the geology of the
132,000 metres of historic drill core in August 2019. This program
is currently approximately 50% complete.
- Mobilized for a Phase 1 diamond drilling program on September
10, 2019, five weeks ahead of the originally anticipated start
date. The Company plans to drill approximately 30,000 to 35,000
metres by the end of 2020. The program is focused on delineating
and discovering higher-grade areas of mineralization within the
known deposit and testing new high priority targets near the
deposit.
- Added a second drill rig on November 7. To-date 3,600 metres
have been completed in 11 drill holes.
- Began a 5,100 line-kilometre airborne magnetic and
electromagnetic survey at the start of November. This is the first
time the 35,000-hectare property will be covered by geophysics.
Discovery’s aim is to define new and compelling targets based on
the geophysical signature of known mineralization from the current
resource area.
Coahuila projects:
- At Minerva, the Company announced channel sample results of 112
underground samples2. This was the first documented underground
channel sampling program at Minerva, an historic artisanal
operation. At the key target area, a 2.5 kilometre by 300 metre
corridor, 78 channel samples were taken and 53 returned grades
greater than 500 g/t AgEq2, averaging 1,804 g/t AgEq2 (710 g/t Ag,
13.1% Zn, 8.8% Pb, 0.2% Cu) over 0.6 meters. Minerva is
drill-permitted and geophysics results are being finalized in
preparation for a maiden drill program.
- At Monclova, the Company received drilling permits from
SEMARNAT (Secretariat of Environment and Natural Resources)3. The
Real Viejo area is the key near-term target and it hosts five
historic shallow underground mines along a strike of 1.5 kilometres
at a contact between limestone and intrusive rocks. Discovery’s
channel sampling program at Real Viejo consistently returned high
grades. The 50 highest-grade channel samples had an average grade
of 677 g/t AgEq3 (358 g/t Ag, 4.4% Zn, 1.9% Pb, 0.1% Cu) over 1.0
meters. Drill planning is being finalized in preparation for a
maiden drill program.
- At Puerto Rico, the Company is in the final stages of having
the land re-designated and, once completed, will submit its drill
permit application. Phase 1 drill targets have been defined at
Puerto Rico.
Q3 2019 FINANCIAL
HIGHLIGHTS:
The following selected financial data is
summarized from our unaudited condensed interim financial
statements and related notes thereto (the “Interim Financial
Statements”) for the three and nine months ended September 30,
2019.
A copy of the Interim Financial Statements is
available on the Company’s website at www.dsvmetals.com or on SEDAR
at www.sedar.com.
Select financial information for the period
ended September 30, 2019 is as follows:
Net loss |
Q3 2019 |
Q3 2018 |
Q3 YTD 2019 |
Q3 YTD 2018 |
(a) Total(A) |
$ |
(3,876,582 |
) |
$ |
(1,983,699 |
) |
$ |
(5,478,163 |
) |
$ |
(5,646,043 |
) |
(b) basic and diluted per share |
$ |
(0.03 |
) |
$ |
(0.03 |
) |
$ |
(0.06 |
) |
$ |
(0.09 |
) |
Net loss & total comprehensive loss |
$ |
(4,017,681 |
) |
$ |
(1,934,797 |
) |
$ |
(5,636,627 |
) |
$ |
(5,607,998 |
) |
Total weighted average shares outstanding |
|
134,258,418 |
|
|
65,043,998 |
|
|
88,200,293 |
|
|
65,043,998 |
|
A. Net loss for the
three and nine months ended September 30, 2019 includes non-cash
share-based compensation expense of $1,614,616 and $1,718,504,
respectively, and a non-cash impairment charge of $1,000,710 on IVA
receivable.
|
September 30, 2019 |
December 31, 2018 |
Cash and cash equivalents(2) |
$ |
9,974,045 |
$ |
4,691,676 |
Total assets |
$ |
39,074,676 |
$ |
7,216,714 |
Total current liabilities |
$ |
514,414 |
$ |
230,090 |
Total liabilities |
$ |
613,693 |
$ |
230,090 |
Total Shareholders’ equity |
$ |
38,460,983 |
$ |
6,986,625 |
B. Cash and cash
equivalents balance does not include the $19,000,000 gross proceeds
from the non-brokered private placement that closed on November 5,
2019.
At September 30, 2019, the Company had an
aggregate Mexican value added tax (“IVA”) recoverable balance of
$2,743,721 including $1,743,011 acquired in the Levon transaction.
Due to the current political environment and changes in Mexico
resulting from the government’s ongoing internal restructuring
process, the Company evaluated the balance of IVA receivable for
indicators of impairment. Due to the short period of operation in
Mexico, the Company does not have a history of IVA collection. In
addition, there is a high degree of uncertainty surrounding the
timing of repayment by the Mexican government. As a result of this
assessment, on acquisition of Levon, no value was allocated to the
IVA receivable. Additionally, at September 30, 2019, the Company
recognized a provision for 100% of its remaining outstanding IVA
receivable balance of $1,000,710.
The Company believes that the total IVA
receivable balance at September 30, 2019 is legally recoverable in
full and is therefore currently assessing options for collection.
The Company will continue to provide for 100% of the balance until
such time that there are sufficient indicators of
collectability.
About Discovery
Discovery Metals Corp. (TSX-V: DSV, OTCQX:
DSVMF) is a Canadian exploration and development company
headquartered in Toronto, Canada focused on historic mining
districts in Mexico. Discovery’s flagship project is its 100%-owned
Cordero silver project in Chihuahua State, Mexico. The
35,000-hectare property covers an entire porphyry district that
hosts the Cordero deposit and numerous exploration targets for bulk
tonnage diatreme-hosted, porphyry-style, and carbonate replacement
deposits. In addition, Discovery holds a 150,000-hectare land
package containing numerous high-grade carbonate replacement-style
silver-zinc-lead exploration projects in Coahuila State, Mexico.
The Coahuila project land holdings contain numerous historical
direct-ship ore workings and significant underground
development.
For further information:
Discovery Metals Corp.(416) 613-9410info@dsvmetals.com
REFERENCES:
1 Cordero Project: NI 43-101 Technical Report:
Preliminary Economic Assessment Update, Chihuahua, Mexico, dated
March 1, 2018 and issued April 18, 2018, and prepared for Levon.
The Cordero Project Indicated and Inferred Mineral Resources use a
cutoff grade of 15 g/t AgEq, using metal prices (USD) of $20/oz Ag,
$1.20/lb Zn, $1.00 /lb Pb , and $1,250/oz Au. This document is
available on Levon’s SEDAR profile and on Discovery’s website.
2 See Company’s news release dated August 8,
2019
3 See Company’s news release dated July 11,
2019.
For References 2 and 3 above, metal equivalents
(“Eq”) are calculated using (all USD): $16/oz Ag, $1.15/lb Zn,
$0.85/lb Pb, $1,250/oz Au, and do not consider metallurgical or
smelting recoveries.
News releases are available at www.dsvmetals.com
or under our company profile at SEDAR at www.sedar.com.
TECHNICAL NOTES:
Qualified Person: Gernot Wober, P.Geo, V.P.
Exploration, Discovery Metals Corp., is the Company's designated
Qualified Person for this news release within the meaning of
National Instrument 43-101 Standards of Disclosure for Mineral
Projects (“NI 43-101”) and has reviewed and validated that the
information contained in this news release is accurate.
Neither the TSX Venture Exchange nor its
Regulation Services Provider (as that term is defined in the
policies of the Exchange) accepts responsibility for the adequacy
or accuracy of this release.
This news release is not for distribution to
United States newswire services or for dissemination in the United
States.
This news release does not constitute an offer
to sell or a solicitation of an offer to buy nor shall there be any
sale of any of the securities in any jurisdiction in which such
offer, solicitation or sale would be unlawful, including any of the
securities in the United States of America. The securities have not
been and will not be registered under the United States Securities
Act of 1933, as amended (the “1933 Act”) or any state securities
laws and may not be offered or sold within the United States or to,
or for account or benefit of, U.S. Persons (as defined in
Regulation S under the 1933 Act) unless registered under the 1933
Act and applicable state securities laws, or an exemption from such
registration requirements is available.
This news release may include forward-looking
statements that are subject to inherent risks and uncertainties.
All statements within this news release, other than statements of
historical fact, are to be considered forward looking. Although
Discovery believes the expectations expressed in such
forward-looking statements are based on reasonable assumptions,
such statements are not guarantees of future performance and actual
results or developments may differ materially from those described
in forward-looking statements. Factors that could cause actual
results to differ materially from those described in
forward-looking statements include fluctuations in market prices,
including metal prices, continued availability of capital and
financing, and general economic, market or business conditions.
There can be no assurances that such statements will prove accurate
and, therefore, readers are advised to rely on their own evaluation
of such uncertainties. There can be no assurance that the Private
Placement will close on the announced terms. Discovery does not
assume any obligation to update any forward-looking statements
except as required under applicable laws.
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