Acquires Controlling Interest in Mexican
Explorer Minera Portree De Zacatecas
Extends Support
Agreement With Issue of 13 Million Warrants
TORONTO, April 30, 2020 /CNW/ - Xtierra Inc.
(TSXV: XAG) ("Xtierra" or the "Company") reports its
results for the year ended December 31,
2019.
This news release should be read in conjunction with the
Company's audited financial statements and the associated
management's discussion and analysis (MD&A) for the year ended
December 31, 2019 which are
available on the Company's website at www.xtierra.ca or under the
Company's profile on SEDAR (www.sedar.com). Amounts are stated
in US dollars unless otherwise stated.
Company Overview
Xtierra is a natural resource company which holds mineral
exploration properties located in the Central Silver Belt of
Mexico in the State of Zacatecas and is also pursuing new
opportunities, including mineral exploration and development
projects, and the potential acquisition of mineral and other
royalties.
Xtierra is pursuing a strategy for realizing some value on its
Bilbao and other Mexican projects
in the context of the current resource cycle, as well as
identifying and evaluating new potential royalty acquisitions.
Xtierra, through its Mexican subsidiaries, currently holds a
100% interest in the Bilbao
zinc-silver-lead-copper project, in the southeastern part of the
State of Zacatecas, on which an
independent Technical Report in accordance with NI 43-101
containing an updated resource estimate and preliminary economic
assessment (PEA) was completed in 2014. The Company maintains the
Bilbao property in good standing
while at the same time examining strategic alternatives for further
exploring and /or development of the property.
Mineral Royalty Interests
On July 31, 2019, the Company
acquired, indirectly through a wholly owned subsidiary, a 1.5% net
smelter royalty and all legal interests of the vendors and Minera
Portree de Zacatecas, S.A. de C.V
in the four mining concessions comprising the bulk of
the Bilbao property,
previously held by four individuals, for $76,829 (Cdn$100,000), paid as to Cdn$51,000 in cash and Cdn$49,000 by the issue of 980,000 common shares
of the Company.
On August 13, 2019, the Company
signed a letter of intent, to acquire Minera Portree De Zacatecas,
S.A. de C.V ("Minera Portree"), subject to due diligence and final
agreement on price, terms and conditions. Subsequent to
December 31, 2019, the Company
entered into an agreement to acquire 88% of the shares of
Minera Portree in consideration of
the payment of Cdn$56,000, less the
deposit of $20,000 previously paid,
with the remaining Cdn$30,000 payable
in installments subject to certain milestones, and the issue to the
vendors of 2,000,000 shares of the Company, subject to TSXV
approval.
Minera Portree holds various
legal or royalty interests in certain mineral properties in
Mexico, including the Company's
Bilbao property and an
asserted claim to a 2% net smelter royalty on six mining
concessions located adjacent to the Cozamin Mine in Zacatecas operated by Capstone Mining Corp.
(TSX:CS), five of which were acquired by Capstone from a third
party in 2017 and 2019. The third-party had acquired the six mining
concessions from Minera Portree in
2002, subject to a 2% net smelter royalty retained by Minera Portree. The entitlement of
Minera Portree to the royalty may be
contested by the third party and/or Capstone.
The Cozamin Mine is an operating polymetallic copper-silver
underground mine, located 3.6 km north-northwest of Zacatecas City, with a 3,990 tonne per day
milling capacity, which is expected to increase its
production to 50 to 55 million pounds of copper and 1.4 to
1.5 million ounces of silver starting in early 2021, upon
completion of the underground debottlenecking development project.
The current mine plans maintain the Cozamin Mine operations life to
2024.
Based on public disclosure, Capstone reported that during the
third quarter of 2019 Cozamin acquired the Portree claim block that
laid within the Mala Noche Footwall Zone area. The claim block is
surrounded by high grade Inferred Mineral Resources and provides
access to continuously infill drill and eventually mine the Portree
area.
During the fourth quarter of 2019, Cozamin started drilling into
the Portree claim block. Prior to this, Portree was an untested
inlier within Cozamin's land position covering the Mala Noche
Footwall Zone area. Portree is surrounded by high grade Inferred
Mineral Resources that future drilling is expected to increase to
Indicated categorization. Capstone has reported that mining has
already started within the Portree claim.
In the first quarter of 2020 Capstone reported that drilling of
the Mala Noche Footwall Zone, associated with infilling or stepping
out from regions of Inferred Mineral Resource category of the
Mineral Resource estimate, was undertaken with 5 surface and 1
underground diamond drilling rigs. The drill program is aiming to
upgrade Inferred Mineral Resources to the Indicated category to
maximize subsequent conversion to Mineral Reserves in support of a
doubling of mine life.
Support Extension Agreement
On February 14, 2018, the Company
entered into a two-year Support and Standstill Agreement ("Support
Agreement") with Buchans Resources Limited to defer repayment of
principal and accrued interest, and also to provide additional
financial support of up to US$100,000. During the years ended December 31, 2018 and 2019, Buchans advanced $75,000 and $30,000, respectively, to Xtierra under the terms
of the Support Agreement. At December
31, 2019 $800,000 was due to
Buchans.
By an Extension Agreement dated as of February 7, 2020, the term of the Support
Agreement was extended for an additional one year expiring
February 7, 2021, in consideration of
the issue to Buchans of 13
million, non-transferable warrants, subject to TSXV approval,
each warrant entitling Buchans to
purchase one common share of Xtierra for $0.05 per share for a term of two years.
Results of Operations
The Company recorded no revenue for the years ended December 31, 2019 or December 31, 2018.
For the year ended December 31,
2019, the Company recorded a loss of $167,667 ($0.001
per share). The main component being exploration expense of
$104,508, which included $76,829 investment on the acquisition of the 1.5%
royalty on the Bilbao property
which was expensed to exploration and evaluation costs as incurred
as the carrying value of the Bilbao had been impaired in earlier accounting
periods.
For the year ended December 31,
2018, the Company recorded a loss of $882,166 ($0.007
per share). The main components of which were non-cash items
including, warrants valuation of $310,440, share-based payment (stock options)
expense of $302,480 and accretion on
other liability of $156,000; and
exploration expense of $54,719.
SOURCE Xtierra Inc.