Denarius Metals Corp. (TSX-V: DSLV) (OTCQB: DNRSF) is pleased to announce that it has signed a letter of intent for an option and joint-venture arrangement with Europa Metals Ltd. (AIM: EUZ), pursuant to which Europa granted Denarius the right to acquire up to an 80% ownership interest in the Toral Zn-Pb-Ag Project, Leon Province, Northern Spain in two stages.
Serafino Iacono, Executive Chairman and CEO of Denarius, commented, “We are extremely pleased to have agreed the commercial parameters for this proposed farm-in transaction subject, inter alia, to definitive documentation which will enable Denarius to lead the development of this high-grade polymetallic project located in a well-mineralized historic mining area and proactive jurisdiction that also offers potential further exploration opportunities. The high-grade concentrates that could be produced at Toral in the future make this a unique opportunity for Denarius to seek to develop a high-quality base metal project in the heart of western Europe.”
“Surging demand from industry, combined with increasing geopolitical risks, have served to increase raw metals prices over the last year. The production capacity to service the European automotive and lead-acid battery industry is declining and there is an urgent need to develop safer and more sustainable alternative raw material supply systems in the region. The Proposed Transaction could also provide future strategic synergy with our wholly owned Lomero-Poyatos polymetallic project in respect of the commercialization of concentrates from both potential future operations”.
The Proposed Transaction is subject, inter alia, to confirmatory due diligence by Denarius, the finalization and entering into of definitive documentation and Europa receiving all requisite shareholder and regulatory approvals, as appropriate.
The Toral Project is located approximately 400 km or 4 hours’ drive northwest of Madrid in the province of León, within the autonomous region of Castilla-Leon. The Project area is situated within the administrative subdivision of El Bierzo, the capital of which is the city of Ponferrada, approximately 30 km east of the project area by road. The Toral exploration license 15.199, referred to as a Permiso de Investigacion, covers an area of 20.29 km². The Toral Project is located next to a main highway and is very well connected to several industrial ports in northern Spain as well as a major zinc smelter in the Asturias region.
The Toral Project is a carbonate hosted, Mississippi Valley Type Zn-Pb-Ag deposit situated along the contact between middle Cambrian aged slates in the footwall and upper Cambrian aged limestone and dolomite host rocks in the hanging wall. The mineralization is continuous along the contact and has been tested by drilling over at least 1.7 km strike length. It remains open along strike and down dip.
Mineral Resource Estimate for the Toral Project
Europa published an updated JORC 2012 compliant Mineral Resource Estimate for the Toral Project in 2021, prepared by Addison Mining Services Ltd with an effective date of September 14, 2021, comprising:
Scientific and technical information about the Toral Project is summarized, derived or extracted from the Toral Technical Report titled “Updated JORC 2012 Technical Report and Resource Estimate for the Europa Metals Toral Pb-Zn Project, Leon, Spain” prepared by Addison for Europa dated October 20, 2021 and with an effective date of September 14, 2021. The Toral Technical Report was prepared to the standards of the 2012 JORC code by James Hogg MSc MAIG, Richard Siddle MSc MAIG, and Lewis Harvey MSc MAIG. The “Competent Person” pursuant to the 2012 JORC code is James Hogg. The JORC code is an acceptable foreign code as defined by NI 43-101.
Mineral Resources are not Mineral Reserves and do not have demonstrated economic viability. Mineral resources for the Toral Project are reported at a 4.0% Zn equivalent cut-off grade (including Pb and Ag credits). Zn equivalent calculations were based on 3-year trailing average price statistics obtained from the London Metal Exchange and London Bullion Market Association giving an average Zn price of US$2,516/t, Pb price of US$1,961/t and Ag price of US$19.4/oz. Recovery and selling factors were incorporated into the calculation of Zn Eq values. It is the opinion of Addison that all the metals included in the metal equivalents calculation (zinc, lead and silver) have a reasonable potential to be recovered and sold. According to the JORC code, Zn Eq (PbAg)% is the calculated Zn equivalent incorporating silver credits as well as lead and is the parameter used to define the cut-off grade used for reporting resources (Zn Eq (PbAg)% = Zn + Pb*0.867 + Ag*0.027). Zn Eq is the calculated Zn equivalent using lead credits and does not include silver credits (Zn Eq = Zn + Pb*0.867). All figures are rounded to reflect the relative accuracy of the estimate.
Metallurgical testing undertaken by Wardell Armstrong International in 2020 culminated in a locked cycle test which achieved 77.0% zinc recovery to a zinc concentrate grading 59.1% Zn. A separate lead and silver concentrate with recoveries of 83.7% and 87.1%, respectively, was obtained with grades of 60.2% Pb and 1,350 ppm Ag.
Description of the Transaction
The transaction involves the formation of an unincorporated joint-venture between Denarius and Europa for the development of the Toral Project, which will include the Permit and the incorporation of a certain other nearby mineral license when it is approved by the Junta of Castilla and Leon, the local mining authority. The transaction will be completed in two phases and be subject to certain conditions precedent, as described below.
The Definitive Agreement will include an option for the acquisition of a 51% interest in the Toral Project by way of a farm-in by Denarius or its designee, from Europa Metals Iberia S.L. a wholly owned Spanish subsidiary of Europa, which owns the Permit.
In order to exercise the First Option and acquire a 51% interest in the Toral Project: (i) Denarius and Europa shall agree on a work program and budget, and (ii) Denarius will fund a minimum of US$4,000,000 (including US$100,000 to be paid on execution of the Definitive Agreement and US$550,000 to be advanced to Europa on completion of a financing by Denarius, which is expected to be concluded by March 31, 2023) towards:
The disbursement of the remaining amounts to exercise the First Option (a minimum of US$3,350,000), will be contingent on the effective incorporation of a certain other mineral permit to the Toral Project. Denarius will have the right to terminate the joint-venture if (i) Europa is unable to secure the certain nearby mineral rights within the 18-month period following the date of execution of the Definitive Agreement or (ii) results of the due diligence twin drilling project finds significant assay discrepancies with the values previously reported by Europa.
The Definitive Agreement will include an option for the acquisition by Denarius or its designee, from EMI of an additional 29% interest in the Toral Project to take its interest in the Toral Project to 80% by (i) delivering the Pre-Feasibility Study demonstrating positive economic results over the enlarged Toral Project and (ii) making a cash payment of US$2,000,000 to Europa, within the 12-month period following the date of exercise of the First Option.
Qualified Persons Review
The technical information in this news release has been reviewed and approved by Stewart D. Redwood, BSc (Hons), PhD, FIMMM, FGS, who is a “Qualified Person” as defined under National Instrument 43-101.
Denarius is a Canadian junior company engaged in the acquisition, exploration, development and eventual operation of mining projects in high-grade districts, with its principal focus on the Lomero-Poyatos Project in Spain. The Company also owns the Zancudo and Guia Antigua Projects in Colombia.
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