Vancouver, BC, April 17, 2023 – Silver X Mining Corp. (TSX-V: AGX) (OTCQB: AGXPF) (F: AGX) (“Silver X” or the “Company”) announces that it has entered into an asset purchase agreement (the “Agreement”) to acquire the Revenue-Virginius Mine (“RV Mine”) and certain related assets (collectively with the RV Mine, the “Assets”) located in the San Juan Mountains near Ouray, Colorado from Alliance Management LLC (the “Receiver”), as receiver under a court supervised receivership in Ouray County, Colorado (the “Acquisition”). The Acquisition remains subject to several closing conditions, including, without limitation, the approval of the District Court, Ouray County, State of Colorado (the “District Court”).
Highlights of the Acquisition
- Acquisition of a silver project in the United States, which was previously built to a pre-production stage and was permitted for production prior to entering into receivership.
- Low-cost acquisition with infrastructure in place and significant investment by previous owners. The Acquisition provides Silver X with an opportunity to advance the project through the pre-production stages with minimum capital deployment.
- Capitalizes on proven expertise and synergies with Silver X’s team in Peru, where management has experience applying a modern lens to exploration and mechanizing narrow vein structures.
“The Revenue-Virginius Mine complements Silver X’s growth strategy by adding an advanced-stage exploration project to our pipeline at an attractive price,” stated José García, President and CEO of Silver X. “We believe that the project will benefit from our distinct approach to exploration aimed at generating value by reactivating past producing districts with good potential. While we remain focused on our core operations in Peru, our plan is to execute an exploration program over the next 12-18 months to confirm and strengthen the data and our understanding of the potential resource in advance of making a decision on how to best advance the project.”
Mr. García continued: “This acquisition presented us with a low-cost opportunity to acquire a project that has already benefitted from considerable investment. With good planning and minimal expenditures, we hope to be able to add value through exploration while diversifying and gaining exposure to the US, a stable, low-risk mining jurisdiction.”
Subject to the approval of the District Court, the Assets will be acquired for aggregate consideration of US$4,500,000 payable as follows:
- US$200,000 on signing of the Agreement
- US$1,000,000 on closing of the Acquisition;
- US$2,000,000 upon the occurrence of (i) the earlier to occur of the transfer or re-issue of key permits or commencement of exploration drilling, and (ii) negotiation of access arrangements with Ouray County; and
- US$1,300,000 upon the conditions for the immediately preceding payment having been met and the occurrence of the earlier of the completion of a current technical report, or September 30, 2024.
At Silver X’s election on or before May 24, 2023, Silver X has the right to elect to pay the purchase price in full on or before May 31, 2023, and, if so elected, the purchase price will be reduced by US$1 million to US$3.5 million.
The Agreement was signed on April 14, 2023. The Acquisition remains subject to a number of conditions, including receipt of the confirmation of the District Court, completion by Silver X of a financing of not less than US$5 million, receipt of the consent to the assignment to certain material contracts and certain other standard closing conditions. Until the payments set out above have been made, the Assets will be subject to a security interest in favour of the Receiver.
The Acquisition is expected to close during the second quarter of 2023 subject to customary closing conditions including receipt of all required regulatory approvals, including, without limitation the TSX Venture Exchange and the approval of the District Court.
The Revenue-Virginius Mine Overview
The RV Mine is a past-producing polymetallic mine comprised of an epithermal vein system with numerous veins in Tertiary volcanics above the polymetallic replacement deposits hosted in the basal Telluride Conglomerate, including main vein structures such as Virginius, Terrible, Yellow Rose, Montana, Atlas/Cumberland or The Wheel of Fortune. All are quartz-carbonate veins containing silver (Ag), gold (Au), copper (Cu), lead (Pb) and zinc (Zn) minerals hosted primarily in the San Juan volcanic rocks. Veins range from several inches up to 10 feet in width and have been mined historically and drilled over a vertical extent of over 3,000 feet. The Virginius Vein has been mapped at surface by the U.S. Geological Survey (USGS) over a distance of approximately 11,700 feet, the Terrible Vein has been traced for over 4,000 feet and the Yellow Rose up to 16,000 feet extending off the current property limits. The northern portion of the property includes the northern extensions of the famous Smuggler- Union vein and several precious metal breccias as well as the main RV Mine vein system.
The RV Mine has been mined historically at various intervals since the late 1800s and has seen significant investment in drilling, development and infrastructure. Most recently owned and operated by Aurcana Silver Corporation (“Aurcana”) from 2019 to 2022, production recommenced in 2021 and a feasibility study was completed in 2022. Operations were halted following financial hardships faced by Aurcana and the RV Mine was placed into receivership in March 2022. Much of the project infrastructure is currently in place and had been maintained or upgraded by Aurcana.
A historical estimate prepared in 2021 by SRK Consulting (U.S.), inc. is a report titled “NI 43-101 Technical Report,
Feasibility Study, Revenue – Virginius Mine” is presented in the following table:
Table 1: Mineral Resource Estimate as of December 31, 2021 – SRK Consulting (U.S.), Inc.
The above resource statement predates Silver X’s acquisition of its interest in the RV Mine and is therefore considered to be a historical reserve estimate. As the RV Mine is a past-producing mine with production history, the Company believes that historical estimates are relevant in that they provide a general basis for establishing the potential of mineralized material and historic production statements, however, a qualified person has not done sufficient work to classify the historical estimate as current mineral resources or mineral reserves and they should not be relied upon until verified. Silver X is not treating the historical estimate as current mineral resources or mineral reserves.
The Company will initiate a 12- to 18-month exploration program to confirm and strengthen the data and its geological understanding of the project. With the results of the exploration program and its verification of the recent historical estimate the Company may then decide to produce a new compliant mineral resource as defined under National Instrument 43-101 Standards of Disclosure for Mineral Projects.
Mr. A. David Heyl, B.Sc., C.P.G., is the qualified person under National Instrument 43-101 (“NI 43-101”) for Silver X and has reviewed, approved and verified the technical content of this news release. Mr. Heyl is a consultant for Silver X.