Prime Meridian Resources Corp: La Verde Project Update
Vancouver, October 4, 2022 - Prime Meridian Resources Corp. (TSXV: PMR) ("PMR'' or the "Company") is pleased to announce the following update on the Company's La Verde Project. Further to the News Releases of December 9, 2021 and March 31, 2022, the Company and the Vendor have elected to modify the La Verde Project Purchase Option Agreement (the "Agreement") by changing the requirement for two US$200,000 option payments due under the current Agreement to US$20,000 minimum monthly payments. The Company and the Vendor have made these changes to reduce the up-front obligations under the Agreement and expedite the transaction process. The Company has also extended all financial obligations related to its Red Lake and Kelly claims for up to one year to focus the proceeds of the current financing on the La Verde Project.
Updated Financial Plan
The Company's project payments and work program expenditures for the next six months under the new Financial Plan are projected as follows:
| Monthly Option Payments | $165,600.00 |
| La Verde Project - Mining Duties | $ 22,434.04 |
| La Verde Project - Phase1 Work Program | $264,200.00 |
| $452,234.04 |
In accordance with the Company's Financial Plan, the Company announced in a News Release on July 22, 2022, the commencement of a non-brokered private placement offering of units at five cents per unit for gross proceeds of up to $1.5 million, consisting of:
- Up to 30 million units priced at five cents per unit;
- Each unit includes one common share and one common share purchase warrant.
- Each common share purchase warrant is exercisable at 10 cents for a period of three years.
- The company may pay finders fees on the proceeds of the private Placement.
- All securities issued will be subject to a statutory four-month hold period.
The company has the right to accelerate the exercise period on the warrants if, after the expiry of the four-month hold, the common shares of the company close at or above 50 cents for a period of 10 consecutive trading days.
The Company has closed a $340,000 first tranche of this private placement financing with the intended use of these funds being solely for working capital purposes. The Company will not be using these funds for expenditures on the pending La Verde acquisition until that acquisition has been approved by the TSX Venture Exchange.
The La Verde Project
The La Verde Project consists of multiple Copper-Zinc-Silver-Gold skarns and breccias along with the potential for a proximal copper porphyry based on encouraging results from previous exploration. Copper mineralization typically occurs as copper oxides, primarily malachite, chrysocolla and chalcocite, with sulphides reported in small zones and at depth.
The La Verde Grande mine, which was the subject of historical production between 1903 and 1981 is the most advanced of the known targets at the La Verde Project, as it has a historical ore reserve estimate for the central mineralized zone that covers only 110 metres of strike length. The La Verde Grande orebody is also located close to the surface which is ideal for low strip ratios. Metallurgical testing by various companies has consistently shown favourable results with average recoveries for silver by floatation of approximately 80% and copper and zinc of approximately 86% and 76%, respectively through acid leaching.
The La Verde Grande orebody remains open along strike to the southwest and northeast and within the project boundaries there are numerous other copper-silver skarn occurrences that have been located within the concessions surrounding the La Verde Grande Mine.
The combined results of recent underground and surface trench rock chip sampling at the La Verde Grande orebody have defined a horizontally oriented mineralized body approximately 50 to 70 metres wide, 35 to 50 metres thick and over 250 metres in length. Magnetic and IP/Resistivity geophysical surveys over the La Verde Grande orebody indicated that the deposit might extend over a strike length of more than 400 metres. The survey also identified three additional anomalies in the immediate vicinity to the La Verde Grande Mine deposit (immediately southeast of the deposit, 100 metres west of the deposit, and 250 metres southwest of the deposit).
Cautionary Note: A Qualified Person has not done sufficient work to classify the historical estimate as current mineral resources or mineral reserves; and the Company is not treating the historical estimate as current mineral resources or mineral reserves. The Company will need to undertake a comprehensive review of available data, as well as further work, to verify the historical estimate.
Permitting Plans and Work Programs
Upon TSX Venture Exchange approval, the Company will initiate the permitting process for the work programs at the La Verde Project through the delivery of certain outstanding items based on the conclusions of the La Verde title opinion that was completed by PMR's Mexican lawyers EC Rubio, who's offices are in Chihuahua, Mexico (the "Title Opinion"). This work will be completed in partnership with the Vendor and through the utilization of their resources and exploration logistics team located in Hermosillo, Mexico.
The details of the NI 43-101 Phase 1 Work Program planned for the La Verde Project, are detailed below. There will be no allocations of expenditure under the NI 43-101 Phase 1 or Phase 2 Work Programs on the La Verde 3 concession and the the La Verde 3 concession is not material to the Company's current plans for the exploration and development of the La Verde Project.
| Work Recommendations | Budget |
| 1. Structural mapping/ Magnetometer study | |
| Literature review/ Program preparation | $ 2,800 |
| Mobilization and transport | $ 2,000 |
| 7 days fieldwork, (2 geologists, 2 assistants) | $ 11,200 |
| 7 days food/ lodging (4 people) | $ 2,800 |
| Equipment rental | $ 4,000 |
| Data processing/ report | $ 4,700 |
| 2. Prospecting / Geochemical Sampling | |
| Literature review/ Program preparation | $ 2,800 |
| Mobilization and transport | $ 2,000 |
| 7 days fieldwork, (2 geologists, 2 assistants) | $ 11,200 |
| 7 days food/ lodging (4 people) | $ 2,800 |
| Sampling supplies | $ 2,500 |
| Assays (600) | $ 18,000 |
| Data processing/ report | $ 9,400 |
| 3. Definition Drilling (1200m) | |
| Mob/ Demob | $ 20,000 |
| Drilling - all in ($100/m) | $ 120,000 |
| Assays, core processing, etc. ($40/m) | $ 48,000 |
| Phase I - Cost Estimate | $ 264,200 |
Relevant Title Opinion Information
The following information has been extracted from the specifics of the Title Opinion on the La Verde Project, comprised of concessions which are held by Minerales el Agave S.A. de C.V. (the "Title Holder") with whom PMR has executed the Agreement.
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Note: the validity extension application for the Verde Grande Extension must be submitted this year to extend the validity of that title until June 28, 2073. La Verde 3 is subject to its own specific option terms within the La Verde Project Formal Agreement.
Mining Reports
- Work Assessment Reports
Pursuant to the Mexican mining law titleholders of concessions are required to file work assessment reports disclosing labor and exploration activities performed. This obligation is in good standing for all the La Verde concessions excluding two reports regarding the La Verde 3 concession which were not filed for the 2017 and 2020 periods. Therefore, prior to PMR exercising the option to acquire the La Verde 3 concession the required reports for 2017 and 2020 will need to be submitted to the Mexican Mining Authority. Additionally, there has been no previous occasion on which the titleholder has suspended this obligation in accordance with Mexican procedures and therefore, all the opportunities to suspend are still available.
From the review conducted in conjunction with producing the Title Opinion, it was determined that the concessions (excluding La Verde 3) preserve or maintain a positive surplus in required investment which arises from previous investments in the cumulative amount of CA$288,131.89 (MXN 4301809.11), and that may be applied by PMR in subsequent applications to fulfill the minimum investment amounts which are mandated by law.
Note: La Verde 3 obligation needs to be reconciled due to the failure to submit the 2017 and 2020 reports.
The minimum amounts to be invested through work on the concessions in 2022 totals CA$207,306.93 (MXN 3,095,092.40). As stated above, the Phase 1 Work Program as detailed in the PMR La Verde NI 43-101 Technical Report is CA$264,200.
- Technical Reports
According to Mexican mining law, all the concessions were obligated to have technical reports filed relating to work performed during the first six years since they have a current validity of greater than six years. The technical reports related to the concessions should have been submitted more than five years ago, but pursuant to Mexican Law, the authority to impose any penalty arising from any such possible failure has now expired, and therefore the Titles are in compliance with this obligation and there is no potential risk in connection with this obligation.
- Statistical Reports
According to Mexican mining law title holders holding rights over concessions with a validity of 6 years or more are obligated to report annual production. All the concessions are in compliance with this obligation, since the statistical reports were duly submitted, even though no production has arisen from the concessions during the years under analysis.
Mining Taxes/Duties/Fees
- Ordinary Mining Duties
Mexican concession holders are liable to pay governmental fees arising from the exploration and exploitation rights, usually referred to as Ordinary Mining Fees or Duties. Such payments must be performed on a six-month basis. Overdue payments may cause the cancellation of the concessions.
The payments due for the La Verde concessions (excluding La Verde 3) have been paid properly and there is no debt resulting from the obligation to pay Ordinary Mining Duties. In this sense, all the concessions (excluding La Verde 3) are in good standing regarding the compliance with this obligation.
Pursuant to the Agreement, PMR is compelled to pay the Ordinary Mining Duties on the La Verde concessions upon receipt of TSX Venture Exchange final approval of the transaction. Upon receipt of TSX Venture Exchange final approval, PMR will make payment on any accrued amounts and this amount plus the amounts due for the next six months are included in the PMR Financial Plan as detailed above and total CA$22,434.04.
Regarding "La Verde 3", there are non-paid Ordinary Mining Duties that have accrued since 2017. Should PMR exercise the option to acquire La Verde 3, it will be required to perform the regularization process before the Mining Authority and pay the outstanding duties, which as of May 5, 2022, amount to US$290,962.
- Additional Mining Duties
Pursuant to the "Work Assessment Reports", this duty is not applicable to any of the La Verde concessions, since the Titleholder has not suspended mining works within the Concessions or failed to submit the work assessment reports during two consecutive years. Additionally, based on historical mining customs this duty is not paid until the Mining Authority requests it.
- Special and Extraordinary Mining Duties
Pursuant to the "Statistical Reports", none of the La Verde concessions have been the subject of any recent production, and therefore, there is no obligation to make any payment related to this specific duty.
Other Specific Obligations
- Notification to the GMB Regarding the Beginning of the Benefit Operations
Pursuant to the "Statistical Reports", none of the La Verde concessions are producing ore, and therefore, there is no required notification obligation.
- Appointment of an Engineer for Safety
The titleholder of a mining concession must appoint an engineer legally authorized as the responsible individual to verify the compliance of security measures to recognize dangers and prevent accidents. The La Verde Project does not currently fall under the scope of this obligation and PMR will appoint such an individual when the obligation arises.
Environmental Authorization
This Authorization from the Ministry of Environment and Natural Resources grants the titleholder authorization to perform mining exploration activities and specifically drilling activities on mining concessions.
Pursuant to Mexican legal provisions, if the original environment will be modified because of human activity, the legal entity responsible for such activity is compelled to file before the Environmental Authority an Environmental Impact Assessment (EIA).
The last Authorization at La Verde, (which covered all concessions except La Cobriza 229407 and La Verde 3) was granted for a 12-month period which expired on September 02, 2019, and therefore, exploration activities cannot currently be undertaken prior to obtaining a new Authorization.
The proposed exploration activities match with existing Mexican Environmental Standards, and the surface on which the activities will be conducted lacks vegetation and protected animal species, has pre-existing roads, and the surface will not suffer further negative impacts. This provides an opportunity, considering that the original environment of the surface has been modified because of previous activities, for the Environmental Authority to approve the La Verde Project without the need to submit a new EIA, through the submission of a Preventive Report, for which approval is simpler and historically more likely than an EIA. PMR and the Title Holder are working to submit a new Preventative Report to cover all of the concessions. There is no guarantee that a new environmental authorization will be granted.
Litigation and Movable Guarantees Registry
In connection with the research on litigations over the concessions, it is important to clarify that such information is reserved for the interested parties, and therefore, there is no authority or governmental office in Mexico entitled to provide such information, officially. Research in the Movable Guarantees Registry to verify whether the La Verde concessions are subject to any kind of encumbrance showed that there is no encumbrance registered over the La Verde concessions.
Specific Deliverables
PMR is currently working with the Titleholder to complete the following:
- Submission of the validity extension application concerning the Verde Grande Extension concession, which may expire in the upcoming year (2023);
- Registration of the definitive assignment agreement through which the Titleholder acquired the mining claims; and
- Submission of the Preventive Report for the required Environmental Authorization.
And specifically, prior to PMR exercising the La Verde 3 Option, the following will be required:
- Submission of the two work assessment reports for 2017 and 2020; and
- Payment of the outstanding Ordinary Mining Duties.
The La Verde acquisition remains subject to exchange approval and that approval may never ultimately be obtained if the Company cannot satisfy the Exchange's filing requirements in respect thereof.
The Company has also granted 1.0 million stock options to directors, officers, consultants, and advisors of the Company. The options have an exercise price of 15 cents per share, expire five years from the date of grant and are subject to TSX Venture Exchange approval.
Qualified person
The technical contents of this release were approved by Case Lewis, PGeo, a qualified person as defined by National Instrument 43-101.
On behalf of the Board of Directors of
Prime Meridian Resources Corp.
"Brian Leeners"
Brian Leeners, CEO & Director
ir@primemeridianresources.com
The TSX Venture Exchange has in no way passed upon the merits of the proposed transaction and has neither approved or disapproved the contents of this press release.
To view the source version of this press release, please visit https://www.newsfilecorp.com/release/139442
