MISSION, British Columbia, Oct. 22, 2018 (GLOBE NEWSWIRE) -- Sierra Madre Developments Inc. (TSX-V:SMG) (the “Company”) is pleased to provide the following corporate update:
CTO Revocations
The Company recently filed its financial statements and corresponding MD&A and certifications for the fiscal years ended March 31, 2017 and 2018. It has also filed its interim financial statements, MD&A and certifications for the three months ended June 30, 2018.
The Company is pleased to announce it has received revocation orders to the cease trade orders previously issued by the British Columbia Securities Commission on August 6, 2014, by the Ontario Securities Commission on August 25, 2014, and by the Alberta Securities Commission on November 5, 2014.
Management
The Company’s current officers and directors are: Carl von Einsiedel – CEO and interim CFO and Director, and Garth Kirkham - Director. The Company intends to add additional directors so as to comply with TSX Venture Exchange policies. In that regard, the Company has scheduled an annual and special shareholders’ meeting for November 9, 2018.
Change of Auditor
The Company recently filed notice that it changed its auditor from De Visser Gray LLP to Wolrige Mahon LLP. The Company noted that (i) De Visser had not expressed any reservation in its reports for, and (ii) no “reportable event” as defined in NI 51-102, had occurred with respect to the most recently completed fiscal year (2013) for which De Visser issued an audit report in respect of the Company, nor for the period therefrom to the date of the notice.
Mineral Property Interests
The Company sold its mineral property interests in Mexico in January 2014 in a transaction which saw the Company’s shareholders receive shares and warrants in Morro Bay Resources Ltd. (now Viridium Pacific Group Ltd.). The Company no longer holds any mineral property interests in Mexico.
The Company’s sole focus is the Harrison Gold Property located near Harrison Lake in south-western British Columbia. The Harrison Gold Property includes the Company’s option (the “Omineca Option Agreement”), originally entered into on November 17, 2011, to acquire a 100% interest in 11 minerals claims comprising 2,426.603 hectares (referred to as the Omineca Property) from Omineca Mining and Metals Ltd. (“Omineca”).
On February 20, 2017, the Company and Omineca amended their option agreement by adding Bear Mountain Gold Mines Ltd. (“Bear Mountain”, the Company’s wholly owned subsidiary) to the agreement as a third party and amending the option payments schedule. This amendment also included a provision whereby Bear Mountain could assume responsibility for the cash and share consideration payable to Omineca and assume responsibility for the exploration expenditures. As consideration, Sierra Madre and Bear Mountain agreed to issue an additional 500,000 shares to Omineca (once the cease trade orders were rescinded), and Bear Mountain agreed to incur a minimum of $50,000 in exploration expenditures on the Property on or before December 31, 2017.
Payments, share issuances and expenditures are now due as follows:
| Cash Payments | Share Payments | Exploration Expenditures | Due Dates | ||
| $ | $ | ||||
| 25,000 | - | - | On execution date (paid) | ||
| 25,000 | 66,667 | - | December 5, 2011 (paid and issued) | ||
| 50,000 | 100,000 | - | December 5, 2012 (paid and issued) | ||
| - | - | 50,000 | December 31, 2017 (incurred) | ||
| - | 666,666 | 100,000 | December 31, 2018 | ||
| - | 500,000 | 100,000 | December 31, 2019 | ||
| 400,000 | 2,000,000 | 1,750,000 | December 31, 2020 | ||
| 500,000 | - | - | Preferred Advance Royalty payments | ||
| 1,000,000 | 3,333,333 | 2,000,000 |
As at March 31, 2013 the Company had incurred exploration expenditures of $358,471 on the Property. As at June 30, 2018 the Company had incurred a total of $710,250 in exploration expenditures on the Property. In order to maintain the Omineca Option Agreement in good standing, approximately $25,000 of additional expenditures must be incurred before December 31, 2018.
Bear Mountain Gold Mines Ltd. Mineral Tenures
Based on management’s assessment of the Harrison Gold Property, a decision was made to acquire additional mineral tenures to the south of the mineral tenures owned by Omineca (referred to as the Harrison South Tenures) and to acquire additional mineral tenures to the north and east of the Omineca Property (referred to as the Harrison Development Operations Tenures).
Sierra Madre incorporated Bear Mountain to hold title to all mineral tenures acquired on behalf of the Company within the Area of Mutual Interest defined in the agreement.
The Harrison Development Operations Tenures are comprised of 12 mineral claims comprising 1,936.4103 hectares (more or less).
The Harrison South Mineral tenures are comprised of five mineral claims comprising 716.3074 hectares (more or less).
The Harrison South Tenures and the Development Operations Tenures are within the Area of Mutual Interest defined in the Omineca Option Agreement and therefore subject to the terms of the Omineca Option Agreement. In the event that Sierra Madre and Bear Mountain do not meet the terms of the Omineca Option Agreement, 100% of Bear Mountain’s interest in the Harrison South Tenures and the Harrison Development Operations Tenures will be transferred to Omineca. Expenditures incurred on the Harrison South Tenures and the Development Operations Tenures are included as expenditures under the Omineca Option Agreement.
Haro Option Agreement
To further advance the exploration of the Harrison Gold Property, on November 30, 2017, Bear Mountain entered into an option and joint venture agreement with Haro Metals Corp. whereby Haro has the right to acquire a 60% interest in the Harrison South Mineral Tenures. To exercise the option, Haro must pay an aggregate of $100,000, and incur an aggregate of $500,000 of expenditures on the Property as to:
| (i) | on or before December 31, 2017, incur at least $100,000 of expenditures on the Property (incurred); | |
| (ii) | on or before June 30, 2019, incur an additional $100,000 of expenditures on the Property; and | |
| (iii) | on or before December 31, 2020, incur an additional $300,000 of Expenditures on the Property, and pay the sum of $100,000 to Bear Mountain (either in cash or shares, at Haro’s election). |
Upon exercise of the option, Haro and Bear Mountain will form a joint venture to further the exploration and development of the Harrison South Mineral Tenures. Initial interests in the joint venture will be 60% held by Haro and 40% held by Bear Mountain. Haro will be the operator or manager of the joint venture, with operational and budget decisions being made by a management committee comprised of representatives of Haro and Bear Mountain. In the event a party contributes less than its pro-rata share of any approved budget toward an approved work program, that party will be subject to having its joint venture interest diluted. Should a party’s interest be diluted to 10% or less, its interest in the joint venture will automatically terminate and instead it will receive a 1.0% net smelter return royalty.
Project Summary
The Harrison Gold Property claims cover several intrusion related gold occurrences that have been intermittently explored by various operators since the early 1970's. Approximately $4.0 - $7.0 million was expended by Abo Resources, Kerr Addison Mines Ltd., Bema International Resources Ltd. and Northern Continental Resources over the last 35 years.
Exploration work since 1970 has included a total of 19,490m (64,000') of diamond drilling in 161 drill holes and small-scale underground development work. Most of the historic work was focused on the northern part of the Property in the area of the Jenner and Portal Zones. Drill results reported from the Portal Zone include 30 meters averaging 3.17 g/t gold (EMPR ASS RPT 19584). Drill results reported from the Jenner Zone include 64m averaging 3.77 g/t (EMPR ASS RPT 20144). In addition to the Jenner and Portal Zones, the Property hosts numerous additional target areas located within a plateau area referred to as Bear Mountain. Other gold-bearing zones identified by previous operators on the Property include the Hill and Lake Stock Zones. These areas have seen limited exploration in comparison to the Jenner and Portal Zones.
Since it entered into the Omineca Option Agreement, the Company has completed extensive repairs to the core storage area and the existing underground workings, staked several mineral claims adjoining the Omineca Property, and completed extensive soil geochemical surveys of the central and southern part of the plateau area on Bear Mountain. Since 2014, the Company has focused on evaluating potential development options for the project that would minimize the impact on local communities. On January 30, 2016, the Company submitted an application to the Ministry of Mines for an amended exploration permit that would allow the Company to complete a verification drilling program to confirm the historic drill results reported by previous operators, and re-open existing underground workings and extract a mini bulk sample for metallurgical and environmental test work.
All disclosure of scientific or technical information pertaining to the Property contained herein has been reviewed and approved by Carl von Einsiedel, a qualified person as defined in NI 43-101 – Standards of Disclosure for Mineral Projects.
Assignment of Assets to Bear Mountain
The Company has determined to divest all of its interests in the Omineca Option Agreement to Bear Mountain, such that Bear Mountain will hold all of the interests in the Harrison Gold Property, and to then seek alternative business opportunities. Pursuant to a Sale Agreement,
| (i) | the Company will vend all of its interests in the Omineca Option Agreement to its subsidiary – Bear Mountain; | |
| (ii) | in consideration, Bear Mountain will (A) issue 2,699,041 common shares in its capital to the Company, calculated on the basis of one Bear Mountain share for every 20 outstanding shares of the Company, and (B) assume $287,822 of debt owed by the Company, which amount relates primarily to expenditures incurred after the Company disposed of its Mexican assets.; | |
| (iii) | the Company will then distribute the Bear Mountain common shares to the shareholders of the Company, on a pro-rata basis, as a return of capital; such that the Company’s shareholders will wholly own Bear Mountain; and | |
| (iv) | Bear Mountain will continue with the development of the Harrison Property. |
Annual and Special Meeting of Shareholders
An annual and special meeting of the Company’s shareholders has been scheduled for November 9, 2018 at which, among other things, shareholders will be asked to approve the Company’s disposition of its interests in the Harrison Gold Property, and the distribution of the Bear Mountain shares as a return of capital (the “Reorganization”). The Reorganization, and other matters, are described in greater detail in the Information Circular for the November 9, 2018 annual and special meeting. As the sale by the Company represents the disposition of substantially all of its assets, shareholders will have the right to dissent to the transaction. A record date of September 26, 2018 has been set for purposes of (i) determining shareholders eligible to vote at the meeting, and (ii) shareholders eligible to receive shares of Bear Mountain under the Reorganization.
ON BEHALF OF THE BOARD:
“Carl von Einsiedel”
Carl von Einsiedel, CEO
Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION: This news release includes certain “forward-looking statements” under applicable Canadian securities legislation. Forward-looking statements include, but are not limited to, statements with respect to: the terms and conditions of proposed revocation orders, property options; the business and operations of the Company. Forward-looking statements are necessarily based upon a number of estimates and assumptions that, while considered reasonable, are subject to known and unknown risks, uncertainties, and other factors which may cause the actual results and future events to differ materially from those expressed or implied by such forward-looking statements. Such factors include, but are not limited to: general business, economic, competitive, political and social uncertainties; delay or failure to receive board, shareholder or regulatory approvals; and the uncertainties surrounding the mineral exploration industry. There can be no assurance that the Company will be successful in completing any or all of the anticipated transactions listed above, or that such statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking statements. The Company disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.
For further information, contact: Carl von Einsiedel, 604-649-5793