Pinnacle Signs Definitive Agreement For Option To Acquire High-Grade Gold-Silver Project In Mexico

 

(TheNewswire)

  

  Highlights:  

 

  - The Agreement   - Pinnacle   Silver   and   Gold   Corp.   ("Pinnacle")   has   signed a Definitive Agreement   (the   "DA")   with   an   arm's   length   private   individual   and a company   he   controls   whereby   Pinnacle   has a staged   option to acquire   up to a 100%   interest   in the 1,074   hectare   El   Potrero   high-grade   gold-silver   project   in   Durango,   Mexico.  

 

  - Prolific Area with Major Operating Mines Nearby - El Potrero is located in the prolific Sierra Madre Occidental of western Mexico and lies within 35 kilometres of four operating mines, including the 4,000 tonnes per day (tpd) Ciénega Mine (Fresnillo), the 1,000 tpd Tahuehueto Mine (Luca Mining) and the 250 tpd Topia Mine (Guanajuato Silver).

 

  - High-Grade & District-Scale with Exploration Upside   - High-grade   gold-silver   mineralization   occurs   in a low   sulphidation   epithermal   breccia   vein   system   hosted   within   andesites   of the Lower   Volcanic   Series   and   has   three   historic   mines   along a 500 metre strike   length. A historic   resource   based   upon   underground   sampling of those three mines   is   reported to consist   of   45,561   tonnes   at   8.0 g/t gold   and   186   g/t   silver   (   10.3   g/t   gold   equivalent or 845 g/t silver equivalent).     1     , 2   The   property   has   been   in   private   hands   for   almost   40   years   and   has   never   been   drilled   or   explored   by   modern   methods, leaving significant exploration potential.  

 

  - Near-term Production Possibility - A 100   tpd   plant   on   site   can   be   refurbished   / rebuilt and   historic   underground   mine   workings   rehabilitated   at   relatively   low   cost   in   order to achieve   near-term   production   once   permits   are   in   place.  

 

  - Infrastructure Friendly   - Property is   road   accessible   with a power   line   within   three   kilometres.  Surface rights over the plant and mine area are privately owned (no community issues).  

 

  - Staged Option and Earn-In Right   -   Pinnacle   will   earn   an   initial   50%   interest   immediately   upon   commencing   production.   The   goal   would   then   be to generate   sufficient   cash   flow   with   which to further   develop the project   and   increase the Company's   ownership to 100%   subject to a 2%   NSR.   If   successful,   this   approach   would   be   less   dilutive   for   shareholders   than   relying   on the still challenging   equity   markets to finance   the   growth   of the Company.  

 

  - Proven Management Expertise in Operating Gold/Silver Mines in Mexico   -   Pinnacle's   Board   and   Management   have   considerable   years   of   experience   and   success   operating   in the Sierra   Madre   gold-silver belt of Mexico.  Pinnacle's President & CEO, Robert Archer was a co-founder of Great Panther Silver, that initially acquired and restarted the nearby Topia Mine in 2004-06, and successfully transitioned the company from explorer and developer to mid-size silver miner reaching $600 million market capitalization and listing on NYSE-American.  Non-executive director David Salari is involved in the development of two mines in Mexico and Colin Jones, also a non-executive director, is a Technical Advisor to another explorer in the region.  

 

  - The Transaction and Completion of Other Conditions   - The   Transaction is deemed to be a Fundamental Acquisition by the TSXV.  The requisite Part-and-Parcel financing, announced on October 28, 2024 has been fully subscribed at $800,000 and is expected to close on Feb 25, 2025; A NI 43-101 Technical Report has been filed on SEDAR+   .  

 

  - Appointment of Director of Investor Relations   – Karen Davies has been appointed as Director of Investor Relations for the Company.  

 

  VANCOUVER,   BRITISH   COLUMBIA,   February   24,   2025   –   TheNewswire -   (TSXV:   PINN;   OTC:NRGOF;   Frankfurt:   P9J)   –   Pinnacle   Silver   and   Gold   Corp.   ("   Pinnacle   "   or the "   Company   ")   is   pleased   to   announce   that, further to the Letter of Intent announced on October 28, 2024,   the Company   has   signed   a Definitive Agreement   (the   "Transaction")   with José Martinez Gomez and a company he controls   to   acquire   up   to   a   100%   interest,   subject   to   a   2%   NSR,   in   a   high-grade   gold-silver   project in   Durango,   Mexico.  The Transaction is an arm's-length transaction within the meaning of the policies of the TSXV.  

 

  The Potrero Property consists of 1,074 hectares in 8 concessions, 7 of which are contiguous.  Located   in   the   prolific   Sierra   Madre   Trend   of Mexico, which hosts several world class gold-silver mines   and resources, it lies within a 35-kilometre radius of four producing mines, including La   Ciénega, one of Mexico's largest underground gold-silver mines.  Under   a   single   owner for about 40 years, the Potrero property has been subject to small scale production in 1989-   90   and   contains   a   100   tonne   per   day   plant   that   can   be   refurbished / rebuilt   at   relatively   low   cost.   Similarly,   the   underground   mines   are   accessible   via   adits   (no   shafts)   and   can   be   rehabilitated   fairly   quickly   and   inexpensively.   At   that   point,   the   vendor   and   the   Company   will   share   equally   in   all   proceeds   of   production,   allowing   the   Company   to   further   develop   the   property   without   undue   shareholder   dilution.  

 

"We are   extremely   pleased to have the opportunity to develop   and   explore the El   Potrero   Property," stated Robert   Archer,   Pinnacle   President & CEO.   "It is centered in a well-mineralized   district   and   has   had   high-grade   historic   production   of   its   own, yet the extensive   vein   system   has   not   been   drilled   or   systematically   explored   by   modern   methods.   Average   gold   and   silver   grades   are   reported to be   in the range   of 10.3   g/t   gold equivalent or 845 g/t silver equivalent and our preliminary sampling has confirmed those grades.  

 

In the current environment of high metal prices, this presents an exciting opportunity to develop the property from the proceeds of production and continue to advance the project and build the company through additional acquisitions in a non-dilutive manner.  This is a business model that I am very familiar with, having successfully implemented it in the past with Great Panther."

 

  The   property   hosts a northwest-southeast   trending   epithermal   vein   system   containing   high   grade   gold   and   silver   mineralization.   The   veins   are   brecciated   and   hosted   in   andesitic   volcanics   of   the   Tertiary   Lower   Volcanic   Series   near the contact   with the overlying   Upper   Volcanic   Series.   Multiple   small   mines,   accessible   by   adits   into the side   of the   hill,   exist   along the system   and   some   have   been   exploited   in the 1980's   and   possibly   before.   Vein   widths   are   reported to be   in   the 0.5 to 10   metre   range.   Vein   textures   indicate   that the mines   may   be   sitting   fairly   high   in the epithermal   system   implying   good   potential to extend the mineralization to depth.  

 

  There   has   been   no   drilling   on the property   and   no   detailed   production   records   have   been   provided to date, but longitudinal sections of the mine workings indicate mineralized blocks totaling a historic resource of 45,561 tonnes at 8.0 g/t gold and 186 g/t silver (10.3 g/t gold equivalent or 845 g/t silver equivalent 1, 2 ).  First-pass sampling has been conducted as part of Pinnacle's due diligence and results confirm the tenor of the gold-silver mineralization.  It is the Company's intention to conduct extensive   underground   sampling,   commencing   as   soon   as   possible   . A diamond   drill   program   will   also   be   planned   to   initially   test the continuity   of   mineralization   in   and   around the old   workings,   followed   by   step   out   drilling   along   strike   and   down-dip.  

 

A 100 tonne per day processing plant with a vat-leach cyanidation and Merrill Crowe circuit was in operation   in   1989-1990.  The basic infrastructure is sound,   but   some   equipment   will   need   replacement.   The   main   power   grid   is   only   three kilometres away and the property is road accessible, being approximately 9 hours from Durango City and two hours from Topia. Operating   permits   will   need to be   re-established. A geotechnical evaluation of the mine workings will be conducted in order to design and implement a rehabilitation   plan.  

 

  Most of the five northernmost concessions, that will be the main focus of exploration and development, are situated on private property to which the Company will have full access during the term of the agreement so there should be no community issues.  Specifically, the land upon which the plant and historic mines are located are in the process of being acquired by the principal vendor and will become part of the agreement, thereby streamlining the permitting process.  Once the Company has acquired a 90% interest, it   will enter into a lease agreement with respect to the private property for an initial period of 20 (twenty) years, the rent of which will be determined taking into consideration the application of the market value in the area where the property is located, subject to prior TSXV approval, if required.  

 

  1, 2   See footnotes   below  

 

  Terms   of   the   Transaction  

 

  The   Transaction   has   been   structured   as   a   staged   earn-in,   allowing   the   Company   to   acquire   a   direct   interest   in   the   property   and   infrastructure   according   to   the   following   schedule,   cash   payments   and   share   issuances   (all   dollar   amounts   are in United   States   Dollars):  

 

- On signing the Definitive   Agreement (the "DA") - $50,000   cash   and   500,000   shares   of   Pinnacle. As the mining taxes are not up to date, Pinnacle   has committed to   paying the back   taxes for the property   (total estimated   at   $183,000) by entering into a payment plan with the Mexican fiscal authorities whereby 20% will be paid up-front followed by 36 monthly instalments.  

 

- 8 months   from signing   the   DA - $200,000   cash   and   1,000,000   shares   of   Pinnacle.  

 

- 1 year from signing   the   DA - $750,000   cash   and   1,000,000   shares   of   Pinnacle.  

 

  - When the plant is   sufficiently   upgraded   and   all   permits   received   in   order to commence   production,   or 4 years   from   signing the DA,   whatever   happens   first - $1,000,000   cash.   Pinnacle   receives a 50% interest   in the property   (including the mining   concessions, machinery, equipment   and   land)   and,   going   forward, all   proceeds   of   production   will   be   split   according to the   respective   interest levels.  

 

- 1 year after commencing   production   or 5 years   from   signing the DA, whatever   happens   first - $1,500,000   cash.   Pinnacle   receives a further   20%   interest in the property.  

 

- 2 years   after commencing   production   or 7 years   from   signing the DA, whatever   happens   first - $3,000,000   cash.   Pinnacle   receives a further   20%   interest in the property,   totaling   90%.   At   this   point,   both   parties   will   decide   whether to continue   with a participating   interest   or the vendor   will   have the option to convert the remaining   10% interest to a 2%   NSR   royalty.  

 

  - As a Contingent Bonus, should the Company   establish a Mineral   Resource   Estimate,   as   defined   by   NI   43-101,   of   at   least   350,000   gold   equivalent   ounces   in the Inferred   category - $1,000,000   cash   and   1,000,000   shares   of   Pinnacle.  

 

  If all amounts are paid, the totals   would be   $7,500,000   cash   (plus   approximately   $183,000   in   back-taxes)   and   3,500,000   shares   of   Pinnacle for a 100%   interest subject to a 2%   NSR   royalty.  

 

Pinnacle will be the operator throughout the term of the agreement, oversee permitting, and make the semi-annual payment   of mining taxes, etc. If, at any time after acquiring a 50% interest, Pinnacle decides not to proceed, the Company could either continue to operate at its level of interest   at that time or sell its interest, in which case the vendor would   have a Right Of First Refusal (ROFR), subject to TSXV approval, if required.

 

  Part   -   and-Parcel   Financing   (All   dollar   figures   in   CAD)  

 

  The Part-and-Parcel   private   placement to raise   gross   proceeds   of   up to $800,000 (the "Financing"), as announced on October 28, 2024, is fully subscribed and the Company anticipates closing on Tuesday, February 25, 2025, subject to final TSXV approval.  The Company will issue a News Release when the financing has closed.   The   placement   consists   of   20,000,000   units   (the   "Units")   at a price   of   $0.04   per   Unit,   with   each   Unit   comprising   one   common   share   ("Share")   in the capital   of the Company   and   one-half   share   purchase   warrant   ("Warrant"),   whereby   each   whole   Warrant   shall   be   convertible   into   an   additional   Share   at   an   exercise   price   of   $0.06 for a period   of 24   months   from the date   of   issuance.   No f   inder's   fees   were   paid.  

 

  The   net   proceeds   raised   from the Financing   will   be   used for exploration   and   development   of the Potrero   Project, payment of the back-taxes,   and   for   working   capital.  

 

  All   securities to be   issued   will   be   subject to a four-month   hold   period   from the date   of   issuance   and   subject   to   TSX   Venture   Exchange   approval.  The   securities   offered   have   not   been   registered   under   the   United   States   Securities   Act   of   1933   ,   as   amended,   and   may   not   be   offered   or   sold   in the United   States   absent registration   or an   applicable   exemption   from the registration   requirements.  

 

  Insiders subscribed for an aggregate of 648,500 Units for a total of $25,940.  As insiders of Pinnacle participated in the financing, it is deemed to be a "related party transaction" within the meaning of   Multilateral Instrument 61-101 Protection of Minority Security Holders in Special Transactions ("MI 61- 101").  Pinnacle is relying on the exemptions from the formal valuation and minority approval requirements contained in Sections 5.5(a) and 5.7(1)(a) of MI 61-101, on the basis that the fair market value of the transaction does not exceed 25% of the Company's market capitalization.  The Company will be filing a material change report in respect of the related party transaction on SEDAR.  

 

  Finder's Fee  

 

A Finder's Fee of 4% of the measurable benefit of each installment will be paid to an arm's length party, corresponding to the payment schedule outlined above, with this first installment Finder's Fee being 71,580 shares.  Any future Finder's Fee cash payments and/or share issuances will be subject to TSXV approval.

 

  Closing  

 

  The closing of the acquisition and the private placement are subject to TSXV final approval.   It is anticipated that trading   in the shares   of the Company   on the TSXV   will   resume within a few days.  The Company will provide an update in the next news release.  

 

  Director of Investor Relations  

 

  The Company is also pleased to announce the appointment of Karen Davies to the role of Director of Investor Relations, effective February 3, 2025.  

 

  Ms. Davies brings a wealth of experience   in the mining industry   where, over her extensive career, she has led various marketing initiatives with public company management teams to assist with equity financings, securing coverage from all sectors of the investing community, and implementing internal procedures to ensure clear and effective communication.  

 

  Early in her career Karen was part of the Investor Relations team at Fortuna Silver Mines Ltd. through the acquisition of the Caylloma Silver Mine in 2005 which came online as the company's first operating mine.  She was Manager, Investor Relations for Rye Patch Gold Corp., and Head of Investor Relations for Mariana Resources Ltd. where she played a key role in shareholder communications through the takeover by Sandstorm Ltd. in 2017.  Karen has continued in similar roles with her current position for Capella Minerals Ltd.  

 

  "I am very happy to be working with Karen as Pinnacle moves forward in a new chapter of our growth as an Americas-focused silver-gold company," stated Robert Archer, Pinnacle's President & CEO.  "We have known each other for many years, and I have a great deal of respect for her accomplishments and work ethic.  In these challenging times for junior miners, I look forward to working with Karen to develop and implement a successful communications strategy for the Company."  

 

  Ms. Davies is at arm's length to Pinnacle, has no interest, directly or indirectly, in the Company or its securities, or any right or intent to acquire such an interest; and has no other relationship with the Company, except pursuant to her Employment Agreement.  

 

  Technical Report  

 

  A new Technical Report entitled "NI 43-101 Report on the Potrero Project, Durango State, Mexico" prepared for Pinnacle Silver and Gold Corp., dated February 21, 2025, with an effective date of February 1, 2025 has been filed on SEDAR+.  

 

  Qualified   Person  

 

  Mr.   Jorge Ortega   ,   P.   Geo, a Qualified   Person,   and   independent from Pinnacle, as   defined   by   National   Instrument   43-101,   and the author   of   the   NI 43-101 Technical Report,   has   reviewed,   verified   and   approved for disclosure the technical   information   contained   in   this   news   release.  

 

  ABOUT Pinnacle Silver and Gold Corp.  

 

  Pinnacle   is   focused   on   district-scale   exploration   for   precious   metals   in the Americas.  The addition of the high-grade Potrero gold-silver project in Mexico's Sierra Madre Belt will complement the Company's project portfolio and provide the potential for near-term production   .   In the prolific   Red   Lake   District   of   northwestern   Ontario, the Company owns a 100%   interest in the   past-producing,   high-grade   Argosy   Gold   Mine and the adjacent North Birch   Project   with an eight-kilometre-long target horizon   .   With   a   seasoned,   highly   successful   management   team   and   quality   projects,   Pinnacle   Silver   and   Gold   is committed   to   building   long   -term   ,   sustainable   value   for   shareholders.  

 

  Signed:   "Robert   Archer"   President & CEO  

 

  FOR   FURTHER   INFORMATION   CONTACT:  

 

  Email:    info@pinnaclesilverandgold.com    Tel.:   +1-877-271-5886   ext.   110  

 

  Website:    www.pinnaclesilverandgold.com   

 

  Neither   the   TSX   Venture   Exchange   nor   the   Investment   Industry   Regulatory   Organization   of   Canada   accepts   responsibility   for   the   adequacy   or   accuracy   of   this release   .  

 

   1    1   These   resources   are   historical   in   nature   and   Pinnacle   is   not   treating   these   estimates   as   current   mineral   resources   as   a qualified person on behalf of Pinnacle has not done sufficient work to classify them as current mineral resources.  As a   requirement of the acquisition, Pinnacle will be producing a NI 43-101 compliant technical report, but not a resource estimate at this stage, subject to the approval of the TSX Venture Exchange.  

 

  2   Gold and silver equivalents calculated using   a gold:silver   price   ratio   of   82   (i.e.   82 g/t   silver   = 1   g/t   gold).   The   metal   prices   used   to   determine   the   82:1   ratio   are   the   closing   prices   in New York on Oct. 25, 2024:   gold   US$2,747.90   and   silver   US$33.67.  

 

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