Buchans Half Year Report
Toronto, July 31, 2018 – Buchans Resources Limited (“Buchans” or the “Company”) is pleased to report interim results and exploration update for the quarter and six months ended June 30, 2018.
This news release should be read in conjunction with the Company’s unaudited financial statements and the associated management’s discussion and analysis (MD&A) for the second quarter and six months ended June 30, 2018 which are available on the Company’s website at www.buchansresources.com or under the Company’s profile on SEDAR (www.sedar.com).
- High-Grade massive sulphides and extensive stockwork mineralization intersected at Lundberg
- Drilling continues at Buchans with 3,500 metres drilled to date in 19 holes
- Exploration drilling program in central Newfoundland expanded to 7,000 metres
- Acquisition of Dalradian shares by Orion Mine Finance
CENTRAL NEWFOUNDLAND ZINC LEAD PROJECTS
In June 2018, Buchans started a 5,000 metre drilling program to test targets within its Buchans area and Tulks North Properties in central Newfoundland using two drill rigs. Nineteen holes totalling approximately 3,500 metres have been drilled to date.
In August, the drilling program was expanded to include approximately 7,000 metres of drilling with additional holes proposed at both Lundberg and other exploration target areas in Buchans. This is the largest drilling program undertaken at Buchans in the past six years and drilling will continue into the fourth quarter of 2018.
The program was expanded in response to favourable results returned from the first five holes of the program. Among these results are intercepts of 28.0 m 0.34% Cu, 0.83% Pb, 1.47% Zn, 3.0 g/t Ag & 0.05 g/t Au starting at a depth of 52 m in hole H-18-3501; and 152.0 m averaging 0.27% Cu, 0.71% Pb, 1.50% Zn, 4.20 g/t Ag & 0.05 g/t Au in hole H-18-3505. (See Buchans News Release July 31, 2018).
In addition, drilling on the southwest margin of the deposit also encountered remnants of high-grade massive sulphide mineralization associated with the former Lucky Strike orebody above the Lundberg deposit. Highlights for this mineralization intersected include 1.0 m assaying 0.59% Cu, 7.90% Pb, 13.50% Zn, 109.9 g/t Ag & 1.93 g/t Au (i.e., 21.99% combined base metals) as well as 1.8 m assaying 4.29% Cu, 11.62% Pb, 16.30% Zn, 85.4 g/t Ag & 1.39 g/t Au (i.e., 32.22% combined base metals). (See Buchans News Release July 31, 2018).
LUNDBERG OPEN PIT MINE – RESOURCE UPDATE AND OPTIMIZATION STUDIES
Results from the Lundberg 2018 drilling will be compiled with previous drilling results obtained in 2014 and 2015 that extended mineralization beyond the limits of the currently defined resource estimate which was compiled in 2013. Buchans has engaged Mercator Geological Services of Dartmouth, Nova Scotia to prepare a new resource estimate expected to be available in the fourth quarter of 2018.
In addition, Buchans has engaged AGP Mining Consultants Inc. of Toronto, to conduct an internal scoping study to evaluate and assess possible mining and processing scenarios for development of Lundberg as an open pit mine, including further application of Dense Media Separation (“DMS”) technology.
It is expected that the updated resource estimate and scoping study will provide a path forward for completion of a Preliminary Economic Assessment (PEA) on Lundberg as an open-pit, zinc, lead and copper mine.
ZINC EXPLORATION IN IRELAND
Buchans entered into a new joint venture agreement with Boliden Tara Mines on Licence 3373, contiguous to the west with Licence 1440R which lies immediately adjacent to Boliden’s large 130 million tonne Tara zinc lead mine at Navan, Ireland. In early 2018, Buchans completed two drill holes for a total of 636 metres on PL 3373 to define the location of a boundary fault and assist in structural interpretation of this large strategically located property.
LAKE DOUGLAS GOLD, NEWFOUNDLAND
In July 2018, Buchans completed soil geochemical surveys over a portion of its 2,075-hectare Lake Douglas gold project in central Newfoundland the property covering favourable geology and structure. Assays are pending.
Since staking the property in 2016, Buchans has conducted preliminary reconnaissance work including a compilation of previous work from historic assessment files. This work confirms the presence of unexplored favourable hosts rocks on the Lake Douglas property that are akin to the rocks hosting gold mineralization on adjacent properties. Results from limited prospecting include one anomalous gold assay from quartz float assaying 913 ppb Au (0.9 g/t Au).
TASIUYAK GOLD PROPERTY, LABRADOR
In July 2018, Buchans undertook a limited prospecting and sampling program on its Tasiuyak gold exploration property in Labrador. This 100% Buchans-owned property, located 10 kilometres south of Vale’s Voisey Bay nickel-copper-cobalt mine, includes mineral rights to 11.5 km2 covering a historic gold prospect discovered by previous explorers, while exploring for nickel during the Voisey’s Bay exploration rush in the mid-1990s.
The prospect, known as the VBE2 gold prospect, consists of a 90 m long bedrock exposure of sulphide-rich iron formation and has returned historic sampling results that include chip samples assaying up to 18.9 grams per tonne gold over 1 metre, as well as drilled intercepts over a 275 metre strike that include intercepts of 5.5 g/t Au over 2.1 m, 4.2 g/t Au over 3.0 m, and 4.1 g/t over 2.1 m.
Compilation of historic data indicates the host horizon may be traceable beyond the extent of previous drilling where it remains essentially unexplored. Buchans believes the Tasiuyak property represents an excellent exploration opportunity for discovery of new gold deposits in a frontier area.
DALRADIAN RESOURCES INC
At June 30, 2018, Buchans held 2.37 million shares of Dalradian Resources Inc., which is developing the Curraghinalt gold deposit in Ireland.
On June 21, 2018, Dalradian announced that it had entered into an arrangement agreement with Orion Mine Finance whereby Orion will acquire all the outstanding shares of Dalradian by way of a statutory plan of arrangement under the Business Corporations Act (Ontario) and Dalradian shareholders will receive cash consideration of C$1.47 for each Dalradian Share. The Arrangement will require the approval of Dalradian shareholders at a special meeting scheduled to be held on August 31, 2018 and is expected to close in the third quarter of 2018.
Although the price to be paid by Orion is stated by Dalradian to represent a 62% premium to the closing price of Dalradian shares on the day immediately prior to the announcement, and is recommended by the Dalradian Board supported by independent valuations and fairness opinions, the effect of the arrangement with Orion, if approved, will be to deprive Dalradian shareholders of exposure to the Curraghinalt gold project in Ireland, as Dalradian continues its exploration and development activities, and to cash out shareholders at a price which Buchans believes is inadequate and does not properly reflect the underlying value and potential of the Curraghinalt gold deposit.
The underlying value and potential of the Curraghinalt gold deposit were among the main reasons Minco proposed and recommended the scheme of arrangement whereby Minco disposed of its 2% net smelter royalty on the Curraghinalt gold deposit to Dalradian and Dalradian acquired all of the shares of Minco plc in 2017. As such, the arrangement with Orion whereby Buchans, and any Buchans shareholders still holding Dalradian shares, will be involuntarily cashed out of Dalradian and Curraghinalt is considered a disappointment by Buchans.
RESULTS OF OPERATIONS
For the three-month period ended June 30, 2018, the Company recorded a gain of $943,790, compared to a loss of $296,423 for the same period ended June 30, 2017. The gain for the three-month period ended June 30, 2018 included a gain in market value of marketable securities of $1,053,879.
For the six-month period ended June 30, 2018, the Company recorded a loss of $218,857, compared to a loss of $513,638 for the same period ended June 30, 2017. The loss for the six-month period ended June 30, 2018 included a gain in market value of marketable securities of $187,857. Administrative expenses, excluding foreign exchange, for the six-month period ended June 30, 2018 amounted to $487,599 compared to $421,713 for the same period ended June 30, 2017.
Buchans recorded no revenue in the periods ended June 30, 2018 or June 30, 2017.
During the six-month period ended June 30, 2018, Buchans invested $601,641 (2017- $421,408) on exploration of its mineral properties, of which the largest amounts were expended on the Buchans zinc lead project in central Newfoundland.
At June 30, 2018, Buchans held $2,185,995 (December 31, 2017- $3,426,194) in cash and cash equivalents and marketable securities of $3,331,639 and had a working capital surplus of $5,354,910, compared to a working capital surplus of $6,205,009 at December 31, 2017.
LISTING OF BUCHANS SHARES
When the shares of Buchans were distributed to Minco shareholders in August 2018 as part of the scheme of arrangement whereby Dalradian acquired all of the shares of Minco plc, Buchans indicated that, subject to market and trading conditions and obtaining any necessary approvals, it was intended that Buchans would either make an application for its shares to be listed on a Canadian stock exchange or complete another transaction whereby Buchans would acquire or be acquired by a company listed on a Canadian stock exchange, as soon as reasonably practicable.
Unfortunately, throughout 2018 to date market conditions in Canada for junior exploration companies have not been conducive to an initial public offering of the shares of a new listed company and, based on advice from the Company’s brokers and financial advisors, it has been determined to postpone the planned listing of the Company’s shares pending more favourable market conditions. Nevertheless, it is still intended to list the shares of Buchans at an appropriate time, subject to market conditions.
In the meantime, Buchans continues in good standing as a Reporting Issuer in the Provinces of British Columbia, Alberta, Nova Scotia and Newfoundland and Labrador, and in compliance with all of the requirements of the Securities Acts and Securities Regulations in Canada. All public filings of the Company may be inspected under the Company’s profile on SEDAR at www.sedar.com. Shareholders who wish to transfer their shares to anther party may do so by submitting appropriate transfer documentation in the usual manner to Computershare Investor Services in Vancouver or Toronto.
ABOUT BUCHANS RESOURCES
Buchans Resources Limited was incorporated on May 8, 2015 under the laws of the Province of Ontario, Canada. The Company was a wholly-owned subsidiary of Minco plc until August 30, 2017, at which time all the shares in the Company were transferred to Minco shareholders.
Buchans has interests in zinc, lead, silver properties located in Canada, Ireland and the United Kingdom, gold properties in Newfoundland and Labrador, manganese in New Brunswick and, indirectly through its 22% shareholding in Xtierra Inc. (TSXV: “XAG”), in base metal and silver projects in Mexico.
John F. Kearney: Chairman & Chief Executive +1 416 362 6686
Paul Moore: Vice President Exploration + 1 709 738-7384
Peter McParland: Director – Ireland +353 (0) 46 907 3709
Additional information about the Company is available on the Company’s website at www.BuchansResources.com.
This document contains certain forward-looking statements relating to, but not limited to, the Company’s expectations, intentions, plans and beliefs. Forward-looking information can often be identified by forward-looking words such as “anticipate”, “believe”, “expect”, “goal”, “plan”, “intend”, “estimate”, “may” and “will” or similar words suggesting future outcomes, or other expectations, beliefs, plans, objectives, assumptions, intentions or statements about future events or performance. Forward-looking information may include reserve and resource estimates, estimates of future production, unit costs, costs of capital projects and timing of commencement of operations, and is based on current expectations that involve a number of business risks and uncertainties. Factors that could cause actual results to differ materially from any forward-looking statement include, but are not limited to, failure to establish estimated resources and reserves the grade and recovery of ore which is mined varying from estimates, capital and operating costs varying significantly from estimates, delays in obtaining or failures to obtain required governmental, environmental or other project approvals, delays in the development of projects changes in exchange rates, fluctuations in commodity prices, inflation and other factors. Forward-looking statements are subject to risks, uncertainties and other factors that could cause actual results to differ materially from expected results. Shareholders and prospective investors should be aware that these statements are subject to known and unknown risks uncertainties and other factors that could cause actual results to differ materially from those suggested by the forward-looking statements. Shareholders are cautioned not to place undue reliance on forward-looking information. By its nature, forward-looking information involves numerous assumptions, inherent risks and uncertainties, both general and specific, that contribute to the possibility that the predictions, forecasts, projections and various future events will not occur. The Company undertakes no obligation to update publicly or otherwise revise any forward-looking information whether as a result of new information, future events or other such factors which affect this information, except as required by law.
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