Buchans Reports Second Quarter 2019 Results
August 29th, 2019
Toronto, August 29, 2019 – Buchans Resources Limited (the “Company” or “Buchans”), a Canadian base metal mineral exploration and development company, reports its interim financial results and results of operations for the quarter and half year ended June 30, 2019.
This news release should be read in conjunction with the Company’s condensed interim consolidated financial statements and the notes thereto for the period ended June 30, 2019, which are available on the Company’s website at www.BuchansResources.comor under the Company’s profile at www.sedar.com
Buchans has interests in zinc-lead-silver properties located in Canada, Ireland and the United Kingdom; gold properties in Newfoundland and Labrador; nickel-copper-cobalt properties in Labrador; a battery metal manganese project in New Brunswick; and, indirectly through its 22% shareholding in Xtierra Inc. (TSXV: “XAG”), in base metal and silver projects in Mexico.
NEWFOUNDLAND – BASE METALS
Buchans holds an extensive mineral land package in the Buchans district of central Newfoundland with interests in four undeveloped base metal deposits, including the large, lower grade, Lundberg stockwork sulphide deposit, as well as three smaller, higher grade, volcanogenic massive sulphide (“VMS”) “satellite” deposits, each with excellent exploration potential.
Buchans is confident that its Newfoundland mineral properties hold potential for discovery of new Buchans-style high-grade deposits similar to those previously mined at Buchans by ASARCO, which produced more than 16.2 million tonnes from five separate deposits, with a combined average grade of 14.51% Zn, 7.65% Pb, 1.33% Cu, 126 g/t Ag, and 1.37g/t Au, before exhaustion of ore reserves and mine closure in 1984.
On March 1, 2019 Buchans announced a new updated pit-constrained Mineral Resource Estimate for its lower-grade, bulk tonnage Lundberg base metal deposit, located at the former Lucky Strike mine site, and a NI 43-101 Technical Report was filed in April, 2019, reporting a resource of more than 1.25 billion pounds Zinc Equivalent, with 98.7% of the mineral resources in the Indicated category. [“Technical Report and Mineral Resource Estimate on the Lundberg Deposit, Buchans Area, Newfoundland and Labrador, Canada” Mercator Geological Services Limited, April 15, 2019].
Following recommendations in the Technical Report, Buchans has engaged Stantec Consulting Limited of Fredericton, New Brunswick to undertake an internal scoping study evaluating potential options for Lundberg’s development as a stand-alone open-pit resource. The study will incorporate updated parameters determined by the Company’s continued technical assessments of the deposit since completion of a Preliminary Economic Assessment in 2011. In addition to applying prevailing metal pricing forecasts and currency exchange rates, these parameters include revised metallurgical assumptions determined by bench-scale metallurgical test work completed in 2017 and additional inputs relating to capital and operating costs, as well as other operational considerations.
The internal scoping study is expected to be completed in September and will be used to determine the Company’s future strategy for Lundberg.
Buchans – VMS exploration
In 2018, a total of 8,000 metres of drilling was completed in 38 holes exploring the Buchans and Tulks North base metal properties in central Newfoundland. Drilling at four target areas located within a radius of 3.5 kilometres of the Lundberg/Lucky Strike Deposits returned favourable results warranting further exploration for additional higher-grade resources.
Buchans is undertaking additional investigation of these areas through expansion of its core relogging program to best determine appropriate step out directions, as well as evaluate additional target areas to be tested by future exploration drilling. Since initiating its core relogging program in 2014, Buchans has relogged more than 123,000 m of core from 652 holes drilled by previous operators and continues to revise its geological model for the Buchans camp as a means of identifying additional exploration targets.
At Tulks North, located 20 km south of Lundberg, drilling completed in 2018 returned encouraging results highlighted by the intersection of semi-massive to massive sulphide mineralization down plunge of the Bobbys and Daniels deposits indicating both zones remain open at depth. Both deposits have mineral resource estimates supported by NI 43-101 technical reports and have been favourably assessed by bench-scale metallurgical test work completed in 2017.
In 2018, Buchans completed SkyTEM airborne geophysical surveys over its Tulks North property as exploration for additional VMS deposits. In July 2019, the Company undertook follow-up investigations of several prospective anomalies identified by the 2018 SkyTEM survey and is awaiting results from soil geochemical surveys undertaken as part of these investigations.
ZINC EXPLORATION IN IRELAND – JOINT VENTURES WITH BOLIDEN
In Ireland, Buchans, through its wholly owned subsidiary Minco Ireland Limited, is continuing exploration for zinc, both in joint venture with Boliden Tara Mines near Navan and on its own licences at Moate. Buchans also entered into a new exploration agreement with Boliden Tara Mines on six Prospecting Licences in Galway.
Buchans is participating at 20% in a joint venture with Boliden Tara Mines at 80% on Licence 1440R, which lies immediately adjacent to Boliden’s large 130 million tonnes Tara zinc-lead mine at Navan. Buchans is also participating in a joint venture with Boliden Tara on Licence 3373, contiguous to the west with Licence 1440R, where Buchans can earn up to a 75% interest.
Exploration on Licence 3373, which covers an area of approximately 30 square kms located northwest of the Navan orebody and constitutes the north-western quadrant of a contiguous block of ground currently being explored by Boliden Tara Mines, has focused on the search for zinc-lead mineralization within the Navan Group (Pale Beds).
Four structurally defined drill targets with potential for late epigenetic mineralisation, comparable to that at the nearby small Tatestown-Scallanstown deposit, have been identified lying to the south of a controlling boundary fault and offset sinisterly by a series of north east striking faults.
These four target areas, located eight to fifteen kilometres west of the Tara Mine, at estimated depths of 550 to 800 metres below surface, are the focus of exploration during 2019. Ongoing work programs include re-interpretation of previous seismic survey data based on 2018 drilling, soil geochemistry, and integration of new geological re-interpretation with that of Boliden’s on adjacent Licence 1440R to the east, to create a large “Boundary Fault Corridor” targeting project. One shallow hole was drilled and abandoned in Spring 2019 and further diamond drilling is planned to refine the geology and test these targets.
BATTERY GRADE MANGANESE IN NEW BRUNSWICK
In New Brunswick, Canadian Manganese Company Inc., a wholly owned subsidiary of Buchans Resources, holds the Woodstock manganese property containing the Plymouth manganese-iron deposit on which a positive preliminary economic assessment (“PEA”) technical report was completed in 2014.
Metallurgical development programs for Woodstock have focused on the production of high-grade electrolytic manganese metal and the intermediate production of purified manganese sulphate solution as an interim step, enabling the add-on production of manganese chemicals, manganese catalyst, battery grade manganese dioxide and high-purity manganese metal for electronics. Electrowinning tests consistently produced electrolytic manganese metal with a metallic manganese content of greater than 99.99% and a total manganese content ranging from 99.70% to 99.76% Mn.
Advancements in electric vehicle manufacturing are transforming the entire global automobile industry driving increased battery demand and NMC (nickel-manganese-cobalt) batteries are becoming the rechargeable battery of choice for next-generation automotive and industrial uses. Manganese is a key component in the formulations of the cathode material used in high-performance lithium-ion batteries and in utility bulk energy storage facilities, which are expected to create strong demand for high-purity manganese products.
Paul Moore, P. Geo. is Buchans’ Non-Independent Qualified Person for the purposes of National Instrument 43-101, Standards of Disclosure for Mineral Projects and has approved the technical disclosures on mineral projects in Canada in this MD&A. Historic mine production figures are derived from historic archived documents of the former operator, Asarco, and have not been independently verified.
Information on base metal properties in Ireland is derived from the Company’s communications with Boliden Tara Mines Limited, Operator of the Tatestown-Scallanstown (Licence 1440R) and Kells (Licence 3373) joint ventures.
Buchans recorded no revenue in the three and six month periods ended June 30, 2019 or June 30, 2018.
For the three-month period ended June 30, 2019, the Company recorded a loss of $285,371, compared to a gain of $943,791 for the three-month period ended June 30, 2018. The loss for the three-month period ended June 30, 2019 included a loss in fair value of Xtierra warrants of $82,537, depreciation of $61,435 and finance costs in accordance with IFRS 16, Leases of $17,604. The gain in the quarter ended June 30, 2018, included a gain in the fair value of Xtierra warrants of $1,053,879.
For the six-month period ended June 30, 2019, the Company recorded a loss of $618,100, compared to a loss of $218,857 for the six-month period ended June 30, 2018. The loss for the six-month period ended June 30, 2019 included a loss in fair value of the Xtierra warrants of $214,013, depreciation of $102,392 and finance costs in accordance with IFRS 16, Leases of $29,881.
During the six months ended June 30, 2019, Buchans invested $220,284 (2018 – $411,148) 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, 2019, Buchans held $2,248,353 (December 31, 2018- $2,895,188) in cash and cash equivalents and had a working capital surplus of $1,944,447, net of a $225,548 lease obligation liability, compared to a working capital surplus of $2,760,648 at December 31, 2018.
At June 30, 2019, Buchans held mineral properties with a combined book value of $18,116,634. The balance sheet values for these assets may not represent that which could be obtained if the assets were to be offered for sale.
ABOUT BUCHANS RESOURCES
Buchans Resources Limited is incorporated under the laws of the Province of Ontario, Canada and is a “reporting issuer” in the Provinces of Alberta, British Columbia, Nova Scotia and Newfoundland and Labrador.
Buchans Resources has interests in zinc, lead, silver properties located in Canada, Ireland and the United Kingdom ; gold properties in Newfoundland and in Labrador; nickel, copper, cobalt properties in Labrador and a manganese project 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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