Buchans Year End 2019 Results

Buchans Year End 2019 Results

On April 21, 2020, Posted by , With Comments Off on Buchans Year End 2019 Results

Click here to Download the full News Release (PDF).

Toronto, April 20, 2020 – Buchans Resources Limited (the “Company” or “Buchans”), a Canadian base metal mineral exploration and development company, reports its financial results and results of operations for the year ended December 31, 2019.

This news release should be read in conjunction with the Company’s audited financial statements and the associated management’s discussion and analysis (MD&A) for the year ended December 31, 2019 which are available on the Company’s website at www.buchansresources.com or under the Company’s profile at www.sedar.com.


Buchans has interests in zinc-lead-silver properties located in Newfoundland, gold properties in Newfoundland and Labrador; nickel-copper-cobalt properties in Labrador, and, indirectly through its 21% shareholding in Xtierra Inc. (TSXV: “XAG”), in base metal and silver projects in Mexico.

The Company’s core holding within the Buchans mining district of central Newfoundland includes mineral rights covering approximately 252 km2 (25,200 hectares) considered prospective for VMS Zn-Pb-Cu-Ag-Au base metal deposits.  This extensive land package includes several undeveloped deposits including the large, lower grade, Lundberg stockwork deposit located beneath the former Lucky Strike massive sulphide orebody at Buchans, as well as several smaller “satellite deposits”, composed of higher-grade, volcanogenic massive sulphide mineralization.  The latter include the Company’s Daniels, Bobbys and Tulks Hill deposits, each with excellent exploration potential and located within the Company’s Tulks North and Tulks Hill properties, all located less than 45 km south of Lundberg.

The Company’s land position within the Buchans mining camp itself exceeds 72 km2, and includes mineral rights covering essentially all previously mined orebodies, undeveloped deposits and prospects, as well as most of the favourable stratigraphy, where Asarco mined 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 mine closure in 1984.

Buchans also controls several projects outside of its central Newfoundland VMS properties as additional exploration opportunities with potential to generate significant shareholder value.  These typically earlier stage opportunities have been generated and acquired by the Company and are held 100% without underlying interests or royalties.  These properties include nickel-copper-cobalt projects in the Voisey’s Bay area of Labrador as well as gold projects in Newfoundland and Labrador.  Several of these properties were worked in 2019 and continue to be maintained as highly prospective exploration projects.

The Company’s planned 2020 exploration programs include drill testing high priority targets, upgrading existing targets and continuing to develop new targets through field work and data interpretation. The schedule and timelines for these programs will depend on the stabilization of the COVID-19 pandemic and associated developments. With the evolving COVID-19 pandemic the Company is following the instructions and advice of Provincial and Federal health professionals and government officials, as well as industry-wide best practice guidelines, to help limit the spread of COVID-19, and has instituted a number of preventative measures including the closure of all corporate offices,  implementing remote work for all personnel able to do so, and eliminating all business travel and in-person meetings.

PLAN OF ARRANGEMENT – Group restructuring

On December 31, 2019, the Company filed Articles of Arrangement to implement a group reorganization whereby the shares of two wholly-owned subsidiaries were distributed to shareholders pursuant to a Plan of Arrangement, which was approved by shareholders on December 10, 2019, and sanctioned  by the Ontario Superior Court of Justice on December 19, 2019.

Under the Plan of Arrangement, shareholders retain their existing shares of Buchans, and the Company distributed to its shareholders, pro rata, all of the shares of Canadian Manganese Company Inc  on the basis of one share of Canadian Manganese for each share of Buchans held; and exchangeable warrants entitling shareholders to receive either one share of Minco Exploration Limited or 0.25 additional shares of the Company, at their option, for each share of Buchans held.  Any exchangeable warrants which remain unexercised on the expiry date will be automatically exchanged for shares of Minco Exploration.


Lundberg Deposit – 2019 Resource Estimate

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 on April 15, 2019.  The 2019 Mineral Resource Estimate contains more than 1.25 billion pounds Zinc Equivalent, with 97.8% of the Mineral Resources in the Indicated category.

The Mineral Resource Estimate, effective February 28, 2019, includes In-pit Indicated Mineral Resources of 16,790,000 tonnes grading 1.53% Zn, 0.64% Pb, 0.42% Cu, 5.69 g/t Ag and 0.07 g/t Au (3.38% Zn Eq) and In-pit Inferred Mineral Resources of 380,000 tonnes grading 2.03% Zn, 1.01% Pb, 0.36% Cu, 22.35 g/t Ag and 0.31 g/t Au (4.46% Zn Eq).  The Resource Estimate is estimated within an optimized pit shell at a cut-off grade of US$20/t NSR and is considered to reflect reasonable prospects for economic extraction in the foreseeable future using conventional open-pit mining methods.

Based on work carried out for the 2019 Mineral Resource estimation, Mercator is of the opinion that the Lundberg deposit has been sufficiently delineated by drilling to support Pre-feasibility (PFS) or Feasibility level studies, and that additional infill resource delineation drilling is not required for this purpose.

Mercator’s primary recommendation arising from the current Mineral Resource Estimate program is that an updated assessment of the Lundberg deposit’s economic potential be completed as the next phase of project evaluation.  This could take the form of a new Preliminary Economic Assessment or an internal economic study leading to a decision to proceed directly to a PFS assessment of Lundberg Deposit economics.

Lundberg Deposit – 2019 Deposit Optimization Study

Based on recommendations of the 2019 Mineral Resource Estimate, the Company engaged Stantec Consulting Limited of Fredericton, New Brunswick to undertake a deposit optimization study of the Lundberg deposit evaluating potential options for Lundberg’s development as a stand-alone open-pit resource.  The study incorporated updated parameters determined by the Company’s continued technical assessments of the deposit since completion of a Preliminary Economic Assessment of the project in August of 2011.  These parameters include revised metallurgical assumptions including assumptions determined by bench-scale metallurgical test work completed in 2017.  In addition, Stantec also evaluated various development, mining and processing options and scenarios, as well as reviewed tailings disposal options and shipping port alternatives.

The purpose of the Stantec study was to prepare a high-level options assessment for use internally by Buchans to assist with planning for future work on the Lundberg project.

Among the recommendations of the study are that additional metallurgical testing is recommended to support a Preliminary Economic Assessment; that further work be undertaken to further assess potential application of a stockpiling strategy; and that tailings management options be further evaluated.

The results and conclusions of the Stantec study will now be utilised to focus the Company’s approach towards completion of an updated assessment of the Lundberg deposit’s economic potential in the form of a new Preliminary Economic Assessment as the next phase of the project evaluation.

Buchans Exploration

Buchans is confident that its Newfoundland mineral properties hold potential for discovery of new VMS deposits comparable to historically mined orebodies in the Buchans camp.

As part of these exploration efforts, during 2019 Buchans expanded its land position through the purchase of mineral claims covering the former MacLean mine, a significant past producer of Zn-Pb-Cu-Ag-Au, and competitive staking of the Wiley claims.

It is anticipated that Buchans will proceed with assessment activities in 2020 to develop and identify additional targets for exploration for new high-grade orebodies at Buchans, as well as continue to evaluate development options for its Lundberg deposit as a stand-alone open pit mine and processing complex.

Buchans – Relogging and Target Generation

Throughout 2019, the Company continued its relogging program, reviewing archived drill cores from its Buchans project as a means of identifying and evaluating additional exploration target areas for the discovery of new high-grade Buchans orebodies.  To date the Company has relogged more than 134,000 metres of archived drill core from more than 680 drill holes since initiating its relogging program in 2014, including relogging of more than 10,800 m of archived core in 29 holes in 2019.

Also, in 2019, Buchans undertook work to incorporate its extensive relogging data into an expanded digital database that the Company intends to use to create a new, digital, 3-dimensional geological model extending out from previously mined orebodies to key undeveloped prospects and exploration targets.  The database is currently being developed in cooperation with Mercator Geological Services of Dartmouth, Nova Scotia, who previously constructed a deposit-scale model for the Lundberg deposit.  Buchans believes creation of a digital 3-dimensional geologic model will greatly enhance the Company’s ability to successfully target and explore for new, buried, high-grade deposits and the model’s construction is a priority for 2020.


Buchans recorded no revenue in the periods ended December 31, 2019 or December 31, 2018.

For the year ended December 31, 2019, the Company recorded a loss of $1,160,604.  The loss included a loss in fair value of the Xtierra warrants in the amount of $334,462, lease depreciation in the amount of $225,262, $60,992 finance costs in accordance with IFRS 16, Leases, and a loss in the amount of $289,662 attributable to discontinued operations.

For the year ended December 31, 2018, the Company recorded a loss of $42,303.  The loss included a gain on disposal of marketable securities in the amount of $344,037, income of $464,377 representing the fair value of Xtierra warrants received during 2018, a change in the amount of $57,465 in the estimated fair value of the warrants as at December 31, 2018, and a loss in the amount of $495,972 attributable to discontinued operations.

At December 31, 2019, Buchans held $1,443,246 (December 31, 2018- $2,895,188) in cash and cash equivalents and had a working capital surplus of $1,238,704, compared to a working capital surplus of $2,760,648 at December 31, 2018.

At December 31, 2019, Buchans held mineral properties with a combined book value of $12,797,123. The balance sheet values for these assets may not represent that which could be obtained if the assets were to be offered for sale.

The widespread COVID-19 health crisis has adversely affected the economies and financial markets of many countries, resulting in an economic downturn that could affect the Company’s operations and ability to finance its operations.


Buchans Resources currently holds interests in zinc, lead, silver properties located in Newfoundland; gold properties in Newfoundland and in Labrador; nickel, copper, cobalt properties in Labrador and indirectly through its 22% shareholding in Xtierra Inc. (TSXV: “XAG”), in base metal and silver projects in Mexico.

Enquiries:       info@buchanslimited.com

John F. Kearney: Chairman & Chief Executive                                           +1 416 362 6686

Danesh Varma: Chief Financial Officer                                              + 44 (0)77409 32766

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.

Additional information on Canadian Manganese Company Inc. is available at www.CanadianManganese.com

Additional information on Minco Exploration Limited is available at www.MincoExploration.com


This news release 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.

# # # # #