Highlights:

• The Agreement - PinnacleSilverandGoldCorp.“Pinnacle”)hassignedaLetterofIntent(the“LOI”)withanarm’slengthprivateindividualandacompanyhecontrolswherebyPinnaclewillhaveastagedoptiontoacquireuptoa100%interestinthe1,074hectareElPotrerohigh-gradegold-silverprojectinDurango, Mexico. 

• Prolific Area with Major Operating Mines Nearby - ElPotreroislocatedintheprolificSierraMadreOccidentalofwesternMexicoandlieswithin35kilometresoffouroperatingmines,including the 4,000tonnesperday (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-gradegold-silvermineralizationoccursinalowsulphidationepithermalbrecciaveinsystemhostedwithinandesitesoftheLowerVolcanicSeriesandhasatleastsixhistoricminesalongthefour-kilometrestrikelength.Ahistoricresourcebaseduponundergroundsamplingisreportedtoconsistof45,561tonnesat8.0g/tgoldand186g/tsilver (10.3g/tgoldequivalent or 845 g/t silver equivalent).1, 2   Thepropertyhasbeeninprivatehandsforalmost40yearsandhasneverbeen drilled or exploredbymodernmethods, leaving significant exploration potential. 

• Near-term Production Possibility - A 100tpdplantonsitecanberefurbished/ rebuilt andhistoric underground mineworkingsrehabilitatedatrelativelylowcostinordertoachievenear-termproductiononcepermitsareinplace. 

• Infrastructure Friendly - Property isroad accessible with a powerline within four kilometres.  Surface rights are privately owned (no community issues) and the acquisition includes approximately 200 hectares of land where the plant sits. 

• Staged Option and Earn-In Right -Pinnaclewillearnaninitial50%interestimmediatelyuponcommencingproduction.ThegoalwouldthenbetogeneratesufficientcashflowwithwhichtofurtherdeveloptheprojectandincreasetheCompany’sownershipto100%subjecttoa2%NSR. Ifsuccessful,thisapproachwouldbelessdilutiveforshareholdersthanrelyingon the still challengingequitymarketstofinancethegrowth ofthe Company. 

• Proven Management Expertise in Operating Gold/Silver Mines in Mexico -Pinnacle’sBoardandManagementhaveconsiderableyearsofexperienceandsuccessoperating intheSierraMadre 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 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 LOI - Thenon-bindingLOIisconditionaluponanumberofstandardconditions,includingcompletionofsatisfactoryduediligencebyPinnacle,completionofafinancing,thefilingofaNI43-101TechnicalReport,theexecutionofaformalDefinitiveAgreementandfinalapprovaloftheTSXVenture Exchange.  Pinnacle has exclusivity during the 3-month LOI period. 

 

VANCOUVER, BRITISH COLUMBIA – TheNewswire - October 28, 2024 - (TSXV:PINN; OTC:NRGOF; Frankfurt:P9J) – Pinnacle Silver and Gold Corp. ("Pinnacle" or the “Company") is pleased to announce that it has signed a Letter of Intent (the “Transaction”) to acquire up to a 100% interest, subject to a 2% NSR, in a reportedly high-grade gold-silver project in Durango, Mexico.

Located in the prolific Sierra Madre Trend of Mexico, which hosts several world class gold-silver mines and resources, the 1,074 hectare El Potrero Project 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 four-kilometre strike length of the 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.

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 four-kilometre strike length of 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 totalling 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 equivalent1, 2).  First-pass sampling has been conducted as part of Pinnacle’s due diligence and samples are in the lab at SGS Durango.  It is the Company’s intention to conduct extensive underground sampling, commencing as soon as possible after signing the Definitive Agreement.  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 four 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.

1, 2 See footnotes above

 

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):

1. 1. • On signing aDefinitive Agreement (the“DA”) -$50,000 cashand500,000sharesofPinnacle.Pinnacle will paythe backtaxesfortheproperty(estimated at$160,000). 

      • 8 monthsfrom signing the DA - $200,000cash and 1,000,000 sharesof Pinnacle. 

      • 1 year from signing theDA -$750,000cash and1,000,000sharesofPinnacle. 

      • WhentheCompanyhas established aMineral Resource Estimate, asdefined byNI43-101, ofatleast 350,000 gold equivalentouncesintheInferredcategory, or 2.5 yearsfrom signing theDA,whateverhappens first - $1,000,000cash and 1,000,000 sharesof Pinnacle. 

      • Whenthe plant issufficientlyupgradedandall permitsreceivedin order tocommenceproduction, or 4years fromsigningthe DA, whateverhappensfirst - $1,000,000 cash. Pinnacle receivesa50% interestintheproperty (including themining concessions, machinery, equipmentandland) and,goingforward, all proceedsof production will be splitaccordingtotherespectiveinterest levels. 

      • 1 year after commencingproductionor 5years fromsigningthe DA, whateverhappensfirst -$1,500,000cash.  Pinnaclereceivesafurther 20%interest inthe property. 

      • 2 yearsafter commencing productionor 7years fromsigningthe DA, whateverhappensfirst -$3,000,000cash.  Pinnaclereceivesafurther 20%interest inthe property, totaling 90%. Atthispoint,both parties will decide whether tocontinuewith a participating interestor the vendorwillhave theoptiontoconvert the remaining 10% interest toa 2%NSRroyalty. 

Totals of $7,500,000 cash (plus approximately $160,000 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, 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).

 

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

Pinnacle will be arranging a private placement to raise gross proceeds of up to $800,000 (the “Financing”), to close concurrently with the closing of the Transaction.  The placement will consist of up to 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.  Finder’s fees may also be paid.

The net proceeds raised from the Financing will be used for exploration and development of the Potrero Project 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.

 

Due Diligence and Indicative Timeline:

Under the terms of the non-binding LOI, the parties have agreed to a period of up to 3 months to finalize due diligence investigations, file a NI 43-101 Technical Report, complete the aforementioned financing, execute a Definitive Agreement and obtain final TSXV approval.

 

Other Information:

The Transaction is not a non-arm’s-length transaction within the meaning of the policies of the TSXV. A Finder’s Fee of 4% of the cash and shares will be payable to an arm’s length individual.

The Transaction is considered to be a Fundamental Acquisition by the TSXV.  Trading in the shares of the Company on the TSXV has been halted and will remain halted pending formal approval of the Transaction by the TSXV.

 

Qualified Person

Mr. Robert A. Archer, P. Geo, a Qualified Person as defined by National Instrument 43-101, and the President and CEO of the Company, has reviewed, verified and approved for disclosure the technical information contained in this news release.

 

ABOUT PINNACLE SILVER AND GOLD CORP.

Pinnacle is currently focused on district-scale exploration for precious metals in the prolific Red Lake District of northwestern Ontario.  The past-producing high-grade Argosy Gold Mine is open to depth, while the adjacent North Birch Project offers additional district-scale potential.  Pinnacle is also actively looking for other district-scale opportunities in the Americas, with a particular focus on silver and gold. 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.

11These 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.

2Gold 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.