Denarius Silver Announces Completion of Acquisition of the Lomero Project, Spain and Conversion of Subscription Receipts

Highlights:

• Lomero-Poyatos is a polymetallic deposit located on the Spanish side of the prolific copper rich Iberian Pyrite belt with a historical estimate in the inferred category of of 20.93 Mt of 3.08 g/t gold, 62.38 g/t silver, 0.90% copper, 0.85% lead and 3.05% zinc that remains open at depth and along strike. A qualified person has not done sufficient work to classify the historical estimate as current mineral resources or mineral reserves, and the Company is not treating the historical estimate as current mineral resources or mineral reserves.
• The project deposit site is well serviced by water, power, paved highways and port access and is also positioned in close proximity to the Matsa JV project which has processing facilities with the capacity to process 4.4M tons of copper and polymetallic ore annually.
• The Company has a strong cash position and management team with a track record of shareholder wealth creation via exploration, development and mining.
• Strong shareholder base with approximately 27.31% owned by Gran Colombia Gold (TSX: GCM) and 19.22% owned by King Street Capital.

VANCOUVER, BC, April 29, 2021 /CNW/ - Denarius Silver Corp. ("Denarius Silver" or the "Company") (TSXV: DSLV), is pleased to announce that it has acquired a 100% indirect interest in the Investigation Permit Nº 14,977, also identified as Rubia (the "Permit"), covering the areas occupied by the former Lomero-Poyatos Concessions and the mine within them in southern Spain. The Permit is owned indirectly by Transcontinental Gold Mines Pty Ltd. ("TGM"), now a wholly owned subsidiary of the Company.

The acquisition of 100% of the issued and outstanding shares of TGM by the Company (the "Transaction") has been completed pursuant to a share purchase agreement dated April 20, 2021 (the "Share Purchase Agreement") with ZENK Capital Private Fund, Inc. (formerly Qvartz Capital Partners Inc.) ("ZENK"), Continental Mining Australia Pty Ltd, as trustee for Continental Trust ("Continental Trust") and Haramont Pty Ltd, as trustee for D&V Investment Trust ("D&V", and together with Continental Trust, the "Vendors" of TGM) and TGM.  Anthony Trevisan is the control person of Continental Trust and Jerome (Gino) Vitale is the control person of D&V.

Pursuant to the Transaction, the Company has paid (subject to certain post-closing adjustments) the following consideration to the Vendors (i) €3,900,000; (ii) €2,600,000 (which payment had originally been scheduled to be paid within a year, but was accelerated upon the Vendors delivering to the Company certain documentation required as a condition of payment); (iii) reimbursed the Vendors' transaction costs and related expenses in an amount equal to €1,850,000; (iv) issued 5,600,000 common shares of the Company (the "Common Shares"); and (v) granted a 0.5% net smelter returns royalty. In addition, in consideration of the assignment of the rights of ZENK to purchase the interest in the Permit, the Company: (i) issued, at the direction of ZENK, 29,400,000 Common Shares of which 6,000,000 Common Shares were transferred to KSAC Europe Investments S.à r.L., and (ii) granted a 1.5% net smelter returns royalty, of which 0.5% has been transferred to KSAC Europe Investments S.à r.L.  All Common Shares issued in connection with the Transaction are subject to a hold period of four (4) months plus one day, expiring on August 30, 2021.

In connection with closing of the Transaction, the escrow release conditions in respect of the 75,000,000 subscription receipts (the "Subscription Receipts") of the Company issued on March 17, 2021 (the "Financing") were satisfied and the aggregate gross proceeds of $33,750,000 were released to the Company, each Subscription Receipt automatically converted into one unit (each a "Unit") of the Company for no additional consideration. Each Unit is comprised of one Common Share and one common share purchase warrant (each a "Warrant"). Each Warrant is exercisable into one Common Share at a price of $0.80 per Common Share until March 17, 2026. The Company has received conditional approval of the TSX Venture Exchange (the "Exchange") to list the Warrants upon expiry of the hold period, with the listing being subject to satisfaction of standard listing conditions, of which there can be no guarantee will be satisfied. The Common Shares and the Warrants are subject to a hold period of four (4) months plus one day, expiring on July 18, 2021.

In connection with the Transaction, the Company issued to Fiore Management & Advisory Corp. 700,000 Common Shares as an administration success fee. The Company also paid finder's fees in connection with the Financing of 6% to arm's length parties who introduced subscribers to the Financing, totalling approximately $409,035, of which $361,665 was paid by issuing 803,700 Units.  These securities are subject to a hold period of four (4) months plus one day expiring on August 30, 2021.

The proceeds from the Financing were utilized to make the Transaction payments, and the remainder of the proceeds are expected to be utilized to undertake an exploration and development program on the Lomero Project and for the general and administrative expenses of the Company.

Following the closing of the Transaction and the Financing, the Company has approximately 204,676,615 Common Shares issued and outstanding on an undiluted basis.

Lomero Permit

Investigation Permit Nº 14,977 comprises 15 graticular blocks totalling approximately 454 hectares within the adjoining Municipalities of El Cerro del Andevalo and Cortegana within the Huelva Province of the Autonomous Community of Andalucía in southern Spain. The area covered by the Permit is located approximately 85 km north-west of Seville and 60 km north-east of the port of Huelva and includes the area previously occupied by 13 mining concessions including the former Lomero-Poyatos Mine. The Rubia Permit is an Investigative Mining Permit of approximately 454 hectares covering the Lomero-Poyatos Project which is a polymetallic deposit located in the Huelva Province in Southern Spain, within the Iberian Pyrite Belt which is one of the largest districts of pyrite-rich massive sulphide deposits in the world.

The project deposit site is well serviced by water, power, paved highways and port access and is also positioned in close proximity to the Matsa JV project which has processing facilities with the capacity to process 4.4M tons of copper and polymetallic ore annually. Exploration conducted by prior ownership indicates a historical estimate in the inferred category of 20.93 Mt of 3.08 g/t gold, 62.38 g/t silver, 0.90% copper, 0.85% lead and 3.05% zinc. The historical estimate is reported within a >25% S mineral envelope at a cut-off grade of 1.0 g/t Au for an underground mining scenario. The historical estimate was reported in a NI 43-101 technical report by Behre Dolbear with effective date of 2011. A qualified person has not done sufficient work to classify the historical estimate as current mineral resources or mineral reserves, and the Company is not treating the historical estimate as current mineral resources or mineral reserves. Mineral resources that are not mineral reserves do not have demonstrated economic viability. The Lomero-Poyatos (Rubia Permit) deposit remains open at depth and along strike and SRK has been contracted to design an exploration program to confirm the inferred resource base and further explore the potential at Lomero-Poyatos (Rubia Permit).

A technical report with respect to the Project will be available on the Company's website at www.denariussilver.com and its SEDAR profile at www.sedar.com.

Appointment of Interim CEO and New Directors

In conjunction with the closing of the Transaction, the Company announces that Serafino Iacono, the current Executive Chairman of the Company, has also been appointed Interim Chief Executive Officer, replacing Frederic Leigh.  The board of directors has also appointed two new independent members – Jesus Perez and Jerome (Gino) Vitale

Serafino Iacono has over thirty years of experience in capital markets and public companies and has raised more than $4 billion for numerous natural resource projects internationally. He is currently Executive Chairman of Gran Colombia and Chief Executive Officer and a director of NG Energy International Corp. and is a former Co-Chairman and an Executive Director of Pacific Exploration and Production Corporation and a former director of Petromagdalena Energy Corp. Mr. Iacono was also a co-founder of Bolivar Gold Corp and Pacific Stratus Energy, among others, and is involved in numerous resource and business ventures in Latin America, Canada and the United States.

Jesus Perez has over thirty-six years of experience in senior management positions at large public companies, including positions as Chairman, CEO or CFO of Spanish corporations such as BNPP Real Estate, Occidental Hoteles, Metrovacesa, Grupo Ence, Grupo Planeta DeAgostini and Abengoa.  He also has broad industry experience with IPOs, M&A transactions, project financings and restructurings.  Mr. Pérez has served as a member of the Board of Directors of companies in diverse sectors including Abengoa, Befesa, Telvent, Logista, Ibersilva, Gecina (a French REIT), the Socimi GMP, Occidental Hoteles and Levantina de Mármoles.  Currently, Mr. Pérez is also a director of Tubos Reunidos and Project Quasar Investment, and serves as Head in Madrid of CESUR (Círculo de Empresarios del Sur de España), an association of entrepreneurs in Andalusia, the Spanish Region where the Lomero project is located.

Jerome (Gino) Vitale is an experienced corporate and mining operations and project development executive with 25 years of experience in the mineral resources sector.  His focus has been gold, base metals, ferrous and non-ferrous metals and on  turnaround situations identifying value-driven mergers and acquisitions. Former senior appointments held with Normandy Mining Group (one of Australia's largest gold producers, since acquired by Newmont), Standard Chartered Bank, Burdekin Resources, (founder and CEO with operations in Australia and Fiji) Bligh Resources (since acquired by Saracen Mineral Holdings and recently merged with Northern Star Ltd, to become a tier 1 gold producer in Australia). Mr Vitale is a foundation director of Transcontinental Gold Mines which acquired Alto Minerals, owner of the Lomero Gold project in Spain, in June 2018.  Mr Vitale graduated with a Bachelor of Commerce from the University of Western Australia in 1981.  He is a member of the Institute of Chartered Accountants Australia and New Zealand, a Senior Fellow and a former Vice President of Financial Services Institute of Australia (FINSIA), and Fellow of the Australian Institute of Company Directors. 

The board of directors wishes to thank Mr. Leigh for his leadership and guidance in the establishment and financing of the Company and wishes him well in his future endeavours.

Early Warning Language

KSAC Europe Investments S.à.r.L. ("KSAC") acquired 33,333,334 Subscription Receipts in the Financing. King Street Capital, L.P., King Street Capital Master Fund, Ltd., King Street Europe Master Fund, Ltd., King Street Capital, Ltd., King Street Europe, L.P., and King Street Europe, Ltd. are shareholders of KSAC, all of which funds are managed by King Street Capital Management, L.P., and ultimately under the control and direction of Mr. Brian Higgins ("King Street"). As a result of the conversion of the Subscription Receipts into Units, King Street holds 33,333,334 Common Shares and 33,333,334 Warrants. Concurrently with that conversion, ZENK transferred 6,000,000 Common Shares to KSAC pursuant to a share transfer agreement without payment of any additional consideration, for an agreed purchase price of Cdn.$0.00 per share. Following the conversion of the Subscription Receipts and the transfer of additional Common Shares from ZENK, King Street currently holds 39,333,334 Common Shares and 33,333,334 Warrants, with the Warrants being exercisable to acquire an additional 33,333,334 Common Shares. Therefore, King Street is deemed to beneficially own 72,666,668, or approximately 30.53%, of the 238,009,949 Common Shares of the Company deemed to be outstanding for the purpose of calculating King Street's deemed ownership percentage, which includes the 204,676,615 Common Shares actually issued and outstanding and the 33,333,334 Common Shares issuable upon the exercise of the Warrants held by King Street. Without giving effect to the exercise of any Warrants, King Street owns 39,333,334 Common Shares, representing approximately 19.22% of the Common Shares that are currently issued and outstanding.

Prior to the completion of the Financing, Gran Colombia owned, directly or indirectly, or exercised control or direction over, 33,666,666 Common Shares.  The 33,666,666 Common Shares represented approximately 36.15% of the total number of issued and outstanding Common Shares prior to the Financing on an undiluted and partially diluted basis. 

After the completion of the Offering, Gran Colombia now owns, directly or indirectly, or exercises control or direction over, 55,888,889 Common Shares and 22,222,223 Warrants, representing approximately 27.31% of the total number of issued and outstanding Common Shares, resulting in a 8.84% change to Gran Colombia's holdings of Common Shares. If only the Warrants held by Gran Colombia were exercised, Gran Colombia would own, directly or indirectly, or exercise control or direction over, 78,111,112 Common shares, or approximately 34.43% of the total number of issued and outstanding Common Shares, resulting in a decrease of 1.72% to Gran Colombia's holdings of Common Shares on a partially diluted basis after the completion of the Financing.

Gran Colombia and King Street acquired the securities for investment purposes only, and depending on market and other conditions, may from time to time in the future increase or decrease its ownership, control or direction over securities the Company, through market transactions, private agreements, or otherwise.

Gran Colombia has filed an early warning report (the "Early Warning Report") pursuant to applicable securities laws in connection with the completion of the Financing. A copy of the Early Warning Report to which this news release relates will be available under the Company's profile on SEDAR at www.sedar.com. To obtain a copy of the Early Warning Report, please contact Amanda Fullerton, Corporate Secretary, at Gran Colombia's office at 401 Bay Street, Suite 2400, PO Box 15, Toronto, Ontario M5H 2Y4 or by calling [phone].

In satisfaction of the requirements of National Instrument 62-104 - Take-Over Bids and Issuer Bids ("NI 62-104") and National Instrument 62-103 - The Early Warning System and Related Take-Over Bid and Insider Reporting Issues, King Street will be filing an early warning report respecting the acquisition of securities, containing additional information omitted from this news release, under Denarius' SEDAR profile at www.sedar.com.  A copy of the report filed by King Street may be obtained from Randy Stuzin, General Counsel, telephone number [phone].  King Street's address is 299 Park Avenue, 40th Floor, New York, NY 10171. To the extent that the transfer of 6,000,000 Common Shares from ZENK to KSAC may constitute a "take-over bid" subject to the requirements of NI 62-104, King Street relies on the private agreement exemption afforded by Section 4.2 of NI 62-104.

The Company's address is 595 Burrard Street, Suite 3123, Vancouver, BC V7X 1J1.

Qualified Persons Review 

The scientific and technical information in this news release has been reviewed and approved by Stewart Redwood, BSc (Hons), PhD, FIMMM, FGS, a "Qualified Person" as defined under National Instrument 43-101.

On Behalf of the Board of Directors,

DENARIUS SILVER CORP. 

Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release. 

Statements included in this announcement, including statements concerning our plans, intentions and expectations, which are not historical in nature are intended to be, and are hereby identified as, "forward–looking statements". Forward–looking statements may be identified by words including "anticipates", "believes", "intends", "estimates", "expects" and similar expressions. The Company cautions readers that forward–looking statements, including without limitation those relating to the Company's future operations and business prospects, listing of the Warrants and use of proceeds from the Financing are subject to certain risks and uncertainties that could cause actual results to differ materially from those indicated in the forward–looking statements.

SOURCE Denarius Silver Corp.

Serafino Iacono, Executive Chairman and Interim CEO, Phone: [phone] , Email: [email protected], Website: www.denariussilver.com

Related Links

www.denariussilver.com