|By Marketwired .||
|September 4, 2014 11:39 AM EDT||
VANCOUVER, BRITISH COLUMBIA -- (Marketwired) -- 09/04/14 -- TriMetals Mining Inc. (TSX: TMI)(TSX: TMI.B)(OTCQX: TMIAF)(OTCQX: TMIBF) -
To The Shareholders and New Investors:
The year is passing quickly, the market is improving not so quickly but improving it is. Those in precious metals look for signs of inflation to boost a somewhat directionless gold price. My favorite inflation indicator is the cost of a "glass of wine" in a restaurant, now there's inflation!
On a more serious note, it has been a very good year for the Company's exploration and development efforts, particularly at the Gold Springs gold-silver project, in safe, mining friendly Nevada/Utah. We believe we are well on the way to our initial goal of a million ounce resource (gold equivalent) as we continue to drill and move the project closer to production. I continue to believe TMI represents an excellent investment and have been buying more shares since the announcement of our drill results.
We have expanded the resource at Gold Springs (NR 14-02 dated February 26, 2014), issued a very encouraging Preliminary Economic Assessment ("PEA") (NR 14-09 dated May 1, 2014 and NR 14-15 dated July 8, 2014) and issued a series of subsequent news releases which include encouraging drill results.
It is noteworthy that the PEA base case with contractor mining showed a pre-tax NPV5% of $162 million with a 57.5% IRR using a $1,300 oz gold price and an $82 million pre-tax NPV5% at a $1,000 gold price. I believe it is important to note that while having gold prices trending higher is clearly beneficial, it's not necessarily essential for project development.
The Gold Springs project has many advantages as an "exploration/development project", one of which is the very significant exploration potential to expand the existing resource. As I often mention we have presently only done sufficient drilling on two of eighteen outcropping gold targets to develop resource blocks (see PEA for details) and have not drilled any of the buried geophysical targets on our large 74 sq km property position. In fact, we estimate that we have drilled less than 10% of the prospective areas for gold and silver mineralization at Gold Springs. Also of economic importance is the fact that the project is located in well-known mining friendly jurisdictions with good infrastructure, the mineralization starts at the surface and the metallurgical testing done to date shows high recoveries for gold (HDG Press Release 13-23).
The new 2014 drill results at the Jumbo target in Utah suggest the presence of a new higher grade zone of mineralization on the eastern side of the Jumbo resource block. This is a significant development subsequent to the filing of the PEA. Starting on September 3, 2014, we plan on doing additional drilling in this zone, to look for extensions to this mineralization which could lead to an expansion of the resource when it is re-estimated early next year.
We have also drilled a few holes at Etna, one of the 18 outcropping gold-targets identified at Gold Springs. This is the third target we have drilled this year. Results show several holes with contiguous mineralization. The gold grades tend to be lower than Jumbo but substantial widths in excess of a hundred metres of mineralization have been drilled in two of the holes. Further drilling is justified but is probably a 2015 activity because we want to focus on the new higher grade zone at Jumbo.
Drilling this year at our Grey Eagle resource block (see PEA) did not extend the mineralized zone to the south as we had hoped, based on our interpretation of the prior year's drilling, but this still leaves potential in areas further north and west. The 2014 drill samples showed that faulting and erosion removed a large part of the prospective zone to the south.
Work is now starting on a series of metallurgical tests aimed at improving the recovery of precious metals, particularly silver, which, if successful, we believe will have a significant impact on the project's economics. These tests, which will use increasingly coarse material up to an inch in diameter, will lead to a series of column tests using similar coarse material to that which would be used in a "heap leach" mine. Professor Dreisinger, our VP of Metallurgy, will be directing these activities and experimenting with different techniques to increase metal recovery. Information from these tests will become available over the next several months.
At Escalones, our large copper-gold porphyry, permitting is in progress for the next phase of drilling and is expected to be in place prior to the drilling season that starts in November. We continue to pursue an appropriate partner for the property because of its large size.
The other branch of the Company involves managing the arbitration process in which the Company is seeking fair compensation for the expropriation of the large Malku Khota silver-indium property by Bolivia. The time line for the formal hearing is still a ways off (May 2016) but in the meantime there is an important milestone; the submission of the "Statement of Claim" by September 24, 2014. Our first class team of lawyers is preparing the Statement of Claim which includes such items as witness and expert testimony, technical information and valuation of losses supporting the dollar amount of the claim.
The Company also owns the patent to the "acid chloride leach" technology that it developed for the Malku Khota silver-indium project. This patented technology can extract multiple metals from mixed ores including precious and base metals plus indium and gallium. All metals are extracted into a single leach fluid greatly simplifying the process. Now that the Company has the patent in place, it has the opportunity to look worldwide for appropriate projects.
I continue to believe the Company is well positioned compared to many of its peers, with US$ 8 million in cash and no debt. We have an active drill program at Gold Springs, driving the Company towards its initial goal of 1,000,000 ounces of gold-equivalent resource, in safe, low-risk, mining-friendly Nevada/Utah.
I look forward to your continued support.
Ralph Fitch, Chairman, President and CEO
Forward Looking Statements
Certain statements contained herein constitute "forward-looking statements". Forward-looking statements look into the future and provide an opinion as to the effect of certain events and trends on the business. Forward-looking statements may include words such as "believe", "goal", "could", "can", "further", "continue", "potential", "expand", "estimate", "suggest", "opportunity", "expected", "plan", "next", "will", "would", "in progress" and similar expressions. Information concerning mineral resource estimates and the interpretation of drill, metallurgical testing and other exploration results may also be considered forward-looking statements as such information constitutes a prediction of what mineralization might be found to be present if and when a mining project is actually developed. These forward- looking statements are based on current expectations and entail various risks and uncertainties. Actual results may materially differ from expectations if known and unknown risks or uncertainties affect our business or if our estimates or assumptions prove inaccurate. Factors that could cause results or events to differ materially from current expectations expressed or implied by the forward-looking statements, include, but are not limited to, risks of the mineral exploration industry which may affect the advancement of the Escalones and Gold Springs projects, including possible variations in mineral resources, grade, metal prices; availability of sufficient financing to fund planned or further required work in a timely manner and on acceptable terms; timely receipt of required permits, availability of equipment and qualified personnel, failure of equipment or processes to operate as anticipated, changes in project parameters as plans continue to be refined; failure of equipment or processes to operate as anticipated; uncertainties associated with the arbitration proceeding against Bolivia, including the quantum of damages to be obtained and the realization or collection of the value of any award or settlement; regulatory, environmental and other risks of the mining industry more fully described in the Company's Annual Information Form, which is available on SEDAR at www.sedar.com. The assumptions made in developing the forward-looking statements include:
the accuracy of current resource estimates and the interpretation of drill, metallurgical testing and other exploration results; the timely receipt of required permits for the Escalones and Gold Springs projects; the continuing support for mining by local governments in Nevada, Utah and Chile; the availability of equipment and qualified personnel to advance the Escalones and Gold Springs projects; execution of the Company's existing plans and further exploration and development programs for Escalones and Gold Springs, which may change due to changes in the views of the Company or if new information arises which makes it prudent to change such plans or programs; the completion of an updated resource estimate for Gold Springs in early 2015; the ability of the Company to realize value from its investments in Bolivia; the arbitration proceeding along a timeline consistent with other international arbitrations and procedural order no. 1 of the arbitration tribunal; and the third party funder honoring its contractual commitments regarding the arbitration.
Readers are cautioned not to place undue reliance on the forward-looking statements contained in this letter to shareholders. Except as required by law, TMI assumes no obligation to update or revise any forward-looking statement, whether as a result of new information, future events or any other reason. Unless otherwise indicated, forward-looking statements in this letter to shareholders describe the Company's expectations as of September 4, 2014.
Class B Shares
The holders of the Class B Shares have contingent rights to receive a pro rata share of 85% of the net cash proceeds, if any (after deducting all costs, tax and expenses and the third party funder's portion thereof), received pursuant to any award or settlement agreement entered into in respect of South American Silver Limited's arbitration claim against the Government of Bolivia. The holders of Class B Shares will not realize any value if: (i) no award or settlement agreement is reached; (ii) no cash payment is included in a settlement agreement; or (iii) the costs of obtaining a cash payment on, or enforcement of, an award or settlement agreement exceeds the amount of such cash payment. South American Silver Limited has sole discretion and decision making authority over when and whether to pursue any particular course of action in respect of the arbitration proceedings, including whether to negotiate or enter into a settlement agreement and including whether to accept non-cash consideration pursuant thereto.
In addition, the accrual of value on the Class B Shares may be significantly delayed. The international arbitration process can take several years before an award is rendered or settlement reached. Once an award is rendered or settlement is reached, enforcing the award or settlement agreement could take additional several years and the full amount of any award or settlement may not ultimately be received, which would reduce the amount, if any, payable to the holders of Class B Shares.
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