Exercise of Ontario Option - McKellar Property

Power Metal Resources PLC (LON:POW) the AIM listed metals exploration and development company is pleased to announce that following due diligence work the Company has exercised its option to acquire the McKellar Property (“McKellar”) located on the prospective Schreiber-Hemlo Greenstone Belt in north-western Ontario, Canada. McKellar is one of four gold exploration properties upon which the Company has an exclusive option to acquire a 100% interest (as announced 26 January 2021).

Paul Johnson Chief Executive Officer of Power Metal Resources plc commented:

“Exercising the option over the McKellar Property strengthens Power Metals’ landholding over a part of Ontario which is currently seeing heightened junior exploration company activity.

Our due diligence data review has shown McKellar complements Power Metal’s existing Dotted East, Olga Lake and Roger Lake Projects, notably adding ground with indications of VMS style mineralisation sited in association in a structurally prospective fold-hinge setting.

We are continuing our due diligence review of the remaining three option properties and will provide a further update in due course.”

MCKELLAR PROPERTY OVERVIEW

  • McKellar covers the under explored core of a geologically prospective regional scale anticlinal fold hinge structure. Located upon the Schreiber-Hemlo Greenstone Belt the geology of McKellar consists metavolcanic and metasedimentary rock packages prospective for both gold and volcanogenic massive sulphide (“VMS”) style copper-lead-zinc-silver mineralisation.
  • The property includes several strong Versatile Time Domain Electromagnetic (“VTEM”) geophysics anomalies identified by survey work in 2007, these anomalies have either not yet been drill tested or were inconclusively drilled by shallow holes or trenched by previous claim holders.
  • The most recent work within the property was undertaken in 2017, this included soil sampling, outcrop sampling and geological mapping. This work identified an hitherto unmapped exhalative rock unit and geochemical alteration prospective for VMS mineralisation with sample assay data indicating anomalous Au, Zn, Mn, Cd and Ba associated with an undrilled VTEM anomaly. This work concluded further fieldwork with follow-up ground induced polarisation (“IP”) geophysics and drill testing could be warranted.
  • Historical sampling undertaken by Noranda Exploration Company Ltd in 1989 at the historical Little Pick Silver Mine reported a channel sample of 1.4m @ 13.0% Zn, 7.1% Pb & 678.0 g/t Ag and a trench sample of 1.1m @ 32.3% Zn, 1.1% Pb & 68.4 g/t Ag, with the VMS style mineralisation reportedly being traced over a 600m strike.
  • Located approximately 50 km east of the town of Schreiber and 40 km NW of the town of Marathon, Ontario on the Trans-Canada highway. Access within the property is afforded by all-terrain vehicle (“ATV”) trails. A major power line and the Canadian Pacific railway occur within 1 km of the property.

MCKELLAR CLAIM STATUS

Consists of a total of 58 Mining Claims (“Claims”) (49 Single Cell Mining Claims and 9 Boundary Cell Mining Claims) covering a total area of circa 12.3km².

Claims are valid through to between 7 June 2021 to 26 April 2022 upon which they can be renewed on an annual basis. For renewal the McKellar Claims will require an aggregate work spend of CAD$23,600 of which CAD$15,200 has already been applied. Therefore, an additional net aggregate work spend of CAD$8,400 (circa £4,838) is required prior to the individual Claim renewal dates.

ACQUISITION TERMS

The vendors of the Option (the "Vendors") are a consortium led by established local prospector Brian Fowler who was the Vendor of the Hemlo North Gold Project acquired by Power Metal as announced on 21 January 2021.

In exercising the Option to acquire a 100% interest in the McKellar Property Power Metal will make the following cash and equity consideration to the Vendors.

Property Name Cash (CA$) POW Shares (CA$) Note: POW Shares Total Consideration (CA$)
McKellar 50,000 50,000 960,000 100,000

The Power Metal shares payable as consideration are new ordinary shares of 0.1p each in the Company at an issue price of 3.0 pence per share (“Acquisition Shares”). The cash costs of the acquisition are funded from Power Metal’s existing Canadian Dollar cash account.

The Vendors retain a 2% net smelter royalty (“NSR”) on McKellar, Power Metal may purchase 1% of the NSR, at any time, by making a cash payment to the Vendors of CAD$500,000.

The Vendors will continue to work with Power Metal in the local management of any new properties acquired through this transaction; the development and implementation of exploration plans and the identification of further new opportunities.

EXPLORATION PLAN

  • Ongoing exploration spend will be at the discretion of Power Metal as the 100% owner of McKellar.
  • Preliminary exploration work is expected to include both remote sensing data interpretation and ground-based fieldwork with systematic soil sampling and geophysics expected to yield defined targets for future drill testing.
  • The Province of Ontario has an established mineral exploration industry with a large number of local exploration contractors that could be engaged to fulfill the planned work on a cost-effective basis.

Admission And Total Voting Rights

Application will be made for the 960,000 Acquisition Shares to be admitted to trading on AIM, which is expected to occur on or around 25 February 2021 ("Admission"). The Acquisition Shares will rank pari passu in all respects with the ordinary shares of the Company currently traded on AIM.

Following Admission, the Company's issued share capital will comprise 1,119,992,730 ordinary shares of 0.1p each. This number will represent the total voting rights in the Company and may be used by shareholders as the denominator for the calculation by which they can determine if they are required to notify their interest in, or a change to their interest in, the Company under the Financial Conduct Authority's Disclosure and Transparency Rules.

COMPETENT PERSON STATEMENT

The technical information contained in this disclosure has been read and approved by Mr Nick O'Reilly (MSc, DIC, MIMMM, MAusIMM, FGS), who is a qualified geologist and acts as the Competent Person under the AIM Rules - Note for Mining and Oil & Gas Companies. Mr O'Reilly is a Principal consultant working for Mining Analyst Consulting Ltd which has been retained by Power Metal Resources PLC to provide technical support.

Download the full RNS release (PDF)

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18 February 2021

 
 
 

Power Metal Resources plc
201 Temple Chambers
3-7 Temple Avenue
London EC4Y 0DT
United Kingdom

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