Additional Drill Rigs To The Copperstone Gold Project In Arizona

TORONTO - Kerr Mines Inc. reported on drilling at its 100% owned Copperstone gold project located in Arizona, United States.

Giulio T. Bonifacio, Chief Executive Officer, said, “We are very pleased to now be entering the next and most exciting value add phase of Copperstone’s development cycle. Our recently closed project funding transaction will now allow Kerr to move forward with detailed engineering with a targeted re-start of production in Q4-2021. Additionally, our previously funded and current 10,000 meter drilling program is well underway with three drill rigs on site. While we did face some initial delays we remain on track to provide an updated resource in Q2-2021 which will include results from our successful 5,000 meters of drilling in 2019 in addition to results from our current drilling program.”

Previously announced, the Company closed a US$18 million project financing with Star Royalties Ltd. for the restart of operations at the Copperstone gold mine. The US$18 million advance payment under the Streaming Agreement will be provided in three equal installments, with the first US$6 million installment having now been received. The remaining two tranches will be advanced at the request of Kerr as it incurs expenditures for the restart of Copperstone, with a further US$6 million payable on or before February 28, 2021 and the final US$6 million payable on or before April 30, 2021.

The initial installment of US$6 million will be allocated immediately to advance detailed engineering with targeted restart of the Copperstone Mine by Q4-2021. The Company’s focus now shifts to securing long term lead items, finalization of the process facilities to accommodate a Whole Ore Leach approach, and sourcing underground mining contractors and equipment.

In accordance with Copperstone Preliminary Feasibility Study and Management’s successful efforts to further improve project economics and extend the current mine life, the Company will move to gold production using a Whole Ore Leach (WOL) method of processing gold ore. Leaching of gold from the ore-bearing material that is delivered to the mineral processing plant from the underground mining operations has clear advantages versus other mineral processing options - particularly in terms of overall gold recovery. Test work to date has shown that an average of 95% of the gold content of the ore bearing material can be recovered in a WOL method which passes the ore through a series of captive steel tanks within which the gold is leached from the ore. The final step in the mineral processing plant at Copperstone is to produce a gold dore bar.

With increased demand for geologists, drill contractors and lengthy delays at assay labs, the Company has proactively planned for and identified a clear path forward to complete a successful 2020-21 exploration and resource expansion drilling program within the initial timeline envisaged. To offset current industry demands and resulting delays, Kerr Mines has: Accelerated the surface drilling program with the addition of a second drill rig. The surface program is targeted to complete 4,000 to 5,000 meters; and Commenced the underground portion of the program ahead of schedule with a shorter timeline to the required mine rehabilitation and has now mobilized an underground core drill rig that has commenced drilling. The underground program is targeted to complete 4,000 to 5,000 meters.

The company currently has two surface Reverse Circulation (“RC”) drill rigs, and one underground diamond core rig on site and the drilling program continues to advance according to schedule. The Company expects to provide drill results on a frequent and regular basis starting in January 2021 with completion of the current 10,000 meter program expected as early as March 31, 2021. Upon completion of this phase of drilling, the company will provide and updated resource estimate in Q2-2021 which will also include drilling results from 5,000 meters of drilling in 2019.

Initial Preliminary Drill Results and Highlights - Intervals drilled from the surface through the Footwall and Copperstone zones include: 3.0 meters @ 10.54 g/t Au (KER-20S-05), 3.0 meters @ 6.40 g/t Au (KER-20S-01); 18.3 meter interval of gold mineralized shear zone containing two separate intervals of 4 g/t Au or greater (KER-20S-06); Current results demonstrate the Footwall and Copperstone zone remain open and indicate further expansion of mineralized zones along strike and dip with future drilling; Second surface drill rig mobilized and drilling; Underground core drill rig mobilized and drilling ahead of schedule; and Total progress to date from two surface and one underground drilling is 13 drill holes for 2,500 meters with assays results currently pending for 10 drill holes.

KER-20S-05 is an inclined RC drill hole collared at the Southeast end in the bottom of the historic open pit and drilled southwest. This is an exploration hole targeting the edge of the Footwall zone. A group of intercepts of particular interest is in the upper portions of the hole starting at 21.3 meters and extending to 29 meters giving values starting with 3.28 g/t Au and ending with values of 12.60 g/t Au and 8.48 g/t Au. The average grade of this group of intercepts is 5.01 g/t Au over 7.6 meters. This area is within 11 meters of historically drilled KER-17S-21 which reported a 1.5 meter interval with 12.4 g/t Au.

KER-20S-01 is an inclined RC drill hole collared near the Northeast edge at the top of the historic open pit and drilled southwest. This is an exploration hole targeting the edge of the Copperstone C zone. An intercept of primary interest in this hole is from 256 meters to 261 meters with intercepts of 7.87, 4.93 and 1.72 g/t Au respectively. This group of intercepts is about 15 meters to the west of a modeled Copperstone zone resource domain and may serve to extend inferred resources in this direction. There is a potential that this area is thicker than the modeled domain, as evidenced by a group of lower grade intercepts directly above. These are from 248 meters to 253 meters with an average grade of 1.58 g/t Au over 5 meters. In addition, historic hole H4-42 had intercepts 15.12 g/t Au and 4.35 g/t Au located 33.5 meters to the southeast and in the same horizon.

KER-20S-06 is an inclined RC drill hole collared at the Southeast end in the bottom of the historic open pit and drilled east from the same location as KER-20S-05. This is an exploration hole targeting the edge of the Footwall zone. The upper portion of this hole reported an 18.3 meter interval from 90 meters to 108.3 meters at an average grade of 2.04 g/t Au. This interval with starts and ends with values of 4.34 & 4.00 g/t Au respectively and also includes five 1.5 meter intervals of 2 g/t Au or greater. In addition, this interval penetrates a previously modeled Footwall zone resource domain but is displaying greater thickness and lower grade.

The primary focus of the current surface drilling program is further extending the known boundaries and increasing the current resource in both the Copperstone zone and the underlying and parallel Footwall zone. The Footwall zone is located about 150 meters to the southwest of the Copperstone zone which historically produced over 500,000 ounces of gold at an average grade of 3 g/t Au.