Pinnacle Silver & Gold Secures Lead Financier for El Potrero Project

Auramet Capital Partners to Arrange Up to $5 Million in Non-Equity Financing

VANCOUVER, BC – Pinnacle Silver & Gold Corp. (TSX-V:PINN, OTCQB:PSGCF, FRA:P9J) has announced a significant step forward in the development of its El Potrero gold-silver project in Durango, Mexico. The company has entered into an agreement with Auramet Capital Partners, a prominent entity in metals trading and finance, to act as the lead project financier. This strategic partnership aims to secure up to $5 million in non-equity financing, a crucial move to advance the project towards production while minimizing shareholder dilution.

Financing Agreement Details

The agreement grants Auramet an exclusivity period of seven months to arrange or potentially provide the financing. This structured approach allows for thorough due diligence, evaluation of operational progress, and the finalization of a mutually agreeable financial package. Auramet’s involvement underscores the project’s viability and potential, bringing a seasoned financial partner into the development process. The financing is contingent upon customary conditions, including operational and financial milestones.

Strategic Importance of Non-Dilutive Financing

Pinnacle’s focus on securing non-dilutive financing is a key strategic objective. This type of financing typically involves debt or royalty agreements rather than issuing new equity. By avoiding equity dilution, Pinnacle aims to preserve the value of its existing shares and maintain a cleaner capital structure as it progresses through various development stages. This approach also helps to shield shareholders from the potential negative impacts of share price volatility often seen in junior mining companies.

Management’s Outlook

Robert Archer, President and CEO of Pinnacle Silver & Gold, expressed confidence in the partnership, highlighting Auramet’s credibility and the financial flexibility the arrangement provides. “Having a well-known metal trader and financier such as Auramet to partner with, not only brings a lot of credibility but will give us financial flexibility without being captive to the volatility of capital markets as we move through the various stages of development,” Archer stated. He further emphasized the strong existing relationship and Auramet’s prior support, noting their participation in previous financing rounds as a testament to their belief in the management team, the company’s business model, and the El Potrero Project itself.

Project Development Progress

Concurrent with the financing efforts, work at the El Potrero project is advancing. Key activities include ongoing underground delineation drilling, which is crucial for defining the extent and quality of the gold and silver mineralization. Metallurgical testing results have been promising, indicating significant potential:

• Average head grades of approximately 7.7 grams per tonne (g/t) of gold.
• Average head grades of approximately 116 grams per tonne (g/t) of silver.
• Potential recoveries exceeding 97% for gold.
• Potential recoveries around 70% for silver.

Furthermore, Pinnacle has completed a feasibility study for a 3.3-kilometer powerline extension, a critical piece of infrastructure for mine development. The company is also progressing with essential baseline studies for water licensing and permitting, alongside community engagement to secure necessary agreements. These parallel activities demonstrate a well-rounded approach to advancing the project responsibly and efficiently.

Market Context and Outlook

The gold and silver mining sector often relies on strategic financing to bring projects from exploration to production. Partnerships with experienced financiers like Auramet are vital for navigating the capital-intensive nature of mining development. The El Potrero project’s potential, coupled with promising metallurgical results and steady progress on permitting and infrastructure, positions Pinnacle Silver & Gold favorably within the commodities market. The successful arrangement of financing will be a key catalyst for the project’s future development.

Frequently Asked Questions (FAQ)

What is non-equity financing?

Non-equity financing refers to raising capital without issuing new shares of stock. This typically involves debt financing (loans, bonds) or royalty agreements, where a portion of future revenues or production is exchanged for upfront capital. It’s often preferred by companies seeking to avoid diluting existing shareholders’ ownership.

What is the significance of Auramet Capital Partners?

Auramet Capital Partners is recognized as a significant player in the metals and mining finance sector, known for its expertise in arranging and providing project financing. Their involvement lends credibility and financial acumen to the El Potrero project, suggesting a strong belief in its economic viability.

What are head grades and recovery rates in mining?

Head grade refers to the concentration of a valuable mineral (like gold or silver) in the ore as it is extracted from the mine. Recovery rate, on the other hand, indicates the percentage of that valuable mineral that can be successfully extracted and processed from the ore. Higher head grades and recovery rates generally lead to more economically viable mining operations.