Fundamentals
Description and Location
NIEVES — Located in the Famed Mexican Silver Belt — the Faja de Plata
The Faja de Plata
The Faja de Plata is the most prolific silver province in the world. Since its discovery in the 16th century, more than 10 billion ounces of silver and 70 million ounces of gold have been produced. The Faja de Plata is home to numerous 1-billion-ounce silver reserve mines and districts.
Zacatecas
The state of Zacatecas is located in north-central Mexico. It is Mexico’s number one silver-producing state accounting for over 42% of Mexico’s silver production.
Nieves
The Nieves silver property is located 90 km north of Fresnillo, an analogous deposit to Nieves and the largest silver producer in the world. Nieves is 156 km southwest of Peñasquito, the world’s largest silver reserve, the world’s second largest gold producer, and sister property to Nieves.
The Nieves silver property is located 90 km north of Fresnillo, an analogous deposit to Nieves and the largest silver producer in the world. Nieves is 156 km southwest of Peñasquito, the world’s largest silver reserve, the world’s second largest gold producer, and sister property to Nieves. Nieves is a silver, gold, lead, and zinc property. It sits in a volcanic slab window and has been a silver property since the 16th century.
Nieves consists of 18 concessions granted by the federal government of Mexico encompassing a total of 55 sq. miles — 34,451.8945 acres; 14,248.7047 hectares — centered on 23 N 58 latitude 103 W 1 longitude. Nieves lies within the Mexican Altiplano or “Mesa Central” Region of Mexico. Mesa Central is flanked to the west by the Sierra Madre Occidental and to the east by the Sierra Madre Oriental mountain range.
The Mesa Central is dominated by broad alluvium-filled plains between rugged mountains and hills reaching up to 3,000 meters above sea level. Mexico has a 500-year mining history. Mining is an integral part of the national and local economies. Politically, Mexico is the most stable country in Latin America, with favorable tax structures and regulatory environment plus a strong cultural and governmental commitment to resource development.
Description and Location
NIEVES — Located in the Famed Mexican Silver Belt — the Faja de Plata
Blackberry exploration activities are co-ordinated from the small town of Nieves (now re-named Francisco R. Murguia) where they maintain an office and a house. The town of Nieves is accessed via Highway 49, a paved, two-lane toll highway approximately 200 km north of the city of Zacatecas. The town of Nieves is accessed via a 17 km paved road from Highway 49. The nearest major population and service center to Nieves is the mining town of Fresnillo located ~90 km to the south. Fresnillo has a population of approximately 75,000 and services the Fresnillo Mine run by Peñoles. Fresnillo offers a substantial professional work force experienced in mining and related activities in addition to most other supplies and services.
Map with the location of Nieves and Penasquito.
Dirt road accessing property.
International airports are located within approximately a three-hour drive of the Property in the city of Zacatecas to the south, and in Torreõn (Coahuila state) to the north. Road access to the Property is excellent with the main paved highway to Nieves running along the northern portion of the Property. A network of dirt roads and trails provide access to the historical mining operations and extend southward to all areas of the Property. Drill and access roads can be easily built as most of the Nieves Property is flat-lying with only a few dry creek beds.
The Nieves Property lies within the Mexican Altiplano or Mesa Central region. This region is flanked to the west by the Sierra Madre Occidental and to the east by the Sierra Madre Oriental mountain ranges. The Altiplano in this region is dominated by broad alluvium filled plains between rolling to rugged mountain ranges and hills reaching up to 3,000 meters above sea level and average elevations in valleys of approximately 1,700 meters. Elevations on the Nieves Property range from 1,900 meters to 2,000 meters. The terrain is generally flat-lying with a prominent north-south trending ridge along the eastern portion of the Property with moderate to vertical slopes.
Typical landscape looking north.
Typical outcrop in an arroyo near the Chicharrona Hills.
There is very little human habitation on the Property, with only a few widely scattered farm houses, although the town of Nieves directly borders the Property to the northeast.
The climate in the region is continental, warm and arid with temperatures ranging from 0°C to 41°C, averaging ~21°C and less than 1,000 mm of annual precipitation. Due to the limited precipitation, vegetation is sparse and hardy consisting mainly of grasses, low thorny shrubs (including mesquite) and various cacti, with scattered oak forests at higher elevations. Surface water is rare but ground water is readily available. Drilling is feasible year round. Rain in the wet season, May to October, can make drilling conditions difficult due to muddy ground conditions, but not impossible.
Looking SSE towards Chicharrona Hills.
Land Tenure & Ownership
The Nieves Property consists of 18 mineral concessions, issued for 50 years, covering approximately 12,064.075 hectares (Map LT-1 and Table LT-1). These concessions are registered in the name Minera Cerro Gregorio, as of August 5, 2011, a Mexican company wholly owned by Quaterra Blackberry Nieves (BVI) Joint Venture Corp. which in turn is wholly owned by Blackberry Ventures I, LLC. Minera Cerro Gregorio does not own the surface rights on the concessions. The location of a concession is determined from the position of a single claim monument (“mojonera”). The corners are all located based on surveyed distances and bearings from that monument by a registered Mexican Mineral Concession Surveyor.
Land Tenure Table
Concession | Title | Area (ha) | Date Issued | Expiry Date |
San Gregorio I | 209552 | 944.4291 | 03/08/1999 | 02/08/2049 |
Lalos | 210858 | 30.1924 | 16/12/1999 | 15/12/2049 |
Lalos II | 207131 | 3.9268 | 29/04/1998 | 28/04/2048 |
Lalos III | 206550 | 0.7370 | 23/01/1998 | 22/01/2048 |
(GPO) Elvita | 206549 | 92.7895 | 23/01/1998 | 22/01/2048 |
Lalos IV | 206727 | 5.6194 | 12/03/1998 | 11/03/2048 |
Orion | 211168 | 21.8825 | 11/04/2000 | 10/04/2050 |
Nieves F. II | 236448 | 6.4577 | 11/10/1995 | 10/10/2045 |
Santa Rita | 219398 | 24.0000 | 04/03/2003 | 03/03/2053 |
Nieves F. I | 220487 | 3638.0359 | 12/08/2003 | 11/08/2053 |
Nieves F. III | 220321 | 6.3400 | 11/07/2003 | 10/07/2053 |
Nieves 2 | 220519 | 59.2114 | 14/08/2003 | 13/08/2053 |
Nieves F. IV | 223616 | 3.7494 | 21/01/2005 | 20/01/2055 |
Dolores | 191776 | 61.0047 | 19/12/1991 | 18/12/2041 |
Nazaret | 180574 | 7.1302 | 13/07/1987 | 12/07/2037 |
Nieves 5 | 230071 | 1266.5766 | 17/07/2007 | 16/07/2057 |
Cerro Gregorio | 239616 | 2200.0000 | 31/01/2012 | 30/01/2062 |
Cerro Gregorio 2 | 239596 | 3691.9899 | 31/01/2012 | 30/01/2062 |
Total: 12064.0725 | ||||
The Nieves Property is wholly owned by Blackberry. In 2019, Blackberry (through Minera Cerro Gregorio) paid US$172,000 to the Mexican government in taxes to maintain the concessions (Table LT-1) and US$75,000 Minimum Royalty Payment to the Mexican Concessionaires. These payments are required each year to maintain the Nieves Property. The taxes are payable every six months (January and July) and the Annual Royalty Payment is due each January. Net smelter return royalties remain outstanding on each of the concessions acquired from Kennecott (recently purchased by Royal Gold Inc.) and Quaterra Resources owns a 5.0% net profits interest in Nieves.
In the early 1990s, Abelardo Garza Hernandez, Noel McAnulty and Bill Shafer (sometimes referred to hereinafter as the “Mexican Concessionaires”) (Table LT-1) acquired eight concessions.
On January 16th, 1995, Kennecott entered into an option agreement with Mexican Concessionaires that allowed Kennecott to explore and acquire the Nieves Property by making specified option payments over five years, and advance minimum royalty payments (AMR).
Concessions on the Nieves Property
On March 13th, 1998, Kennecott transferred its rights under the Nieves option to Western in consideration for an uncapped 2% net smelter royalty (NSR) on certain core concessions and a 1% NSR on others.
Western subsequently assigned its rights to the Nieves project as specified in the “Underlying Agreement” to Quaterra on March 26th, 1999, in consideration for 1,444,460 common shares of the Company at a deemed price of CDN$0.20 per share (CDN$288,892). In addition, the Company issued 360,000 common shares at a deemed price of CDN$0.20 per share (CDN$72,000) to the concessionaires in lieu of the US$50,000 option payment otherwise due under the terms of the Underlying Agreement.
The payment schedule in the Underlying Agreement was amended on November 22nd, 1999, February 11th, 2000 and May 2002, such that US$30,000 was paid in January 2000, US$15,000 in May 2002 and US$25,000 in January 2003, for a total of US$70,000. In addition, to acquire the interest in the claim fractions the Company paid US$40,000 to the concessionaires. Advanced minimum royalty (AMR) payments of US$75,000 are due on or before the 26th of January each year from 2004 until the commencement of commercial production. The Nieves concessions are subject to a maximum 3% net smelter royalty to be partially offset by the cumulative AMRs (currently $1,050,000) to the original concession holders, which the Company may purchase at any time for US$2 million (Table 4-3).
On April 10th, 2003, Quaterra completed a US$1.5 million limited partnership financing with Blackberry, whereby Blackberry could earn a 50% interest in the Property by funding two exploration programs of US$750,000 each. The initial payment of US$750,000 received in the 2003 Fiscal Year was expended on a 5,300-metre drill program on the Nieves Property. During the 2004 Fiscal Year, Blackberry elected to continue by advancing a further US$750,000 towards a follow-up drill program completed in May 2005, thereby earning a 50% interest in the Property. The partners signed a joint venture agreement in 2006 jointly contributed to all exploration and property maintenance costs subsequently incurred.
On January 24th, 2007, Kennecott’s royalty was purchased by Royal Gold Inc.
On August 5, 2011, the Nieves asset was transferred into a single purpose company, Minera Cerro Gregorio which is wholly owned by Quaterra Blackberry Nieves (BVI) Joint Venture Corp, a British Virgin Islands Company which was jointly owned by Quaterra Resources (50%) and Blackberry Ventures I, LLC (50%).
Areas of Mineralization on the Nieves Property
On or about December 29, 2014, Quaterra Resources Inc. and Blackberry Ventures I, LLC entered into a Stock Purchase Agreement whereby Quaterra agreed to sell and Blackberry agreed to purchase all of Quaterra’s rights title and interest in Quaterra Blackberry Nieves (BVI) Joint Venture Corp for $4,000,000 to be paid in four equal payments of $1,000,000 each. Further, the Stock Purchase Agreement called for purchaser to pay an “Additional Amount” of 5% of the amount by which the gross proceeds exceed the amount of money the Purchaser has contributed in total to Nieves in the event Blackberry failed to make the payments timely.
On February 25, 2016, Quaterra and Blackberry entered into a modification of the December 29, 2014 Stock Purchase Agreement (the “February 25, 2016 Modification”) whereby Quaterra granted Blackberry’s Request for a postponement of the March 2016 payment of $1,500,000 due Quaterra under the December 29, 2014 Agreement which added a 5% net profits interest from the disposition of the Nieves Silver Property and the November 12, 2015 Modification Agreement to on or before June 1, 2016.
On or about June 1, 2016 Blackberry Ventures fulfilled the original terms and conditions of the Stock Purchase Agreement and the subsequent Modifications thereto.
Property Valuation
For all property types, asset value is a joint product of any potentially extractable mineral resources located under the earth’s surface and any invested capital that is used to extract this mineral resource. In order to perform a fundamental valuation of a mining company the amount of mineral reserves must be estimated.
History
The history of the area is rich. The first discovery in the area covered by the Nieves Property was the Santa Rita Vein in 1560 by Spanish explorers (Turner, 1999; Cavey, 1999).
Geology
Silver mineralization on the Nieves property is classified as low-sulphidation epidermal and is the primary target. Epidermal silver veins are dominant in the Altiplano Region of Mexico that include world-class examples such as Pachuca, Zacatecas, Fresnillo, and Guanajuato.