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Partner: BHP Exploration SpA
Commodity: Copper
Location: Sonora, Mexico (Central Portion of the Laramide Copper Belt)

Riverside and BHP have agreed to move forward with a third year of generative funding for copper exploration in Sonora, Mexico. BHP Exploration Chile SpA (“BHP”) will fund US$1,300,000 in year 3 towards the Exploration Financing Agreement (“EFA”) in the copper producing belt of Mexico (the “Program”). The Program will focus on identifying and developing exploration opportunities leading to the discovery of new large copper deposits within an Area of Interest using Riverside’s technical knowledge base of copper systems and strong generative exploration team strategically based in Hermosillo, Sonora.

Generative budgets have increased from US$600,000 in year one, to US$1.3M in the second year and now a third year. This funding is part of a larger overall funding package relating to the portfolio of copper assets that the BHP-Riverside Program has generated by completing extensive exploration work over five district areas. The generative program aims to secure and consolidate additional prospective ground in high potential copper districts in Sonora see (see Figure 1).

In July 2021 an additional US$5,400,000 in exploration funding was granted to advance four (4) previously generated copper projects as part of the expanding copper exploration program with BHP in Sonora, Mexico. This new funding of at least US$5,400,000 is in addition to the US$1,300,000 allocated for the next generative phase of exploration work, which began in May 2021. Program funding highlights for the new project-focused funding are summarized below (see Figure 1):

  • Drilling funding has been allocated for the Chuin Project, including an initial 4,500 metres ("m") of drilling to test three geophysical centres within the Chinalito Target area.

  • Drilling funding budgeted for the Palofierro Project, including 4,500 m stratigraphic core drilling to cut bedrock beneath post-mineral cover and test for Laramide aged porphyry potential.

  • Geophysics funding designated for a close spaced MT (Magneto-telluric) Survey at Sinoquipe, designed to uncover conductive bodies (i.e., potential porphyry copper deposits) underneath post-mineral conglomerate cover.

  • Geophysics funding budgeted for a broadly spaced MT Survey and geophysical targeting at Peñitas which will lead toward drill targeting.

Riverside BHP Generative Program
Figure 1: Region of Copper Belt of Mexico and Riverside-BHP Generative Program
 
 
 
YEAR 3 PROGRAM DETAILS

The Chuin Project is a top priority drill project arising from the staking of highly prospective copper prospectively areas using BHP's Machine Learning, Artificial Intelligence-style data integration along with Riverside's extensive generative databases. Together, these efforts provided context from previous Riverside work combined with recent field exploration to move ahead on this large +100 kmproject. The EFA has also completed 1 km spaced Magneto-teluric (MT) geophysics, which has defined a series of interpreted Laramide age porphyry Cu targets which can now be evaluated now with vectored drilling. 

A second priority drill project is the Palofierro Project with environmental drill permits currently being processed following the completion of field geochemistry vectoring using propyltic alteration, whole rock, mineral prospect sampling plus gravity geophysics. These tools are being used for modeling the post-mineral gravel cover over the top of regional magnetic low geophysics defining a series of target areas that have porphyry Cu possibilities and for which the drill program will continue our vectoring and district evaluations.

Finally, the remaining three priority districts - Sinoquipe, Penitas, and Montosa - are progressing along with geophysics, with plans for additional funding and continued field work on these projects in the coming weeks. The Company anticipates a second half of 2021 with MT exploration, building upon the over $400,000 in gravity and other exploration work on these three districts over the past 12 months.

In summary, the overall strategy of the EFA is to prioritize the highest potential segments and well-endowed areas within Sonora and to progress them rapidly with a pipeline of prospective copper districts heading toward drill permitting and potential discovery during this calendar year.

  

YEAR TWO OF PROGRAM

BHP will be providing Riverside with US$720,000 to commence the first half of the second year of the Program to continue to grow the portfolio of copper projects which is an increase of US$220,000 from the initial plan and better captures the investment to progress toward a Defined Project. These funds fully cover the continued generative grass-roots copper exploration and project acquisitions within the Laramide copper belt. BHP will make the following US$720,000 deposit at the next 6-month mark near the end of this calendar year. The BHP-Riverside Technical Steering Committee met last week and the program is on track and progressing with a series of properties now acquired and results coming along.

The program has been successful for the first year having identified and developed targets, acquired projects and progressing these through toward drill targeting. The first year saw Riverside bring forward a range of property opportunities and collectively acquiring large tenures with strong porphyry copper potential. 

During the First year of the EFA Riverside and BHP completed extensive project reviews, data integration and acquired five (5) new properties in Sonora. These include areas around known systems, new areas based upon geochronology and other data integration. One of the highly important aspects has been the collaborative sharing between BHP and Riverside, with vast historical data and innovative new Machine Learning data integration. Riverside believes its field, tenure, access, and project area specific experience along with new collaborative Machine Learning prospective maps is leading to new ideas and opportunities for new discoveries in Sonora, Mexico.

During year 1 the funding was increased by 20% for specific refinement work on target areas that were generated from the Generative Budget and these additional working areas were evaluated effectively leading to several progressing while others were dropped to focus the team’s efforts on the highest potential opportunities. During this upcoming 2nd year of the EFA the Company expects to actively progress toward drill 

 

Project Generation Phase (I):

During the Project Generation Phase, Riverside will act as the operator and earn a monthly fee plus 10% on internal activities and 5% on third party external contractor work with an estimated ~US$85,000/month for generative work. Riverside’s technical team will carry out generative exploration and work up targets with the aim of moving prospects toward the Project Operation Phase (II).

Project Operation Phase (II):

A prospect that is advanced to the Project Operation Phase will become a DP and will trigger a success fee of US$200,000 payable to Riverside for each prospect so advanced. BHP will fund up to US$5,000,000 for drilling and further exploration on each DP, having the option to become the operator of such DP. Riverside has the option to contribute between 10% and 20% of the exploration expenditures (“Riverside’s Contribution to Expenses”) during this phase, with BHP funding the balance (80-90%) should Riverside elect to participate. BHP may discontinue funding with respect to a specific DP at any time in which case Riverside would be entitled to 100% interest in the project and depending on the funds expended to date, BHP may retain a net smelter returns royalty interest. 

Joint Venture Stage (III):

Should the program advance a DP to the Joint Venture Stage, a title to the project would be transferred to a joint venture company and the parties would enter into a formal joint venture partners’ agreement. If Riverside’s cash contribution reaches a minimum of 10% in Phase (II), the Company’s deemed initial interest in the joint venture company will be 20%.

If Riverside’s Contribution to Expenses to a DP is less than 10%, Riverside will have no interest in the Joint Venture. For each DP that is advanced to the Joint Venture Stage, Riverside will be entitled to a success fee of US$1,500,000 if Riverside’s Contribution to Expenses to a DP is at least 10% and US$300,000 if it is less than 10%. At the point of Joint Venture formation, with respect to a DP in which Riverside has at least a 10% interest,          

  1. Riverside may sell its interest earned as a result of its Contribution to Expenses to BHP at the rate of US$100,000 for each 1% interest sold; and
  2. BHP may purchase the difference between 20% and Riverside’s actual Contribution to Expenses at the rate of US$300,000 for each 1% interest purchased.

2021/22 Program Details: 

  • Chuin Project: Funding of core drilling to test the main Magneto-telluric (MT) anomalies discovered through last year's funding. This first phase of drilling is focused on 3 geophysical centers identified at the Chinalito Target, which if successful could trigger an expanded drilling program as a Defined Project ("DP") as outlined in the reference terms of the Exploration Funding Agreement ("EFA"). Environmental permitting for drilling is being progressed. Chinalito remains the priority copper target for Riverside.  

  • Palofierro Project: Funding of of stratigraphic core drilling to probe bedrock beneath the post-mineral units and evaluate the basement geology for Laramide style porphyry Cu potential to the east of the Opodepe Mo-Cu porphyry district and west of exposed high sulfidation and upper-level porphyry copper geology where the Riverside-BHP target area is covered by post-Laramide gravel. This target area is defined by combining gravity survey results with geological mapping of the margins of the Rayon, Sonora Tertiary pediment, with the Company having found positive indicators for potential porphyry system at the margins of the basin and exploration data vectoring toward underneath the post-mineral cover. Environmental permitting for drilling is in progress.

  • Sinoquipe Project: Funding of an extensive and close-spaced MT survey which includes over 250 stations and is expected to start in late July 2021 pending weather and contractor availability. The interpreted target at Sinoquipe is a porphyry copper system projected under varying thickness of post-mineral conglomerate and possibly some Tertiary volcanics, where both margins of the basin show compiled geological evidence that indicates large potential for porphyry copper underneath the gravels. The purpose of this survey is to find conductive bodies that will potentially turn into drill targets in the coming months. This work builds on the 2021 field programs of sampling, mapping and targeting that remain on-going.

  • Peñitas: Funding of an open-spaced MT survey that comprises 150 stations to cover multiple target areas already identified with geological mapping and geochemical sampling. Similar to Sinoquipe, Peñitas has multiple targets that are projected under post-mineral cover and the aim of the survey is to detect large conductive bodies that would eventually generate geophysical drill targets.

These four projects include the previously highlighted: Chuin, Palofierro, Sinoquipe, and Peñitas properties (see press release dated June 21, 2021). The projects have now been approved for full funding to move toward drilling on the Chuin and Palofierro projects and deep geophysics on the Sinoquipe and Peñitas projects which would lead toward additional drill decisions in the near future and will be ongoing for a third consecutive year (see press release dated May 27, 2021). Sinoquipe and Peñitas will be progressed with geophysical studies similar to those done at Chuin and Palofierro where BHP and Riverside are preparing targets for upcoming drill programs.

The scientific and technical data contained in this news release pertaining to the BHP Exploration Financing Agreement was reviewed and approved by Freeman Smith, P.Geo, a non-independent qualified person to Riverside Resources, who is responsible for ensuring that the geologic information provided in this news release is accurate and who acts as a "qualified person" under National Instrument 43-101 Standards of Disclosure for Mineral Projects.

A Technical Committee (“TC”) will be formed to approve Work Programs and Budgets during Phase (I) and (II). The TC will have two representatives from each of BHP and Riverside with equal voting powers for both groups for DP’s operated by Riverside. For DP’s operated by BHP, BHP will have the casting vote on the TC.