Dolly Varden Silver acquires Homestake Ridge Gold and Silver Project to further develop Precious Metals Resources

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Dolly Varden Silver (Toronto Stock Exchange symbol: DV; American over-the-counter Market symbol: DOLLF) is acquiring Fury Gold Mines (in cash and stock trading on the Toronto Stock Exchange symbol: FURY; New York Stock Exchange: FURY) 's Homestake Ridge gold and silver project in the Golden Triangle, British Columbia, with a transaction value of C $5000 (US $39 million).

Homestake Ridge is adjacent to the Dolly Varden project of the same name, located about 32 km southeast of Stewart and 113km from the town of Terez.

Under the transaction, Dolly Varden will pay C $5 million in cash and issue 76.5 million common shares to Fury Gold Mines. If the deal is completed, Fury Gold Mines will own about 36.9% of Dolly Varden Silver.

Shareholders of Dolly Varden will vote on the acquisition at a special meeting in February.

The Homestake project, covering an area of 7500 hectares, is estimated to contain 736000 tons of indicative resources with a grade of 7.02g gold per tonne, 74.8g silver per tonne, 0.18 per cent copper and 0.077 per cent lead, and contains 165993 ounces of gold, 1.8 million ounces of silver, 2.9 million pounds of copper and 1.25 million pounds of lead. The inferred resources increased by 5.55 million tons, with a grade of 4.58g gold per ton, 100g silver, 0.13% copper, 0.142% lead, 816719 ounces of gold, 17.8 million ounces of silver, 15.9 million pounds of copper and 17.3 million pounds of lead. The marginal grade used in resource assessment is 2.0 grams of gold equivalent per ton.

The two companies said the merger would be called the Kitsault Valley project and would become one of the largest high-grade precious metals assets in western Canada.

The Dolly Varden project has indicated resources of 3.42 million tons, silver grade of 299.8 grams per ton, worth 32.93 million ounces of silver, inferred resources of 1.29 million tons, grade of 277g / ton silver, worth 11.45 million ounces of silver. The marginal grade of this resource is 150 grams of silver per ton.

The two projects will have indicative resources of 166000 ounces of gold and 34.7 million ounces of silver, as well as speculative resources of 816719 ounces of gold and 29.28 million ounces of silver.

"this is a win-win situation for both companies. I think we will do well in the future," Shawn Khunkhum, chief executive of Dolly Varden, said on a conference call with analysts and investors. "We expect this merger to produce significant synergies in the areas of exploration, development, licensing and production.

Tim Clark, chief executive of Fury Gold, said merging the two projects would create an "attractive opportunity" to build shareholder value through potential synergies.

Ivan Bebek, chairman of Fury, pointed out that although the sale of Homestake was a difficult decision, the merger of the two assets was "the best way forward" given the positive exploration prospects of the project.

"the deal also simplifies Fury's portfolio, which is consistent with recent aggressive drilling results for Fury's Quebec and Nunavut assets," Bebek said.

A preliminary economic assessment of the Homestake project released in April showed that the initial mining life was 13 years, with an annual production of 45400 gold equivalent ounces and a combined maintenance cost of $670 per ounce. The total output of mine life will reach about 590040 gold equivalent ounces. Earlier studies estimated an after-tax net present value of $173 million, an after-tax internal rate of return of 32%, and gold prices of $1620 an ounce and $14.40 an ounce.

Barry Allan, a mining analyst who is in charge of Fury Gold Mines, for Laurentian Bank Securities, expects the deal to have a positive impact on Fury's shares as it allows the company to focus on its Eau Claire and Committee Bay projects in Quebec and Nunavut while still moving forward with Homestake Ridge. " In a research note to clients, he commented: "although our net asset value and target price for Fury is C $62.7 million, slightly higher than the actual sales price, we think this is a good move for Fury.

Allan's target price for the stock is C $2.65 per share. As of the time of the interview in Toronto, Fury shares were trading at 84 cents, with a 52-week trading range of 75 cents to $2.36.