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FenixOro Gold Corp.

Other OTC: FDVXF $0.2031

Canadian Sec: FENX.CN C$0.25

August 16, 2021

 

Business Overview

 

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FenixOro Gold Corp. owns rights to claims in the Abriaqui gold project located in Antioquia State approximately 100 km northwest of Medellin.

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The Abriaqui project is at the early drill stage, and results to date exhibit great promise. The property is on a prolific gold belt and is only 15 km from one of the largest and highest-grade gold projects in the world (the Buritica mine owned by Zijin-Continental Gold).

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Mineralization has shown many similarities to that of the Buritica deposit. Positive comparisons include a similar geological setting that is identical to that of Buritica, scores of closely spaced high-grade veins, and lower-grade mineralization between the vein corridors.

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The Abriaqui land package is a contiguous block of three concessions and one application. The total area is 1395 hectares (each hectare = 100 x 100 meters), including the pending acquisition of additional acreage (the Polo acquisition). The Pan-American highway is nearby, as is electricity and local labor.

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Management plans to create value by building the mineral reserves to the point where they are large enough to entice one of the major miners to take the project into production.

 

 

Colombia Gold Mining Prospects

 

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The Colombian mining sector began opening up in the early 2000s under the presidency of Alvaro Uribe, benefitting from higher gold prices and improved security conditions. The Colombia Gold Letter estimates that 90M oz of gold have been discovered since Uribe took office. While there are some lingering problems with illegal miners, crime, and community tensions, they are believed to be mostly in remote areas.

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Several good-sized Colombian gold mining projects are now moving forward at a good clip. The San Ramon gold project, owned by Red Eagle Mining and in Antioquia department 70 km north of Medellin, started production in 2016 only five years after the first gold discovery there. The Cisneros underground mine, owned by Antioquia Gold, began production only a year or so after receiving its environmental license.

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The Buritica mine, in northwestern Antioquia about 100 km north of Medellin, is the first large-scale underground gold project in Colombia in years. The gold grades are very high. At the time of the latest NI 43-101 report by Continental Gold, mineral reserves at Buritica were estimated at 3.7M oz of gold (8.4 g/t), indicated and measured resources 5.32M oz (10.32 g/t), and inferred 6.02M oz (8.56 g/t). Production was estimated to be approximately 250k ounces of gold per year at an all-in sustaining cost of approximately US$600 per ounce. Zijin, based in Fujian, China, purchased its interest in 2019, a year in which the gold price was considerably lower than today, for approximately C$1.4 billion.

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The Gramalote project, a partnership between AngloGold Ashanti and B2Gold, is another large project that received its environmental license. It is an open-pit mine sited to the east of both San Ramon and Buritica.

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Environmental responsibility and community relations have been key elements in the rapid advancement of these projects.

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On-going gold exploration programs by various companies have met with many promising indications, including soil sampling, magnetic anomalies, and high-grade drilling intercepts.

 

 

The Abriaqui Project

 

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Stockwork potential (a complex system of structurally controlled or randomly oriented veins). The Company has identified more than 100 gold-bearing veins in the project area at both outcrop and drill core (to a 1000 meter vertical interval), and 20+ of them have assayed at greater than 20 g/t gold. Drill core results were open at depth. Areas between the vein corridors have shown lower-grade mineralization.

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Soil sampling. An extensive soil sampling on a 100 x 25 meter grid identified many soil gold anomalies. Prominent soil anomalies enabled the Company to discover new veins in most of its drill holes, and the known veins showed gold-in-soil anomalies. These factors indicate potential for yet-to-be-identified vein families. In addition, a multi-sample anomaly in a corner of the grid coincides with a prominent magnetic high. The outcropping mineralization is at elevations well below the Colombian paramo restricted zone.

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Magnetic anomalies. A ground magnetometry grid showed (i) a strong magnetic high in the center of the property and (ii) an anomaly in the southern property block that coincides with a gold-in-soil anomaly. Both of these anomalies are open at depth to at least 700 meters.

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Phase 1 drilling. The Company operates a track-mounted drill with 800 meter depth capacity. This phase of the drilling program targeted nine holes for a total of 4500 meters at 45 to 65 degrees downward from the surface. Drill results have included the following intercepts up to 750 meter vertical extent, and they were well correlated with surface exposures and soil anomalies:

 

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Hole P001: 4.14m at 5.08 g/t, 2.60 m at 9.09 g/t, and 1.30 m at 28.18 g/t gold.

 

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Hole P001: 0.70 m at 19.75 g/t gold and 58.8 g/t silver

 

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Hole P001:2.60 m at 9.09 g/t gold and 6.3 g/t silver

 

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Hole P001: 1.30 m at 28.18 g/t gold and 24.5 g/t silver

 

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Hole P002: 0.50 m at 71.9 g/t gold and 60.2 g/t silver (one of the deepest intersections)

 

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Hole P003: 2.00 m at 3.26 g/t gold and 0.3 g/t silver (drilled to test a gold-in-soil anomaly.

 

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Hole P004: 7.75 m at 1.53 g/t gold and 1.5 g/t silver

 

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Hole P006: 7.70 m at 8.6 g/t gold and 0.45 m at 124 g/t gold.

 

Early Phase 1 results indicate potential for 1.6 to 2.4 million ounces of contained gold on four of the 100+ veins identified to date on the property. There appears to be substantial additional potential from many other drill intercepts (including hole P006), drill testing of more of the known veins on the property, and sampling of all veins below the 1500 meter elevation used in the above indication of the potential resource. Additional drilling will be required to develop NI 43-101 compliant resources or reserves, and there is no guarantee that any such resources or reserves will ever be delineated.

 

A mine mapping and sampling exercise correlated 16 veins that were intersected in more than one drill hole. Ten of the 270 samples taken of veins and adjacent material returned 50+ g/t gold, including 5.1 m at 6.64 g/t gold and 0.8 m at 149 g/t gold (the Baul 3 vein).

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Phase 2 drilling. This 4000+ meter infill and step-out drilling program is underway. It is designed to test the northwest trending vein as well as the highly prospective southern block. Visual analysis of the core of the first hole (P010) shows many intervals of mineralization, and initial batches of samples have been sent to the lab for assaying. Hole P011 is being drilled at a steeper angle to reach a greater depth and possibly add significantly to the vertical extent of the mineralization.

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Additional drill targets. Management has identified a great number of additional district-wide drill targets.

 

 

Management and Directors

 

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John Carlesso, CEO and a Director, has 25+ years of international business experience with mining, technology, and special situations companies. He was Executive Chairman of Explorator Resources prior to its acquisition by Pucobre in 2011 and VP/Corporate Development for Desert Sun Mining prior to its acquisition by Yamana Gold in 2006.

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Stuart Moller, VP/Exploration, a Director, and a Qualified Person for purposes of NI 43-101, has 40+ years of experience in mineral exploration, having held senior roles with Barrick Gold and Pan American Silver and as VP/Exploration at Continental Gold during the early years of the Buritica property development.

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Jing Peng, CFO, since September 2020.

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Keith Minty, Independent Director, is an experienced mining engineer, having been COO of Thani Dubai Mining (2008-13) and President and CEO of North American Palladium Ltd. (1997-03). He is also a director of several other mining companies.

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Leonardo Riera, Independent Director, has considerable experience in mining projects, South American countries, and financial matters.

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On March 1, 2021, executive management as a group beneficially owned approximately 29% of the common shares outstanding.

 

 

Financials (02/28 FY)(CAD)

 

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Income Statement (12 months through 02/28/21 vs. 02/29/20)

 

Administrative expenses: 498,298 vs. 39,599

Advertising and promotion: 330,968 vs. 677,289

Consulting: 892,060 vs. 281,810

Exploration expense: 1,315,652 vs. 150,567

Professional fees: 377,568 vs. 136,753

Stock-based compensation: 1,054,207 vs. 14,744

Other operating expenses: 504,950 vs. 136,039

Operating income (loss): (4,596,135) vs. (1,436,801)

Other items: 91,090 vs. (559,869)

Net loss (4,505,045) vs. (1,996,670)

Foreign currency translation adjustment: 106,951 vs. 0

Comprehensive loss: (4,398,094) vs. (1,996,670)

Earnings (loss) per basic and diluted common share: (0.07) vs. (0.07)

Weighted average common shares outstanding: 64,281,618 vs. 26,701,164

 

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Balance Sheet (02/28/21)

 

Cash: 706,328

Other current assets: 295,470

Total current assets: 1,001,798

Exploration and evaluation assets: 8,188,594

Other assets: 144,340

Total assets: 9,334,732

Current liabilities: 1,139,360

Equity by stockholders: 8,195,372

Common shares outstanding: 73,200,000

Stock options outstanding: 5,680,000 at a weighted average exercise price of $0.26.

Warrants outstanding: 12,090,896 at a weighted average exercise price of $0.20.

 

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On April 26, 2021, the Company announced that it had granted to certain officers, directors, and consultants stock options to acquire up to 2,300,000 common shares at C$0.30 apiece.

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On March 4, 2021, investors exercised 700,000 warrants.

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On February 17, 2021, the Company issued 3,234,800 units for gross proceeds of $970,440. Each unit is comprised of one common share and a one-year share purchase warrant for one common share at C$0.35. Legal fees for the transaction were C$50.196.

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The report by independent auditors (Clearhouse LLP) for fiscal year-end 2021 noted a going-concern qualification. Such a qualification is not unusual for early stage exploration companies.

 

 

Valuation Considerations

 

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Management is highly experienced in this and other related businesses, and it holds a meaningful financial stake in the Company.

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The technical team has guided the exploration program to considerable early success. At this point, management believes that it has a much more extensive database and understanding (from experience), and has identified a far greater number of vein structures, than Buritica had at the same early state of exploration. Although there are many similarities between Abriaqui and Buritica, exploration results at Abriaqui are still quite early. The economic characteristics of the Abriaqui property may turn out to be quite different than those at Buritica. The Company does not yet have any NI 43-101 compliant resources or reserves.

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The path to 2 million ounces of gold reserves has been clearly identified, with significant upside remaining in several promising, yet-untested areas. Phase 2 of the drilling program, results from which are beginning to come in, should provide a much better definition of the resource potential.

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The stock remains well off its high, and the present market valuation is less than US$16 million. This is but a small fraction of a typical valuation for a company that has proven 2 million ounces. Thus, there appears to be room for substantial appreciation if the 2 million ounce gold resource potential is proven and expanded.

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The Company is likely to require significant additional financial resources to carry out its exploration program. A higher stock price should encourage exercise of options and warrants outstanding.

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The ongoing impact of COVID-19 is an uncertainty. The SEDAR filings expand upon this risk and list other risk factors which are hereby incorporated by reference.

 

 

Contacts

 

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Mailing address: 350 Bay St., Suite 700, Toronto, Ontario, M5H 2S6, Canada

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Registered office: The Canadian Venture Building, 82 Richmond Street East, Toronto, Ontario, M5C 1P1, Canada

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Solicitors: Chitiz Pathak, Toronto, Ontario

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Website: www.fenixoro.com

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Investor contact: John Carlesso, CEO and a Director, at 833.676.4653 or jcarlesso@fenixoro.com

 

 

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