Buchans Resources Limited (the “Company” or “Buchans”), a Canadian base metal mineral exploration and development company, reports its financial results and results of operations for the second quarter and six months ended June 30, 2021.

This news release should be read in conjunction with the Company’s unaudited financial statements and the associated management’s discussion and analysis (MD&A) for the six-month period ended June 30, 2021, which are available on the Company’s website at www.BuchansResources.com or under the Company’s profile at www.sedar.com.

COMPANY OVERVIEW

Collaboration Agreement with Boliden

Work under the Collaboration Agreement with Boliden Mineral AB (“Boliden”), under which Boliden is evaluating the Company’s Buchans VMS property for possible future investment and participation, commenced in early 2021. To date, Buchans has undertaken a coordinated compilation of past work on the project and continues to compile these data together with additional relogging collected in 2021 into a new, digital 3D geological model.  In addition, Boliden is continuing its review of past geophysical survey data to evaluate optimal geophysical exploration strategies for future exploration. 

Boliden Mineral AB, is a Swedish company, is part of the Boliden Group and is a wholly owned subsidiary of Boliden AB (publ), a leading European mining and metals producer of zinc, copper, lead, and nickel.  Subject to the outcome of Boliden’s evaluation, it is the intention of the Parties to discuss and negotiate an agreement pursuant to which Boliden shall be given a right to earn an interest in the Buchans Project against contributing to funding of exploration and development  (the “Earn-in and Option Agreement”) and a joint venture agreement which shall govern the Parties’ interest in the Project in the event Boliden exercises its right to earn an interest in the Project (the “JV Agreement”).

Under the Collaboration Agreement, Boliden has been granted exclusivity on the project until December 31, 2021 during which time Boliden may complete its evaluation and negotiate this Earn-in and Option Agreement and JV Agreement.  During this period Boliden is contributing $600,000 to Buchans towards the costs of maintaining the Property and exploration and evaluation programs being undertaken jointly by Buchans and Boliden.  To date, Boliden has paid Buchans $544,500 to fund these activities.  During the exclusivity period, Buchans has agreed not to provide information to or negotiate with third parties on the project.  If Boliden submits a proposal prior to the end of the exclusivity period, Boliden will be granted a right of first refusal for a further six-month period. 

Activities under the Collaboration Agreement are ongoing and are expected to culminate in the confirmation of priority exploration targets for buried high-grade Buchans VMS deposits.  As part of this evaluation, Boliden and Buchans intend to develop specific recommendations for future exploration to be considered by Boliden for future participation and investment.

Lundberg Deposit – potential open pit mine development

The Company continues to advance its Lundberg deposit as a potential open mine development.  This deposit hosts a large lower grade resource of near-surface stockwork sulphide mineralization. The Resource Estimate includes Indicated In-pit Mineral Resources of 16,790,000 tonnes grading 1.53% Zn, 0.64% Pb, 0.42% Cu, 5.69 g/t Ag and 0.07 g/t Au (3.38% Zn Eq) and Inferred In-pit Mineral Resources of 380,000 tonnes grading 2.03% Zn, 1.01% Pb, 0.36% Cu, 22.35 g/t Ag and 0.31 g/t Au (4.46% Zn Eq). 

Buchans recognizes further enhancements for development of Lundberg could be achieved through discovery of additional higher-grade mineral resources adjacent to the lower-grade Lundberg deposit.  To this end, the Company has reviewed the potential of the Lundberg Deposit area to host additional, nearby high-grade resources that might supplement an open pit mine development at Lundberg as either additional in-pit or underground resources. 

Since 2014, the Company’s has been engaged in a major relogging program, reviewing archived drill cores from its Buchans Project.  To date, the program has identified multiple target areas warranting further exploration, including the Two-Level (Lucky Strike) mine area, located immediately north of the Lundberg deposit, where the Company believes potential exists to discover additional high-grade resources down plunge of previous exploration drilling. 

The Two-Level target is located on-strike to the northwest of mineralization intersected by the Company’s 2018 drilling campaign just north of Lundberg and beyond the reach of underground workings of the former Lucky Strike Mine. In 2018 drilling north of historic underground workings in hole H-18-3524 intersected 1.0 m assaying 14.83% combined base metals (%Cu+%Pb+%Zn or “CBM”) as 8.70% Zn, 4.87% Pb, 1.26% Cu, 133.2 g/t Ag and 0.47 g/t Au (see Buchans news release dated November 20, 2018). 

The Company believes the Two-Level target area remains underexplored for additional fault-displaced orebodies in this area where historic drilling from surface tended to be drilled either too shallow or at too wide a spacing to adequately test this concept.  Buchans believes the Two-Level area holds potential for discovery of additional high-grade ore that may complement the open pit development of the Lundberg deposit, or perhaps extend down plunge into areas capable of hosting additional high-grade resources that may be developed as new underground mines. 

Buchans had planned a minimum 3-hole, 1,500 metre drill program to test the Two-Level target in 2021.  At this time, the Company maintains its focus on furthering its evaluation activities under its Collaboration Agreement with Boliden.

Exploring for gold in Newfoundland

Buchans recently entered into new joint ventures to explore for gold on three of Buchans’ properties located within the central Newfoundland gold belt and field exploration programs are underway on all JV properties.  These joint ventures are:

• the 11,050 ha Long Range JV with Benton Resources Inc (BEX.TSXV; “Benton”),
• the 5,425 ha Tulks South JV with Quadro Resources Ltd. (QRO.TSXV; “Quadro”), and
• the 9,100 ha Lake Douglas-South Tally JV with C2C Gold Corp (CTOC.CSX; “C2C”).

Qualified Person:

Paul Moore, M.Sc., P.Geo., (NL), Buchans Resources’ Vice President of Exploration, is acting as Qualified Person in compliance with National Instrument 43-101 with respect to this release and has reviewed the contents for accuracy.  Management cautions that past results or discoveries on properties in proximity to properties held by the Company may not necessarily be indicative of mineralization on the Company’s properties.  Reported third-party assays are derived from reports submitted to the Newfoundland Government and have not been verified by the QP. 

FINANCIAL RESULTS SECOND QUARTER 2021

Buchans recorded no revenue in the quarters ended June 30, 2021 or June 30, 2020.

For the three-month period ended June 30, 2021, the Company recorded a gain of $37,869, compared to a gain of $422,723 for the three-month period ended June 30, 2020.

During the six-month period ended June 30, 2021, Buchans invested $193,592 (June 30, 2020 – $214,368) on exploration of its mineral properties. To date, Boliden has contributed $544,500 under the Collaboration Agreement. At June 30, 2021, Buchans held mineral properties with a combined book value of $13,296,758.

At June 30, 2021, Buchans held $748,859 capital (December 31, 2020- $780,219) in cash and cash equivalents and had a working capital surplus of $623,816, compared to a working surplus of $1,463,756 at December 31, 2020.

As at June 30, 2021, Buchans held 43,000,000 shares in Xtierra Inc. (“Xtierra”), a company listed on the TSX Venture Exchange under the symbol “XAG”, and also held 5,000,000 share purchase warrants entitling Buchans to purchase one common share for $0.10 until April 30, 2023. The market value of the Company’s shares in Xtierra Inc at August 25, 2021 was $2,150,000 based on the market price of Xtierra shares on the TSX Venture Exchange. At June 30, 2021, the Company held secured Notes receivable from Xtierra in the amount of $237,882.  

The Support Agreement between Buchans and Xtierra was further amended to provide that interest on the remaining balance of the notes receivable from Xtierra in the amount of $250,000 will resume to accrue at the rate of 5% per annum effective May 1, 2021 until paid, and the Term of the Support Agreement was extended for a further period to April 30, 2023. In connection with the Second Extension Amendment Agreement, Xtierra agreed to issue to Buchans, 5 million share purchase warrants each warrant entitling Buchans to purchase one common share of Xtierra at a price of $0.10 per share for a term of two years, subject to regulatory approval.