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District Executes Definitive Agreement to Acquire the Gruvberget Property in the Bergslagen Mining District of Sweden

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Vancouver, British Columbia--(Newsfile Corp. - July 28, 2021) - District Metals Corp. (TSXV: DMX) (FSE: DFPP); ("District" or the "Company") is pleased to announce the Company has executed a definitive purchase agreement dated July 27, 2021 (the "Purchase Agreement") with Explora Mineral AB ("Explora") to acquire 100% ownership of the Gruvberget Property (Figures 1 to 3) in the prolific Bergslagen District of Sweden, which hosts Boliden's Garpenberg Mine and Lundin Mining's Zinkgruvan Mine. Upon closing the acquisition of the Gruvberget Property the Company's primary focus will remain on aggressively advancing the highly prospective Tomtebo Property.

Garrett Ainsworth, CEO of District, commented: "Gruvberget is another highly accretive advanced stage exploration property to our polymetallic portfolio within the renowned Bergslagen Mining District. We now have four mineral licenses situated in proximity to the historic Falun Mine and Boliden's producing Garpenberg Mine with our flagship Tomtebo Property continuing to be the priority. A core portion of the Gruvberget Property has seen significant polymetallic mineralization drilled along a strike length of 1 km that is open in most directions, while the remaining 14 km strike length within the Property is strewn with historic polymetallic mines and mineral occurrences that have not seen modern systematic exploration."

Gruvberget Property Highlights

  • Gruvberget is an advanced stage exploration property that covers an area of 5,286 ha and is located approximately 230 km northwest from the capital city of Stockholm in Sweden.

  • Boliden's Garpenberg Mine is located 60 km to the southeast, and the historic Falun Mine is located 30 km to the east. Lundin's Zinkgruvan Mine is located 190 km to the south.

  • Gruvberget is located 35 km to the northwest from District's Tomtebo Property, and contains similar host rocks, structure, alteration, and mineralization styles as the Garpenberg Mine, Historic Falun Mine, and the Tomtebo Property.

  • Significant high grade polymetallic mineralization was discovered at Gruvberget around 1900. Mining at the South zone did not occur until 1987 where 40,000 tonnes at 90 g/t Ag, 5.1% Zn, 1.9% Pb, and 0.3% Cu1 was extracted via open pit mining, and transported to the Falun Mine facility for processing.

  • The Gruvberget South zone contains an unmined historical resource to a depth of 50 m from surface associated with the following drill intersection highlights:

  • Hole GS-20-55 intersected 6.4 m at 129 g/t Ag, 8.7% Zn, 3.2% Pb, 0.48% Cu

  • Hole DBH-18 intersected 4.6 m at 139 g/t Ag, 11.7% Zn, 3.0% Pb, 0.42% Cu

  • Hole DBH-17 intersected 6.4 m at 66 g/t Ag, 7.8% Zn, 1.8% Pb, 0.38% Cu

  • The Gruvberget North zone has a strike length of 550 m and vertical extent of 160 m that remains open. A mineral resource estimate has not been established at the North zone that contains the following drill intersection highlights:

  • Hole GRU1003 intersected 8.9 m at 40 g/t Ag, 3.7% Zn, 1.3% Pb, 0.16% Cu, 0.04 g/t Au

  • Hole GRU1008 intersected 4.8 m at 98 g/t Ag, 5.3% Zn, 2.0% Pb, 0.28% Cu, 0.14 g/t Au

  • Hole GRU1011 intersected 6.1 m at 1.3% Cu, 1.9 g/t Au, 51 g/t Ag, 1.1% Zn, 0.15% Pb2

  • The Gruvberget Property comprises a 208 ha core mineral license that covers the North and South zones. The 5,078 ha enclosing mineral license is in the application process, and contains numerous polymetallic showings that have not seen modern systematic exploration.

  • Wiking Mineral AB conducted the last significant work program on the Gruvberget Property in 2011 by drilling 2,200 m in 15 holes at the North zone.

The Purchase Agreement

Pursuant to the Purchase Agreement, District will acquire a 100% interest in the Gruvberget Property upon the following principal terms:

  • At closing of the proposed transaction District will:(i) make a cash payment of CAD$20,000 to Explora; and (ii) issue Explora 1,000,000 common shares of District.

  • To retain the Property, District must incur CAD$500,000 of eligible expenditures on the Gruvberget Property within two years of the closing of the proposed transaction.

  • District will grant Explora a 2.5% NSR royalty on the Gruvberget Property subject to an option to repurchase the entire 2.5% NSR royalty for CAD$8,000,000 at any time.

Figure 1: District Metals Mineral Licenses in the Bergslagen Mining District

To view an enhanced version of this graphic, please visit:
https://orders.newsfilecorp.com/files/7971/91361_3d2180305416aa9d_002full.jpg

Note: The nearby mines provide geologic context for District's Properties, but this is not necessarily indicative that the properties host similar tonnages or grades of mineralization.

Figure 2: Location Map of Gruvberget Property

To view an enhanced version of this graphic, please visit:
https://orders.newsfilecorp.com/files/7971/91361_3d2180305416aa9d_003full.jpg

Note: The nearby mines provide geologic context for District's Properties, but this is not necessarily indicative that the properties host similar tonnages or grades of mineralization.


Figure 3: Property Map of Gruvberget Property

To view an enhanced version of this graphic, please visit:
https://orders.newsfilecorp.com/files/7971/91361_3d2180305416aa9d_004full.jpg


References

1 Sveriges Geologiska Undersökning (SGU) Map Viewer: https://apps.sgu.se/kartvisare/kartvisare-malm-mineral.html

2 Wiking Mineral AB News Release dated May 12, 2011

3 Allen, R.L., Lundström, I., Ripa, M., and Christofferson, H., 1996, Facies analysis of a 1.9 Ga, continental margin, back-arc, felsic caldera province with diverse Zn-Pb-Ag-(Cu-Au) sulfide and Fe oxide deposits, Bergslagen region, Sweden: Economic Geology, v. 91, p. 979-1008.

4 Ed. Eilu, Pasi, 2012, Geological Survey of Finland, Special Paper 53, Metallogenic areas in Sweden.

5 Geological Survey of Sweden report grb_097, 1997.

6 https://www.boliden.com/globalassets/operations/exploration/mineral-resources-and-mineral-reserves-pdf/2020/resources-and-reserves-garpenberg-2020-12-31.pdf

Technical Information

All scientific and technical information in this news release has been prepared by, or approved by Garrett Ainsworth, PGeo, President and CEO of the Company. Mr. Ainsworth is a qualified person for the purposes of National Instrument 43-101 - Standards of Disclosure for Mineral Projects.

Mr. Ainsworth has not verified any of the information regarding any of the properties or projects referred to herein other than the Svärdsjö and Tomtebo Properties. Mineralization on any other properties referred to herein is not necessarily indicative of mineralization on the Svärdsjö and Tomtebo Properties.

The drill results reported in this news release are historical in nature. District has not undertaken any independent investigation of the sampling, nor has it independently analyzed the results of the historical exploration work in order to verify the results. District considers these historical drill results relevant as the Company will use this data as a guide to plan future exploration programs. The Company also considers the data to be reliable for these purposes, however, the Company's future exploration work will include verification of the data through drilling.

About District Metals Corp.

District Metals Corp. is led by industry professionals with a track record of success in the mining industry. The Company's mandate is to seek out, explore, and develop prospective mineral properties through a disciplined science-based approach to create shareholder value and benefit other stakeholders.

The advanced exploration stage Tomtebo Property is located in the Bergslagen Mining District of south-central Sweden is the Company's main focus. Tomtebo comprises 5,144 ha and is situated between the historic Falun Mine and Boliden's Garpenberg Mine that are located 25 km to the northwest and southeast, respectively. Two historic polymetallic mines and numerous polymetallic showings are located on the Tomtebo Property along an approximate 17 km trend that exhibits similar geology, structure, alteration and VMS/SedEx style mineralization as other significant mines within the district. Mineralization that is open at depth and along strike at the historic mines on the Tomtebo Property has not been followed up on, and modern systematic exploration has never been conducted on the Property.

For further information on the Tomtebo Property, please see the technical report entitled "NI 43-101 Update Technical Report on the Tomtebo Project, Bergslagen Region of Sweden" dated effective October 15, 2020 and amended and restated on February 26, 2021, which is available on SEDAR at www.sedar.com.

On Behalf of the Board of Directors

"Garrett Ainsworth"
President and Chief Executive Officer

(604) 288-4430

Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

Cautionary Statement Regarding "Forward-Looking" Information.

This news release contains certain statements that may be considered "forward-looking information" with respect to the Company within the meaning of applicable securities laws. In some cases, but not necessarily in all cases, forward-looking information can be identified by the use of forward-looking terminology such as "plans", "targets", "expects" or "does not expect", "is expected", "an opportunity exists", "is positioned", "estimates", "intends", "assumes", "anticipates" or "does not anticipate" or "believes", or variations of such words and phrases or statements that certain actions, events or results "may", "could", "would", "might", "will" or "will be taken", "occur" or "be achieved" and any similar expressions. In addition, any statements that refer to expectations, predictions, indications, projections or other characterizations of future events or circumstances contain forward-looking information. Statements containing forward-looking information are not historical facts but instead represent management's expectations, estimates and projections regarding future events. Forward-looking statements in this news release relating to the Company include, among other things, statements relating to the Company's planned exploration activities, including its drill target strategy and next steps for the Tomtebo Property; the company's interpretations and expectations about the mineralization of the Tomtebo Mine; the Company's belief that the numerous gravity high anomalies identified at the historic Tomtebo Mine provide immense expansion potential; the Company's belief that the modeled gravity high anomalies at the historic Tomtebo Mine could correspond with polymetallic and/or iron sulphide mineralization, or a mafic unit; and the Company's belief that the gravity high anomaly located one kilometer to the northeast of the Tomtebo Mine represents a potential grassroots discovery opportunity with a modeled tonnage that compares with the historic production tonnage from the historic Falun Mine.

These statements and other forward-looking information are based on opinions, assumptions and estimates made by the Company in light of its experience and perception of historical trends, current conditions and expected future developments, as well as other factors that the Company believes are appropriate and reasonable in the circumstances, as of the date of this news release, including, without limitation, assumptions about the reliability of historical data and the accuracy of publicly reported information regarding past and historic mines in the Bergslagen district; the Company's ability to raise sufficient capital to fund planned exploration activities, maintain corporate capacity and satisfy the exploration expenditure requirements required by the definitive purchase agreement between the Company and the vendor of the Tomtebo Property (the "Tomtebo Purchase Agreement") by the times specified therein; and stability in financial and capital markets.

Forward-looking information is necessarily based on a number of opinions, assumptions and estimates that, while considered reasonable by the Company as of the date such statements are made, are subject to known and unknown risks, uncertainties, assumptions and other factors that may cause the actual results, level of activity, performance or achievements to be materially different from those expressed or implied by such forward-looking information, including but not limited to risks associated with the following: the reliability of historic data regarding the Tomtebo Property; the Company's ability to raise sufficient capital to finance planned exploration (including incurring prescribed exploration expenditures required by the Tomtebo Purchase Agreement, failing which the Tomtebo Property will be forfeited without any repayment of the purchase price); the Company's limited operating history; the Company's negative operating cash flow and dependence on third-party financing; the uncertainty of additional funding; the uncertainties associated with early stage exploration activities including general economic, market and business conditions, the regulatory process, failure to obtain necessary permits and approvals, technical issues, potential delays, unexpected events and management's capacity to execute and implement its future plans; the Company's ability to identify any mineral resources and mineral reserves; the substantial expenditures required to establish mineral reserves through drilling and the estimation of mineral reserves or mineral resources; the Company's dependence on one material project, the Tomtebo Property; the uncertainty of estimates used to calculated mineralization figures; changes in governmental regulations; compliance with applicable laws and regulations; competition for future resource acquisitions and skilled industry personnel; reliance on key personnel; title matters; conflicts of interest; environmental laws and regulations and associated risks, including climate change legislation; land reclamation requirements; changes in government policies; volatility of the Company's share price; the unlikelihood that shareholders will receive dividends from the Company; potential future acquisitions and joint ventures; infrastructure risks; fluctuations in demand for, and prices of gold, silver and copper; fluctuations in foreign currency exchange rates; legal proceedings and the enforceability of judgments; going concern risk; risks related to the Company's information technology systems and cyber-security risks; and risk related to the outbreak of epidemics or pandemics or other health crises, including the recent outbreak of COVID-19. For additional information regarding these risks, please see the Company's Annual Information Form, under the heading "Risk Factors", which is available at www.sedar.com. These factors and assumptions are not intended to represent a complete list of the factors and assumptions that could affect the Company. These factors and assumptions, however, should be considered carefully. Although the Company has attempted to identify factors that would cause actual actions, events or results to differ materially from those disclosed in the forward-looking statements or information, there may be other factors that cause actions, events or results not to be as anticipated, estimated or intended. Also, many of such factors are beyond the control of the Company. Accordingly, readers should not place undue reliance on forward-looking statements or information. The forward-looking information is made as of the date of this news release, and the Company assumes no obligation to publicly update or revise such forward-looking information, except as required by applicable securities laws. All scientific and technical information contained in this news release has been prepared by or reviewed and approved by Garrett Ainsworth, PGeo, President and CEO of the Company. Mr. Ainsworth is a qualified person for the purposes of National Instrument 43-101 - Standards of Disclosure for Mineral Projects.

To view the source version of this press release, please visit https://www.newsfilecorp.com/release/91361