District Metals (DMX) - 10,000m Drilling to Unlock Polymetallic Potential

District Metals Corp. is a geoscience-based exploration and development company based out of Vancouver, British Columbia. It seeks to explore prospective mineral properties to generate shareholder equity. The company's major projects include the Tomtebo mine and Trollberget site in Sweden, and the Bakar project in British Columbia. Their team consists of professionals with extensive industry experience and a strong track record in the mining sector.

We met with Garrett Ainsworth, CEO, District Metals. He joined us from Kelowna, British Columbia. He is credited with raising over $300M in convertible debt and equity through two major mineral discoveries. Garrett holds 1.8M shares at District Metals which were acquired through personal investments within the $0.12 - $0.38 range. This further showcases his confidence in the company as it's one of his largest investments.

Garett serves as the Director at Standard Uranium and is involved with exploration projects in southwest Athabasca. He is also the Director at AuGold Corp., a start-up with Gold-Silver epithermal projects situated near Westhaven.

Company overview

District Metals is an exploration and development company headquartered in Vancouver, Canada founded in 1989. Global Minerals Slovakia s.r.o is a subsidiary of District Metals and was established in 2007. 

District Metals sourced several grab samples at the Tomtebo mine and the results uncovered significant regional anomalies, especially at the Tomtebo mine, where drill operations are underway. The drill program started on 15th March and so far, they have been able to drill 20 holes amounting to 5,000m. The company put out their first drill assays recently, where the initial 3 holes returned high grades of polymetallic mineralization with healthy widths.

The Tomtebo Mine

Located in the Bergslagen Mining District in Sweden, this property is spread across an area of 5,144 hectares. The mine is located within a 4km stretch of highly positive geophysical anomalies. It consists of host rocks and VMS-style mineralization. This property was fully acquired by District Metals in June 2020. It features two historic mines along with mineralized deposits which are open in all directions.

The Tomtebo mine is a project with high prospects that currently lacks modern systemic exploration. The previous exploration was carried out in the 1970s and since then, the tools and technologies have made significant advancements. Currently, the company is carrying out a down hole EM survey to identify conductive bodies that are present off-hole. The current drill program has achieved 5,000m depth across 20 holes. Infill is being carried out as well.

In phase 2, the company will carry out visual surveys of mineralization through assays, employing geophysics, whole-rock geochemistry,and EM surveys that would guide through deeper targets. This will help further expand the mineralization, generating value for the company. The site survey has uncovered Silver deposits of 1.4kg/t in recent drill findings, however, the site is mostly dominated by Zinc reserves.

As the district remains largely under-explored, the company is looking to continue the ongoing programs while also seeking a third project.This is because most of the claims are by junior companies and the sites offer a lot of prospective ground to explore. 

A Team of Experts

The company recently hired two key members with experience in Bergslagen, Sweden. The property became a tier 1 asset as he guided the team on a hole-by-hole basis

In January 2021, Hein Raat joined the team as a country manager to run the ongoing drill program. Hein Raat is based out of the Netherlands and has worked as a consultant for several companies including EMX Royalty, Boliden(6 years), and Bergslagen (8 years). His specialty lies in polymetallic targets in Sweden and Scandinavia. He is a geologist who has worked on the Tomtebo mine in the past.

Rodney Allen is a minister from Bergslagen who joined District Metals as a part-time technical advisor. In the past, he has worked at the Boliden's Garpenberg mine and brought it back to operation from a near-closure status. He is also working as a consultant geologist working on the Lundin mine forBoliden and LKAB.

Both Hein and Rodney played a key role in the mapping and sampling carried out by the company in fall 2020.

Doug Ramshaw serves as a Director at District Metals. Doug has a strong technical background in geology and capital markets. He has worked as an executive with Minera Alamos and serves as a director at Great Bear. He joined the company in April 2020.

Joanna Cameron is a Director and serves as a legal expert for District Metals. Equipped with over 21 years of experience, Joanna excels as a corporate, governance, and securities advisor. She has a working history with Garett at NextGen and has worked with Garrett in the past at NextGen.

Jonathan Challis is a Director at District Metals and a mining engineer with experience spanning over three decades. He also has a strong background in capital markets.

‍Capital Allocation

The major portion of the raised capital will be allocated towards the technical work being carried out, while 10% of the total budget will be designated towards marketing. The company is currently at a market cap of $38M.

The subsequent drilling strategy is heavily dependent on the results acquired through exploration. This helps strategize the drilling targets and allows for a streamlined budget allocation. The company is fully funded to handle an additional 5,000m drill program, bringing the total count to 10,000m. Phase 2 is scheduled for October 2021.

Revenue Generation

Since the last interview with crux investor in December 2020,District Metals was able to raise USD $4.75M, surpassing the original target of$3M. The company invested the funds raise into a 5,000m drill program and the revenue generated has provided sufficient headroom for another 5,000m exploration.

In 2020, the Garpenberg site's revenue generation accounted for 37.5% Silver, 37.5% Zinc, 15% Lead, and 10% Gold. The site features Silver-Zinc-Lead mineralization along with Copper Gold mineralization, the latter being lower tonnage. At the Tomtebo site, the company is exploring Silver-Zinc-Lead style mineralizations.

The Garpenberg site generated a volume of 3Mt consisting of 300g/t Silver and 8.8% Zinc equivalent. It offers an opportunity to mine at a significantly lower cost due to the condition of the rocks. At Garpenberg, the mining has reached 200m depth.

The race to 5,000m

District Metals commenced their drilling operation on 15th March 2021 and based on the current pace, the 5,000m target is scheduled to conclude latest by June end. The results of the program have a turnaround duration of up to 6 weeks. It is important to note that the assays are scheduled until September 2021.

The initial drill results were focused mainly on the Steffenburgs and Oscarsgruvan zones. The drilled holes extend up to 300m in depth where past evidence of mineralization was observed. The historic holes are wide open,which is an added bonus. The company plans to drill a collective 8 holes once the results are in.

Furthermore, they are looking to accelerate the drilling process by employing 2 rigs, cutting the overall exploration time from 3 to just 1.5 months. Multiple rigs will help drill significantly faster and allows for exploration at different regions, especially for deeper holes.

In the second phase, the company plans to target wider intercepts of mineralization that extend beyond the 200m depth. This will be followed by raising capital through financing to employ additional rigs. The current cost of drilling is in CAD $300/m range (~USD $242), which is a fair price.

District Metals is seeking polymetallic VMS (Volcanogenic Massive Sulphide ore) deposits at the Bergslagen site. It's also referred to as the stratabound style of mineralization by local geologists. 

A host of opportunities

Sweden is a major supplier of metals across Europe and offers a mining-friendly jurisdiction. The country is moving towards further expansion of local mines.Sweden also offers significantly lower costs for the expansion of claims beyond the existing area.

The Northvolt site features a battery factory that is seeking a local supplier for its metal demands. Since Boliden and Lundin sites already have multiple smelters in Scandinavia, the supply requirements can be easily met with a significant reduction in the overall carbon footprint.

To find out more, go to the District Metals Website