Desert Star Resources Ltd. Options the Anchor Project in Nevada from Pilot Gold
VANCOUVER, Sep 17, 2013 - Desert Star Resources Ltd. (TSX VENTURE:DSR) ("Desert Star" or the "Company") is pleased to announce that it has entered into an exploration and development agreement (the "Option Agreement"), dated September 16, 2013, with a wholly-owned subsidiary of Pilot Gold Inc. (TSX: PLG) ("Pilot Gold"), under which Desert Star is granted an option to earn up to a 65% interest in the Anchor gold project (the "Anchor Project"), located approximately 11 kilometers northwest of Eureka, Nevada, United States. The Anchor Project consists of 54 unpatented federal lode mining claims on BLM land and is located at the south end of Diamond Valley, Eureka County, Nevada (Fig.1). The Anchor Project is situated 10 kilometers northwest of Barrick Gold Corp.'s Ruby Hill mine at the southern end of the Battle Mountain-Eureka gold trend. This prolific gold trend includes mines such as the Pipeline Mine complex, the Marigold Deposit, and Barrick Gold Corp.'s recent Gold Rush discovery.
The Anchor Project is centered on a 600 meter by 500 meter gold-arsenic-antimony rock and soil geochemical anomaly hosted in Mississippian siliciclastic sedimentary rocks (Chainman Formation; Fig. 2). Previous exploration work conducted by various groups identified gold mineralization (rock grab samples) up to 1.83 g/t gold and associated with highly anomalous arsenic (11,900 ppm) and antimony (1,030 ppm), elements typically linked with Carlin-style gold systems. Historic drilling at the Anchor Project focused on the siliciclastic Chainman Formation and did not test the carbonate debris flow sedimentary rocks of the underlying Devils Gate Formation (Fig. 2 and Fig. 3). Carbonate debris flow sedimentary rocks are the most prolific gold host rocks in the Great Basin. Desert Star's technical team believes the gold and associated arsenic and antimony mineralization within the siliciclastic sedimentary rocks at the Anchor Project represent a "leakage anomaly" above possible gold mineralization in the prospective Devils Gate Formation debris flow host rocks at depth.
Exploration History
The claims representing the Anchor Project were originally staked in 1988. Various exploration campaigns consisting of data compilation, rock chip sampling, soil sampling, mapping, trenching, IP, TEM surveys and drilling were completed by various groups between 1988 and 2010. Of note, Rio Algom Limited drilled 18 holes between 1988 and 1992, and Kennecott Utah Copper drilled 13 holes in 1999. Nevada Eagle LLC acquired the claims by staking in 2005 after they became open. Pilot Gold (through its predecessor, Fronteer Gold) acquired the Anchor Property as part of its purchase of Nevada Eagle LLC's portfolio of properties in April 2010. Pilot Gold has since performed reconnaissance mapping, rock chip sampling and a gravity survey.
"The Anchor Project is highly prospective for a large bulk tonnage gold resource," stated Desert Star President and CEO Vince Sorace. "The presence of gold at surface, favourable host carbonate debris flows at depth and the Carlin-type geochemical signature give us a high degree of confidence in the Anchor Project."
Expected 2013 Exploration Program
Desert Star intends to initiate a systematic exploration program on the Anchor Project in the fall of 2013, which will include compilation of historic data, rock and soil sampling as well as field mapping and 1,500 meters of diamond drilling.
Terms of the Option Agreement
Pursuant to the terms of the Option Agreement, Desert Star will be required to make the following payments to Pilot Gold and incur the following exploration expenditures in order to earn in a 51% interest (the "Primary Earn-In") in the Anchor Project:
- On execution and approval by the TSX Venture Exchange (the "Effective Date"), issue to Pilot Gold 200,000 of Desert Star's common shares;
- Before the first anniversary of the Effective Date, drill 1,500 meters aimed at the Devils Gate Formation (the "Initial Drilling");
- Prior to the second anniversary of the Effective Date, incur exploration expenditures of $2 million (including the exploration expenditures incurred for the Initial Drilling);
- On or prior to the first anniversary of the Effective Date, issue to Pilot Gold 300,000 of Desert Star's common shares; and
- On or prior to the second anniversary of the Effective Date, issue to Pilot Gold 500,000 of Desert Star's common shares.
Upon completing the Primary Earn-In, Pilot Gold will be granted a royalty equal to 1% of net smelter returns on the property, the parties will form a limited liability company ("LLC") and enter into a shareholders' agreement governing the terms and conditions of the LLC, and Desert Star may elect to acquire an additional 14% interest (the "Secondary Earn-In") in the Anchor Project (bringing its total ownership in the project to 65%) by making the following payments and incurring the following exploration expenditures:
- Prior to the fourth anniversary of the Effective Date, incur additional exploration expenditures in the amount of $4 million; and
- On or prior to the fourth anniversary of the Effective Date, issue to Pilot Gold 1,000,000 of Desert Star's common shares.
Upon completion of the Secondary Earn-In, Desert Star may earn an additional 5% in the Anchor Project (bringing its total ownership in the project to 70%) if it elects to complete a preliminary economic assessment ("PEA") on the project and Pilot Gold elects not to participate in funding its proportionate cost of the PEA.
Disclaimer
There are no assurances that the geological similarities of the projects located in the Battle-Mountain-Eureka gold trend will result in the establishment of any resource estimates at the Anchor Project. The Anchor Project is an early stage development project without any current resource estimates and there is no certainty that any such resource estimates will ever be established.
Qualified Person
Dr. Alan J. Wainwright, PhD PGeo, is Desert Star's designated Qualified Person (within the meaning of National Instrument 43-101 Standards of Disclosure for Mineral Projects) for this news release, and has reviewed and approved all technical and scientific information contained herein. Dr. Wainwright is Desert Star's Chief Geologist.
About Desert Star
Desert Star is a Vancouver-based mineral exploration company focused on the identification, acquisition and development of copper and gold projects located in top-tier mineral belts in the southwestern United States that contain significant historical production, existing mining infrastructure and an established mining culture.
Vince Sorace, President and CEO
Desert Star Resources Ltd.
Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
Cautionary Note Regarding Forward-Looking Statements
This news release contains certain statements that may be deemed "forward-looking statements" with respect to Desert Star within the meaning of applicable securities laws. Forward-looking statements are statements that are not historical facts and are generally, but not always, identified by the words "expects", "plans", "anticipates", "believes", "intends", "estimates", "projects", "potential" and similar expressions, or that events or conditions "will", "would", "may", "could" or "should" occur, or describes a goal or strategy. Although Desert Star believes the expectations expressed in such forward-looking statements are based on reasonable assumptions and estimates, such statements are not guarantees of future performance and actual results or realities may differ materially from those in forward-looking statements.
Such forward-looking statements are subject to risks and uncertainties, which could cause actual results to differ materially from estimated results. Such risks and uncertainties include, but are not limited to, Desert Star's ability to raise sufficient capital to fund its obligations under the Option Agreement, incur the minimum annual expenditure requirements, issue the common shares as consideration for the option under the Option Agreement and otherwise earn-in its interest in the Anchor Project; changes in economic conditions or financial markets; the ability of Desert Star to obtain the necessary permits, licenses, approvals and consents required to explore and develop the Anchor Project; and changes in environmental, mining and other laws or regulations that could have an impact on the Company's operations. Many assumptions are based on factors and events that are not within the control of Desert Star and there is no assurance they will prove to be correct. Forward-looking statements are based on the beliefs, estimates and opinions of Desert Star's management on the date the statements are made, and except as required by law, Desert Star undertakes no obligation to update these forward-looking statements in the event that management's beliefs, estimates or opinions, or other factors, should change. Although Desert Star has attempted to identify important factors that could cause actual actions, events or results to differ materially from those described in forward-looking information, there may be other factors that cause actions, events or results not to be as anticipated, estimated or intended. Readers are referred to the additional risk factors discussed in Desert Star's financial statements, including management's discussion and analysis, available under Desert Star's SEDAR profile at www.sedar.com.
To view the figures associate with this press release, please visit the following link:
http://media3.marketwire.com/docs/DSRfig1.pdf
Contact
Desert Star Resources Ltd.
(604) 639-9052
(604) 647-6613
info@desertstar.ca
www.desertstar.ca