Sparton Signs Option Agreement for Sale of Nevada Gold Project
TORONTO, ONTARIO -- (Marketwire) -- 06/22/11 -- SPARTON RESOURCES INC. (TSX VENTURE: SRI), (the 'Company') is pleased to announce that, effective June 17th, 2011, it has signed a Purchase Option Agreement (the 'Agreement') with Purple Gold Corporation ('PGC') where under PGC will acquire all of the Company's rights and obligations related to the SBD gold project near Battle Mountain, Nevada. PGC is a newly incorporated private British Columbia company which will seek a public listing in the near future.
Under the terms of the Agreement, PGC will make cash payments to Sparton totalling US $500,000 over the next 6 months, and issue free trading shares of PGC with a value of US $250,000 within 18 months of June 17, 2011. Additionally, PGC will also issue to the Company the greater of 500,000 free trading shares of PGC or shares having a value of US $250,000 on or before December 15, 2012.
Alternatively, at PGC's option, PGC may make cash payments totalling US $500,000 in two equal tranches on or before the dates above and not issue any shares to Sparton.
The Company will also receive a 1% Net Smelter Return Royalty on any production from the SBD property.
WORK COMMITMENT
Under the terms of the Agreement, PGC will also spend a minimum of US $750,000 dollars for exploration on the SBD property within 12 months of any PGC financing that raises a minimum of US $1,000,000. Further it has agreed to pay the cost of a surface geochemical sampling program (to a maximum of US $30,000) to complete the geochemical coverage of the entire property and cover several very strong geophysical targets located in earlier Sparton work programs. This work will begin immediately and be completed by Sparton staff.
DISCUSSION
The transaction is part of the Company initiative to rationalize its mix of exploration project assets and focus on core businesses and programs in the specialty metals field.
The SBD Project claim group is in the heart of the Battle Mountain Gold Region and is located near Newmont's past producing Trenton Canyon Mine. Past work programs by the Company and others located a semi continuous zone of gold mineralization on the west side of the claim group that is identical to Trenton Canyon style mineralization. 2007 drilling and high resolution geophysics by Sparton confirmed earlier results and located at large untested resistivity anomaly on the eastern part of the claims which will be covered by the current geochemical sampling program. The Company has permitted over 20 drill sites for new work and PGC will receive all available exploration data to plan their program.
The previous Sparton work program included 7 reverse circulation drill holes which confirmed earlier work by previous operators and a complete compilation of all historical data available for the property. These included 33 metres of 1.12 g/t gold in Hole SBD 07-05, and 10.7 metres of 1.91 g/t gold in Hole SBD 07-03. (See Sparton News Release dated June 13, 2007).
The Company looks forward to collaborating with the PGC technical staff to further test the new targets developed at SBD.
The Agreement is subject to any required regulatory approvals.
Sparton's international exploration, development, and evaluation programs are being carried out under the direct supervision of A. Lee Barker, P. Eng., P Geol., the Company's President and CEO, who is a Qualified Person under National Instrument 43-101 and has approved the technical content of this release.
Statements in this release that are forward-looking statements are subject to various risks and uncertainties concerning the specific factors disclosed under the heading 'Risk Factors' in the Company's filings with Canadian securities regulators. Such information contained herein represents management's best judgment as of the date hereof based on information currently available. The Company does not assume any obligation to update any forward-looking statements, save and except as may be required by applicable securities laws.
This news release and the information contained herein does not constitute an offer of securities for sale in the United States and securities may not be offered or sold in the United States absent registration or exemption from registration.
We Seek Safe Harbour.
Neither 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.
Contacts:
Sparton Resources Inc.
A. Lee Barker
President and CEO
416-366-3551 or Mobile: 416-716-5762
416-366-7421 (FAX)
info@spartonres.ca
Sparton Resources Inc.
Edward G. Thompson
Chairman
416-366-6083
416-366-2713 (FAX)
egt@interlog.com
www.spartonres.ca