Sparton Resources Inc.

Sparton Resources Inc.

July 28, 2009 09:00 ET

Sparton Announces $1.7 Million Financing and Acquisition of Majority Interest in Profitable Coal/Germanium/Uranium Opportunity

TORONTO, ONTARIO--(Marketwire - July 28,2009) - Sparton Resources Inc. (TSX VENTURE:SRI) (the "Company")is pleased to announce that its wholly-owned subsidiary, Sparton Energy Inc.("SEI") has completed a $1.7 million financing provided by anarm's length third party (the "Lender") by way of a loan (the"Loan"). The proceeds of the Loan will be used to complete theacquisition of a further 34% share interest in Linxing 306 Huajun Coal Co. Ltd.Lincang City ("Huajun"), which owns the Huajun coal and germaniumproducing operations in Yunnan, China. This will result in SEI taking overcontrol of the operations and cash flow at Huajun. SEI has completed thesourcing of experienced technical and financial staff to effect a smoothtransition of the operational and management changes.

The Loan is for a principal amount of $1.7million evidenced by a debenture and will carry interest at 17.6% annuallypayable on a quarterly basis for 18 months and is repayable on or beforematurity on April 23, 2011. The Loan will be repaid outof the proceeds from a future financing.

The Loan can be prepaid at any time priorto 30 days of maturity without penalty. Within 30 days prior to maturity, theparties can each elect for the repayment of the principal in full plus $425,000in cash. In the event no such election is made, the Lender can elect to requiretransfer of SEI's 34% interest Huajun acquired with the proceeds of the Loan infull satisfaction of the amounts owing under the Loan. In addition, if at anytime the board of directors of SEI formally authorizes a going publictransaction of SEI and so long as none of the elections described above hasbeen made, the Lender shall have the right to convert the debt owed under theLoan in the capital of SEI in an amount equal to 150% of the then outstandingprincipal amount on the Loan, subject to all applicable regulatory approval.

SEI, the Company and another subsidiary ofthe Company are providing security for the Loan in the form of a guaranteebacked by the Huajun shares, SEI's interest in its equipment, inventory andintangible assets and certain other assets of the Company.

Quam Limited has agreed to extend therepayment date of the US$2 million bridge loan made to SEI to April 23, 2011, provided that the US$500,000 be repaid by September 30,2009.

This press release contains"forward-looking statements" within the meaning of applicableCanadian securities legislation. Generally, forward-looking statements can beidentified by the use of forward-looking terminology such as "plans","expects" or "does not expect", "is expected","budget", "scheduled", "planned","estimates", "forecasts", "intends","anticipates" or "does not anticipate", or"believes", or variations of such words and phrases or state thatcertain actions, events or results "may" , "could","would", "might" or "will be taken","occur" or "be achieved". Forward-looking statements aresubject to known and unknown risks, uncertainties and other factors that maycause the actual results, level of activity, closing of transactions,performance or achievements of the Company to be materially different fromthose expressed or implied by such forward-looking statements, including butnot limited to: risks related to exploration and development, the environment,local and foreign government regulation, currency fluctuation infrastructure,capital markets and additional funding requirements and the departure of keyexecutives as well as those factors discussed in the Company's documents filedon SEDAR (

Although the Company has attempted toidentify important factors that could cause actual results to differ materiallyfrom those contained in forward-looking statements, there may be other factorsthat cause results not to be as anticipated, estimated or intended. There canbe no assurance that such statements will prove to be accurate, as actualresults and future events could differ materially from those anticipated insuch statements. Accordingly, readers should not place undue reliance onforward-looking statements. The Company does not undertake to update anyforward-looking statements that are contained herein, except in accordance withapplicable securities laws. Further information on Sparton Resources Inc. isavailable at

This news release and the informationcontained herein does not constitute an offer of securities for sale in theUnited States and securities may not be offered or sold in the United Statesabsent registration or exemption from registration.

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.

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