Mineral Mountain Resources Ltd.
TSX VENTURE : MMV

Mineral Mountain Resources Ltd.

September 28, 2010 07:00 ET

Mineral Mountain Options Former High Grade Gold Producer

VANCOUVER, BRITISH COLUMBIA--(Marketwire - Sept. 28, 2010) - Mineral Mountain Resources Ltd. (TSX VENTURE:MMV) ("Company" or "Mineral Mountain") is pleased to report that the Company has entered into a letter of intent ("LOI") with Shotgun Exploration ("Shotgun"), a private company based in Atikokan, Ontario, to earn up to a 75% interest in Shotgun's 100%-owned Straw Lake Beach Gold Mine, a former gold and silver producer that was forced to shut down early in its mine life due to the lack of power needed to extract the ore from the deeper levels and the onslaught of World War II. The Mineral Mountain technical team, as part of its due diligence, made several site visits, sampled rock dump development material and conducted a complete review of all historical development and regional exploration in the Straw Lake area. As a result, the team established that the Straw Lake Property has high potential to host both hydrothermally emplaced high grade gold mineralization as seen at the Straw Lake Beach Gold Mine and large volume gold mineralization present in the altered pyritic host rock proximal to the regional Manitou Stretch-Pipestone Fault system and in contact with the Lawrence Lake Batholith. Many geological and mineralogical similarities between the Straw Lake area and the Hemlo gold deposits are evident. Access to the property is excellent with a network of all weather gravel roads crossing the property and connecting with Highway 502. In a straight line, the property lies approximately 70 km northeast from Rainy River Resources' (RR.V-TSX) 5 Moz gold deposit situated in Richardson Township and approximately 100 km northwest of Brett Resources' (BBR.V-TSX) 6.9 Moz Hammond Reef deposit.

Straw Lake Beach Gold Mine Property

A high grade gold-silver vein system associated with complexly folded volcanic rocks which is cut by a regional fault known as the Pipestone-Manitou Stretch Fault, was discovered on the south shore of Straw Lake in 1933. Subsequent prospecting, trenching and sampling successfully traced the vein system for over 250 metres in strike length with assays ranging from 0.15 to 0.52 opt Au from systematic channel sampling. The vein system was hosted in altered and sheared rhyolite varying from 13 inches to 28 inches in width and is oriented 80˚ to 100˚ and dips vertically. Metallic minerals associated with the vein system included native silver, pyrite, chalcopyrite, galena, magnetite and sphalerite. Based on the vein system's strong continuity and it's consistently high grade gold values, Straw Lake Beach Gold Mine sunk a 723-foot shaft in 1934, established production levels at 100, 200, 300, 425, 575 and 700 feet and completed 4,631 feet of underground development. Between 1938 and 1941, 11,568 ounces of gold and 1,049 ounces of silver were produced from 33,662 tons grading 0.343 ounces per ton of gold primarily from the two top levels. Archived development plans of the mine confirm that the vein system improved in width and grade at depth. For example, the 700-foot level returned wider widths (up to 28 inches) and a higher grade of gold (averaged 0.40 opt Au) of ore than any other level of the mine. Grab sampling of the "wall rock" consisting of altered pyritic rhyolite hosting the high grade vein system by the Mineral Mountain's technical team returned values as high as 12.73 g/t Au.

Gold mineralization in the Straw Lake area occurs in four different geological environments supporting a hydrothermal origin. Of particular interest to Mineral Mountain's technical team is that several drill holes completed previously by other mining groups in the Straw Lake area intersected important gold intervals highlighting the significant bulk-tonnage gold potential for the property:

  • In 1995, a drill hole (SLT95-01) completed in the Straw Lake Beach Mine area intersected over 250 metres of altered pyritic rhyolite carrying anomalous gold values up to 520 ppb Au.
  • In 1980, Selco intersected 18.43 metres grading 1.49 g/t Au in drill hole FS-8.
  • In 1983, Sparton Resources intersected 1.52 metres grading 10.05 g/t Au in drill hole SL83-2 approximately 1 kilometre east of the mine shaft (no record of drilling between the shaft and this hole.
  • In 1985, Minnova delineated a gold-bearing alteration system within a fault structure 244 metres long and 22.3 metres wide in the Lawrence Lake batholith approximately one kilometre north of the Straw Lake mine shaft. Three drill holes intersecting the system intersected 5.6 metres grading 1.86 g/t Au (SL-09), 4.7 metres grading 2.80 g/t Au (SL-11) and 1.52 metres grading 3.80 g/t Au (SL-07) 

The Straw Lake Property consists of 4 patented mining claims which cover the mine shaft and 16 unpatented mining claims totalling approximately 1,706 hectares (4,215 acres). 

Wally Rayner, the Company's Vice President of Exploration commented: "The principal focus during the Straw Lake mine development between 1938 and 1941 was on the high grade vein system and not the altered pyritic rhyolite that we now know is auriferous. Our sampling of the altered pyritic rhyolite did return robust gold values, thus supporting our theory that the area may be amenable to large tonnage, near surface mining."

Pursuant to the LOI, the Company may earn a 60% interest in the Straw Lake Beach Gold Mine Property by:

  • making total cash payments of $550,000 to Shotgun over a three year period ($250,000 on TSXV approval; $100,000 on the first anniversary of the definitive option agreement (the "Agreement"); $100,000 on the second anniversary of the Agreement; $100,000 on the third anniversary of the Agreement)
  • issuing a total of 2,500,000 shares to Shotgun over a three year period (250,000 shares on TSXV approval; 500,000 shares on the first anniversary of the Agreement; 750,000 shares on the second anniversary of the Agreement; and 1,000,000 shares on the third anniversary of the Agreement)
  • incurring $4,750,000 of exploration expenditures over a four year period ($750,000 before the first anniversary of the Agreement; a further $1,000,000 before the second anniversary of the Agreement; a further $1,500,000 before the third anniversary of the Agreement; and a further $,500,000 before the fourth anniversary of the Agreement)

Once Mineral Mountain has earned its 60% interest, it will have a second option to earn an additional 15% participating interest (for a total of 75%) by:

  • making total cash payments of $750,000 to Shotgun over a three year period ($250,000 on the fourth anniversary of the Agreement; $250,000 on the fifth anniversary of the Agreement; and $250,000 on the sixth anniversary of the Agreement)
  • issuing a total of 2,500,000 shares to Shotgun over a two year period (1,250,000 shares on the fourth anniversary of the Agreement; and 1,250,000 shares on the fifth anniversary of the Agreement)
  • incurring $5,000,000 of exploration expenditures over a two year period ($2,500,000 before the fifth anniversary date; and a further $2,500,000 before the sixth anniversary of the Agreement)

After Mineral Mountain has earned it's 75% participating interest, Mineral Mountain and Shotgun will form a joint venture in which Mineral Mountain and Shotgun will jointly fund and manage the Straw Lake Gold Mine Property as a 75% Mineral Mountain and a 25% Shotgun joint venture. The joint venture will include a Management Committee comprised of three members of Mineral Mountain and one member of Shotgun. If a party's interest is diluted below a 10% participating interest, then such party's interest will be converted to a 3% net smelter return with 1% buy-back at $1,000,000.

The transactions with Shotgun are subject to certain conditions including, but not limited to, the receipt of applicable regulatory approvals including approval of the TSXV and entering into a definitive option agreement. Wally Rayner, P.Eng, the Company's Vice President of Exploration and Nelson W. Baker, P.Eng, are the qualified persons responsible for this news release.

About Mineral Mountain 

Mineral Mountain intends to become a significant explorer and developer of precious metals with a particular focus on gold, silver and base metals. The Company's business model is based on a strong management, a strong technical team, on the ability to raise the funds necessary to properly explore its projects and on establishing strategic partnerships. Our mandate is to explore in politically safe countries where infrastructure plays a significant role in reducing overall exploration and future development costs. Presently, Mineral Mountain has over $4 million in its treasury.

Mineral Mountain has identified three major gold projects that meet the Company's objectives. In south eastern British Columbia, the Company has identified the 60,600-hectare Kootenay Arc Project as having a geological environment that could host hypogene, sediment hosted precious metal deposits similar to those found in the Carlin Trend of Nevada. To date, several kilometre-scale gold and silver anomalies have been defined by prospecting and systematic soil and stream sediment sampling within the project area. The 90 km² Golden Harp option in the emerging Shining Tree mining camp and the Straw Lake Beach Mine Property both are considered to have excellent bulk tonnage gold potential.

To view the map associated with this press release, please click on the following link: http://media3.marketwire.com/docs/rr927.pdf

On behalf of the Board of MINERAL MOUNTAIN RESOURCES LTD.

Nelson W. Baker, President and CEO

This release includes certain statements that may be deemed to be "forward-looking statements". All statements in this release, other than statements of historical facts, that address events or developments that the Company expects to occur, are forward looking statements. Forward looking statements are statements that are not historical facts and are generally, but not always, identified by the words "expects", "plans", "could" or "should" occur. Although the Company believes the expectations expressed in such forward looking statements are based on reasonable assumptions, such statements are not guarantees of future performance and actual results may differ materially from those in forward looking statements. Factors that could cause the actual results to differ materially from those in forward-looking statements with respect to the transactions described in the LOI include future gold prices, results of exploration and development activities, regulatory changes, defects in title, availability of materials and equipment, timeliness of government approvals, continued availability of capital and financing and general economic, market or business conditions. The Company cautions the foregoing list of important factors is not exhaustive. Investors and others who base themselves on the Company's forward-looking statements should carefully consider the above factors as well as the uncertainties they represent and the risk they entail. The Company believes that the expectations reflected in those forward-looking statements are reasonable, but no assurance can be given that these expectations will prove to be correct. Please see the public filings of the Company at www.sedar.com for further information.

The TSX Venture Exchange has not reviewed and does not accept the responsibility for the adequacy and accuracy of this news release.

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