Nevada Sunrise Gold Corp.
TSX VENTURE : NEV

Nevada Sunrise Gold Corp.

September 02, 2010 12:45 ET

Nevada Sunrise Signs Agreement on Pinnacle Gold Property

VANCOUVER, BRITISH COLUMBIA--(Marketwire - Sept. 2, 2010) - Nevada Sunrise Gold Corp. (TSX VENTURE:NEV) ("Nevada Sunrise", or the "Company") has entered into a Letter Agreement with Nevada Sunrise LLC (the "Vendor"), a private company controlled by two directors of the Company, to acquire the rights to a mining lease on the Pinnacle Property, located in northern Nye County approximately 125 miles east of Reno, Nevada. The Pinnacle Property is highly prospective for gold mineralization and is situated within a mining district known for its historical gold production.

The Pinnacle Property

The Pinnacle Property is covered by 83 unpatented lode mining claims totalling approximately 1,650 acres in the Gold Park mining district along the east range front of the Shoshone Mountains. Gold was first discovered in the area in 1864, and the district reportedly produced 35,000 to 40,000 ounces of gold up to the early 1900s. Limited gold production was reported within the boundaries of the Pinnacle Property claims at the Ward Mine from about 1935 to 1940.

The Pinnacle Property hosts a large gold-mineralized system defined by rock chip sampling and limited drilling. The system as currently defined is approximately 20,000 feet (6,370 metres) in length with a width of at least 4,000 feet (1,274 metres). Work completed on the property includes rock chip sampling, geophysics, and drilling by Homestake Mining Company in 1998, and rock chip sampling by Meridian Gold Incorporated in 2007.

Homestake drilled 12 reverse circulation holes in a limited area. Seven of the holes had intercepts of at least 5 feet of 0.34 grams of gold per tonne ("g/t Au"). The best intercepts reported are shown in Table 1 below:

Table 1. Homestake Mining Drilling Results, 1998

Hole # Depth (ft) Thickness (ft) Au Grade (g/t)
HBC -3 50-60 10 2.2
HBC -3 330-335 5 1.5
HBC -3 380-385 5 3.2
HBC -3 405-435 30 4.1
HBC -6 20-30 10 1.9
HBC -12 490-520 30 1.1

Meridian Gold collected 125 rock chip samples of which 28 contained more than 1.0 g/t Au. Of those 28 samples, seven contained more than 10.0 g/t Au, and the highest ran 35.1 g/t Au. It was described by Meridian geologists as a sample of stockwork quartz veins in an unaltered pumice-lithic tuff from the dump of a small adit. The gold mineralization is hosted in Tertiary-age volcaniclastic rocks with very subtle alteration features.

William Henderson, President and CEO of Nevada Sunrise stated, "Past work has been carried out by experienced geologists from well-known gold mining companies Meridian Gold and Homestake, and is considered to be indicative of the potential of the Pinnacle Property. Based on their work and our observations in the field, we believe the Pinnacle Property has the potential to host a significant gold deposit. Nevada Sunrise is excited to have the opportunity to explore the Pinnacle Property."

[While the technical information in this release has been taken from reports and analysis Nevada Sunrise believes to be reliable, readers are cautioned that a qualified person has not done sufficient work to verify the technical information. Nevada Sunrise believes the Pinnacle Property merits additional work, part of which will be to verify past results, and is not relying on past work as indicative of the value of the Pinnacle Property.]

Terms of the Agreement

Nevada Sunrise has agreed to pay US $15,000 to the Vendor to secure a due diligence option period, and has the right to conduct due diligence activities including but not limited to such activities as geochemical sampling on the property and title searches through December 31, 2010. All 2010 claim maintenance fees will be paid by the Vendor. Subject to the completion of due diligence to the satisfaction of Nevada Sunrise, the Vendor and Nevada Sunrise have agreed to negotiate in good faith the terms of a mining lease for the Pinnacle Property. The parties have agreed that the consideration payable by Nevada Sunrise for the mining lease shall be:

  • 2011: Advance minimum royalty payments totalling US $30,000 payable in four equal quarterly instalments, plus property maintenance fees of approximately US $12,500 per year;

  • 2012: Advance minimum royalty payments totalling US $45,000 payable in four equal quarterly instalments, plus property maintenance fees of approximately US $12,500 per year, and a minimum work commitment of US $100,000 for 2011-2012 to be completed by the end of 2012;

  • 2013: Advance minimum royalty payments totalling US $60,000 payable in four equal quarterly instalments, plus property maintenance fees of approximately US $12,500 per year, and a minimum work commitment of US $100,000 by the end of 2013;

  • 2014-2020: Advance minimum royalty payments totalling US $60,000 payable by July 1 of each year, plus property maintenance fees of approximately US $12,500 per year, and a minimum annual work commitment of US $100,000 by the end of 2014 and 2015, which then increases to a US $250,000 minimum annual work commitment from 2016 to 2020.

A net smelter returns royalty ("NSR") variable with the average price of gold in US dollars as determined by the London Metal Exchange afternoon fix averaged over a period of 30 days will be retained by the Vendor as follows: 2.5% NSR at an average gold price less than or equal to $1,000, with each $500 increase in the average price of gold corresponding to a 0.5% increase in the NSR payable, up to a maximum of a 5.0% NSR at an average gold price of $3,000 or greater.

The Vendor

Nevada Sunrise LLC is a private Nevada limited liability corporation in which Mr. William Henderson, a director and officer of Nevada Sunrise, and Mr. Robert Leppo, a director of Nevada Sunrise, hold a majority equity interest. As a result, the proposed transaction is a related party transaction under Multilateral Instrument 61-101 and TSX Venture Exchange Policy 5.9. The transaction will not affect either Mr. Henderson's or Mr. Leppo's percentage interest in securities of Nevada Sunrise. Nevada Sunrise intends to rely on the exemption from the formal valuation and minority approval requirements of Multilateral Instrument 61-101 provided by section 5.5(1)(a) and 5.7(1)(a) that Instrument, as management does not believe the current fair market value of the Pinnacle Property, or the consideration to be paid for the Pinnacle Property, exceeds 25% of Nevada Sunrise's market capitalization. The transaction agreement with the Vendor will be subject to review and approval by the independent directors of Nevada Sunrise.

The acquisition of the Pinnacle Property mining lease by Nevada Sunrise is subject to the approval of the TSX Venture Exchange and the independent members of the Board of Directors of the Company.

The technical disclosure in this news release has been reviewed by Richard Kehmeier, a director of Nevada Sunrise Gold Corporation and a Qualified Person as defined by N.I. 43- 101 of the Canadian Securities Administrators.

CAUTIONARY NOTE

This release contains forward-looking statements which may include, but is not limited to, statements with respect to the timing of our exploration and drilling programs; geological models; expectations related to enhancing resource grades; financing plans and availability of future financing for our projects; anticipated results of our exploration, mineral resource estimates and other plans, projections, estimates and expectations. Such statements address future events and conditions which are subject to various risks and uncertainties that are based on the expectations and opinions of the Company's management on the date the statements are made. The assumptions used in the preparation of such statements, although considered reasonable at the time of preparation, may prove to be imprecise and, as such, undue reliance should not be placed on forward-looking statements. For details of the Company, its business and properties, including risks relating to an investment in securities of the Company, see the Company's prospectus dated June 25, 2008, as amended by an amendment dated August 22, 2008, both of which are available on SEDAR at www.sedar.com, or directly from the Company.

The Securities of Nevada Sunrise Gold Corporation have not been registered under the United States Securities Act of 1933, as amended, and may not be offered or sold within the United States or to the account or benefit of any U.S. person.

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.

Contact Information

  • Nevada Sunrise Gold Corp.
    William B. Henderson
    President and Chief Executive Officer
    (530) 887-9901
    (530) 884-3822 (FAX)
    ir@nevadasunrise.com