Salmon River Resources Ltd.

Salmon River Resources Ltd.

June 26, 2012 08:45 ET

Salmon River Progresses Treppo Grande Iron Acquisition, Significant Initial Results From Mapping of Hematite Zones, Further Corporate Updates

VANCOUVER, BRITISH COLUMBIA--(Marketwire - June 26, 2012) - Salmon River Resources Ltd. (TSX VENTURE:SAL) (together with its subsidiaries individually and jointly referred to as "Salmon River" or the "Company") is pleased to announce several important corporate developments and the results of its latest exploration activities.

Extension of Treppo Grande Option

Salmon River is pleased to announce that it has further extended the payment terms on its agreement to acquire a 100% interest in the shares of Treppo Grande Iron Pty Ltd. (the "Acquisition") (see press releases dated 16 June 2010 and 2 May 2012), a private Australian company which holds five granted tenements in the Yilgarn Craton of southwestern Australia, including the highly prospective Treppo Grande iron ore prospects. Under the terms of the agreement for the Acquisition (the "Acquisition Agreement"), the Vendor has agreed to extend the date for completion to 15 January 2013.

Under the terms of the Acquisition Agreement, the Company has agreed to make a payment to the Vendor of A$4,000,000 on or before 20 July 2012; the two pre-completion payments of A$1,000,000 each previously paid by the Company to the Vendor in relation to earlier extensions will now be in addition to the Purchase Price; the Company has agreed to implement an additional exploration programme and incur not less than A$4,000,000 in exploration expenditure within the Tenements by no later than 15 November 2012;the rate of the royalty has been increased from A$0.50 per metric tonne of all Iron Ore to A$1.00 per metric tonne of all Iron Ore; and the final payment for completion of the sale of A$96,000,000 is to be paid by no later than 15 January 2013.

Doug Betts, Chairman of the Company, commented, "The extension of the payment terms is an important development for Salmon River. This allows us additional time to complete several strategic initiatives currently underway that are expected to provide significant funding and strategic benefits for the Company. Additionally this allows us to progress exploration on the project to further demonstrate the potential of the Treppo Grande Iron Project and significantly enhance shareholder value prior to any such funding."

Exploration Update

As part of the terms of fulfilment of the Option Amendment Agreement, Salmon River has developed plans for the next phase of exploration focused on the highly prospective hematite potential of Treppo Grande South (E77/1208). In this regard, the Company has engaged Digirock Pty Ltd ("Digirock") to carry out a program of 1:5,000 scale geologic mapping over the southern part of their E77/1208 tenement covering the Mount Manning Range, WA, which has potential for banded iron formation (BIF) related iron ore deposits. The mapping program has particularly focused on identifying and delineating the surface extents of hematite enrichment in BIF, and down-slope detrital iron deposits derived from BIF, which may contain high iron grades suitable for direct shipping ore, in the vicinities of the Hook, Shank and Western anomalies that were previously defined by interpretation of aero-magnetic survey data (See Figure 1).

To view Figure 1 please click on the following link:

The Company has received a preliminary report, based on eleven days of surface mapping between 11-21 May 2012 at a 1:20,000 scale and an account of the geology observed. During that time Digirock mapped the Hook and Shank anomaly zones, over a combined strike length of about 7 1/2 kilometre ("km") at the southern end of Treppo Grande South. The preliminary geologic mapping has indicated that the Hook anomaly zone is dominated by iron-rich BIF that crops out on the upper northern slope and the crest of the main ridge, in a unit up to about 150 metres thick. This iron-rich BIF facies is nearly continuous over 4 1/2 kilometres strike and appears to have an average thickness of approximately 125m (See Figure 2). The down dip extension is not yet determined but preliminary drilling suggests a high probability of >50m in depth and geophysical interpretations suggest the potential for extensions to at least 250m. These results support the potential for substantial DSO hematite mineralization.

To view Figure 2 please click on the following link:

The preliminary mapping also identified the potential for substantial indurated detrital ironstone (DID) on both the northern and southern lower slopes of the Hook area. The Company expects to release final results of the surface mapping in the near future.

The next phase of exploration work during the period to the end of 2012 will initially focus on completing an updated Conservation Management Plan and a new Programme of Work. This will allow for more intensive drilling at Treppo Grande South and an extensive rock chip sampling programme to target outcropping BIF and DID units. A small resource delineation drill programme is expected to be completed during this period.

Financing and Other Negotiations

During the last several months, Salmon River has also been involved in extensive negotiations with a number of strategic and financial investors regarding funding for payments under the terms of the Acquisition Agreement and for the furthering of the Treppo Grande Project. Salmon River continues discussions with General Steel Holdings Inc. ("General Steel") regarding the terms of potential arrangements under the previously announced Memorandum of Understanding and their potential participation alongside other investors who have indicated interest in participating in agreements with the Company. As well, in light of the developments described herein, the Company will not proceed with the Private Placement previously announced on 29 December 2011.

In the interim the Company is also in discussions with a number of potential investors regarding an approximately C$10 million financing to fund the payments to the Vendor and the exploration program and working capital requirements. More details are expected to be released shortly.

These discussions are at an advanced stage and the Company remains confident of the ultimate success of these discussions, especially given the potential of the Treppo Grande Iron Project. Any financing proposals will be subject to approval by the TSX Venture Exchange and may require shareholder approvals. There can be no assurance that these discussions will be successfully completed or required approvals obtained.

Temporary Management Changes

The Company also wishes to advise that for personal reasons Mr. James Stewart has temporarily relinquished his role as CEO of the Company. Mr. Douglas Betts will assume the position as Interim CEO, pending Mr. Stewart's return.

Qualified Person

Mr. Hector Galam, B.App.Sc. (Hons) (App. Geology), M.Sc. (Geology), is a Member of both the AIG and the AusIMM; and the Exploration Manager responsible for the geological programmes on all the EL's referenced in this document. He is a full time employee of the Company. Mr. Galam is a Qualified Person as defined in National Instrument 43-101 and has assisted in the preparation of and approved this news release in relation to the exploration update.

Salmon River has established and maintains a comprehensive quality assurance-quality control (QA/QC) program.


Salmon River Resources Limited (TSX VENTURE:SAL) is a mineral exploration company engaged in the exploration for and development of commercial deposits of iron ore in Western Australia. It exercised its option to acquire five tenements in the Yilgarn region of Western Australia including the Treppo Grande iron ore project, approximately 210 kilometres northwest of Kalgoorlie, comprising three tenements covering approximately 396.7 km2. Completion of the acquisition of the tenements is subject to certain conditions, including payment of approximately A$100 million to the vendor. For further information see our website at

Forward-Looking Statements:

This press release contains forward-looking statements that are based on the beliefs of management and reflect Salmon River's current expectations. This press release relates to the extension of terms for the Treppo Grande Iron acquisition, further exploration and future financing requirements. The forward-looking statements are based on certain assumptions, which could change materially in the future, including the assumption that the current negotiations will lead to definitive agreements, that the transactions and financings contemplated herein will be completed, that Salmon River will be able to complete on its exercise of the Treppo Grande option and that the Treppo Grande property will ever be developed. By their nature, forward-looking information involves known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking information. Such factors include the risk that the definitive agreements contemplated may not be completed, that Salmon River may not complete the financings in the amounts contemplated and that the Company may not complete on its exercise of the Treppo Grande acquisition. There can be no assurance that forward-looking information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, investors should not place undue reliance on forward-looking information. Forward-looking information is provided as of the date of this press release, and the Company assumes no obligation to update or revise them to reflect new events or circumstances, except as required in accordance with applicable laws.

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" and elsewhere in the Company's periodic filings with Canadian securities regulatory authorities. Such information contained herein represents management's best judgment as of the date hereof based on information currently available. The Company does not assume the obligation to update any forward-looking statement.


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