Sparton Resources Inc.
TSX VENTURE : SRI

Sparton Resources Inc.

August 09, 2005 12:45 ET

Sparton And Santoy Consolidate Blizzard Uranium Holdings

TORONTO, ONTARIO--(CCNMatthews - Aug. 9, 2005) - Sparton Resources Inc. (TSX VENTURE:SRI)("Sparton") and Santoy Resources Ltd. ("Santoy")(TSX VENTURE:SAN) (the "Companies") announced today a consolidation of their joint venture holdings in the Blizzard uranium deposit situated in the Greenwood Mining Division of British Columbia. Under the terms of this agreement, Santoy will acquire the right to earn a 100% interest in the Blizzard Property in return for issuing to Sparton 1 million shares of Santoy, 1 million share purchase warrants exercisable at $0.75 per share for a two year period, $50,000 cash, the assumption of all of Sparton's obligations under the previously announced Option Agreement with the underlying vendor (see news release dated June 13, 2005), and a production royalty of $0.50 per pound of uranium. The agreement is subject to regulatory approvals and certain conditions precedent.

This consolidation is believed by both Companies to be a positive strategic transaction in that it unitizes the Blizzard holding and provides a simplified ownership basis going forward in order to address the various technical, legal and social issues associated with the project. Sparton's senior management, who were previously closely involved with the discovery and development of Blizzard, will continue to provide advisory services to the program.

The Blizzard deposit was the subject of a positive feasibility study in 1979 completed by a joint venture company comprised of Norcen Energy Resources Limited, Campbell Chibougamou Mines Ltd., E & B Explorations Ltd. and Ontario Hydro. The property was never placed in production due to a (now expired) moratorium on exploration and development for uranium resources in the Province, which was imposed by the B.C. government in 1980.

The feasibility study was prepared after extensive drilling (over 400 reverse circulation and diamond drill holes) and engineering studies and was based on a reported resource of 2.2 million tonnes grading 0.214 per cent U3O8, using a cut-off grade of 0.025 per cent U3O8 (for an estimated total of 10.4 million pounds of U3O8). This estimate predates and therefore does not conform to the more stringent reporting requirements of Canada's National Instrument 43-101 and thus should not be relied upon according to these standards; however, while the drill and assay data have not yet been independently verified, Santoy believes that the calculations provide an excellent conceptual indication of the potential of the deposit and are therefore relevant to this news release. Santoy expects to have access to and be able to compile all of the pertinent data from the 1979 study. An independent qualified person has been retained to undertake an NI 43-101 compliant resource evaluation of the project and this information will be filed on SEDAR and posted to the Companies' websites as soon as it becomes available.

Blizzard is a secondary type uranium deposit located in a paleo-drainage channel of Tertiary age. It is interpreted to have been formed by the concentration of uranium minerals leached from nearby intrusive rocks, which are anomalously high in uranium content, and deposited in an old riverbed channel which was preserved from glacial erosion by a cover of younger volcanic rocks. This type of deposit is often amenable to exploitation by widely used, low environmental impact, in situ solution recovery processes (ISL). Santoy plans to undertake a full engineering study to investigate the viability of using this recovery method, which involves only minimal surface disturbance. The previous feasibility study did not consider this extraction option and was based on the application of a conventional open pit mining method.

The Qualified persons, as defined by National Instrument 43-101, responsible for review of this news release are Ron Nichols, P.Eng, Santoy Vice-President of Exploration, and A. Lee Barker P. Eng. President and CEO of Sparton.

About Sparton Resources Inc.

Sparton Resources Inc. is a diversified mineral exploration company, which has been an active participant in the Canadian junior resource sector for over 20 years and is currently focused on their advanced exploration stage Luxi Gold Project in south western Yunnan Province, China.

About Santoy Resources Ltd.

Santoy Resources Ltd. is a mining exploration company focused primarily on the energy sector. Emphasis is being placed on uranium projects in Saskatchewan, Manitoba, Labrador, the United States and Central America; and on coal and coal bed methane in Western Canada. A description of our properties, including maps and photographs, can be viewed on the Company's website at www.santoy.ca.



On Behalf of the Respective Boards of Directors

SANTOY RESOURCES LTD. SPARTON RESOURCES INC.

"Ron Netolitzky" "A. L. Barker"

Ron Netolitzky, President A.Lee Barker, President


Cautionary Statement on Forward-Looking Information

The statements made in this News Release may contain certain forward-looking statements. Actual events or results may differ from the Company's expectations. Certain risk factors may also affect the actual results achieved by the Company.

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

Contact Information

  • Sparton Resources Inc.
    A. Lee Barker
    President and CEO
    (416) 366-3551
    (416) 366-7421 (FAX)
    info@spartonres.ca
    or
    Sparton Resources Inc.
    Edward G. Thompson
    Chairman
    (416) 366-6083
    (416) 366-2713 (FAX)
    egt@interlog.com