Sparton Resources Inc.
TSX VENTURE : SRI

Sparton Resources Inc.

April 12, 2011 09:13 ET

Sparton Announces Exclusive Agreement to Acquire 80% Interest in Rentian Vanadium Project, China

TORONTO, ONTARIO--(Marketwire - April 12, 2011) - Sparton Resources Inc. (TSX VENTURE:SRI) ("Sparton" or the "Company"), announced today that its 74.2% percent owned British Virgin Island ("BVI") subsidiary company, VanSpar Mining Inc. ("VanSpar") has executed an exclusive option agreement (the "Agreement") for the acquisition of an 80% interest in Jiangxi Rentian Mining Co. Ltd ("Rentian"). Rentian holds various rights and assets including two mining licences and a new, 1,000 tonne per year (V2O5) capacity vanadium processing plant in Jiangxi Province, China.

AGREEMENT

The terms of the agreement provide VanSpar with a 90 day exclusive option period starting April 11, 2011, to complete the due diligence program, which includes confirmation drilling by Sparton, currently underway at Rentian. To date, the Rentian evaluation program has been producing very positive results. See Sparton news releases dated December 2, 2010, March 10, 2011 and March 15, 2011. VanSpar may exercise its right to acquire the 80% interest by making an initial payment of 28.67 million RMB (approximately CAD$4.2 Million) and providing a program for restructuring an agreement with the Rentian's creditors related to the settling of Rentian's outstanding loan obligations.

The Peoples' Government of Xiushui County ("PGX"), where the Rentian assets are located, is also a party to the Agreement. PGX has given VanSpar assurance that it will coordinate the program for restructuring the Rentian assets and support VanSpar in consolidating three other vanadium projects in the area, subject to positive due diligence evaluations.

DUE DILIGENCE PROGRAM

Following completion of a positive surface sampling program on the Rentian 1.6Sq km Quankeng Mining Licence, four drills were mobilized and are currently testing a 1.4 km strike length of the vanadium –copper - silver horizon, exposed along the trend of the mineralized zone. Initial assay results are expected in approximately two weeks and will be reported when available. Metallurgical testing on the drill core for vanadium and copper – silver recoveries will begin shortly. The initial 1,100 metre drilling program objectives are to confirm the depth extensions of the surface exposures of vanadium mineralization and provide initial indications of a minimum of 100,000 tonnes of contained V205, which will require additional drilling to confirm.

As part of the due diligence program, VanSpar has also completed an audit of the processing plant, and redesigned its flow sheet with VanSpar's proprietary vanadium recovery technology that has recently received patent approval in China. The Company believes this recently constructed plant can be upgraded and made operational within less than one year and will have the capacity to produce approximately 1,000 tonnes of V2O5 annually. It is fully permitted and in good condition.

VANADIUM MARKET

Currently the vanadium market is very strong with China being the world's largest consumer of vanadium. Domestic demand requires over 30% of its needs to be imported. There are no restrictions on foreign investment in vanadium production in China. Major demand is for specialty steel alloys used in railway components and other large volume, specialty high-strength steel applications.

There is also major growing demand for large specialty batteries (vanadium redox batteries) for use in energy storage for wind farm and solar energy applications that will continue to support future growth in demand for this specialty metal.

VanSpar is in a unique position to be able to acquire a majority interest in Rentian, begin early vanadium production from the upgraded Rentian plant, and consolidate other vanadium projects in the Xiushui area. VanSpar also has the right to acquire a 65% interest in the nearby Guojiaping vanadium project which has already had initial drilling that has outlined a significant V2O5 deposit which can be expanded with additional confirmatory drilling. (see Company news releases dated August 3 and August 11, 2010).

By consolidating and developing the various Xiushui vanadium projects, Sparton's objective is to have VanSpar become a world-class producer of vanadium pentoxide. Company President, and VanSpar Chairman Lee Barker commented: "Over the past 7 years, Sparton has established an award winning mining program in China and systematically developed and grown its specialty metals operations. We believe that our entry into the Vanadium sector will be an exciting transformational step in our corporate development."

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" in the Company's filings with Canadian securities regulators. Such information contained herein represents management's best judgment as of the date hereof based on information currently available. The Company does not assume any obligation to update any forward-looking statements, save and except as may be required by applicable securities laws.

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

We Seek Safe Harbour.

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.

Contact Information

  • Sparton Resources Inc.
    A. Lee Barker
    President and CEO
    416-366-3551 or Mobile: 416-716-5762
    416-366-7421
    info@spartonres.ca

    Sparton Resources Inc.
    Richard D. Williams
    Director
    int'l +1 416-364-3123
    blackwell@tcn.net