Sparton Resources Inc.
TSX VENTURE : SRI

Sparton Resources Inc.

August 15, 2011 08:30 ET

Sparton Closes Sale Agreement With American Consolidated Minerals Corp. for Interest in Sierra Rosario Project, Mexico

TORONTO, ONTARIO--(Marketwire - Aug. 15, 2011) - SPARTON RESOURCES INC. (TSX VENTURE:SRI) (the "Company') reported today that it has closed the agreement with American Consolidated Minerals Corp. ("ACM"), (TSX.V "AJC") for the acquisition of 50% of Sparton's 51% interest in the Sierra Rosario Property ("SRP"), located in the state of Sinaloa, Mexico (the "Acquisition"). Please see Sparton news release dated May 11, 2011. International Northair Mines Ltd. (TSX.V "INM") will hold the remaining 50% and are operators of the project. In consideration for INM waiving its pre-emptive right of first refusal to match the ACM Acquisition terms, Sparton has transferred a 1% interest in Sierra Rosario to INM.

ACQUISITION

ACM has completed a due diligence study on the SRP, received regulatory approval for the transaction, and given Sparton notice it will proceed with the acquisition.

The Company and ACM have agreed to amend the schedule of payments as stipulated in the original agreement, such that the ACM will complete the aggregate purchase consideration of $500,000 and 500,000 common shares paid to Sparton by March 1, 2012, with terms as follows:

  1. On or before August 4, 2011, a cash payment of $100,000 and the delivery of 250,000 shares of ACM; (paid and shares issued)
  2. On or before September 1, 2011, a further payment of $100,000;
  3. Commencing October1st, 2011 and on or before the first day of every month thereafter, a monthly payment of $50,000 until an aggregate cash payment of $500,000 is completed. For further clarity, the last monthly payment of $50,000 shall be made on or before March 1, 2012.

In consideration of amending the cash payment terms as requested by ACM, Sparton will receive a further cash payment of $30,000 when ACM completes the acquisition of the 50% interest in Sierra Rosario. ACM has also agreed that upon completion of an equity financing of a minimum of $1.5 million before March 1, 2012, the amended payment schedule will be accelerated, such that all unpaid amounts will be due and payable immediately, and the balance of 250,000 shares of American Consolidated will be issued concurrently, subject to regulatory approvals. All securities issued pursuant to this Acquisition will be subject to a four-month hold period.

Sparton will also receive Net Smelter Return Production Royalties ("NSR") payable from ACM's share of any production on the SRP of:

  1. 3% of ACM's share of Base Metal Production
  1. 2% of ACM's share of Gold Production
  1. 1.5% of ACM's share of Silver Production

ACM will assume the responsibilities of being a 50% partner in the joint venture with INM and be subject to the existing joint venture terms.

The plus 500 hectare Sierra Rosario Property was explored by Sparton and INM over a four year period from 2004-2008. It lies within the Sierra Madre Occidental Mineral Belt of Sinaloa Province in northern Mexico, approximately 25 kilometres northwest of the town of Choix and 40 kilometres east of the town of Alamos. Both areas have a strong history of precious metals mining. There are several precious metal zones on the property with excellent drill targets already identified that represent areas of potentially bulk mineable silver and gold mineralization.

Sparton is looking forward to the successful development of the Sierra Rosario Project under this new ownership structure. ACM and INM are committed to advancing the program and with INM's experience and recent success in Mexico the Company is confident the work programs will proceed in an effective manner.

Sparton's domestic and international exploration, development, and evaluation programs are being carried out under the direct supervision of A. Lee Barker, P. Eng., P Geol., Sparton's President and CEO who is a Qualified Person under National Instrument 43-101. Mr. Barker has reviewed and approved the contents of this release.

Sparton Resources Inc. is an exploration and development company with uranium, germanium and vanadium interests in China, gold interests in Ontario and Nevada, and silver and gold interests in Mexico. The Company also has a natural gas interest off-shore Nova Scotia. There are currently 94.283,930 shares issued and outstanding.

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.

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