Sparton Resources Inc.

Sparton Resources Inc.

November 21, 2006 09:19 ET

Sparton Concludes New Agreement to Sell 41% of Luxi Gold Project for RMB 19,680,000 Million '$C2.81 Million'


TORONTO, ONTARIO--(CCNMatthews - Nov. 21, 2006) - Sparton Resources Inc. (TSX VENTURE:SRI)(the "Company") announced today that it has concluded an agreement with Starry Limited ("Starry"), a company registered in the British Virgin Islands (BVI) where under Starry has undertaken to purchase from the Company's BVI registered subsidiary, Sparton Resources International Inc. ("SRI"), a 41% share interest in SRI's 80% owned Yunnan Sparton Minerals Company Limited ("YSM").

YSM is a PRC registered foreign joint venture company, and is the owner of all the Luxi Gold Project Exploration Licences and other assets in Yunnan Province. SRI will retain 39% of the shares in YSM. In the same agreement SRI's partner in YSM, Yunnan Nuclear Exploration Team 201 ("201") also agreed to sell 10% of its YSM shares to Starry. The total purchase price for a 51% share interest in YSM is RMB 24,480,000 or approximately $C3.497 million dollars.

The new share interests in YSM will be 51% Starry, 39% SRI and 10% 201. As a consequence of the earlier agreements between SRI and 201, the 10% share interest in YSM held by 201 is now a carried interest and 201 will no longer be responsible for future costs of YSM exploration and operations.

The portion of the purchase price payable to SRI for 41% of the shares is RMB 19,680,000 or approximately $C2,810,000 million dollars, and the portion to payable to 201 is RMB 4,800,000 or approximately $C690,000 dollars.

SRI has received the first payment of RMB 3,772,000 or approximately $C540,000 dollars. The remainder of the purchase price payable to SRI will be made in three further payments as follows:

1. RMB 3,772,000 (approximately $C540,000) will be paid to SRI within 7 days of YSM receiving approval of the share purchase transaction by the Bureau of Commerce of Yunnan Province.

2. RMB 8,200,000 (approximately $C1,170,000) will be paid to SRI within 7 days of the completion of the legal transfer to YSM of the Deep Exploration Licence ("DEL") under the Guanlingpo Gold Mine Mining Licence. This licence is currently held by 201 and the transfer process is underway.

3. The remaining payment of RMB 3,396,000 (approximately $C485,140) due to SRI will be made within 7 days of cancellation of the 25% participation right (see News Release dated June 10 , 2004) held by the Luxi Gold Mine in the DEL, or a new agreement satisfactory to all YSM shareholders is made with the holder of the Luxi Gold Mine Mining Licence for the disposition of the 25% participation right.


In a separate agreement Starry agreed to repay YSM 51% of YSM's Luxi exploration costs incurred between May 1, and September 30, 2006. This amounted to RMB 344,504 or approximately $C49,214 and these funds have now been received by YSM. Because SRI has been responsible for all of these costs this amount will be credited to SRI's account within YSM.

Starting October 1, 2006 it was further agreed that further expenses for YSM will be paid as to 57% by Starry and 43% by SRI. The new cost sharing percentages are as a result of the 10% share interest held by 201 being a non contributing carried equity interest in YSM.

The Company is pleased to have completed this agreement with Starry, which is supported by one of China's largest integrated gold producers. Future exploration at Luxi, including further evaluation of the exciting new Nongchiuba area, (see news release dated October 26, 2006) will be organized and executed by a Joint Working Committee which will be set up shortly to plan and approve the continuing work program.

(i)Note currency exchange rate: 1 CANADIAN DOLLAR = approximately 7 RMB

The TSX Venture Exchange has not reviewed and does not accept responsibility for adequacy or accuracy of the content of the information contained herein.

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