Sparton Resources Inc.

Sparton Resources Inc.

May 11, 2011 07:00 ET

Sparton Concludes Sale Agreement for Interest in Sierra Rosario Project, Mexico

TORONTO, ONTARIO--(Marketwire - May 11, 2011) - SPARTON RESOURCES INC. (TSX VENTURE:SRI), (the "Company') reported today that it has executed an agreement with American Consolidated Minerals Corp. ("ACM"), (TSX VENTURE:AJC) for the acquisition of Sparton's 50% interest in the Sierra Rosario Property ("SRP"), located in the state of Sinaloa, Mexico (the "Acquisition"). Sparton currently holds a 51% interest in the SRP in a Joint Venture with International Northair Mines Ltd. ("INM") holding the remaining 49%. In consideration for INM waiving its pre-emptive right of first refusal to match the ACM Acquisition terms, Sparton will transfer a 1% interest in Sierra Rosario to INM concurrently with the closing of the first payment and share issuance from AMC to Sparton, as outlined below.


Under the terms of the agreement, the ACM will have a 45-day period to conduct a due diligence study on the SRP and, upon giving Sparton notice to proceed with the acquisition, ACM can acquire the 50% right, title and interest in and to the SRP by paying to Sparton:

1. $250,000 cash ($10,000 non-refundable upon signing) and issuing 250,000 common shares of ACM upon receiving TSX Venture Exchange ("Exchange") approval of the Acquisition transaction;

2. $250,000 cash and issuing 250,000 shares of ACM on or before the first anniversary date of Exchange approval; and

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

  1. 3% of ACM's share of Base Metal Production
  2. 2% of ACM's share of Gold Production
  3. 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. INM will become operator of the joint venture going forward.

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.


Included in the multiple precious metals targets at Sierra Rosario are epithermal gold veins hosted by Tertiary volcanic rocks, disseminated silver and gold in altered intrusive rocks, and base and precious metal zones replacement bodies (mantos) hosted in Cretaceous limestone.

The underexplored claim area also includes over 175 placer gold workings in various drainages throughout the project area which enticed INM to stake the original concessions to cover the San Rafael gossan area. At the present time, the source of the gold in many of the drainages is unknown, indicating the potential of additional mineral discoveries on the property.

Previous drilling by Sparton on the La Josca vein system in the south end of the property suggested limited potential for bulk minable mineralization in that zone, however road building for the initial drilling program was extended and opened up access to the San Rafael Zone and the northern section of the SRP which hosts the bulk mineable targets.

Exploration of the San Rafael Zone defined a 70 by 200 meter area of quartz stockwork in silicified rhyolite porphyry. This mineralized body has been sampled both underground in tunnels following the prominent vein structures and along the new road cuts. The initial sampling of underground workings and outcrops prior to road construction included 23 chip samples with average weights of 2.5 kg and averaged 5 meters in width. An arithmetic average from these samples was 181 g/t silver and 0.32 g/t gold. Additional sampling completed in 2008 along the road cuts included an additional 321 samples using continuous channel sampling along 3 meter sample lengths. Two continuous channel samples in this area averaged 34.8 meters of 192 g/t silver and 27 meters of 91.8 g/t silver respectively. No drilling has ever been documented in this area.

Several small underground mines, including La Descubriadora and Dulces Nombres were discovered on the east of San Rafael during this work program. Both host manto-skarn base and precious metal mineralization. At Dulces Nombres 35 underground chip samples from 1.5 to 3.0 metres in length averaged 0.71g/t gold, 263 g/t silver and 0.35% copper. At La Descubriadora 19 chip samples of similar size taken underground averaged 0.40g/t gold and 83.7 g/t silver.

As well, there has been no past drilling documented for any of the occurrences in this area.

INM and ACM will meet to design a joint exploration program for the 2011 season after the notice to proceed is given to Sparton, the details of which are expected to be press released once the program planning is completed and approved.

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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