Sparton Resources Inc.

Sparton Resources Inc.

March 22, 2006 09:19 ET

Sparton Signs Agreements To Acquire Two Highly Prospective Nevada Gold Properties; Evaluation Of Several Other Nevada Prospects Continues

TORONTO, ONTARIO--(CCNMatthews - March 22, 2006) - Sparton Resources Inc. (TSX VENTURE:SRI) (the "Company") reported today, it has signed agreements to acquire two gold exploration properties (the " Properties') in Lander, and Pershing Counties, Nevada, USA.. The Properties have been acquired under the terms of an option agreement and a lease assignment agreement respectively, from the underlying owners or lessees of the claims. The Company had previously held an exclusive due diligence option on a property package which included several claim groups, one of which is included in the agreements reported here. Sparton management has been evaluating numerous other opportunities in Nevada over an extended time period, and continues to do so.

The two property groups reported here, include the SBD claims ("SBD") in Lander County, near Battle Mountain (see news release dated January 17, 2006), and the Coal Canyon claim group in Pershing County near Lovelock. The SBD property has been acquired through a 10 year (renewable for an additional 10 years) lease assignment agreement with Crescent Valley Minerals Inc. ("CVM"), (successor to Golden Phoenix USA in the news release of January 17, 2006). CVM holds the SBD Property under a previous lease agreement from Aquarian Mining Exploration Inc. ("AME"). CVM will assign the AME lease to Sparton.

Coal Canyon has been acquired through an option agreement where under the Company may purchase the claims outright from the private owners .

The terms of the SBD Lease assignment agreement include a cash payment of US$100,000 to CVM, and the issuance of 500,000 common shares of Sparton on closing, and a further issuance of 500,000 common shares of Sparton 6 months after closing. Sparton will assume the lease obligations of CVM to AME which include total annual payments of US$12,000 (payable quarterly) and on production, payment of a 5% Net smelter return royalty ("NSR"). One half of this royalty can be purchased at any time for $US1.5 million dollars. Sparton will further make annual advance royalty payments of $US75,000 which will be credited against any NSR royalty payments payable on production. Sparton will expend a minimum of $C500,000 on exploration work on the SBD property during the first year of the agreement.

Final closing the SBD agreement will be subject to the approval of the Boards of Directors of Sparton, CVM and AME, the receipt and acceptance of an NI 43-101 compliant Technical Report on the SBD Property (in preparation) , approval of the TSX Venture Exchange, and any other regulatory authority having jurisdiction over the transaction.

The terms of the Coal Canyon option to purchase agreement include an initial cash payment of $US15,000, with escalating annual option payments to a maximum of US$50,000 per year in the third and subsequent years. The property may be purchased outright for the sum of US$300,000 at any time and will then be subject to the payment of a 3% NSR production royalty. One percent (1%) of this royalty may be purchased at any time for $US 1.0 million dollars.


The SBD claims comprise 29 lode claims covering approximately 2 square kilometres which are located in Section 20, Township 32N, Range 43E, approximately 10 km west of Battle Mountain. They are adjacent to Newmont's Trenton Canyon open pit and approximately 6 km northeast of Newmont's Phoenix Mine development infrastructure. Glamis' Marigold Mine is located about 5km to the north. The property is part of the general Phoenix Mine (+10 million ounces gold) development area, and within the prolific Battle Mountain - Eureka Gold Trend.


Most exploration data for the SBD claim group has now been reviewed by Company management and its Nevada based consultant who is preparing the NI 43-101 Technical Report. Early drilling information (1992-3) by Echo Bay is reported in the previous Company news release January 17, 2006. Three mineralized zones are reported on the property, the West, Stibnite and South gold zones. Newer drilling data up to the time work stopped in 1997 indicates several significant areas where the mineralization located by the earlier work was not adequately followed up. Past exploration concentrated on testing local favourable stratigraphic rock units to locate drill targets and ignored the structural controls now known to control much of the mineralization in the Battle Mountain area. Mineralization on SBD appears to be controlled by fault structures along which intrusive rocks have been emplaced. The 1ast drilling in 1996-1997 by International Calneva focussed on the Stibnite and West zones. Over one half of these holes were vertical and would not have intersected near vertical structures hosting gold mineralization, while several angle holes were drilled in a northerly direction or sub parallel to the local structural elements also introducing a high risk of missing these type of targets. Highlights from the 1996 (15 shallow hole) program on the Stibnite and West Zones include:

96-1 148-166m. 18.0m@0.9 g/t Stibnite Zone
96-3 27.4-30.6m 3.2m@2.0 g/t West Zone
96-5 3.3-6.5m 3.2m@1.0 g/t "
96-6 22.6-35.5m 12.9m@1.5g/t "
96-7 27.4-33.9m 16.5m@1.5g/t "

(a) Values converted from Imperial to metric units from International
Calneva Gold Corporation reports from 1996 and 1997.

The West Zone appears to trend north westerly and most of the remainder of the 1996 holes were apparently collared east of the structure hosting the mineralization and returned low values. The 1997 drill program consisted of 8 vertical holes testing the South zone. All of these holes also appear to have the missed the structure hosting the South zone which was intersected in Echo Bay angle hole 93-19 (8.0 metres of 1.54 g/t gold and 33 metres of 1.54 g/t gold), (see news release dated January 17, 2006).

The initial part of Sparton's SBD exploration program will involve detailed Controlled Source Audio Magneto Telluric (CSAMT) geophysical surveys to properly delineate structures and alteration on the claims and correlate them with the known mineralization. This technique is widely used in Nevada exploration and has been very successful in providing reliable structural information. All previous drill holes will be relocated in the field and old drill data compiled on a comprehensive set of plans and sections. A Phase 1 reverse circulation drilling program will begin following completion of the geophysics. Field work is expected to begin in late April.


The Coal Canyon claims are located east of Lovelock in the West Humboldt Range of Pershing County. The property is southwest of Jipangu Inc.'s (formerly Appollo Gold) Florida Canyon Mine (over 1 million ounces produced), and the Willard and Rochester gold deposits. Previous exploration has outlined a north west trending 1200 metre by 250 metre soil and rock chip gold geochemical anomaly with values up to 3 g/t gold and associated anomalous values in arsenic, antimony and mercury. The zone is associated with a large coincident area of intense hydrothermal alteration with extensive jasperoid development in impure calcareous sediments intruded by felsic and mafic sills and dykes which appear to have been emplaced along thrust faults. A second parallel mineralized zone approximately 500 by 150 metres in size has been defined by recent mapping to the east of the main anomaly.

A well defined structural intersection zone is centred on the claim group. No drilling has ever been done on the property since it was first identified by modern exploration in 1994. Sparton plans to complete Induced Polarization (IP) and CSAMT surveys on the claims prior to commencing a drill program. These will follow completion of the geophysics at SBD.


Sparton views the acquisition of these properties as major opportunity for the Company. Nevada is North America's most prolific gold producing area and major new discoveries continue to be made there on an ongoing basis. A number of new opportunities continue to be evaluated in Nevada by the Company and additional acquisitions are expected. Projects with identified drill targets will be the prioritized for detailed review and evaluation.

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. It holds a portfolio of Chinese, Mexican, U.S. and Canadian mineral exploration properties focussing on base and precious metals, and maintains a 12.5% interest is the south part of the undeveloped Chebucto natural gas discovery in offshore Nova Scotia Canada.

NOTE: The metric conversion for imperial measure assay data is one ounce per short ton equals 34.3 grams per metric tonne, and one foot equals 0.30 metres.

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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