Sphere Resources Inc.
TSX VENTURE : SPH.H

Sphere Resources Inc.

April 01, 2011 08:34 ET

Sphere Resources Sale of its Ziggurat & Poker Flats Properties in Nevada to Spartan Gold & Acquires Option of up to a 75% Interest in the Gold Jackpot Au, Ag, Te, Cu Property From Mexivada Mining

VANCOUVER, BRITISH COLUMBIA--(Marketwire - April 1, 2011) - Sphere Resources Inc. ("the Company"), NEX Board of the TSX Venture Exchange (TSX VENTURE:SPH.H), is pleased to make the following announcement:

The Company entered into an Option and Mining Claim Acquisition Agreement (the "Poker Flats Option Agreement") executed and effective as of December 22, 2010 whereby Spartan Gold Ltd, ("Spartan") (OTCBB:SPAG) was granted an exclusive option to acquire up to a seventy percent (70%) interest in and to certain (25) mining claims owned by Mexivada Mining Corp. ("Mexivada") (TSX VENTURE:MNV), in Elko County, Nevada known as the Poker Flats Property ("Poker Flats Property") and, upon exercise of the option, the Company was to be granted one-half of Spartan's interest (35%) in the Property under the terms of a joint venture agreement to be entered into by Spartan and the Company.

Further, the Company entered into an Option and Mining Claim Acquisition Agreement (the "Ziggurat Option Agreement") executed and effective as of December 27,2010 whereby Spartan was granted an exclusive option to acquire up to a seventy percent (70%) interest in and to certain (57) mining claims owned by Mexivada in Nye County, Nevada known as the Ziggurat Property ("Ziggurat Property"), and upon exercise of the option, the Company was to be granted one-half of Spartan's interest (35%) in the Property under the terms of a joint venture agreement to be entered into by Spartan and the Company.

The Company entered into an Agency Agreement dated December 24, 2010 with its 100% wholly owned subsidiary Andhra Blue Ltd (incorporated in the BVI) ("Andhra") and negotiated all of its right, title and interest in and to the Poker Flats Property obtained under the Poker Flats Option Agreement; and on December 29, 2010 negotiated all of its right, title and interest in and to the Ziggurat Property obtained under the Ziggurat Option Agreement to Andhra under the Agency Agreement. Sphere is selling 100% of Andhra for the consideration outlined below.

The company entered into an Amendment to Option and Mining Claim Acquisition Agreement ("Amended Agreement") in relation to the Poker Flats Property on March 28, 2011, whereby Mexivada grants Spartan the sole and exclusive right and option to acquire an undivided seventy five percent (75%) interest in and to the Property, free and clear of all charges, encumbrances and claims, except for the Mining Lease and the Royalty burdening the Property.

In order for Spartan to exercise its option:

  1. Spartan shall pay US$57,750.00 to Sphere and US$8,250.00 to Mexivada. Fifty percent (50%) of the payments to Sphere (US$28,875.00) and to Mexivada (US$4,125.00) will be paid within sixty (60) days after the effective date of the S-1 Registration Statement being prepared by Spartan described in subsection (3) below. The balance will be paid to each party at the time Spartan raises capital and obtains funding for Spartan of a minimum of two million dollars ($2,000,000.00).
  1. On signing the Amended Agreement Spartan will issue 3,887,500 restricted common shares of Spartan to Sphere and 412,500 restricted common shares of Spartan to Mexivada. Spartan will also issue 1,887,500 Warrants to Sphere to purchase Spartan restricted common shares and 412,500 Warrants to Mexivada with a strike price of US$1.00 per share within 5 years.
  1. As additional consideration, Spartan is preparing and planning to file before May 1, 2011 an S-1 Registration Statement with the US Security Exchange Commission (SEC) that will allocate 500,000 restricted common shares to Andhra and 125,000 restricted common shares to Mexivada.
  1. Spartan may acquire an initial fifty-one percent (51%) interest in the Property upon incurring Exploration Expenditures of US$500,000 on or before the third anniversary date of this Agreement, such expenditures to be incurred and paid by Spartan.
  1. Spartan may acquire an additional twenty-four percent (24%) interest in the Property upon incurring additional Exploration Expenditures of US$250,000 and by also completing and delivering to Mexivada an industry standard Mining Pre-Feasibility Study on or before the fifth anniversary date of this Agreement, such additional expenditures and Mining Pre-Feasibility Study to be incurred and paid by Spartan.
  1. In order to maintain the Option Agreement, the Company shall allot and issue to Mexivada, 150,000 common shares of the Company within 60 days of the execution of the Amended Agreement; and 150,000 common shares of the Company within 60 days Spartan acquiring a 75% interest in the Property.
  1. On execution of the Amended Agreement, Spartan shall have the right to purchase up to seventy five percent (75%) of the three percent (3%) Net Smelter Returns (NSR) Production Royalty reserved and provided to Lessor under the Mining Lease and Mexivada shall have the right to purchase up to twenty five percent (25%) of this NSR Production Royalty. The consideration to be paid for the NSR Production Royalty shall be one million dollars ($1,000,000.00) per NSR Production Royalty percentage point.
  1. On execution of this Amended Agreement, Andhra shall be granted a two percent (2%) NSR Production Royalty for any and all Bullion and Other Products, produced from the Property. Upon agreement of the Parties to convey and sell all the Property or any of their interest in the Property to an independent third party or parties, Spartan is granted and shall have the right to purchase one hundred percent (100%) of the two percent (2%) NSR Production Royalty granted to Andhra.
  1. Once Spartan is deemed to have earned the seventy five (75%) interest in the Property it will create a joint venture (the "Joint Venture") with Mexivada for the purpose of further exploration and development work on the Property. At the time of the joint venture the respective interest in the Property will be 75% to Spartan and 25% to Mexivada.
  1. The Company, Spartan and Mexivada understand and agree that in consideration of closing the transaction memorialized in the Option Agreement and the Amended Agreement, the Company shall transfer and convey all of the shares, rights and interests the Company owns and holds in Andhra to Spartan and Andhra will become a wholly owned subsidiary of Spartan.

The company entered into an Amendment to Option and Mining Claim Acquisition Agreement ("Amended Agreement") in relation to the Ziggurat Property on March 28, 2011, whereby Mexivada grants Spartan the sole and exclusive right and option to acquire an undivided seventy five percent (75%) interest in and to the Property, free and clear of all charges, encumbrances and claims.

In order for Spartan to exercise its option:

  1. Spartan shall pay US$117,250.00 to Sphere and US$16,750.00 to Mexivada. Fifty percent (50%) of the payments to Sphere (US$58,625.00) and to Mexivada (US$8,375.00) will be paid within sixty (60) days after the effective date of the S-1 Registration Statement being prepared by Spartan described in subsection (3) below. The balance will be paid to each party at the time Spartan raises capital and obtains funding for Spartan of a minimum of two million dollars ($2,000,000.00).
  1. On signing the Amended Agreement Spartan will issue 7,862,500 restricted common shares of Spartan to Sphere and 837,500 restricted common shares of Spartan to Mexivada. Spartan will also issue 3,862,000 Warrants to Sphere to purchase Spartan restricted common shares and 837,500 Warrants to Mexivada with a strike price of US$1.00 per share within 5 years.
  1. As additional consideration, Spartan is preparing and planning to file before May 1, 2011 an S-1 Registration Statement with the US Security Exchange Commission (SEC) that will allocate 500,000 restricted common shares to Sphere and 125,000 restricted common shares to Mexivada.
  1. Spartan may acquire an initial fifty-one percent (51%) interest in the Property upon incurring Exploration Expenditures of US$1,500,000 on or before the third anniversary date of this Agreement, such expenditures to be incurred and paid by Spartan.
  1. Spartan may acquire an additional twenty-four percent (24%) interest in the Property upon incurring additional Exploration Expenditures of US$1,000,000 and by also completing and delivering to Mexivada an industry standard mining Pre-Feasibility Study on or before the fifth anniversary date of this Agreement, such additional expenditures and Mining Pre-Feasibility Study to be incurred and paid by Spartan.
  1. Spartan shall pay Mexivada US$110,000.00 on the basis of US$25,000 on the execution of the Amended Agreement; US$35,000 within 30 days of the execution of the Amended Agreement, US$25,000 on or before the second anniversary date of the Amended Agreement; and US$25,000 on or before the third anniversary date of the Amended Agreement.
  1. In order to maintain the Option Agreement, the Company shall allot and issue to Mexivada, 250,000 common shares of the Company within 60 days of the execution of the Amended Agreement; and 250,000 common shares of the Company within 60 days Spartan acquiring a 75% interest in the Property.
  1. On exercising the Option, Spartan shall have an undivided seventy five percent (75%) right, title and interest in and to the Property, free and clear of all charges, encumbrances and claims. Mexivada and Sphere agree that they will not pursue acquisition of other mining properties or mining development opportunities in the Area of Interest as defined in the Amended Agreement.
  1. Once Spartan is deemed to have earned the seventy five (75%) interest in the Property it will create a joint venture (the "Joint Venture") with Mexivada for the purpose of further exploration and development work on the Property. At the time of the joint venture the respective interest in the Property will be 75% to Spartan and 25% to Mexivada.
  1. The Company, Spartan and Mexivada understand and agree that in consideration of closing the transaction memorialized in the Option Agreement and the Amended Agreement, the Company shall transfer and convey all of the shares, rights and interests the Company owns and holds in Andhra to Spartan and Andhra will become a wholly owned subsidiary of Spartan.

Option Agreement in Gold Jackpot

The Company has entered into an option agreement dated March 30, 2011 (the "Gold Jackpot Option Agreement") with Mexivada Mining Corp. (TSX VENTURE:MNV) ("Mexivada") to option a 75% interest in the Gold Jackpot gold-silver-tellurium-copper project in Nevada's Pequop Gold Trend. Under the terms of the agreement, the Company is responsible for financing of the exploration activities at Gold Jackpot, and will assume the responsibility to complete a mining prefeasibility study for the project upon successful completion of the exploration program. 

The Company can earn a fifty-one percent (51%) interest in Gold Jackpot (the "Property") by compensating Mexivada by payments to be made and the shares to be issued by the Company to Mexivada contingent upon and completed by the closing and payment of consideration and issuance of common shares by Spartan to the Company under the Amendment Agreement dated March 28, 2011 for the Poker Flats Property in Elko County, Nevada, and the Amendment Agreement dated March 28, 2011 for the Ziggurat Property in Nye County, Nevada entered into by the Company, Spartan and Mexivada.

Mexivada grants the Company the sole and exclusive right and option to acquire and vest a 75% undivided interest in the Gold Jackpot Property, by:

  1. The payment of US$75,000 in cash within 15 days of signing the Agreement
  2. Payment of US$50,000 in cash on or before June 28, 2011
  3. Payment of US$75,000 on or before the second anniversary date of the Agreement
  4. Payment of US$75,000 on or before the third anniversary date of the Agreement
  5. Payment of US $75,000 on or before the fourth anniversary date of the Agreement
  6. Deliver to Mexivada 400,000 Spartan common shares within 60 days of the Effective Date of March 30, 2011
  7. Issue to Mexivada 1,500,000 common shares of the Company on or before the first anniversary of the Effective Date of March 30, 2011
  8. Issue to Mexivada 1,000,000 common shares of the Company on or before the second anniversary of the Effective Date of March 30, 2011
  9. Issue to Mexivada 1,000,000 common shares of the Company on or before the third anniversary of the Effective Date of March 30, 2011
  10. Issue to Mexivada 1,000,000 common shares of the Company on or before the fourth anniversary of the Effective Date of March 30, 2011
  11. Investing a sum of $3,000,000 into the property in exploration and development expenditures (inclusive of assessment work) over a 48 month period from the Effective Date of March 30, 2011.

The Company can earn an additional twenty four percent (24%) interest in the property, for a total of 75%, upon incurring additional Exploration Expenditures of US $2,000,000 and by also completing and delivering to Mexivada an industry-standard Mining Pre-Feasibility Study on or before the sixth anniversary date of the effective date of this Agreement, such additional expenditures and Mining Feasibility Study to be incurred and paid for by the Company.

A joint venture will be negotiated between Mexivada and the Company for additional work on this claim upon the Company earning its 75% interest in the property, and Mexivada and its joint venture partner are required to contribute their proportionate share of costs of future exploration and development.

The proposed transaction remains subject to, among other things, receipt of all requisite Regulatory and other approvals, including the approval of the NEX board of the TSX Venture Exchange. A finder's fee is payable by The Company in regards to this transaction.

Malcolm Stevens, Chairman & President of Sphere commented, "We are pleased to have become a significant shareholder in Spartan and to continue our long relationship with Mexivada at Gold Jackpot. The Gold Jackpot agreement enables the Company to explore and potentially mine a concession situated near both lucrative producing mines and industry leaders. The existing data on the Gold Jackpot prospect is extremely encouraging because of the high-grade nature of the gold-silver-tellurium mineralization present. These agreements will strengthen Sphere's balance sheet and enhance our exploration objectives. As Chairman of Spartan, I look forward to develop Spartan´s Nevada properties for the benefit of Sphere and all shareholders".

Gold Jackpot Gold Property

The Gold Jackpot property is located 70 kilometers north of the Long Canyon, Nevada gold property of Fronteer Gold/Newmont, along the northern extension of the Pequop Gold Trend in the northeastern part of Elko County. The Gold Jackpot property comprises non-contiguous blocks containing 124 unpatented lode mining claims, covering approximately 2,480 acres, along a 6 Km long system length. The exploration focus at Gold Jackpot will be on high-grade epithermal Emperor Mine (Vatakuolo) style gold-silver-tellurium mineralization exposed at the surface, as well as indications of Carlin-style gold mineralization and possible hidden porphyry copper-gold mineralization at depth. Gold Jackpot is in the vicinity of the large Long Canyon/West Pequop (Fronteer Gold/Newmont/AgnicoEagle) gold properties and east of the Jerritt Canyon gold mine (Yukon-Nevada Gold Corp.). The previous geophysical, structural, and geological interpretations of Gold Jackpot indicate that the property has favourable characteristics for the above styles of gold mineralization. Tenneco Minerals drilled at least 3 exploration holes on the Gold Jackpot property 1989-1990. Mexivada began a program of geologic mapping the property in 2010, which will be completed in 2011, along with a program of geophysics to aid in delineation of the gold targets present. Additional drilling work is planned at Gold Jackpot by the Company under a two-phase exploration program. The exploration goal at the Gold Jackpot prospect is to identify an open-pittable and underground-mineable gold-silver-tellurium resource. Tellurium is used in the production of thin-film solar panel chips by such companies as First Solar Corporation.

About Sphere Resources Inc.:

Sphere Resources Inc. listed on the NEX Board of the TSX Venture Exchange (TSX VENTURE:SPH.H) is focused on identifying and appropriating exploration targets and other high quality assets in major global mining camps with a particular emphasis on precious metals. It is currently involved in exploring for gold mineralization in the Red Lake District of Ontario and in Nevada, USA.

On behalf of Sphere Resources Inc.

Malcolm L Stevens, Executive Chairman and President

Neither NEX Board of the 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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