Strike Gold Corp.
TSX VENTURE : SRK

Strike Gold Corp.

September 01, 2011 10:00 ET

Strike Acquires Two Graphite Projects in Saskatchewan, Canada

VANCOUVER, BRITISH COLUMBIA--(Marketwire - Sept. 1, 2011) - Strike Gold Corp. (TSX VENUTRE:SRK) (the "Company" or "Strike") is pleased to announce that it has signed an agreement to acquire a 100% interest in the Deep Bay East and Simon Lake Graphite Properties both located in northern Saskatchewan.

Geoff Balderson, President & CEO, remarks, "We are delighted to have secured these two properties and give our shareholders investment exposure in what many believe to be such a promising resource sector."

Deep Bay East Project

The Deep Bay East Project covers approximately 5,500 hectares (13,590 acres) and is located 25 kilometres east of the community of Southend, Saskatchewan and less than 15 kilometres east of the Deep Bay West Graphite Mine.

The property is noted for its potential to host a near-surface graphite deposit comprised of scarce, large-flake, high-purity graphite. The property is situated within high-grade metamorphic rocks of a sedimentary origin which is an ideal setting for the development of these types of deposits.

The property has been explored for graphite since the 1960s, with surface trenching, mapping, electromagnetic surveys and limited diamond drilling (4 holes totalling 383 metres). The historic drilling and trenching was completed on an east to northeast trending conductor along 1,600 metres of strike length. The exploration identified high grades of graphite across thick intervals as follows:

Deep Bay: Drilling and Trenching Highlights

Hole / Trench From (m) To (m) Interval (m) % C
DB 2 76.20 111.25 35.05 8.58%
DB 3 7.32 20.42 13.11 8.97%
60.96 71.63 10.67 9.06%
Trench B 0 9.45 9.45 17.34%
10.97 14.33 3.35 27.52%
14.33 17.37 3.05 8.75%

A geological compilation map showing the location of the historic drill holes and trenching will be posted on the Company's website.

The Deep Bay East Project was explored by Sherritt Gordon Mines Ltd. in the 1960s and later by Superior Graphite Company in the 1970s as they searched for secure sources of flake graphite. The property was discovered at the same time as the Deep Bay West Graphite Mine located about 15 kilometres to the west of Strike's Property.

The Deep Bay West Mine is currently being advanced towards production and is host to a historic non-NI 43-101 compliant resource of "1.8 million tonnes grading 10.32% C to a depth of 60 metres" (Saskatchewan Mineral Deposit Index Report #0480). The geology and grades of the Deep Bay East Project appear to be similar to the Deep Bay West Mine. Recent testing of graphite from Deep Bay West achieved >95% carbon content for all flake sizes +32+50+80+100 and -100. Further treatment was able to achieve >99% purity (Noble Bay Mining Development Inc.).

Simon Lake Project

The Simon Lake Graphite Project covers 3,472 hectares (8,579 acres) located approximately 280 kilometres northeast of La Ronge, Saskatchewan and is a short distance east of Highway 905. The property consists of several showings of flake graphite mineralization in historic drill holes which were discovered during the exploration of base metals. Historic Drill Hole 2-72 encountered a graphitic, biotite gneiss with visual estimates of zones containing from a few percent up to 70 percent graphite across a 68 metre interval. Approximately 5.5 kilometres to the southwest, along a conductive zone, Drill Hole 42-5 encountered a graphitic, biotite gneiss with visual estimates of graphite ranging from 5 to 70 percent across a 21 metre interval.

Graphite Market

Demand for graphite has been increasing by approximately 5% per year since 2000 due to the ongoing modernization of China, India and other emerging economies, resulting in strong demand from traditional end uses such as the steel and automotive industries. Graphite also has many important new applications such as lithium ion batteries, fuel cells and nuclear and solar power that have the potential to create significant incremental demand growth. There is roughly 10 times more graphite in a lithium ion battery than there is lithium. Demand for graphite is expected to rise as electric vehicles and lithium battery technology are adopted.

Natural graphite comes in several forms: flake, amorphous and lump. Of the one million tonnes of graphite produced annually, approximately 40% is of the most desirable flake type. China, which produces about 70% of the world's graphite, is seeing production and export growth leveling and export taxes and a licensing system have been instituted. A recent European Commission study regarding the criticality of 41 different materials to the European economy included graphite among the 14 materials high in both economic importance and supply risk (Critical Raw Materials for the EU, July 2010).

Graphite prices have been increasing in recent months and over the last couple of years have more than doubled. Other public companies developing graphite projects in Canada include Northern Graphite Corp. with their Bissett Creek Project in Ontario and Focus Metals Inc. with their Lac Knife Project in Quebec. High-growth, high-value graphite applications require large-flake and/or high-purity graphite which are the prime exploration targets at Deep Bay East and Simon Lake.

Terms

Strike has the option to earn a 100% interest in the Deep Bay East and Simon Lake Graphite Properties from Zimtu Capital Corp. and 877384 Alberta Ltd. (collectively the "Optionors") by making the following payments and issuing the following common shares to the Optionors: (i) $25,000 on signing of the letter of intent (paid) (ii) $50,000 and 1,000,000 common shares on receipt of the TSX Venture Exchange ("TSXv") acceptance to the option agreement; (iii) $100,000 and 1,000,000 common shares 6 months from TSXv acceptance; and (iv) $150,000 and 1,000,000 common shares 14 months from TSXv acceptance. The Optionors will retain a 3% Net Smelter Royalty ("NSR") on the properties. The agreement remains subject to acceptance by the TSXv. A finder's fee will be payable with respect to the transaction pursuant to the policies of the TSXv.

NI 43-101 Disclosure

Mr. Neil McCallum, P.Geol., a qualified person as defined by National Instrument 43-101, supervised the preparation of the technical information in this news release.

The resource estimate for Deep Bay West is historic in nature and is not considered a National Instrument 43-101 compliant resource. The historic figures were generated from sources believed to be reliable but have not been refined to conform to the CIM-approved standards required by NI 43-101. Although the resource estimate is relevant, it has not been verified. A qualified person has not done sufficient work to classify the historic estimate as a current mineral resource. Strike is not treating the historic estimate as a current mineral resource and therefore the historic estimate should not be relied upon. Additionally, mineralization encountered at Deep Bay West is not necessarily indicative of the mineralization on the Deep Bay East Property.

We seek safe harbor.

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