Zone Resources Inc.

Zone Resources Inc.

May 03, 2011 09:00 ET

Zone Resources Inc. Adds a Fifth Property to its Labrador Trough Iron Project, Quebec

VANCOUVER, BRITISH COLUMBIA--(Marketwire - May 3, 2011) -Zone Resources Inc. (Zone) (TSX VENTURE:ZNR) announces that it has acquired an option to earn a 100% interest in the Knob Hill Iron property, consisting of approximately 2,000 hectares, located in Nunavik, northern Quebec. The terms of the agreement are subject to regulatory approval of the TSX Venture Exchange. The property, located in the Labrador Trough is the fifth property that Zone has added to its "Labrador Trough Iron Project" bringing the project size to 13,200 hectares. This new acquisition is approximately 12 kilometers north of the recently announced Moore-Ross Iron property.

The Knob Hill Iron property covers an area of extensive iron formation outcropping and is described in several historic reports as a discovery of iron formation on a dolomite footwall with overlying sediments, called the Red Knob Hill made in the late 1940's. A 1950 report, GM01085, describes a large favorable structure identified in the Red Knob Hill area, "a sharp syncline the iron compressed in a tight synclinal fold 1500 ft across..." and within the same report, maps indicate that intermittent outcrops of iron formation were mapped from Red Knob Hill to the Melezes River for a distance of over 5km, a 1948 report, GM00408, describes the outcropping iron formation width as "...their width varies from a few hundred to around one thousand feet...there are scattered piles of broken oxidized material along this iron formation which should be investigated by digging pits...".

"We are excited that Zone has successfully established a significant land package in the Labrador Trough," stated Charles Desjardins, President and CEO of Zone Resources. "Plans are currently being made to begin exploration in the near future."

Pursuant to the terms of the option agreement, Zone will pay a cumulative amount of $155,000 cash and issue 1,800,000 common shares over a three year period. The Knob Hill Iron Property will also be subject to a 2.0% Net Smelter Royalty ("NSR") and Zone shall have an option to purchase 1% of the NSR for the sum of $1,000,000 at any time up to when a production decision is made.

Labrador Trough Iron Project

The Project is northwest of Adriana Resources' Lac Otelnuk Project (wherein Wuhan Iron and Steel Corp. has paid $120 million for a 60% interest), and New Millenium's Kémag and Labmag projects (who have an option agreement with Tata Steel for a $4.9 billion development which includes the construction of a 750 km slurry pipeline). Zone has recently acquired the Girard Iron Project, The Moore-Ross Iron property, and most recently the Knob Hill Iron property.

Girard Iron Project

The Girard Iron Project, consisting of approximately 7,200 hectares in three non-continuous properties, contains a minimum of 6 zones of iron mineralization that were identified in historic work which was completed by the Quebec Labrador Development Company Ltd. between 1947 and 1960. The zones of iron mineralization are located over a length of 19 km and a width of up to 5 km. Outcrop is limited and overburden is up to 25 feet (7.6 meters) deep. As a result, the property was not extensively worked during the period that the major iron mines of the Labrador Trough were developed near Schefferville and Labrador City.

The 6 zones of iron mineralization on the property, from south to north, are; the MacDonald, Gagnon, Big Dome, Ball No.1, Ball No. 2 and Girard Lake.

The MacDonald Zone had been exposed by hand trenching, pitting and small x-ray sized core drilling with holes to a maximum of 100 feet. The MacDonald Zone was discovered because of a prominent rust covered area, one and one half miles long and widths exceeding 600 feet. Trenching, pitting and drilling on the North Zone, where the overburden was the thinnest, extended the iron zone by at least 2,600 feet. Assays from trenches and pits, outlined in a report dated 1950 by K.C. Burwash of the Quebec Labrador Development Company Ltd., ranged from one sample assaying a low of 28.37% iron to a high sample assaying 65.24% iron, with 6 (out of 41) samples assaying from 33.25% iron to 39.50% iron, and 20 (out of 41) samples assaying from 40.37% iron to 49.23% iron, and 12 (out of 41) samples assaying from 50.16% iron to 59.75% iron, and 2 (out of 41) samples assaying from 62.41% to 65.24% iron, with the full range of assays from 4 separate trenches and 13 separate pits. There is no reference to whether the samples were chip or grab.

The Ball No. 1 Zone is approximately 8 km north of the MacDonald Zone. The Ball No. 1 Zone is in an area of overburden at least 25 feet (7.6 meters) thick and was originally discovered due to the soil discoloration. The following excerpts are from a 1949 report by W.P. Corking for the Quebec Labrador Development Company Ltd.; "...the Ball No. 1 showing is iron formation...analysis of nine samples showed iron content ranging from 28% to 43%...the work done to date consists of 15 test pits covering a length of 800 feet and a width in one place of 600 feet. The actual dimensions of the oxidized zone are not known because of glacial covering: on the evidence of the soil colouration however, it is estimated that not more than 10% of the zone has been test pitted."

Between the MacDonald and the Ball No. 1 Zones, the Big Dome and the Gagnon Zones were identified. In a 1952 report by Burwash, it is reported that Dr. Sandefur had; " located a very prominent and deep fold in the iron formation....this trough has been outlined by Dr. Sandefur for over a length of 4 miles of which the Ball No. 1 forms the eastern extremity."

The Ball No. 2 Zone lies 6 km to the north of the Ball No. 1 Zone. The Ball No. 2 Zone had 8 test pits and trenches over an area of ½ mile by ½ mile and returned from 35.67% Iron to 45.52% Iron as reported in 1950 by Burwash.

The Girard Lake Zone is 5 km northwest of the Ball No. 2 Zone. The Girard Lake Zone consists of iron formation and magnetite and was reported by Bergeron in 1952 as; "...A preliminary sampling showed an iron content varying between 60% and 68%." The zone was outlined by pits and trenches in excess of 400 feet and with widths varying from 12 to 40 feet.

Moore-Ross Iron property

The Moore-Ross Iron property, consisting of approximately 4,000 hectares, located in Nunavik, northern Quebec. The property covers historic Iron Formation mineralization, known as the Moore, Ross Mountain, Ross Mountain West, Eagle's Nest and Jasper Lake showings and several other unnamed areas of Iron Formation mineralization.

The property covers historic iron showings, initially discovered in 1948, with exploration carried out by Fenimore Iron Mines Ltd., up to the mid-1950's. Several samples, from different areas within the present property area, returned values ranging from 21.84% to 56.5% Fe.

The Ross Mountain showings were described by Lucien Eaton in 1949 as "...two hills of Iron Formation with overlying slate more than two miles long...these hills stand 100 to 200 ft., above the plains....There are many outcrops of iron formation for two miles west of Ross Mountain, some of them showing considerable oxidation and enrichment." Reviewing the Ross Mountain-Ross Mountain West areas of the project, on Google Earth, clearly shows abundant iron oxidation. To view the map, click here:

The Moore showings, located a further approximate 2 miles NW of the Ross Mountain West area, were described in a 1948 report, by Corking, who summarized the visit to the Moore showings " examine what appeared, on aerial reconnaissance, to be a sizable area of oxidization...". The report describes the Moore Showing area as "The showing consists of iron formation of the "hard-ore jasper" type which has been oxidized to an advanced degree, to form one or two places, beds of hard, blue hematite are exposed...". Several grab samples from the Moore showings are tabulated in this report and range from 29.67% Fe to 67.35% Fe. Corking goes on to report "...The oxidized iron formation is exposed for perhaps 2000 feet along the flanks of a sharply V-shaped ravine which almost parallels the structure, and cuts it in such a way that the north side shows mostly oxidized iron formation and the south side, mostly red sandstone with some oxidized iron formation. The thickness of the exposed oxidized material is obscured by talus debris, but it probably exceeds 50 feet; if the structure has been interpreted correctly, there must be several hundred feet lying above which does not outcrop..."

The property is located approximately 115 kilometers southwest of Kuujjaaqq in Northern Quebec.

Technical information in this news release has been reviewed by Mike Magrum, PEng, a qualified person as defined in NI 43-101.

About Zone Resources Inc.

Zone Resources Inc. is in the business of evaluating and acquiring mineral, oil, and natural gas properties for exploration and development. The Company's shares trade on the TSX Venture Exchange under the symbol ZNR.

Cautionary note:

This report contains forward looking statements. Resource estimates, unless specifically noted, are considered speculative. Any and all other resource or reserve estimates are historical in nature, and should not be relied upon. By their nature, forward looking statements involve risk and uncertainties because they relate to events and depend on factors that will or may occur in the future. Actual results may vary depending upon exploration activities, industry production, commodity demand and pricing, currency exchange rates, and, but not limited to, general economic factors. Cautionary Note to US investors: The U.S. Securities and Exchange Commission specifically prohibits the use of certain terms, such as "reserves" unless such figures are based upon actual production or formation tests and can be shown to be economically and legally producible under existing economic and operating conditions.

Neither 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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