|By Marketwired .||
|June 24, 2014 02:27 PM EDT||
TORONTO, ONTARIO -- (Marketwired) -- 06/24/14 -- Goldspike Exploration Inc. ("Goldspike" or the "Company") (TSX VENTURE: GSE) is pleased to report that it has entered into an assignment agreement granting the Company the right to acquire a 100% interest in the Lone Mountain Zinc Property (the "Property") comprised of 170 claims in Eureka County, Nevada, (Figure 1). The Property contains a significant drill hole zinc lead discovery that intersects several intervals of high grade zinc lead mineralization including an interval at the bottom of the hole assaying 41.3% zinc and 1.4% lead over 4.1 metres. The discovery hole ended in high grade zinc lead mineralization. No further work has been completed on the Property since this zinc discovery in 2007. The Company has commenced fieldwork on the Property and will begin drilling as soon as arrangements can be finalized.
Highlights on the Property include:
-- High grade zinc lead mineralized intervals were discovered in reverse circulation drill hole LM-07-01. The mineralization is reported to commence at 114.3 metres down hole and to continue to the bottom of the hole at 155.4 metres for an aggregate interval of 41.1 metres. -- No sample material was recovered from one interval of 7.62 metres. This interval was bounded by high grade zinc lead mineralization. It is not known if this interval was mineralized. As a result of a lack of assays for this interval, composite assay values for the entire interval cannot be calculated. -- The hole ended in high grade zinc lead mineralization grading 38.8% zinc and 2.3% lead over 1.52 metres. -- The drill hole encountered lead values of up to 51.24% over 1.52 metres in the upper part of the mineralized interval. -- The drill hole contained zinc values of up to 48.4% over 1.52 metres in the lower part of the mineralized interval. -- Only two intervals were assayed for germanium content and these intervals at the bottom of the discovery hole were found to contain significant germanium with values of 103 grams per tonne and 133 grams per tonne. -- Composite assay intervals in the discovery drill hole included an upper high grade interval grading 32.55% lead and 0.71% zinc over 6.08 metres and a high grade interval at the bottom of the hole grading 41.3% zinc and 1.4% lead over 4.2 metres. -- At the time of the discovery in 2007 and by the time the presence of the high grade zinc lead mineralization was established by assaying, the drill had been de-mobilized from the Property and no further drilling has been completed since the receipt of these high grade zinc lead assays. -- While it was reported that further work was contemplated and planned, it appears that a series of events that included corporate M&A activity, the global financial crisis and metal and stock market turmoil apparently precluded any follow-up exploration on the Property. The vendors eventually reacquired the Property and have held it privately since that time. -- At the time of the zinc lead discovery, the lessee was evaluating the Property (as defined at that time) for its precious metal potential. -- As part of that exploration program the lessee at the time carried out programs that included geological mapping of the somewhat limited outcrop, geophysical surveys and compilations, as well as soil geochemical surveying. This preliminary work was followed by a five hole, 795.5 metre reverse circulation drilling program. Current available information indicates no field work was competed after the drilling was terminated. -- Of particular note, the soil geochemical sampling was carried out on wide spaced (500 metre centered) lines. Samples were collected at only 50 metre intervals on the lines. The samples were analyzed for a suite of elements and an evaluation of those results show the strong correlation of a suite of indicator elements with the location of the historic zinc mine workings and scattered surface trenches that contain zinc mineralization as well as the location of the high grade zinc lead mineralization in the discovery drill hole, (Figure 2), (Figure 4). -- The suite of elements that correlate with the presence of zinc lead mineralization include: zinc, lead, barium, mercury, cadmium, arsenic, copper and thallium. The overall trend of this suite of elements can be traced for more than 3 kilometres in a direction sub-parallel to the bedding in a general northwest to southeast direction. The geochemical anomaly tested with the discovery hole was not the strongest part of the more than 3 kilometre long multi-element anomaly. -- Goldspike has mobilized exploration personnel to the Property to undertake field work in preparation for drilling and the Company will commence drilling immediately upon receipt of the necessary approvals.
At this time, the Company has not been able to ascertain the details, if any, of any QA/QC programs that were in place at the time of the last work on the Property and therefore the Company advises readers that all technical data in this release must be assumed to be historical in nature and as such should not be relied upon.
Commenting on the acquisition, the Company's President and CEO Bruce Durham said; "since our IPO in August of 2011 we have been searching for a special project to complement our extensive Yukon holdings and we have reviewed dozens of opportunities. What makes the Lone Mountain Zinc Property so special is the fact that it is a high grade, very significant drill hole discovery that remains open in all directions. No follow-up was ever completed. The land package covers a large area, the target is extensive and the project is located in a great jurisdiction. We are excited to secure the Property and can't wait to start drilling."
History of Work and Geology
Zinc mineralization was first reported to have been mined in the area of the Property in 1942 and operations between 1942 and 1964 were reported to have mined nearly 5 million pounds of zinc, 650 thousand pounds of lead and 4 thousand ounces of silver. Mined mineralization has been reported to consist of smithsonite, zincite, hydrozincite, cerussite, malachite and azurite along with minor sulphides. At this time it does not appear there is any public record of any significant history of modern exploration work in the area of the Property for zinc lead mineralization. The discovery of the high grade zinc lead mineralization in hole LM-07-01 appears to be a largely fortuitous event that occurred in the course of exploring the property for precious metal mineralization. The Company is not aware of any mineralogical work having been completed on the mineralization in discovery hole LM-07-01. Part of the property that extends well to the southeast of the discovery hole is reported to have prospectivity for gold. The Company will evaluate these prospects as work on the Property proceeds.
Work by the previous lessee in the period from 2006-2008 included re-evaluation of the gravity and magnetic data available on the Property. Their evaluation also included the geochemical surveying as described above and also included a CSAMT geophysical survey that successfully identified a significant resistivity contact crossing much of the Property in a direction mostly parallel to the interpreted stratigraphic trends in the area. The high grade zinc lead mineralization appears to sit very close to the interpreted resistivity contact, (Figure 3). This interpreted contact may prove to be an excellent marker in follow-up drilling programs.
The mineralization discovered in drill hole LM-07-01 has not been well studied and remains open to considerable interpretation. The mineralization is thought to be located at or close to the contact of the Devils Gate Formation, an Early to Middle Devonian dolomite in the Nevada Formation. Rocks in the area generally strike northwest-southeast and dip generally 55 degrees easterly, (Figure 5). There is a suggestion by some workers that the mineralization may be located at the intersection of northwest and generally northeast trending structures, however, the single drill hole in the high grade zinc lead discovery to-date, LM-07-01, precludes any conclusions at this time as to the orientation of the mineralization. The previous operator of the Property drilled four additional holes to the discovery hole. The second hole, drilled on the same section line as discovery hole LM-07-01, was collared 100 metres to the north and drilled parallel to hole LM-07-01, (Figure 5). The second hole was stopped at 183 metres and based on the geology and assay data from samples at the bottom of the hole it appears to the Company that this hole was stopped just above the down dip extension of the high grade zinc lead mineralization. The remaining three holes were drilled 3 kilometres to the east of the discovery hole evaluating other unrelated targets, thereby leaving the high grade zinc lead discovery completely untested up dip, down dip and along strike.
Principal Transaction Terms
Goldspike has been granted the right to acquire a 100% interest in the 170 claims that comprise the Property pursuant to an assignment agreement (the "Assignment Agreement") between Norvista Capital Corporation ("Norvista") and the Company. Pursuant to the terms of the Assignment Agreement, Norvista will assign all of its rights and obligations under a lease agreement of the Property (the "Lease Agreement") between Norvista, as lessee, and Owyhee Exploration II LLC, as lessor, to Lone Mountain Zinc Ltd., a wholly-owned Nevada subsidiary of the Company.
Under the terms of the Lease Agreement the lessee has the right to continually lease the Property for a minimum 20 year period or longer if the Lease Agreement is extended beyond 20 years. The principal terms of the Lease Agreement require the lessee to make annual lease payments of $25,000 to the lessor during the first three years of the Lease Agreement, after which the lease payments increase to $50,000 per year in years four and five. Beginning in year six and thereafter the lease payments increase to $100,000 per year, however, these lease payments are treated as advances against royalty payments from production, if any, during the year the lease payment is made.
The lessee must also make all payments to keep the Property in good standing and must carry out work programs during the first five years of the Lease Agreement. The work programs are comprised of a minimum of $50,000 per year in the first three years of the Lease Agreement and a minimum of $100,000 in years four and five of the Lease Agreement.
The Lessor will retain a 3% net smelter returns royalty on precious metals production, if any, and a 2% net smelter returns royalty on base metal production, if any, from the Property. The precious metals and base metals net smelter returns royalties on the Property can be reduced to 2% and 1%, respectively, under certain circumstances.
R. Bruce Durham, President and Chief Executive Officer of the Company, and Donald H. Christie, Chief Financial Officer and Secretary of the Company, both also serve as directors of Norvista. As such, the assignment of the Property under the terms of the Assignment Agreement `is a "related party transaction" for the purposes of Multilateral Instrument 61-101 - Protection of Minority Security Holders in Special Transactions ("MI 61-101"). The Company is relying on an exemption from the minority approval and formal valuation requirements of MI 61-101 due to the fact that the value of the transaction does not represent greater than 25% of the Company's market capitalization. The independent directors of the Company approved the Assignment Agreement and Messers. Durham and Christie abstained from voting on the approval of the Assignment Agreement. Other than Mr. Durham and Mr. Christie, no director of the Company abstained from voting on the Assignment Agreement.
Pursuant to the terms of the Assignment Agreement the Company will issue 2,000,000 common shares in its capital stock (the "Common Shares") to Norvista at a deemed value of $0.15 per Common Share and grant Norvista the right to subscribe to a private placement of up to 3,333,333 Common Shares at a price of $0.15 per Common Share for gross proceeds of up to $500,000 (the "Financing").
The closing of the Assignment Agreement and the completion of the proposed Financing are subject to the approval of the TSX Venture Exchange.
The scientific and technical information in this press release has been reviewed by the Company's President and CEO, Bruce Durham, P.Geo, who is a "Qualified Person" as that term is defined under National Instrument 43-101 - Standards of Disclosure for Mineral Projects.
All technical information contained herein is considered to be historical in nature and should not be relied upon. The Company is in the process of determining the quality and completeness of the work completed in the period 2006-2008 and is satisfied at this point that the work was completed in a professional manner and will provide updates on its follow-up work on this matter as appropriate.
The Company will also commence work on some of its landholdings in Yukon over the next 30 days particularly at the Livingstone project where the Company hopes to expand on the bedrock gold discovery last year in an area located up hill and upstream from the historic Livingstone placer gold creeks where more than 50,000 ounces in mostly coarse gold nuggets were mined historically.
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.
CAUTIONARY STATEMENT: This news release contains forward-looking information which is not comprised of historical facts. Forward-looking information involves risks, uncertainties and other factors that could cause actual events, results, performance, prospects and opportunities to differ materially from those expressed or implied by such forward-looking information. Forward-looking information in this news release relates to, among other matters, the Company's indirect interest in the Project under the terms of the Assignment Agreement and the proposed Financing. Factors that could cause actual results to differ materially from such forward-looking information include, but are not limited to, failure to convert any estimated mineral resources to reserves, capital and operating costs varying significantly from estimates, the preliminary nature of metallurgical test results, delays in obtaining of failures to obtain required regulatory approvals, political risks, uncertainties relating to the availability and costs of financing needed in the future, changes in equity markets, inflation, changes in exchange rates, fluctuations in commodity prices, delays in the development of the Project, risks involved in the mineral exploration and development industry, and those other risks set out in the Company's public documents filed on SEDAR. The Company believes that the assumptions and factors used in preparing the forward-looking information in this news release are reasonable. Nevertheless, undue reliance should not be placed on such information, which only applies as of the date of this news release, and no assurance can be given that such events will occur in the disclosed time frames or at all. The Company disclaims any intention or obligation to update or revise any forward-looking information, whether as a result of new information, future events or otherwise, other than as required by applicable securities laws.
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