MONTREAL, QUEBEC, Nov. 11, 2010 (Marketwire) -- Osisko Mining Corporation ("Osisko"),(TSX:OSK)(FRANKFURT:EWX) is pleased to announce that it has signed a Letter of Intent (the "LOI") with Sparton Resources Inc. ("Sparton", SRI - TSX.V) to option Sparton's West Hammond Contact and Clement Lake gold properties, as well as six surrounding wholly-owned Sparton claims (the "Properties"), all located adjacent to Osisko's Hammond Reef property near Atikokan, Ontario. Osisko has a working right and exclusive option to acquire up to a 70% undivided interest in Sparton's gold Properties under the following terms:
-- In order to maintain the option in good standing and acquire a 60%
undivided interest in the Properties (the "First Option"), Osisko shall:
(a)before signing of a definitive agreement, close a subscription in the
capital stock of Sparton of 2,000,000 Units at a price of $0.25 per Unit,
for gross proceeds of $500,000. Each Unit shall consist of one common
share and one-half transferable common share purchase warrant. Each whole
transferable common share purchase warrant will entitle its holder to
acquire one common share for $0.40 for a period of 1.5 years from the
closing of the subscription.
(b)on November 10, 2011, subscribe in the capital stock of Sparton for a
total amount of $500,000, priced at the 20-day VWAP preceding November
10, 2011, and Osisko will refrain from any trading in the shares of
Sparton during said 20-day pricing period.
(c)pay Sparton's counterparts to the Underlying Option agreements (the
"UOA") cash and shares of Sparton according to the following schedule:
(i) $140,000 and 200,000 shares on or before July 10, 2011;
(ii) $200,000 and 220,000 shares on or before July 10, 2012;
(d)incur aggregate expenditures on the Properties :
(i) in the amount of at least $1,000,000 on or before November 10, 2011;
(ii) in the aggregate amount of at least $2,500,000 on or before
November 10, 2012;
(iii) in the aggregate amount of at least $5,000,000 on or before
November 10, 2013;
(iv) in the aggregate amount of at least $8,000,000 on or before
November 10, 2014, including funding and completion of a scoping
(Preliminary Assessment) study.
-- Upon acquiring a 60% interest, Osisko will have the option of earning
an additional 10% interest (aggregate 70% interest, or the "Second
Option") by either expending an additional $6,000,000 on the
Properties or funding and delivering a bankable feasibility study on
or before November 10, 2016.
-- Osisko may, at its sole discretion, accelerate and apply exploration
and development expenditures to future years' expenditures and,
accordingly, the First or Second Options may be exercised sooner.
Osisko will be the manager of the project. A management committee will be formed during the Option Period with two representatives from each party. This management committee will be responsible for reviewing programs submitted by Osisko and for approving and evaluating the results of all programs. In the event of a tie, Osisko shall have the casting vote during the Option Period. Upon acquiring a 60% or a 70% interest in the Property, a joint venture would be formed between Osisko and Sparton.
Robert Wares, Executive Vice-President and COO of Osisko, stated: "Osisko is very pleased to have the opportunity to acquire a majority interest in the Sparton gold properties. Sparton has identified several significant gold zones on these properties that offer additional potential for bulk minable gold deposits. This represents a strategic acquisition for Osisko that is located adjacent to the Hammond Reef project, where sixteen drills are currently defining and expanding the Hammond Reef gold resource. Osisko will finalize the review of available exploration data on Sparton's properties with the objective of testing favorable structures during the winter months."
The Sparton common shares to be acquired by Osisko will represent approximately 2.3 % of the outstanding common shares of Sparton before giving effect to the exercise of the warrants and approximately 3.4 % of the outstanding common shares of Sparton after giving effect to the exercise of the Osisko warrants (but before the exercise of any other warrants or convertible securities of Sparton). Osisko will acquire the Sparton common shares and warrants for investment purposes. Osisko has no present intention to increase its holdings in Sparton although it will evaluate the investment in Sparton and whether to increase or decrease its shareholdings in response to market conditions, the business and prospects of Sparton and other factors. The private placement is exempt from the prospectus and registration obligations as it is for an amount greater than $150,000.
About Osisko Mining Corporation
Osisko Mining Corporation is currently developing the Canadian Malartic gold deposit in Quebec and evaluating adjacent areas for a large-scale open pit, bulk-tonnage mining operation. The Canadian Malartic deposit currently represents one the biggest permitted gold reserves in Canada, and is still growing through ongoing drilling on new mineralized zones. Current reserves for the Canadian Malartic property are 9.0 million ounces (see details in Osisko press release dated February 10, 2010). Osisko is also developing the Hammond Reef gold project near Atikokan Ontario through an aggressive definition drilling program of 350,000 metres. Hammond Reef is currently estimated to contain a National Instrument 43-101 compliant inferred resource of 6.70 million ounces of gold (259.4 million tonnes at a grade of 0.8 grams per tonne, using 0.3 grams per tonne cut-off), of which 97% lies within 300 metres of surface.
Mr. Robert Wares, P. Geo. and Executive Vice-President of Osisko, is the Qualified Person who has reviewed this news release and is responsible for the technical information reported herein.
Cautionary Notes Concerning Estimates of Mineral Resources
This news release uses the terms measured, indicated and inferred resources as a relative measure of the level of confidence in the resource estimate. Readers are cautioned that mineral resources are not economic mineral reserves and that the economic viability of resources that are not mineral reserves has not been demonstrated. In addition, inferred resources are considered too geologically speculative to have any economic considerations applied to them. It cannot be assumed that all or any part of an inferred mineral resource will ever be upgraded to a higher category. Under Canadian rules, estimates of inferred mineral resources may not form the basis of feasibility or pre-feasibility studies or economic studies except for Preliminary Assessment as defined under NI 43-101. Readers are cautioned not to assume that that further work on the stated resources will lead to mineral reserves that can be mined economically.
Certain statements contained in this press release may be deemed "forward-looking statements". All statements in this release, other than statements of historical fact, that address events or developments that Osisko expects to occur, are forward looking statements. Forward looking statements are statements that are not historical facts and are generally, but not always, identified by the words "expects", "plans", "anticipates", "believes", "intends", "estimates", "projects", "potential", "scheduled" and similar expressions, or that events or conditions "will", "would", "may", "could" or "should" occur including, without limitation, the commencement of commercial production. Although Osisko believes the expectations expressed in such forward-looking statements are based on reasonable assumptions, including, without limitation, that all technical, economical and financial conditions will be met in order to warrant further development of the project, such statements are not guarantees of future performance and actual results may differ materially from those in forward looking statements. Factors that could cause the actual results to differ materially from those in forward-looking statements include gold prices, access to skilled consultants, mining development personnel, results of exploration and development activities, Osisko's limited experience with production and development stage mining operations, uninsured risks, regulatory changes, defects in title, availability of personnel, materials and equipment, timeliness of government approvals, actual performance of facilities, equipment and processes relative to specifications and expectations, unanticipated environmental impacts on operations market prices, continued availability of capital and financing and general economic, market or business conditions. These factors are discussed in greater detail in Osisko's most recent Annual Information Form and in the most recent Management Discussion and Analysis filed on SEDAR, which also provide additional general assumptions in connection with these statements. Osisko cautions that the foregoing list of important factors is not exhaustive. Investors and others who base themselves on forward-looking statements should carefully consider the above factors as well as the uncertainties they represent and the risk they entail. Osisko believes that the expectations reflected in those forward-looking statements are reasonable, but no assurance can be given that these expectations will prove to be correct and such forward-looking statements included in this press release should not be unduly relied upon. These statements speak only as of the date of this press release.
Osisko Mining Corporation
Vice-President Corporate Development
Toll Free: 1-888-674-7563