Sparton Resources Inc. Announces Eldorado Gold Corporation to Explore Bruell Gold Project

TORONTO, Dec. 16, 2019 (GLOBE NEWSWIRE) -- Sparton Resources Inc. (TSXV.SRI) ("Sparton" or the "Company") announced today that it has executed definitive agreements, including an option agreement (“Option Agreement”) with Eldorado Gold Corporation (“Eldorado”) an international mid-tier gold and base metals producer, under which Eldorado was granted an option to earn up to an initial 75% interest (“Option”) in the Company’s 51-claim Bruell Gold Project in Vauquelin Township, Quebec (the “Property”).

During its 2018-2019 2,000 metre drill program, Sparton located (in the only area tested) continuous gold mineralization along a 250-metre strike length and to a vertical depth of about 125 metres.  This work tested the “Vein Zone” area on the east central part of the claims (See Sparton News Release dated April 25, 2019).  This was regarded as a new and significant discovery on the Property.

THE OPTION

Pursuant to the Option Agreement (which was executed by the Company and Eldorado effective December 9, 2019) and in consideration for the grant of the Option, Eldorado will make all future cash payments and fund all the future expenditure requirements under the existing Property Option Agreement (the “Underlying Option Agreement”) between the Company and the original optionor (see Sparton News release dated August 11, 2017).

Sparton will also receive a cash payment of CAD $150,000 as partial compensation for past expenditures funded by the Company pursuant to the Underlying Option Agreement.

If Eldorado makes all future cash payments and funds all the future expenditure requirements under the Underlying Option Agreement, then, upon the exercise of the Option, it will have the right to elect to have Sparton participate in a new joint-venture for further development of the Property in which Sparton will hold a 25% participating interest, or buy-out Sparton’s 25% interest in the Property for the sum of CAD $1.8 million, adjusted for the Consumer Price Index (“CPI”) at the time Eldorado makes its election.

If Eldorado elects to buy out Sparton’s 25% interest in the Property then, upon a decision to place any mining project on the Property into commercial production, Sparton will be granted a 2% Net Smelter Return Production Royalty (“NSR”) in respect of the Property. Fifty percent (50%) of the NSR, can, at any time, be purchased by Eldorado for the sum of CAD $2.5 million.