VANCOUVER, Jan. 21 2016 /CNW/ - Eureka Resources Inc. ("Eureka" or the "Company") (TSXV: EUK) announced today that it has entered into a letter agreement dated January 20, 2016 (the "Agreement") to acquire from Nevada Sunrise Gold Corporation ("Nevada Sunrise", TSXV: NEV) a 50% working interest in a lithium exploration property proximal to the Clayton Valley in Nevada (the "Transaction"). The Clayton Valley hosts the Silver Peak mine, which is the only current lithium producer in North America.
"We have made this strategic move in order to diversify the Company's property portfolio in the face of a challenging gold market. Lithium is a commodity unlike most others in that its price has increased in the past year," said Michael Sweatman, CEO of Eureka. "Nevada Sunrise has secured a significant land position in the Nevada lithium play and this opportunity allows for an efficient way for Eureka to diversify our holdings."
Pursuant to the terms of the Agreement, Eureka will have the right to acquire a 50% participating interest in the Gemini Lithium Project ("Gemini"), located in the western Lida Valley, by reimbursing Nevada Sunrise for 50% of Gemini's acquisition costs, which are estimated at approximately US$85,000. These costs include staking costs, data acquisition and processing, and claims registration fees payable to Esmeralda County and the Bureau of Land Management ("BLM"). In addition, Eureka will issue Nevada Sunrise 500,000 of its common shares as a prospect fee, with 300,000 shares to be issued on receipt of approval for the Transaction from the TSX Venture Exchange (the "TSXV") and 200,000 to be issued on the first anniversary of such approval. Eureka and Nevada Sunrise will also enter into a joint venture with respect to Gemini, with Nevada Sunrise acting as operator of exploration in exchange for a 10% management fee to be charged to the joint venture.
The Transaction is subject to the satisfaction of certain conditions, including: entry into a definitive agreement; completion of due diligence on Gemini by EUK; the approval of the independent directors of Eureka and Nevada Sunrise; and the acceptance of the TSXV. The Transaction constitutes a "non-arms length" transaction under TSXV policies, as EUK and Nevada Sunrise have certain directors and officers in common. Specifically, Michael Sweatman, the President, CEO and a director of EUK, is also a director and chair of the board of directors of Nevada Sunrise; Brent Petterson, the CFO of EUK is also the CFO of Nevada Sunrise; Warren Stanyer, a director of EUK, is the President, CEO and a director of Nevada Sunrise; and Christina Boddy, the Secretary of EUK is also the Secretary of Nevada Sunrise. The non-independent directors will abstain from voting on the proposed Transaction.
About Gemini and the Lida Valley
Gemini is located approximately 6 miles (10 kilometres) east of the town of Lida, Nevada, and consists of 247 placer claims totalling 4,940 acres (2,000 hectares), staked by Nevada Sunrise in November and December 2015. Gemini flanks the Gold Point Solar Energy Zone, a BLM land reserve for solar power generation. Previous ground gravity surveys in the Lida Valley area were widely-spaced and limited in scope, however in 2012-2013, an independent research group collected approximately 500 gravity measurements along 7 transects crossing the Lida Valley.
The detailed Lida Valley gravity survey results indicate strong gravity lows within two, faulted sub-basins approximately 7 kilometres (4.5 miles) apart, each interpreted to be hundreds of metres deep. Nevada Sunrise made the decision to acquire claims covering the available land after reviewing the geophysical results in conjunction with favourable local geology, namely Esmeralda Formation rocks adjacent to Gemini that could, over many millennia, have provided a source of lithium to trapped, saline groundwaters beneath the valley floor. Geophysical exploration is planned to determine the presence of conductive horizons that may host lithium brines, followed by exploratory drilling, if warranted. There are no known drill holes at Gemini for lithium brines exploration.
Since its incorporation in 1981, Vancouver-based Eureka Resources Inc. has focused on the exploration and development of natural resource properties. Its flagship project, the Frasergold Project, is the subject of a National Instrument 43-101 ("NI 43-101") compliant technical report entitled "NI 43-101 Technical Report Frasergold Exploration Project", dated July 20, 2015 and amended July 27, 2015, authored by K. V. Campbell, Ph.D, P.Geo, and G. H. Giroux, MA.Sc, P.Eng., and filed on SEDAR. The Frasergold Project is located 100 kilometres east of Williams Lake, B.C., with good summer/fall access by provincial highways and secondary roads.
John R. Kerr, P.Eng., is the Company's designated Qualified Person for this news release within the meaning of NI 43-101 and has reviewed and approved the technical information described in this news release.
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 news release.
Cautionary Statement Regarding Forward-Looking Information
This news release includes certain "forward-looking statements" under applicable Canadian securities legislation that are not historical facts. Forward-looking statements involve risks, uncertainties, and other factors that could cause actual results, performance, prospects, and opportunities to differ materially from those expressed or implied by such forward-looking statements. Forward-looking statements in this news release include, but are not limited to, statements regarding the proposed Transaction, future exploration plans at Gemini, and the business and operations of the Company. Forward-looking statements are necessarily based on a number of estimates and assumptions that, while considered reasonable, are subject to known and unknown risks, uncertainties and other factors which may cause actual results and future events to differ materially from those expressed or implied by such forward-looking statements. Such factors include, but are not limited to: general business, economic and social uncertainties; litigation, legislative, environmental and other judicial, regulatory, political and competitive developments; delay or failure to receive board, shareholder or regulatory approvals; those additional risks set out in the Company's public documents filed on SEDAR at www.sedar.com; and other matters discussed in this news release. Although the Company believes that the assumptions and factors used in preparing the forward-looking statements are reasonable, undue reliance should not be placed on these statements, which only apply 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. Except where required by law, the Company disclaims any intention or obligation to update or revise any forward-looking statement, whether as a result of new information, future events, or otherwise.
SOURCE Eureka Resources, Inc.
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For further information: Further information on Eureka can be found on the Company's website at www.eurekaresourcesinc.com and at www.sedar.com, or by contacting Michael Sweatman, President and CEO, or Bob Ferguson by email at firstname.lastname@example.org or by telephone at (604) 449-2273.