Sphinx Resources Ltd. announces the execution of a binding letter of agreement to acquire the Calumet Sud project in the Pontiac MRC in southwestern Quebec. The Project is adjacent to its 100% owned Green Palladium project.
The acquisition of the Project is made in consideration for an aggregate purchase price of $580,000 (the "Purchase Price") and is subject to the approval by the TSX Venture Exchange and the execution of a definitive agreement at closing (the "Closing"). The Purchase Price shall be paid by issuing an aggregate of 6,153,846 common shares of the Corporation to Amixam Resources Inc. ("Amixam"), the private company that currently owns the Project. The price per share is $0.13. The schedule for issuing these shares is as follows: (i) 1,384,615 million common shares at Closing, (ii) 1,923,077 common shares on the first anniversary, and (iii) 2,846,154 common shares on the second anniversary. In addition Sphinx will: (i) make cash payments to Amixam totaling $93,000 in reimbursement of expenses spent by Amixam on the Project, and (ii) fund not less than $350,000 in exploration expenditures by the third anniversary. A 2% net smelter return royalty is granted to Amixam. The shares that will be issued to Amixam will be subject to a statutory four-month hold period. No finder's fee will be payable by the Corporation in respect of the transaction.
The Corporation further announces that closing of the transaction will result in Amixam and its principals Michel Belisle and Michel Gauthier owning or exercising control over 5,384,615 common shares, or 11.8% of the currently outstanding common shares, and up to 10,615,384 common shares, or up to 22.6% of the currently outstanding common shares assuming full issuances to Amixam under both the Project acquisition agreement and the Green Palladium property acquisition agreement disclosed on May 13, 2015 (collectively, the "Amixam Agreements"). However, the definitive agreement for the acquisition of the Project will provide that in no event Amixam and its principals shall own at any time more than 19.99% of the outstanding common shares of the Corporation and share issuances contemplated in the Amixam Agreements will be postponed until such time as this condition can be met. Except as set forth in the Amixam Agreements, Amixam and its principals do not have any present intention to acquire additional ownership of, or control over, additional securities of Sphinx. It is the intention of Amixam and its principals to evaluate their investment in Sphinx on a continuing basis and such holdings may be increased or decreased in the future. The address of Amixam for the purposes of National Instrument 62-103 - Early Warning System and Related Take-Over Bid and Reporting Issues is 344 Chemin du Tour du Lac, Ste-Anne-du-Lac, QC J0W 1V0. As a result of the transaction, Amixam will become a new insider of the Corporation. A copy of Amixam's Early Warning Report is available on SEDAR at www.sedar.com.
The Project consisting of 21 claims (12.1 km2) is located in the Municipality of Grand Calumet Island. The Project is immediately adjacent and south of the former New Calumet mine that produced from 1943 to 1968, 3.8 million tonnes at 5.8% Zn, 1.6% Pb, 65 g/t Ag and 0.4 g/t Au. In the 1980s, Lacana Mining Ltd. discovered significant gold mineralization immediately below the underground workings of the former New Calumet mine.
In 2014, Amixam carried out a soil geochemical survey on the northwest portion of the Project. A follow-up soil survey at 25 m spacing outlined a strong 300 m-long lead and zinc anomaly. One-metre long channel samples were taken in the trenches dug by Amixam over the anomaly. . Trench #1 returned 1.9% Zn over 5 m followed by 3.7% Zn over 4 m including 5.4% Zn over 2 metres. Trench #2 returned 3% Zn over 10 m including 6.9% Zn over 1 metre. It should be noted that sphalerite is partially leached by surface waters in these trenches, which may have superficially impoverished the mineralization. This mineralization corresponds to an interpreted exhalative horizon at the contact between dolomitic marble and meta-volcanic rocks. It is the same exhalative horizon that is followed at the New Calumet mine. Sphinx considers that these trenches reveal a first priority zinc target that is drill-ready.
The Project also includes the southwestern quarter of the Obwondiag layered igneous complex, which was recently named by Sphinx. It is in this layered igneous complex that Sphinx recently discovered a platinum group elements-bearing reef (see press release of June 18, 2015) and will provide Sphinx with additional and highly prospective stratigraphy.
The Corporation also announces that, subject to TSX Exchange Venture's approval, it will issue an aggregate of 448,767 common shares in lieu of a cash payment of the first six (6) months interest of $22,438 payable, to the whole in accordance with the terms of the $375,000 convertible debentures issued by the Corporation in December 2014. The shares will be issued by Sphinx at a conversion price of $0.05 per share in accordance with the provisions of such convertible debentures.