Redzone Resources Ltd. ("Redzone" or the "Company") is pleased to announce that it has entered into a binding letter agreement (the "Agreement") with two vendors (the "Vendors") providing for the grant to the Company of an option to acquire up to a 100% interest in the property known as the Lucky Mica Claim Group (the "Property").
The claims comprising the Property are situated approximately 8 miles south west of the city of Wickenburg in Maricopa County, Arizona. The Property consists of 14 contiguous unpatented lode claims totaling approximately 280 acres. The claims cover the "Fortner and Boyd Lithium Deposit" recorded as such by the USGS (United States Geological Survey) as Deposit 10064183 and catalogued as MRDS (Mineral Resources Data System) ID TC38458, hereby referred to as the "Mineralization".
The Mineralization occurs within a pegmatite dyke in granitic rocks and schists. The dyke contains lithium bearing micas noted as spodumene, amblygonite, lepidolite and beryl. Field visits by a Company representative confirm that the width of the dyke varies between 10 meters and 25 meters and extends in a north south direction for approximately 600 meters.
The Mineralization has been explored and developed intermittently since 1950 and during that time a small shaft was sunk to a reported depth of 30ft from which two adits were driven along the footwall both to the north and south. The dip of the dyke noted in the shaft was between 65 and 70 degrees. In addition 12 bulldozer trenches were completed in the 1950's. These are situated at intervals of approximately 50 meters along the strike of the Mineralization varying in depth from 2.0 to 4.0 meters. These have helped define the surface dimensions of the Mineralization.
In the archives of the Arizona Geological Society files from the Arizona Department of Mineral Resources contain information recorded by Department Field Engineers after visiting the Property. The reports are from 1952 through 1964. In the 1964 Field Engineers report it states "75 wagon drill holes were completed at an average depth of 187 feet". In addition A Mine Owners Report from 1958 states "Wagon drilling shows the ore body extends 110 ft (in depth) from end to end". Records show the drilling was completed by the Consolidated Uranium Co. of Canada but this has not been verified. A Field Engineers Report dated October 1964 also states that the then owner, Hanley, reports Li grades of between 3.0% and 3.5%.(Arizona Department of Mines and Mineral Resources AZMILS Data - Lucky Mica, Department of Mineral Resources, State Of Arizona Reports.)
The mineral descriptions and grades cited above are presented only in a historical context and use historical terminology which does not conform to current standards and, as such, should not be relied upon. Although the historical data is believed to be based on reasonable assumptions, such data was generated prior to the implementation of National Instrument 43-101 ("NI 43-101"). These historical descriptions do not meet current standards as set forth under NI 43-101 and therefore should not be relied upon.
A Company representative conducted sampling on the Property and submitted 4 samples from the Property to ALS Minerals in Reno Nevada for analysis. The samples were crushed, split, a portion was pulverized and a one (1) gram aliquot analyzed by ALS Chemex method ME-MS61 (48 element, including lithium, four acid ICP-MS). Duplicates of all samples have been retained by the Company in a secure location. As a check the pulps from all four samples were analyzed by ALS Chemex method "Li-OG63" Four Acid Digestion with an ICP finish.
A select grab sample taken by the Company representative of hand sorted micas on the side of a bulldozer trench returned an assay of 2.67% Li, a chip sample across 1.2 meters from the face of one of the trenches returned 0.427% Li, two further grab samples from two of the faces of the trenches assayed 408 parts per million ("ppm") Li and 380 ppm Li. Other anomalous elements noted in the samples were Rubidium and Phosphorus. Potential quantity and grade is conceptual in nature. There has been insufficient exploration to define a mineral resource at the Property to date and it is uncertain if further exploration will result in the target being defined as a mineral resource.
The Company plans to conduct further sampling, deposit scale mapping and mineralogical studies on the micas and other constituent minerals at the Property, as well as to conduct trenching and geophysics initially comprised of magnetics to assist with geological mapping, as well as EM and radiometrics if appropriate.
In order to earn an initial 75% interest in the Property, subject to a 0.5% net smelter return royalty ("NSR"), the Company is required to (i) issue an aggregate of 400,000 common shares to the Vendors over a two year period, of which 300,000 common shares must be issued in the first 15 months; (ii) make aggregate cash payments to the Vendors of US$37,500, of which US$17,500 must be paid in the first 15 months; and (iii) complete exploration expenditures of US$100,000 on the Property over the first year. As of July 29, 2016, the Company's total current assets (cash and cash equivalents) were approximately $500,000.
Upon exercising its initial option to earn a 75% interest in the Property, the Company shall have the further option to acquire the remaining 25% interest in the Property, subject to an aggregate .667% NSR on the Property (which may be purchased by the Company in consideration of a cash payment of $1,000,000). The Company can exercise this further option to earn the remaining 25% interest by (i) making an additional cash payment of US$25,000 to the Vendors; (ii) issuing an additional 100,000 common shares to the Vendors; and (iii) completing additional exploration expenditures on the Property in the aggregate amount of US$400,000 over the ensuing two year period.
The Agreement remains subject to, among other things, the receipt of all applicable regulatory approvals, including the approval of the TSX Venture Exchange. One of the Vendors, Alan Matthews, is a non-arm's length party to the Company, as he is also a director of the Company.
All scientific and technical information set forth herein concerning the Property has been prepared under the supervision of Richard A. Graham, P. Geol., who is a consulting geologist to Redzone and is a "qualifying person" within the meaning of NI 43-101. Mr. Graham has verified all of the scientific and technical information respecting the Property set forth herein, other than information obtained from the archives of the Arizona Geological Society as he did not have access to the necessary historical data to verify the information set forth in such archives.