VANCOUVER, BRITISH COLUMBIA--(Marketwire - Feb. 26, 2013) - Pistol Bay Mining Inc. (TSX VENTURE:PST) ("the Company") is pleased to announce that it has entered into an Option Agreement with Zimtu Capital Corp. and MPH Consulting Ltd. (together the "Optionees"), subject to TSX Venture Exchange approval, to acquire a 100% interest in the advanced-stage Portland Graphite Property ("the Property"), located in southeastern Ontario.
The Property is situated 1.6 km north of Highway 15 between Kingston and Ottawa. It is road-accessible and consists of private lands covering approximately 429 hectares, located 5.5 km northeast of the community of Portland, Ontario. Power and water are available on-site and rail access is nearby.
Graphite on the Property is hosted primarily in Precambrian marbles of the Grenville Province. Ontario government geologists reported in the 1960's that the graphite occurs as disseminated flakes averaging 1/8 inch in diameter. Work on the Property by previous operator Victoria Graphite Inc., including 73 drill holes (5,884m), identified graphite mineralization in three zones (D-zone, G-zone and I-zone) over a total strike length of 1700m. Mineralization dips at approximately 70 degrees to the west. In general, the zones are characterized by broad envelopes of lower-grade graphite mineralization with widths up to 75m, within which are zones of higher grade material, to greater than 10% graphitic carbon ("Cg"), based on the diamond drilling by Victoria Graphite in the late 1980's.
Victoria Graphite also carried out test mining and milling utilizing a 100 tonne per day pilot plant in the early 1990's. Results of this test milling work are not available to the Company at this time. The mill building is still present and represents a potentially significant asset to the Company in terms of the ongoing development of the Property.
A historical "probable reserve" of 295,000 tonnes grading "slightly above 6% graphite" was delineated on the property. This estimate is a historical estimate prepared by R.A. Elliot for Victoria Graphite in 1989. Although it appears to have been done in a professional manner by the standards of the time, it does not conform to the standards of NI 43-101. The category "probable reserve" appears to conform most closely to the currently accepted category of" Inferred Mineral Resource". A program of re-logging, resampling and re-assaying of drill core would be required to bring the estimate up to 43-101 compliance. A qualified person has not done sufficient work to classify the historical estimate as a current mineral resource or mineral reserve. The company is not treating the historical estimate as a current mineral resource or mineral reserve.
In terms of the quality of the graphite material, metallurgical testing on a 34 tonne sample of material from the D-zone was carried out in 1989 by Lakefield Research Ltd on behalf of Victoria Graphite. This work indicated recoveries of 87 to 95% of the graphite for material ground to -10 mesh. Flotation concentrates grading 80 to 85% Cg were produced which could be upgraded to 91-93% Cg by heavy liquid separation. Of particular note, this work indicated a coarse flake (+48 mesh or 0.325mm) content of 66% in the concentrate (Ontario Geological Survey, Open File Report 5729, 1990).
Charles Desjardins, President and Director of Pistol Bay Mining Inc. stated: "The Portland Graphite project is a high-quality undeveloped graphite deposit strategically located near infrastructure in southeastern Ontario. The Property has excellent potential to host a large-flake graphite resource with low development costs. The Company's goal is to advance the project to a production decision as quickly as possible."
A detailed helicopter EM/magnetic survey over the Property is planned in order to establish geologic controls on mineralization, to better define the known graphite zones, and to identify new drill targets outside of the main zones. Trenching and diamond core drilling will support the development of an initial NI 43-101 compliant resource. Resource definition and exploration work will be complemented with metallurgical test-work.
Terms of the Option Agreement:
Pursuant to the terms of the Option Agreement, Pistol Bay will pay a cumulative amount of $150,000 and a cumulative amount of 5,500,000 common shares over a 2 year period.
Zimtu Capital Corp. and MPH Consulting Limited. ("the Optionees") entered into an Option Agreement with John E. Riley and Steven J. Riley ("The First Optionor") dated March 5, 2012 (the "Option 1 Property Agreement") as well as another Option Agreement with Our Getaway Inc. ("The Second Optionor") dated June 1, 2012 (the "Option 2 Property Agreement", and together with the Option 1 Property Agreement, the "Property Option Agreements"), whereby the Optionors each granted an exclusive option to the Optionee to acquire up to an undivided 100% of the title and interest in and to the Properties, by paying certain consideration on the terms and conditions therein provided.
Pistol Bay acknowledges that a payment of $60,000 is due under the Option 1 Property Agreement to the First Optionor on or before March 5, 2013, and agrees to pay same on or prior to said date, regardless of any pending approvals or any other matter. Under the Agreement, if the $60,000 payment due March 5, 2013 under the Option 1 Property Agreement or the $60,000 payment due June 1 2013 under the Option 2 Property Agreement is not made by Pistol Bay, 2,000,000 common shares in the capital of Pistol Bay will be payable to the Optionees (the "Break Fee"). These 2,000,000 common shares of Pistol Bay are in addition to the Consideration Shares below.
In the event that the aggregate mineral resource estimate (inclusive of mineral reserves and including measured, indicated and inferred mineral resources) within any deposit or all deposits combined on the Properties is 200,000 tonnes or greater of graphite content and such estimate is verified by a technical report prepared in compliance with National Instrument 43-101 (using CIM Definition Standards), Pistol Bay will issue an additional 1,000,000 shares to Optionees (50% each) within 5 business days of such technical report being publicly filed or announced. These 1,000,000 common shares of Pistol Bay are in addition to the Consideration Shares.
Issuance of Consideration and Shares:
The Consideration Shares will be issued to the Optionees or their assigns as follows:
2,000,000 shares on the date of approval of the TSX Venture Exchange to the transactions contemplated herein ("TSX Approval");
1,500,000 shares 12 months after TSX Approval;
2,000,000 shares 24 months after TSX Approval; and
$150,000 in cash 6 months after TSX Approval.
Technical information in this news release has been reviewed by William Brereton P. Eng of MPH Consulting Limited, Toronto, and a Qualified Person under the definition of National Instrument 43-101.
About Pistol Bay Mining Inc. (TSX VENTURE:PST) is a diversified Junior Canadian Mineral Exploration Company with a focus on precious and base metal properties in North America.
On Behalf of the Board of Directors
PISTOL BAY MINING INC.
Charles Desjardins, President and Director
This report contains forward looking statements. Resource estimates, unless specifically noted, are considered speculative. Any and all other resource or reserve estimates are historical in nature, and should not be relied upon. By their nature, forward looking statements involve risk and uncertainties because they relate to events and depend on factors that will or may occur in the future. Actual results may vary depending upon exploration activities, industry production, commodity demand and pricing, currency exchange rates, and, but not limited to, general economic factors. Cautionary Note to US investors: The U.S. Securities and Exchange Commission specifically prohibits the use of certain terms, such as "reserves" unless such figures are based upon actual production or formation tests and can be shown to be economically and legally producible under existing economic and operating conditions.
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 release.
Pistol Bay Mining Inc.
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