Feb 5 2013
New Klondike Exploration Ltd. is pleased to announce that it has entered into an option agreement to purchase a 100% interest in a strategic mining claim in the Kawashegamuk Lake Area, near Katisha Lake, contiguous to the western boundary of the Company's Goldstorm Project.
The claim (the "Katisha Lake Claim") is jointly owned by Alexander Glatz and Ivar Joseph Riives (the "Optionors") of Dryden, Ontario. The transaction forms part of the Company's continuing land acquisition strategy for the Goldstorm Project area.
The Katisha Lake Claim consists of 9 claim units covering an area of 144 hectares. The claim is host to at least eight known gold prospects, as documented in Ontario Geological Survey data files. During the mid-1980s, Esso Minerals Limited ("Esso") carried out an exploration program on a property that included the Katisha Lake Claim. That work program included shallow drill testing of five of these prospects.
Gold mineralization at Katisha Lake is hosted by silicified zones and quartz veining developed within sheared, sericitized and pyritized zones ranging from 1 to 20 metres in width. These zones have been traced for lengths ranging from 50 to 300 metres. The zones are hosted within layered gabbroic sills that intrude Archean aged mafic to felsic volcanic rocks. All of these rocks are unconformably overlain by a band of Timiskaming-type sediments immediately to the north of the known gold (Au) prospects. Historic sampling from quartz veining and silicified zones within the host structures has returned gold values ranging from 2.06 to 18.6 grams per tonne (g/t). The results from the 1985 and 1987 Esso drilling programs are only partially available. The best assay result from the available data was a 1.55 metre intersection that assayed 8.57 g/t Au. The assay results and other data from the Katisha Lake Claim are historic in nature and have not been verified by the Qualified Person (identified below). A work program that will include re-sampling of the surface exposures of the known Au prospects is currently being planned.
Michael Coulter, President of New Klondike said, "We are pleased to have added this important property to the Goldstorm Project. The Company believes that the Katisha Lake Claim is highly representative of one of our five key exploration target areas identified in our geological model for the Goldstorm Project. As discussed in the technical report filed by the Company on January 29, 2013, the unconformity between the Timiskaming-type sedimentary rocks and the underlying volcanic rocks have excellent potential to host economic gold deposits. The property has good access as it is traversed by a major forestry road and is expected to provide near-term drill targets for the Company."
Option Terms
The Optionors have granted New Klondike the right and option (the "Option") to acquire a one hundred percent (100%) interest in the Katisha Lake Claim, over the four-year term of the Option, by:
- making cumulative cash payments of $150,000 ($20,000 (paid) on signing and subsequent payments on the first, second, third and fourth anniversary dates of the agreement of $20,000, $30,000, $30,000 and $50,000, subject to the Company's right to make up to fifty percent (50%) of the payments due on the second, third and fourth anniversary dates in common shares;
- making minimum annual exploration expenditures of $5,000 during the term of the Option;
- granting the Optionors a two percent (2%) net smelter royalty upon exercise of the Option, subject to the Company's right to purchase one percent (1%) of the net smelter royalty at any time for $250,000, payable in cash or common shares; and
- making annual advance royalty payments of $2,500 to each Optionor commencing on February 15, 2017, to a maximum cumulative total of $25,000, subject to the Company's right to prepay this amount at any time in cash or common shares.
In the event that the Company elects to satisfy any of the future payments described above by issuing its common shares, the number of shares to be issued will be determined by the 30-day volume-weighted average price of the Company's common shares on the TSX Venture Exchange at the time of issue, subject to a minimum price of $0.10. Any shares issued will be subject to four-month statutory hold period.
An existing one percent (1%) net smelter return and/or net sales return royalty on the Katisha Lake Claim, payable to Ontario Exploration Corporation, remains the responsibility of the Optionors, and would be paid out of any royalty payments to which they are entitled, and not by New Klondike.
Qualified Person
Mr. Seymour M. Sears, B.A., B.Sc., and P.Geo., a director of the Company, has reviewed and approved the technical content of this press release.