Mountain Lake Resources to sell Bobby's Pond property

Mountain Lake Resources (CVE:MOA) said Tuesday it has entered into an agreement with SG Spirit Gold (CVE:SG) whereby it will sell its full interest in the Bobby's Pond base metals project in central Newfoundland in exchange for common shares, a cash payment and a net smelter royalty (NSR).

Under the terms of the agreement, Mountain Lake will receive 3.65 percent of the issued and outstanding shares of SG, a 0.5 percent NSR, and a one-time, $100,000 cash payment.

Concurrent to the Mountain Lake deal, SG announced that it would also purchase a full interest in the Buchans property, including the Lundberg deposit and the Daniels Pond deposit, and a 49 percent interest in the Tulks Hill deposit, from Buchans Minerals (CVE:BMC).

Under the terms of that agreement, Buchans Minerals will receive 50 percent of the issued and outstanding shares of SG, the number of share purchase warrants representing 10 percent of SG shares, a one-time, $2.0 million cash payment, and the right to nominate half of SG's board of directors.

SG will also be required to incur cumulative expenditures of at least $7.5 million in connection with the Buchans property, within two years.

Mountain Lake president and CEO, Gary Woods said: "We have long believed that area consolidation was the logical way to develop Bobby's Pond and the other known VMS deposits in the Buchans Camp.

"This transaction gives us the opportunity to monetize value from a non-core asset while retaining an interest in the future potential of the consolidated company."

The latest NI 43-101 compliant report for Mountain Lake's Bobby's Pond property estimates 1.095 million tonnes grading 4.61 percent zinc, 0.44 percent lead, 0.86 percent copper, 16.6 g/t silver, and 0.2 g/t gold in the indicated category, and 1.177 million tonnes at 3.75 percent zinc, 0.27 percent lead, 0.95 percent copper, 10.95 g/t silver, and 0.06 g/t gold in the inferred category.

At Buchans Minerals' Lundberg property, the report estimates 22.21 million tonnes at 1.62 percent zinc, 0.69 percent lead, 0.38 percent copper, and 5.81 grams per tonne (g/t) silver in the inferred category.

For the Daniels Pond property, the latest report estimates 929,000 tonnes grading 5.13 percent zinc, 2.5 percent lead, 0.34 percent copper, 101.4 g/t silver, and 0.63 g/t gold in the indicated category. In the inferred category for Daniels Pond, the report estimates 332,000 tonnes grading 4.61 percent zinc, 2.13 percent lead, 0.3 percent copper, 85.86 g/t silver, and 0.53 g/t gold.

The Tulks Hill property has indicated resources of 431,000 tonnes at 3.97 percent zinc, 1.61 percent lead, 0.89 percent copper, 35.09 g/t silver, and 1.17 g/t gold.

Based on these reports, as well as the preliminary economic assessment for the Lundberg property, which includes a pre-tax IRR of 43.94%, an NPV of $217.8 million over the total life of mine, and a 1.5 year project payback, SG said it intends to work toward completing a pre-feasibility study for the complex.

The deal remains subject to all necessary shareholder and regulatory approvals.

On the TSX-Venture exchange, Mountain Lake shares fell 2.0 percent to $0.49, as of 1:29 pm EDT.