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Silver Spruce firms up Melchett Lake acquisition

2019-11-26 12:07 ET - News Release

Mr. Karl Boltz reports

SILVER SPRUCE EXECUTES DEFINITIVE AGREEMENT FOR MELCHETT LAKE VMS-AU PROJECT

Silver Spruce Resources Inc. has completed due diligence and signed a definitive option and purchase agreement (DA) on the Melchett Lake zinc-gold-silver (Zn-Au-Ag) volcanogenic massive sulphide (VMS) project, an advanced precious and base metal project in the Thunder Bay mining district, Northern Ontario, Canada.

"We are very pleased to complete the definitive agreement to acquire 100-per-cent interest in the promising Melchett Lake VMS property," stated Greg Davison, director of Silver Spruce. "We continue to update the multielement data received this week from the recent due diligence sampling, while building our GIS database with revised drill hole co-ordinates and geophysical and geological information focusing on the next phase of the ground-truthing program and developing priority drill targets."

Letter of intent

Silver Spruce signed a binding letter of intent (LOI) on Sept. 9, 2019, to acquire 100 per cent of the property. Silver Spruce had a 90-day window to Dec. 6, 2019, to carry out its due diligence and execute a definitive agreement (DA).

Definitive agreement

The principal terms of the DA, as per the LOI, to purchase 100-per-cent interest in the property, include $150,000 in cash payments and five million Silver Spruce common shares, spread over three years. The initial payment to the vendor of $25,000 and 500,000 shares is due upon signing and Toronto Stock Exchange approval.

Minimum work expenditures total $1-million, with $100,000 during the first year, $200,000 in the second year and $700,000 prior to the third anniversary, with all periods based from TSX approval of the DA. The vendor will retain a 2-per-cent net smelter return royalty, of which 1 per cent can be purchased by the company for $1-million and the remaining 1 per cent at market price.

Due diligence

The recent project work was performed to verify the multikilometre strike length of the known areas of mineralization, broad intervals of mineralization, intense alteration profile similar to well-known polymetallic deposits, and presence of high-grade values of both precious metals and base metals reported from the historical exploration. The team examined the principal showings and trenches and drill core at the Relf and Nakina targets along the principal mineralized trend. A total of 72 rock and core samples were collected, 60 of which were submitted for multielement geochemical analysis. Results of all samples are now in receipt and pending interpretation.

Geology and mineralization

The property, located within the Melchett Lake greenstone belt of the English River subprovince of the Archean-age Superior province, is underlain by a bimodal mafic-felsic sequence of pyroclastics, tuffs and flows with cherts and iron-lean (Fe) to Fe-rich iron formation. The Melchett Lake belt contains several occurrences of polymetallic zinc-lead-copper-silver-gold (Zn-Pb-Cu-Ag-Au) VMS mineralization similar to ore deposits exploited at Mattabi, Winston Lake, Geco, Brunswick and Rouyn-Noranda. Base metal mineralization consisting of pyrite, sphalerite, chalcopyrite and galena occurs within the intermediate to felsic metavolcanic sequences of the property. There are locally high-grade lenses of Zn and Ag, with variable Cu, Au and Pb and historical gold grades to 28.8 g/t Au, silver grades to 560 g/t Ag and zinc grades to 19.1 per cent.

Highlights of the prospective geology, alteration and mineralization include multiple folded or stacked horizons of coincident alteration and metal mineralization, high Zn/Cu, Zn/Pb and Ag/Au ratios, extensive remobilization of major and trace elements with defined enrichment (Fe, magnesium (Mg), cobalt (Co), chromium (Cr) and cadmium (Cd)) and depletion (sodium (Na), strontium (Sr) and calcium (Ca)) zones and continuity, increased alteration, and anomalous metal values over large intervals with a strong electromagnetic offhole response. The mineralization is interpreted to occur as paleo-topographic accumulations related to fumarolic activity, forming polymetallic deposits overprinted by a later-stage gold-rich event.

Silver Spruce (press release of Nov. 12, 2019) reported precious and base metal assay data from the first batch of 13 rock samples collected from the Nakina and Relf zones. Zinc values range up to 14.7 per cent, lead to 0.96 per cent, copper to 0.52 per cent, silver to 301 g/t and gold to 0.737 g/t and clearly represent the polymetallic nature of the mineralization from both targets, particularly the Relf zone. The samples exhibit low alkali content, favourable pathfinder ratios and elevated values of heavy metals, including tellurium (Te), bismuth (Bi), selenium (Se), antimony (Sb), mercury (Hg), Cd and indium (In), associated with sphalerite, galena, chalcopyrite and pyrite observed in the rock samples.

For comparison with the current due diligence samples at the Nakina l zone, historical sampling reported, in separate samples, 14.85 per cent Zn and 28.8 g/t Au from a pyritized felsic metavolcanic. Rock sampling of a pyritized felsic metavolcanic in the Nakina 2 zone returned a value of 15.08 g/t Au. Selected grab samples taken from the Relf zone averaged 13.0 per cent zinc, 1.2 per cent lead, 0.26 per cent copper and 325 g/t silver; best results received were 19.1 per cent Zn, 2.2 per cent Pb, 0.40 per cent Cu, 565 g/t Ag and 1.72 g/t gold. Gold mineralization in the Iron Lake area occurred within a sericite-silica altered felsic metavolcanic containing pyrite with chalcopyrite and sphalerite. Grab samples reported 7.7 g/t Au, 13.05 g/t Au and 13.48 g/t Au. All of the metal values reported by past operators in the Melchett Lake area were sourced from grab samples, which may not be representative of the metal grades, and are historical in nature.

Maps and site photographs of the core and trenching areas are available on the Silver Spruce website and the geological and GIS compilations will be reported and posted on the company website in due course.

Qualified person

Greg Davison, master of science, professional geoscientist and a Silver Spruce director, is the company's internal qualified person for the Melchett Lake project and is responsible for the technical content of this press release within the meaning of National Instrument 43-101 (Standards of Disclosure for Mineral Projects), under Toronto Stock Exchange guidelines. Mr. Davison worked the Melchett Lake area as project manager and vice-president of exploration for Kerr Addison Mines (1983 and 1984) and Tribute Minerals (1999 to 2002), respectively. Consulting geologist Luc LePage, master of science, professional geoscientist, was the manager of the on-site activities for the field program and is a QP within the meaning of NI 43-101 (Standards of Disclosure for Mineral Projects), under TSX guidelines.

About Silver Spruce Resources Inc.

Silver Spruce is a Canadian junior exploration company which has signed a definitive agreement to acquire 100 per cent of the Melchett Lake Zn-Au-Ag project in Northern Ontario and is pursuing development of the Pino De Plata Ag project in western Chihuahua state, Mexico. The company also has entered into a binding letter of agreement to acquire 100 per cent of the advanced Cocula gold project in Jalisco state, Mexico, and subject to continuing due diligence. Silver Spruce continues to investigate opportunities that management has identified or that have been presented to the company for consideration.

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