Toronto, Ontario--(Newsfile Corp. - July 29, 2020) - Metals Creek Resources Corp. (TSXV: MEK) (the "Company") is pleased to announce that that it has entered into an arm's length option agreement (the "Option Agreement") with CellStop Systems Inc. ("Cellstop") in which Cellstop can acquire a 100% of the right, title and interest in and to the Clark's Brook Property in central Newfoundland.
Cellstop commissioned a technical report on the Clark's Brook Property, entitled "Technical Report on the Clark's Brook Property Central Newfoundland and Labrador" (the "Technical Report"). The Technical Report was prepared in accordance with National Instrument 43-101 - Standards of Disclosure for Mineral Projects ("NI 43-101") by Desmond Cullen, P.Geol. and Michael Regular, P.Geol. of Clark Exploration Consulting. Each of Desmond Cullen, P.Geol. and Michael Regular, P.Geol. is a "Qualified Person" as defined in NI 43-101 and is independent of Cellstop and MEK. The Technical Report is available under the Company's profile on SEDAR at www.sedar.com.
The scientific and technical information contained in this press release relating to the Clark's Brook Property is supported by the Technical Report, which is subject to certain assumptions, qualifications, and procedures described therein. Reference should be made to the full text of the Technical Report which has been filed under the Company's profile on SEDAR.
The Clark's Brook Property consists of 31 claim units in one license (026731M) for a total of 7.7 sq. km (770 hectares). The license is held by MEK and is in good standing to August 1, 2028. The claims were staked in 2016 to cover two auriferous showings discovered in 2003. The Clark's Brook Property is located in central Newfoundland near Northwest Gander River, approximately 25 kilometers west of the town of Glenwood. It is situated on NTS map sheet 02D/14. The Clark's Brook Property is centered on UTM coordinates 614,950mE/5,407,000mN (NAD27 Zone 21) on NTS 02D/14.
The Clark's Brook Property itself was subject to limited prospecting carried out by Altius Resources Inc. ("Altius") from 2003 through 2009. Additional prospecting was carried out by MEK in 2016 after the acquisition of the claims.
As part of a large 1:10,000 geological mapping and prospecting program conducted by Altius, both the Clark's Brook East ("CBE") and West ("CBW") gold discoveries were made. On the CBE gold zone, seven representative grab samples were attained, each comprised of material from several mineralized boulders that assayed between 2.98g/t and 24.5g/t gold with an average of 7.93g/t gold. A sample of underlying bedrock on the northern edge of the boulder distribution pattern returned 1.25g/t gold. An additional outcrop exposure some 25m upstream cut by a narrow quartz vein and associated iron-carbonate alteration was sampled in two representative grab samples and returned 0.15g/t and 0.62g/t Au.
The CBW gold zone discovery was first made in mineralized boulders returning 8.9g/t and 9.28g/t gold. The site was revisited and found one of the auriferous boulders to fit on an adjacent outcrop. An additional eight samples of brecciated and altered siltstone were collected from boulder and outcrop, returning anomalous gold values to 0.335g/t Au.
In September 2017, MEK optioned the Clark's Brook Property to Sokoman Iron Corp. (now Sokoman Minerals Corp. ("Sokoman")) who immediately completed a Phase 1 drill program (515 meters) in an effort to locate in situ mineralization similar in tenor to the surface sampling at the CBE Zone. The program was a success in that all holes intersected gold mineralization similar in style and tenor to the surface float. In February 2018, Sokoman completed a second phase, three-hole (594 meter) diamond drill program. This program was also successful in that it expanded the extent of gold mineralization identified by the initial phase of drilling. A third and final, three-hole (1,209 meter) drill program was conducted in August 2019 where the drilling was conducted at a different orientation to drill the center of a magnetic low in an attempt to cut deeper mineralization. All three programs were successful in cutting intervals of vuggy, chalcedonic, quartz veining with 1-3% disseminated pyrite, minor arsenopyrite and very minor stibnite. Intercepts of 3.74g/t Au over 3.20m have been attained.
The Technical Report recommends that Cellstop conduct a $100,400 Phase 1 exploration program of mapping, prospecting coupled with rock and soil sampling on the Property. The program will focus on evaluating the entire Clark's Brook Property to define new areas of the gold mineralization. The mapping program will focus on interpreting the relationships of the pyrite/arsenopyrite mineralization to structure or alteration. Soil sampling orientation surveys using various soil sampling techniques and analysis will be completed in the areas of known gold mineralization and new showings.
In order to maintain the Option Agreement in good standing, Cellstop must issue an aggregate of 1,500,000 common shares of Cellstop and make cash payments totalling $225,000 over the course of a three year period. If Cellstop does not make any or all of the cash payments or issue any or all of the common shares, it will be in default under the Option Agreement and all right and title to the Clark's Brook Property shall remain with MEK. If the option is exercised in accordance with the terms of the Option Agreement, Cellstop will reserve to MEK a 2% net smelter royalty (the "NSR") on the mineral claims, provided, however, that Cellstop shall have the right at any time to purchase from MEK 1% of the NSR in consideration for a one time payment of the sum of $1,000,000.
In conjunction with the execution of the Option Agreement, Cellstop intends to make an application to voluntarily delist its common shares from trading on the NEX board of the TSX Venture Exchange ("TSXV") and concurrently make an application to list the common shares for trading on the Canadian Securities Exchange ("CSE"). The application to voluntarily delist from the TSXV will require approval from the majority of the minority of Cellstop's shareholders in accordance with the requirements of the TSXV. The application to list on the CSE will require majority approval of Cellstop's shareholders in accordance with the requirements of the CSE.
In order to satisfy the listing requirements of the CSE and to finance Cellstop's obligations under the Option Agreement and the Phase 1 exploration program, Cellstop will be required to complete a non-brokered private placement of a minimum of 7,166,667 units (each, a "Unit") and a maximum of 10,000,000 Units at a price of $0.06 per Unit. Each Unit shall be comprised of one common share in the capital of Cellstop and one common share purchase warrant. Each warrant shall entitle the holder to purchase one common share at a price of $0.10 per share at any time within 18 months of the date of issuance of the warrant. All of the securities to be issued under the private placement will be subject to a four month resale restriction.
Cellstop also plans to complete a debt settlement with three directors and officers and eight arm's length creditors (the "Debt Settlement") to enable Cellstop to satisfy the working capital listing requirements of the CSE. The Debt Settlement will result in an aggregate of $479,399.82 of indebtedness being retired in consideration for the issuance of 7,989,997 Units at a price of $0.06 per Unit (same terms as the Units issued under the private placement). The Debt Settlement will not result in the creation of new insiders or a new control person. The Debt Settlement remains subject to the approval of the CSE in conjunction with Cellstop's intended application to list the common shares for trading on the CSE.
The completion of the acquisition of the Clark's Brook Property is subject to a number of conditions precedent including, without limitation, all director, shareholder, securities and regulatory approvals and acceptances (as required) and all third party consents (as required) having been obtained and the completion of due diligence on the Clark's Brook Property. In particular, if Cellstop is not able to complete the private placement and the Debt Settlement, obtain necessary shareholder approvals in accordance with the respective requirements of the TSXV and the CSE and satisfy the listing requirements of the CSE, then it will not be able to satisfy its obligations under the Option Agreement and the Phase 1 exploration program and Cellstop will not be able to exercise the option under the Option Agreement. Cellstop's common shares would then remain listed on the NEX board of the TSXV.
Assuming that Cellstop satisfies all conditions precedent to the completion of the transactions discussed in this press release, Cellstop plans to change its name to General Gold Resources Inc. immediately prior to the listing of its common shares on the CSE.
Trading of the Cellstop's common shares on the NEX board of the TSXV has been halted and will remain halted until Cellstop has obtained all necessary approvals to proceed with the voluntary listing from the NEX board of the TSXV and the concurrent application to list its common shares on the CSE. Further details regarding the transactions discussed in this press release will be available in Cellstop's listing statement being prepared in conjunction with its application to list the common shares on the CSE. If all necessary approvals are obtained, the listing statement will be posted under the Cellstop's profile on SEDAR prior to the commencement of trading on the CSE. Cellstop will issue a news release as soon as further details are available regarding the transactions discussed in this press release and the resumption of trading.
Garry Clark, P. Geo., of Clark Exploration Consulting, is the "qualified person" as defined in NI 43-101, who has reviewed and approved the technical content in this press release.
About Metals Creek Resources Corp.
Metals Creek Resources Corp. is a junior exploration company incorporated under the laws of the Province of Ontario, is a reporting issuer in Alberta, British Columbia and Ontario, and has its common shares listed for trading on the Exchange under the symbol "MEK". Metals Creek has earned a 50% interest in the Ogden Gold Property from Newmont Corporation, including the former Naybob Gold mine, located 6 km south of Timmins, Ontario and has an 8 km strike length of the prolific Porcupine-Destor Fault (P-DF). In addition, Metals Creek has signed an agreement with Newmont Corporation, where Metals Creek can earn a 100% interest in the past producing Dona Lake Gold Project in the Pickle Lake Mining District of Ontario.
Metals Creek also has multiple quality projects available for option in Ontario and Newfoundland which can be viewed on the Company's website. Parties interested in seeking more information about properties available for option can contact the Company at the number below.
Additional information concerning the Company is contained in documents filed by the Company with securities regulators, available under its profile at www.sedar.com.
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.
Alexander (Sandy) Stares, President and CEO
To view the source version of this press release, please visit https://www.newsfilecorp.com/release/60775