Nevada Sunrise (TSXV:NEV) is pleased to announce that it has entered into a 90-day due diligence period related to an option to purchase the Coronado property (“Coronado”, or the “Property”), located in the Tobin Sonoma Range of Pershing County, Nevada, approximately 30 miles (48 kilometres) southeast of Winnemucca.
About Coronado
Coronado currently consists of approximately 109 unpatented claims totaling approximately 2,180 acres (882 hectares) located over an interpreted trend adjacent to the historic Big Mike copper mine. Big Mike was discovered in the 1930s when a shallow, oxidized portion of the deposit was located by prospectors. The area was explored further in the late 1960s by Cerro Corp. and a deeper (greater than 300 feet, or 91 metres) high-grade massive sulphide lens was discovered by drilling at Big Mike. In 1970, Ranchers Exploration and Development Company (“Ranchers”) developed the high-grade portion of the deposit with a small open pit mine that produced approximately 25 million pounds of copper in 100,000 tons of ore grading 10.5% copper, which was shipped directly to a smelter in West Germany. Heap leaching of lower-grade disseminated copper ore was also carried out by Ranchers; approximately 300,000 tons of mineralized rock were treated. Historical sampling also shows the presence of cobalt at Big Mike, with values in the deposit ranging up to 2,500 parts per million cobalt, or 0.25% (Rye et al, Economic Geology, Vol. 79, 1984).
Nevada Sunrise believes that other hidden volcanogenic massive sulphide (“VMS”) deposits could exist at Coronado that would have escaped detection by historical exploration methods. During the 90-day due diligence period, Nevada Sunrise will commission Geotech Ltd. of Aurora, Ontario, Canada to fly a Vertical Transient Electromagnetic (“VTEM”) airborne survey over the Property. If results of the VTEM survey warrant, Nevada Sunrise will exercise its right to proceed to a definitive agreement for Coronado.
“Nevada Sunrise has received a unique opportunity to search for blind VMS deposits within a greenstone belt in Nevadathat remains underexplored,” said Warren Stanyer, President and CEO of the Company. “We are fortunate to be the first company to employ a highly-effective exploration technique such as VTEM to an area that has been overlooked for this style of mineral deposit.”
Theodore DeMatties, CPG, PG, is the Company’s designated Qualified Person for this news release within the meaning of National Instrument 43-101 and has reviewed and approved the technical information contained herein. Readers are cautioned that some of the technical information described in this news release is historical in nature; however, the information is deemed credible and was produced by professional geologists of the eras discussed. Mineralization located on adjacent properties by historical exploration may not be present on Coronado.
Details of Private Placement
In conjunction with the proposed Coronado option to purchase, Nevada Sunrise wishes to announce a private placement (the “Offering”) of up to $500,000, consisting of 3,333,333 units (the “Units”) at a price of $0.15 per Unit, each Unit consisting of one common share of the Company and one common share purchase warrant (a “Warrant”). Each Warrant will entitle the holder to purchase one common share at a price of $0.25 (a “Warrant Share”) for a period expiring on the earlier of three years following the closing date of the Offering and, subject to the issuance of notice by the Company in the manner provided for in the subscription agreements for the Offering, the day which is 30 days after the date that the volume weighted average trading price of the common shares of the Company on the TSX Venture Exchange (the “TSXV”) exceeds $0.40 per share over a period of 10 consecutive trading days.
Finder’s fees may be payable to parties at arm’s length to Nevada Sunrise that have introduced the Company to certain subscribers participating in the Offering. Proceeds of the Offering will be used for exploration expenses on the Company’s Nevada properties, and for general working capital. The Offering is subject to acceptance of the TSXV.
Details of Coronado Agreement Terms
Nevada Sunrise has negotiated the principal terms for the acquisition of a 100% interest in Coronado, subject to a 2.0% net smelter returns royalty (“NSR”). The acquisition is subject to the negotiation and execution of a definitive agreement, which Nevada Sunrise will only proceed with if it is satisfied with the results of its due diligence review. The definitive agreement will provide Nevada Sunrise with the ability to acquire the interest in Coronado in consideration for cash and share payments, and minimum exploration expenditures as described below (all dollar amounts listed are in US dollars):
Schedule of Payments and Expenditures
| Payment Due Dates | Cash
Payments |
Share
Payments |
Minimum
Exploration Expenditures |
| Within 5 business days of execution
of definitive agreement |
$30,000 | 200,000 | $50,000 |
| On or before
1st Anniversary of definitive agreement |
$35,000 | 300,000 | $100,000 |
| On or before
2nd Anniversary of definitive agreement |
$40,000 | 400,000 | $150,000 |
| On or before
3rd Anniversary of definitive agreement |
$50,000 | 500,000 | $300,000 |
| On or before
4th Anniversary of definitive agreement |
$1,250,000 | 600,000 | $500,000 |
| Totals: | $1,405,000 | 2,000,000 | $1,100,000 |
Upon execution of a definitive agreement, Nevada Sunrise will have the right to accelerate the timing of cash and share payments to the vendor at its discretion. If minimum exploration expenditures, which include property maintenance costs, are exceeded in any year the excess expenditures will be credited to a succeeding year. The vendor shall retain a 2.0% NSR royalty applicable to the Property, half of which can be purchased by Nevada Sunrise (i.e., 1.0%) at any time for $1,500,000, minus any advance royalty payments made by the Company. An advance royalty payment of $500,000would be payable to the vendors upon completion of a feasibility study. Should additional staking be required at Coronado, the vendors shall have a right of first refusal to perform the work. A 2.5 mile (4 kilometres) area of interest clause applies to the claims boundaries within the Property. On the 4th Anniversary payment due date, if the cash spot price of copper as quoted on the London Metal Exchange exceeds $4.00 per pound, the payment due of $1,250,000 will be increased to $1,500,000.
The terms of a definitive agreement for Coronado will be subject to approval of the Board of Directors of Nevada Sunrise, and the transaction is subject to acceptance by the TSXV.
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