CASTLE RESOURCES SIGNS LETTER OF INTENT TO ACQUIRE
RIGHTS TO A MAJORITY LAND POSITION WITHIN THE COBALT ONTARIO SILVER CAMP: ONE
OF THE MOST PROLIFIC SILVER MINING CAMPS IN MODERN HISTORY
� Historic Cobalt Mining Camp produced more than 445 million oz silver, 45
million lbs cobalt
� District-scale exploration opportunity on previously unconsolidated 3,083 ha
land package
� Near-term potential for mine rehabilitation , tailings production and
additional acquisitions
January 14, 2008 � Toronto � Castle Resources Inc. (�Castle� or the �Company�)
(TSX Venture: CRI)announced today that it has signed a Letter of Intent (LOI),
dated effective December 4, 2007 with Legends of Cobalt Corporation (�LCC�), a
private Ontario company, and Dr. Paul Adams, Mr. Gino Chitaroni, Ms. Carmen
Diges, Mr. Jonathan Rae and Mr. Derek Zoldy, five sole shareholders of LCC (the
�LLC shareholders�), to acquire all of the issued and outstanding shares of LCC
from the LCC Shareholders. The total consideration paid by Castle to the LCC Shareholders
will be the issuance by Castle of 18-million common shares in the capital of
Castle. All LCC shareholders hold an equal 20% LLC and are Ontario residents.
The transaction is subject to due diligence and regulatory approval.
The primary asset of LCC is an option to acquire any or all of a claim package
that covers the majority of the Historic Cobalt Mining Camp of northeastern
Ontario, one of the most prolific silver mining camps in modern history. The
Cobalt Mining Camp began operations in 1903, producing more than 445 million
ounces of silver, along with more than 45 million pounds of cobalt and
significant base metal byproducts, from more than 100 underground mines through
the 1980s. The claim package under option to LCC includes more than 50 of those
past-producing mines, including four mines that produced in excess of 40
million ounces of silver. Ore from the district averaged head grades of 20 to
25 ounces per ton (oz/t) silver and was often recovered as remarkably large
specimens of �native silver�.
Castle President and CEO Stephen Wallace stated, �We are very excited by the
potential of this opportunity. This acquisition will strengthen the Company,
giving it presence in two major silver camps, Cobalt and Zacatecas. Our
objective at Cobalt will be to quickly assess the rehabilitation of the
historic producing mines, resume exploration on the advanced targets developed
by Agnico-Eagle Mines Limited (�Agnico-Eagle�) in the 1980s while taking
advantage of the opportunity to take a �district-scale� view, exploring
orebodies that cut across historic claim boundaries within the camp. We believe
that the land package has the potential both for large underground operations,
as well as for bulk-tonnage open-pit mining scenarios.�
In its last decades of operation, district production was led by Silverfields
Operating Corporation (a subsidiary of Teck Corporation), Agnico-Eagle, and
Canadaka Mines Ltd. The 3,083-hectare claim package under option to LCC was
assembled by Agnico-Eagle in the 1980s and was later sold to Blackstone
Development, Inc. (�Blackstone�), a private Ontario company. The Cobalt area
has significant infrastructure, including roads, rail, water, and power. It is
politically friendly to mining and home to a skilled workforce. At least some
of the underground workings are likely to be useful, at least
for exploration purposes.
Castle management believes that the district has considerable economic
potential for its silver, cobalt, and base metal by-products. Prior to the
consolidation of the area, modern and district-scale exploration techniques
were never used within the camp, due to the fractured nature of its historical
ownership. Most of the area mines were relatively shallow (less than 600 feet
below surface) and remain untested at depth.
The claim package under option to LCC includes several advanced projects that
were under development by Agnico-Eagle prior to its 1990 decision to conclude
its operations at Cobalt. These include the Penna Mine, where a 1,200-foot
shaft was completed in 1988, which is adjacent to the Langis Mine, a former
10-million ounce silver producer. Exploration records indicate that the
Penna-Langis vein system is thought to be 3,000 feet in strike length with a
vertical extent of 850 feet, featuring bonanza grades and widths. Historic
drill results of this system include silver intercepts of 31.0 feet of 39.0
oz/t, 11.0 feet of 61.0 oz/t, and 5.1 feet of 51.8 oz/t. A second advanced
target is the Peterson Lake Mine, where a ramp
was under development to access a 1.84-million ounce (92,275 tons grading about
20 oz/t) historic silver
resource.
There may also be potential for near-term revenue-generating operations at
Cobalt through the processing of on-surface, mineralized mine tailings from
several locations on the optionable claims. According to a report titled
�Cobalt Mining Camp Tailings Inventory - Cobalt, Ontario� there are more than
14 million tons of mine tailings within the camp. Based on this report it is
believed that as much as 8 to 10 million tons of these tailings are on the
optionable claims, including one million tons averaging 3.6 oz/t silver that
were reported by Agnico-Eagle. This exploration target has not been verified by
Castle and the potential quantity and grade is conceptual in nature. At present
there has been insufficient exploration to define a mineral resource and it is
uncertain if further exploration will result in the discovery of a mineral
resource.
After closing, Castle will embark on a major data compilation effort, restart
exploration on the most advanced-stage projects, investigate the feasibility of
processing on-surface tailings, and explore the possibility of bulk-tonnage
mining scenarios. The Company also plans to pursue the acquisition of
additional mineral rights and processing capabilities opportunities within the
camp.
In addition to the significant silver potential, the camp has a history of
cobalt mining as both a primary metal and silver mining by-product. At the
beginning of 2006 the average offer spread cobalt price stood was US$12 per
pound and by 2007 the price had more than doubled to US$25 per pound. By early
2008 the price had risen to more than US$41.00 due increased production of
batteries for mobile phones and hybrid cars as well as supply constraints following
a moratorium on the export of raw concentrates from the Democratic Republic of
the Congo in October 2007. To conduct this exploration and development the
Company plans to conclude a financing concurrent with the completion of the
agreement with LCC. In addition, the Company is preparing a Filing Statement to
explain the full nature of the transaction and a NI 43-101 report both which
will be filed on SEDAR when regulatory approval is received.
All geological data and resource estimates quoted herein are based on prior
data and reports obtained and prepared by previous operators and information
provided by LCC or located in the public domain. The Company has not completed
the work necessary to verify the mineral resource estimates. The Company is not
treating the mineral resource estimates as NI 43-101 defined resources verified
by a qualified person. The historical estimates should not be relied upon.
These properties will require considerable further evaluation which Castle�s
management and consultants intend to carry out in due course.
About Castle Resources
Castle Resources Inc. is a Toronto-based junior mineral exploration company
focusing on high-quality advanced exploration projects in Mexico. The Company's
initial focus is on silver exploration and development in Zacatecas, Mexico,
one of the most prolific silver camps in Mexico and the world. Management's
goal is to quickly advance current projects and to seek additional
opportunities to continue to add value for shareholders. For more information about
Castle, please visit the Company�s website at www.castleresources.com.
Except for historical information contained herein, this news release contains
forward-looking statements that involve risks and uncertainties. Actual results
may differ materially. Factors that might cause a difference include, but are
not limited to: changes in the worldwide price of mineral commodities, general
market conditions, risks inherent in mineral exploration, risks associated with
development, construction and mining operations, the uncertainty of future
profitability and the uncertainty of access to
additional capital. The Company will not update these forward-looking
statements to reflect events or circumstances after the date hereof. More
detailed information about potential factors that could affect the financial
results is included in documents filed
from time to time with Canadian securities regulatory authorities by the
Company.
The TSX Venture Exchange has not reviewed and does not accept responsibility
for the adequacy or accuracy of this release.
Contact Information:
Stephen Wallace P.Geo.
President and Chief Executive Officer
(416) 366-4100
Maurizio Fava
Investor Relations
(416) 917-1812