MinKap Enters into Property Acquisition Agreement for the Breccia Gold Property, Idaho, USA

TORONTO, ON / ACCESSWIRE / February 18, 2020 / Minkap Resources Inc. (TSXV:KAP) (“MinKap” or the “Company“) is pleased to announce that it has entered into an arm’s-length non-binding letter of intent (the “LOI“) dated February 3, 2020 with DG Resource Management Ltd. (“DGRM“). The LOI sets out the terms of a proposed transaction pursuant to which the Company will acquire a 100% undivided interest in the Breccia Gold Property (“Breccia” or the “Property“) located in Idaho, USA (the “Proposed Transaction“).

The Property

The Property is located approximately 40 km southwest of Salmon, Idaho and is accessible via paved highway and a network of well-maintained gravel roads. The Property hosts the historic Gahsmith Gold Mine (the “Gahsmith Gold Mine“), which is central to a significant low-sulphidation epithermal gold system. The Property consists of 80 claims covering approximately 1,650 acres within the Blackbird Mining District, and while host to the Gahsmith Gold Mine, is also contiguous to the south of the historic Musgrove Creek Mine.

Gold mineralization on the Property occurs within an approximately 1,800 m portion of the Meadows Fault Zone (“MFZ“) (Figure 1), with the northernmost showing referred to as the Lee Prospect, and the Breccia Gold Zone within the southern portion. Historic and recent exploration has shown the gold mineralization to be within an approximate 500 m long by 8 to 20m wide zone (the “Breccia Gold Zone“) of highly brecciated and oxidized host lithologies, proximal to the MFZ.

Figure 1 Location of Meadows Fault Zone and Historic Work.

The Breccia Gold Zone was exploited via at least eight adits during the 1930’s and early 1940’s, with several thousand tons of mineralized material extracted, targeting high-grade gold mineralization within quartz veins, hosted by a wide zone of brecciation. Shipments of hand-cobbed material from the Gahsmith Gold Mine reportedly ran as high as 34.3 g/t Au (1.0 oz/ton Au), with a cutoff grade of about 8.23 g/t (0.24 oz/ton Au), however the Company has not been able to confirm this data under the conforms of NI 43-101 standards.

The Property underwent some exploration in the mid- 1980’s that included metallurgical testing and limited drilling, as well as surface and underground sampling. In 1987 a bulk sample of 4,621 tons of gold bearing material was collected from a bulldozer cut along a 200 ft section of the Breccia Gold Zone north of the South Adit. The material was reported to have had an average grade of 0.335 oz/t Au, however the Company has not been able to confirm those assays under the conditions of adhering to NI 43-101 requirements.

Two drill holes completed in 1985 tested the zone at depth, north of the South Adit. Though assay data for these holes is unavailable, inclined hole DH-1 intersected the Breccia Gold Zone from 200 to 300 ft, while vertical DH-2 continued within the Breccia Gold Zone for its entire 100 ft length.

Prospecting and surface sampling carried out by DGRM in 2018 and 2019, suggests the gold grades are relatively continuous across the Breccia Gold Zone, with higher grades associated with quartz vein and replacements, which generally occur near the center of the zone. In total, 39 grab samples were collected from the Breccia Gold Zone in 2018, these returned an arithmetic average of 6.33 g/t Au and 3.01 g/t Ag. Further sampling in 2019 included a total of 52 chip and grab samples, these returned an arithmetic average of 4.44 g/t Au and 4.83 g/t Ag (see Table 1 above for ranges and average grades). The Company cautions investors that grab samples are selected samples and not necessarily representative of mineralization hosted on the Property.

Table 1: Summary of Gold content for the 2018 and 2019 Grab Samples, Breccia Gold Zone

Au (g/t) Range

2018 Totals

2019 Totals

<0.1

6

12

0.1 – 1.0

10

12

1.0 – 5.0

12

14

5.0 – 10

2

8

>10

9

6

Upon completion of the 2018 program, samples were palletized and shipped via freight by Salmon River Stages to ALS in Reno, Nevada. Samples were bagged in the field using cloth bags, recorded and assigned a sample number. Analysis consisted of multi-element ICP (ME-ICP61) and gold by fire assay (Au-ICP22 and Au-GRA22).

Upon completion of the 2019 program, both rock and soil samples were confirmed, put into pails and labelled for shipping. Samples were collected in polyurethane sample bags, recorded and assigned a sample number. Soil samples were shipped out of Cutbank, Montana via FedEx ground transport to ALS in Reno, Nevada for multi-element aqua regia digestion (AuME-ST43). Rock samples were driven back to Edmonton, Alberta (DGRM’s head office) and then shipped via Purolator ground transport to Actlabs in Ancaster, Ontario for aqua regia multi element (1E3 (ICP-OES)) and fire assay (1A2-ICP)

ALS and Actlabs are commercial laboratories and completely independent of DG Resource Management Inc. ALS in Reno, Nevada and Actlabs in Ancaster, Ontario are both ISO/IEC 17025 accredited.

Figure 2: 15 m west of Adit 6. View to Southeast (Sample Y099086: 84.3 g/t Au).

“The opportunity to acquire and advance a significant gold asset such as Breccia, puts MinKap in the unique position of being able to explore a past producing gold mine at a time when precious metals are seeing near unparalleled interest. Historic work at Breccia has identified a significant, low sulfidation, epithermal gold system, which was tested by only a few drill holes, and several bulk samples; with the largest bulk sample having returned an average grade of 0.335 oz/ton Au,” stated Jonathan Armes, President of MinKap Resources Inc. “We are looking forward to the commencement of a spring/summer exploration program at Breccia, which will include a significant drill program aimed at confirming historic grades and widths of the gold mineralization.”

The nature and style of mineralization observed at the Breccia Gold Zone is characteristic of low sulfidation epithermal gold deposits. Some notable examples of this deposit type include Hishikari Japan, Round Mountain Mine Nevada, and Fruta del Norte, Ecuador.

Immediate exploration plans for the Property include ground geophysics and soil sampling, to be followed by a drill program anticipated to take place during summer months (permitting application has been submitted).

Proposed Transaction

Under the terms of the LOI, the Company may acquire a 100% interest in the Property by completing the following over a 4-year period:

  • Issuing an aggregate of 7,000,000 common shares (the “Consideration Shares“) and 7,000,000 common share purchase warrants (the “Consideration Warrants“) over a 2 year period to DGRM;
  • C$50,000 due on signing of the LOI;
  • C$25,000 due upon receipt of approval from the TSX Venture Exchange (the “Approval Date”);
  • C$100,000 due on the first anniversary from the Approval Date;
  • C$100,000 due on the second anniversary from the Approval Date;
  • C$200,000 due on the third anniversary from the Approval Date;
  • Issuing to DGRM a 2.5% net smelter return royalty (“NSR”) with the Company retaining an option to acquire 1.25% of the NSR for a cash payment of C$2,000,000; and
  • The completion of the Offering (as defined below).
  • A finders fee is payable on the transaction

The completion of the Proposed Transaction is subject to the execution of a definitive agreement and the receipt of all corporate and regulatory approvals, including that of the TSX Venture Exchange (the “TSXV“).

Concurrent Financing

The Company also announces a concurrent non-brokered private placement of up to 10,000,000 units (each, a “Unit“) of the Company at a price of $0.075 per Unit for aggregate gross proceeds of up to $750,000 (the “Offering“). Each Unit shall consist of one common share (each, a “Common Share“) of the Company and one Common Share purchase warrant (each, a “Warrant“). Each Warrant shall entitle the holder thereof to acquire one additional Common Share at an exercise price of $0.15 for a period of twenty-four (24) months from the date of issuance.

The Proposed Name Change

The Company also intends to change its name in conjunction with the Proposed Transaction to “Ophir Gold Corp.” or any such other name that is approved by the board of directors.

The TSXV has in no way passed upon the merits of the Proposed Transaction and has neither approved nor disapproved the contents of this news release.

Further details of the transaction contemplated by the LOI will be included in subsequent news releases and disclosure documents to be filed by the Company.

QP

Mr. Garry Clark P.Geo, (Exploration Manager and a director of the Company), a Qualified Person (“QP“) as defined by National Instrument 43-101, has approved the scientific and technical disclosure in this news release and prepared or supervised its preparation.

On behalf of the Board of Directors

MinKap Resources Inc.

For further information, please contact:

Jonathan Armes
President & CEO
Phone 1 (416) 708-0243

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 press release.

This press release contains forward-looking statements within the meaning of applicable Canadian and U.S. securities laws and regulations, including statements regarding the future activities of the Company. Forward looking statements reflect the current beliefs and expectations of management and are identified by the use of words including “will”, “anticipates”, “expected to”, “plans”, “planned” and other similar words. Actual results may differ significantly. The achievement of the results expressed in forward-looking statements is subject to a number of risks, including those described in the Company’s management discussion and analysis as filed with the Canadian securities regulatory authorities which are available at www.sedar.com. Investors are cautioned not to place undue reliance upon forward-looking statements.

SOURCE: MinKap Resources Inc.

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