July 14, 2011; Ottawa, Ontario: Melkior Resources Inc. (“Melkior” or the “Company”) (TSX VENTURE: MKR) previously announced it had entered into a Letter of Intent dated September 1, 2010 with Green Swan Capital Corp. (GSW.H – NEX) (“Green Swan”) whereby Green Swan would acquire certain assets from Melkior, with the intention that such acquisition would constitute Green Swan’s QT. Melkior and Green Swan are pleased to announce the signing of a fresh binding Letter of Intent (“LOI”) which replaces the earlier agreement between them in its entirety.
Under the LOI, Green Swan can acquire up to a 70% interest in the mining areas commonly known as the Riverbank and Broke Back claims (together, the “Claims”) from Melkior. The Claims are located in the James Bay Lowlands, Ontario, and consist of 69 unpatented claims covering approximately 14,784 hectares (36,532 acres). The Claims consist of two groups. The Broke Back group is located approximately 10 kilometres north of the Noront Resources Limited Eagle’s Nest Nickel deposits. It is contiguous with the Noront claims. The Cliffs Natural Resources Inc. chromite deposits are located approximately 10 kilometres southeast of the Broke Back property. The Riverbank claims are located within a major regional gravity anomaly immediately west of Melkior’s 100% owned East Rim claims.
No exploration activity has been carried out on the Claims, save for a detailed 1659.5 line kilometre versatile time domain electromagnetic (VTEM) survey.
The LOI, to be replaced by a formal option and joint venture agreement, allows Green Swan to earn up to a 70% interest in the Claims, subject to a Gross Overriding Royalty (“GORR”). Green Swan may earn an initial 51% interest (“Option1”) in the Claims by making cash payments to Melkior of $25,000, issuing in favour of Melkior 1,500,000 common shares of Green Swan, issuing in favour of Melkior 750,000 warrants (the “Warrants”), and incurring a gross amount of $1,000,000 in eligible exploration expenditures on the Claims before December 31, 2014 (the “Work Program”). The Warrants are exercisable for a period of 12 months at a price of 15 cents per common share and for a further 12 month period at a price of 25 cents per common share, and have an acceleration clause should Green Swan’s shares trade above 30 cents for 20 consecutive trading days.
If Melkior carries out any exploration activity on the Claims before the closing of the QT, then by December 31, 2011 Green Swan must reimburse Melkior for the costs of such activity, plus a 10% management fee, which reimbursement and management fee will be deducted against the Work Program.
Upon exercise of Option1 outlined above, Green Swan will have to right to elect to proceed with Option2, under which Green Swan would have the right to earn an additional 19% interest in the Claims by incurring additional exploration expenditures totaling a further $1,000,000 over an additional 24 month time frame. Green Swan must advise Melkior within 20 months of the completion of Option1 as to whether it wishes to incur the additional exploration expenditures of $1,000,000 and a failure to give such notice will trigger a payment from Green Swan to Melkior in the amount of $25,000.
On the completion of Option2, Green Swan will own 70% of the Claims, and an industry standard joint venture will immediately be created, pursuant to which each of Green Swan and Melkior will contribute its proportionate share of all expenditures related to the Claims.
Melkior is a exploration company with active exploration projects in West Timmins and the Mc Faulds “Ring of Fire” areas of Ontario. Melkior also holds a 49% interest in the Delta Kenty nickel-copper-platinum-palladium deposit in Ungava and has several other gold properties in Ontario and Quebec.
For more information:
Melkior Resources Inc.
Tel: 613.721.2919 ext 0
E-mail: [email protected]
Neither 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.
This press release may contain forward-looking statements that are subject to known and unknown risks and uncertainties that could cause actual results to vary materially from targeted results. Such risks and uncertainties include those described in Melkior’s periodic reports including the annual report or in the filings made by Melkior from time to time with securities regulatory authorities.