October 19, 2016: Pistol Bay Mining Inc. (TSX-V - PST; Frankfurt - OQS2) (“Pistol Bay” or the “Company’) and AurCrest Gold Inc. (“AurCrest”) (TSX-V: AGO) are pleased to announce that Pistol Bay has entered into a Letter of Intent (“LOI”) with AurCrest to acquire all the mining claims held by AurCrest in the Confederation Lake greenstone belt southeast of Red Lake, Ontario.
Advance Exploration Stage Zinc-Copper Properties in Confederation Lake
The AurCrest property comprises 108 mining claims with a total of 321 claim units with an area of 5,136 hectares (12,700 acres), being the Confederation Lake Property and the Fredart Lake Property. It covers a 31 kilometre length of the Confederation Lake greenstone belt. It includes two substantial mineral deposits and a number of mineralized drill intersections that are in need of follow-up drill testing. Mineralization on the property is all of Volcanogenic Massive Sulphide (VMS) type, dominated by zinc, copper and silver, with occasional associated gold values. In combination with the 100 percent optioned Dixie and Dixie 3 properties, the Company now controls 7,050 hectares (17,400 acres) containing most of the significant mineral occurrences over 43 kilometres of the total 60 kilometre length of the belt.
The Copperlode “A” or Fredart Zone deposit has a historical mineral resource of 425,000 tonnes grading 1.56% copper. This historical resource estimate does not comply with the standards of National Instrument 43-101 and has not been reviewed by a Qualified Person. The zone was drill-tested to a depth of approximately 200 metres over a length of 350 metres, and was reported as being open at depth. The area was also explored for molybdenum in the 1970s, and samples containing up to 1.46% Mo were reported. A diamond drilling program was carried out by AurCrest in 2010, in an attempt to expand the resource base by drilling down a possible easterly plunge in the area of an IP anomaly. A fence of five holes was drilled, without intersecting any significant mineralization. A borehole EM survey carried out on those drill holes in 2010 identified a strong off-hole conductor in two adjacent holes, with an interpreted conductive zone lying between the two holes. It is anticipated that this anomaly may represent the down-plunge extension of the Copperlode “A” zone, or possibly a new zone.
Pistol Bay is engaged in compiling data and re-appraising the AurCrest property with a view to planning an aggressive exploration program that will
generate new drill targets, as well as follow up existing target areas and known deposits. Under the terms of the LOI, Pistol Bay has the option to acquire a 100% interest in the AurCrest properties by paying AurCrest an aggregate of $250,000 and issuing an aggregate of 5 million common shares over four years with an initial payment of $25,000 and the issuance of 1 million common shares on closing, the payment of a further $25,000 within 90 days following closing and the payment of $50,000 and the issuance of 1 million common shares on each of the four anniversaries following closing. The transaction is subject to the consent of Glencore plc and is subject to the rights of Glencore plc in respect of the Confederation Lake Property including a 2% net smelter returns royalty in favour of Glencore plc. The transaction is also subject to TSX Venture Exchange approval. The transaction is anticipated to close within the next week.