RE: RE: Winston Lake
On June 29, 2011, the Company completed an option agreement (“the Formal Agreement”) with Orebot, Inc. ("Orebot") pursuant to which the Company may earn a 100% interest in the Winston Lake Property, which consists of 5 claims (53 claim units, or 848 hectares), located 145 km east of Thunder Bay, Ontario, with road access from Highway 17. The transaction, as amended on June 13, 2012, requires the Company to pay Orebot a total of $1,270,000 of which the Company has paid $40,000 and is expected to pay $20,000 on December 15, 2012, $50,000 on June 15, 2013, $300,000 on June 15, 2014, $360,000 on June 15, 2015 and $500,000 on June 15, 2016, failing which the Company will lose its rights to this property. Independent of the Orebot acquisition, the Company registered 547 units, or 8,752 hectares, of claims in the Winston Lake area, during 2011, and staked an additional 10 claims, in July of 2012, to protect high priority geophysical targets. Including the Orebot acquisition and the additional claims acquired, the Company has a total of 610 units, or 9,760 hectares, of contiguous claims in the area. None of these claims are subject to any NSR. The costs associated with both the Orebot-optioned property and the surrounding areas staked by the Company have been added to a single cost pool for accounting purposes.
The Company’s claims are situated in Winston and Pick Lake region, near Schreiber in North Western Ontario. They are understood to contain the zinc-rich Pick Lake volcanogenic massive sulphide deposit (VMS) and encompass the mining permit containing the similar grade Winston Lake and Zenmac VMS deposits mined out by the late 1990's. According to Ontario Government figures reported by Inmet Mining in 1998, the Pick Lake Deposit has an historical non-compliant reserve estimate of 600,000 tonnes at 21.2% Zinc, 1% Copper, potentially making this the highest grade zinc resource known in Ontario. This tonnage and grade was not verified by the Company and cannot be relied upon as a current resource. The Company’s management believes that the surrounding Winston Lake area has potential for further discoveries in addition to its historical deposits. Geotech Ltd. was contracted in July of 2011 to fly a helicopter–borne VTEM system and mag survey over the property. The VTEM system was selected because of its reported recent successes in identifying more deeply buried targets, a feature of both the Pick and Winston Lake deposits. The 1,060 line-km survey was completed in the latter half of August 2011 over the 95.4 sq. km property. On August 30, 2011, JVX Ltd., a contracting and consulting geophysical company from Richmond Hill, Ontario, was contracted to assess and interpret the quality of the anomaly picks resulting from the Geotech survey and also aid in the selection of appropriate ground geophysical follow-up and possible drill targets. In January of 2012, the Company received the final interpretation report from JVX Ltd. Several VTEM anomalies were encountered. Silvore Fox recently hired Elizabeth Vida, P.Geo., as its Exploration Manager, to manage all of SFX’s properties and to initially perform the on-site investigations of these high priority VTEM anomalies and to determine their viability as potential drill targets, with particular focus on anomalies located within claims optioned from Orebot. Ms. Vida was aided by Marc Gaudreau of Keystone Associates Inc. in the ground checking of these VTEM anomalies last October, 2012 and collected approximately 50 grab samples for assay. Dr. Yang of Beijing Donia Resources Co. Ltd. also visited the site in July-August, 2012 and initiated a preliminary investigation of a few of the VTEM anomalies southwest of Winston Lake mine in the Pick Lake Region and northwest of the Winston Lake Mine. He collected 72 grab samples for assay. Using this information, Ms. Vida is currently developing a drill program. The other high priority VTEM anomalies, all located on 100% owned SFX property, will be ground-checked for potential drill targets next summer and a potential drill program planned for those targets.