Natan Resources (TSXV:NRL) and Critical Elements (TSXV:CRE) to Explore Duval Lithium Property in Quebec

“The Duval project represents a great opportunity for Natan Resources, Critical Elements and the shareholders of both entities. The hard work of companies such as Critical Elements and Nemaska Lithium have unveiled the potential of the Lac des Montagnes volcano-sedimentary belt as one of the most important spodumene lithium hard rock deposit in the world, both in volume and grade.”, stated Michael Blady, CEO, “This acquisition has given Natan a great address, adjacent to Nemaska’s Whabouchi property, which is considered by many the premier spodumene lithium deposit in North America. We are excited to confirm the great potential of this property and will be working swiftly and diligently to plan and execute a program this summer.”

“This option agreement with Natan will allow the Duval property to be explored in detail for a Lithium Pegmatite discovery. Critical Elements is currently focused on the development of its Rose Lithium-Tantalum project. With Natan farming into the Duval project, shareholders of both companies will be able to benefit from successful exploration of a highly prospective project,” stated Jean-Sébastien Lavallée, President and CEO, Critical Elements.

The Duval property is comprised of two blocks totaling 46 claims, with a total area of 2,458.92 hectares covering a distance of approximately 7 kilometres along a SW-NE axis. It lies two kilometres south of the Route du Nord and is served by a Hydro Quebec power line and a gravel road, which cross the southern half of the block in a southeasterly direction. The Duval main block can be accessed by the road leading to Lac des Montagnes and then by boat. An old winter road along the SE shore of Lac des Montagnes has been refurbished and can be used for winter drilling on the main block.

The property covers a large part of the regional volcano-metasedimentary unit, known to be the host for Nemaska Lithium's Wabouchi deposit and the Lemarre showings. The presence of this favorable lithology within the Company’s claims and being along strike from Nemaska’s successful exploration, increases the potential for the discovery of similar significant mineralization

Figure 1. Location of known lithium deposits and showings and location of Duval claims in the James Bay area of Quebec.

To view the graphic in its original size, please click here

TERMS OF THE TRANSACTION

Under the Agreement, Natan will earn its interest in Duval by way of a farm-in arrangement. The key terms of the Agreement are detailed below:

GRANT OF FIRST OPTION

Critical Elements hereby grants to Natan the exclusive right and option to acquire, on or before December 31, 2017 an initial 50% Earned Interest in the Property (the “First Option”) by issuing to Critical an aggregate of 19.9% of the common shares of Natan, by paying $15,000 cash and by incurring or funding Exploration Expenditures for a total amount of $750,000 on the Property, as follows:

a. paying to Critical $15,000 cash within a delay of five (5) days following the execution of this Agreement (non-refundable);

b. issuing to Critical 19.9% common shares of Natan Resources Ltd immediately following the receipt of the required approvals from the Exchange; and

c. incurring or funding Exploration Expenditures aggregating not less than $750,000 on the Property, of which an amount of $350,000 must be incurred or funded before December 31, 2016 and an amount of $400,000 before December 31, 2017;

GRANT OF SECOND OPTION

Subject to Natan having exercised the First Option in accordance with the Agreement, Critical hereby also grants to Natan the exclusive right and option to increase its undivided interest in and to the Property from 50% to 70% by paying to Critical an additional amount of $350,000, incurring or funding additional Exploration Expenditures of $1,250,000 and by delivering a NI 43-101 compliant resource estimate on the Property prepared by a Qualified Person independent of Natan and Critical, for the period commencing on the delivery of notice of the exercise of the First Option by Natan (the “First Option Exercise Notice”) and ending December 31, 2018, as follows:

d. on the date of delivery of the First Option Exercise Notice, paying to Critical an amount of $350,000, in cash or in common shares of Natan at the sole discretion of Natan;

e. on or before December 31, 2018, incurring or funding additional Exploration Expenditures for an amount of $1,250,000; and

f. on or before December 31, 2018, delivering the Resource Estimate to Critical.

MILESTONE PAYMENTS

Subject to Natan's right to withdraw from and terminate the First Option, Natan agrees to make the following milestone payments to Critical, payable at any time following the exercise of the First Option:

g. On the estimation of a drilled defined resource (NI 43-101 compliant) of 5,000,000 tonnes at a cut-off grade of 0.6% Li2O (all categories) a payment of CAD $500,000, payable in cash or in common shares of Natan at the sole discretion of Natan;

h. On the estimation of a drilled defined resource (NI 43-101 compliant) of 10,000,000 tonnes at a cut-off grade of 0.6% Li2O (all categories) a payment of CAD $750,000, payable in cash or in common shares of Natan at the sole discretion of Natan;

i. On the estimation of a drilled defined resource (Ni 43-101 compliant) of 15,000,000 tonnes at a cut-off grade of 0.6% Li2O (all categories) a payment of CAD $1,000,000, payable in cash or in common shares of Natan at the sole discretion of Natan; and

j. On the estimation of a drilled defined resource (NI 43-101 compliant) of 20,000,000 tonnes at a cut-off grade of 0.6% Li2O (all categories) a payment of CAD $1,500,000, payable in cash or in common shares of Natan at the sole discretion of Natan.

ROYALTY

Following the exercise of the First Option by Natan and in addition to the amounts paid, common shares issued and Exploration Expenditures incurred or funded by Natan under the First Option and thereafter under the Second Option, as applicable, Critical shall receive a royalty equal to 2% net smelter returns resulting from the extraction and production of any Minerals on the Property.

The Royalty, including the right of Natan to purchase a portion thereof (1%).

JAMES BAY LITHIUM RESOURCES

Table 1. Lithium resources of the James Bay area

DUVAL PROPERTY

The Duval property is located within the Opinaca Sub-province in Quebec, characterized by metagraywacke, migmatite, and granite. Polydeformed schists occur at the belt margins, whereas the interior portions are metamorphosed to amphibolite and granulite facies. Mineral occurrences within the Opinaca sub-province include rare metals within the peraluminous granites and associated pegmatites.