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Sparton
Resources Inc. (SRI) (the "Company") is pleased to announce that
its wholly-owned subsidiary, Sparton Energy Inc. ("SEI") has completed
a $1.7 million financing provided by an arm's length third party (the
"Lender") by way of a loan (the "Loan"). The proceeds of the Loan will
be used to complete the acquisition of a further 34% share interest in
Linxing 306 Huajun Coal Co. Ltd. Lincang City ("Huajun"), which owns
the Huajun coal and germanium producing operations in Yunnan, China.
This will result in SEI taking over control of the operations and cash
flow at Huajun. SEI has completed the sourcing of experienced technical
and financial staff to effect a smooth transition of the operational
and management changes.
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The Loan is for a principal amount of $1.7 million
evidenced by a debenture and will carry interest at 17.6% annually
payable on a quarterly basis for 18 months and is repayable on or
before maturity on April 23, 2011. The Loan will be repaid out of the
proceeds from a future financing.
The Loan can be prepaid at any time prior to 30 days of
maturity without penalty. Within 30 days prior to maturity, the parties
can each elect for the repayment of the principal in full plus $425,000
in cash. In the event no such election is made, the Lender can elect to
require transfer of SEI's 34% interest Huajun acquired with the
proceeds of the Loan in full satisfaction of the amounts owing under
the Loan. In addition, if at any time the board of directors of SEI
formally authorizes a going public transaction of SEI and so long as
none of the elections described above has been made, the Lender shall
have the right to convert the debt owed under the Loan in the capital
of SEI in an amount equal to 150% of the then outstanding principal
amount on the Loan, subject to all applicable regulatory approval.
SEI, the Company and another subsidiary of the Company
are providing security for the Loan in the form of a guarantee backed
by the Huajun shares, SEI's interest in its equipment, inventory and
intangible assets and certain other assets of the Company.
Quam Limited has agreed to extend the repayment date of
the US$2 million bridge loan made to SEI to April 23, 2011, provided
that the US$500,000 be repaid by September 30, 2009.
This press release contains "forward-looking
statements" within the meaning of applicable Canadian securities
legislation. Generally, forward-looking statements can be identified by
the use of forward-looking terminology such as "plans", "expects" or
"does not expect", "is expected", "budget", "scheduled", "planned",
"estimates", "forecasts", "intends", "anticipates" or "does not
anticipate", or "believes", or variations of such words and phrases or
state that certain actions, events or results "may" , "could", "would",
"might" or "will be taken", "occur" or "be achieved". Forward-looking
statements are subject to known and unknown risks, uncertainties and
other factors that may cause the actual results, level of activity,
closing of transactions, performance or achievements of the Company to
be materially different from those expressed or implied by such
forward-looking statements, including but not limited to: risks related
to exploration and development, the environment, local and foreign
government regulation, currency fluctuation infrastructure, capital
markets and additional funding requirements and the departure of key
executives as well as those factors discussed in the Company's
documents filed on SEDAR (www.sedar.com).
Although the Company has attempted to identify
important factors that could cause actual results to differ materially
from those contained in forward-looking statements, there may be other
factors that cause results not to be as anticipated, estimated or
intended. There can be no assurance that such statements will prove to
be accurate, as actual results and future events could differ
materially from those anticipated in such statements. Accordingly,
readers should not place undue reliance on forward-looking statements.
The Company does not undertake to update any forward-looking statements
that are contained herein, except in accordance with applicable
securities laws. Further information on Sparton Resources Inc. is
available at www.sedar.com.
This news release and the information contained
herein does not constitute an offer of securities for sale in the
United States and securities may not be offered or sold in the United
States absent registration or exemption from registration.
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.
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