Desert Star Signs LOI to Acquire the Iron Butte Oxide Gold - Silver Project, Nevada
Desert Star Resources Ltd. |717 – 1030 West Georgia Street | Vancouver, British Columbia | Canada | V6E 2Y3
Telephone: (604) 628-5623 | www.desertstar.ca
Desert Star Signs LOI to Acquire the Iron Butte Oxide Gold - Silver Project, Nevada
Vancouver, B.C ., March 6 , 2017. Desert Star Resources Ltd. (TSX -V: DSR) (“ Desert Star ” or the
“Company”) is pleased to announce that it has entered into a Letter of Intent whereby it can earn 100%
interest in the Iron Butte oxide gold -silver project located in Ladner County, north -central Nevada,
approximately 60 kilometres south of Battle Mountain. Access and infrastructure to the project is excellent
with power lines and State maintained roads within 4 kilometres of the property.
Geology and Mineralization . Mineralization at the Red Ridge zone is outcropping at surface and
contributes to the majority of the historically estimated oxide gold-silver resources. Three additional zones
called the North Zone, South Zone and East Zone have all intersected similar styles of mineralization. Gold-
silver mineralization is believed to be controlled by a series of north-south, north-northeast and east-west
structures that host s ilicification and epithermal quartz -pyrite-gold-silver mineralization within
Pennsylvanian to Permian siltstones and argillites of the Cedars Sequence and Tertiary felsic volcanic rocks.
Mineralization is completely oxidized from surface up to 175 metres depth and continues as sulphides to
depths beyond 250 metres. Mineralization is also dissemin ated between veins, silicifi ed structures and
brecciated zones, and can occur as silicified breccia zones at the contact between volcanic and underlying
sedimentary rocks. Mineralization is thought to be epithermal in nature with some similarities to sediment
hosted Carlin type gold systems with jasperoids and opaline silica present.
Historical Work. Historical drilling was conducted between 1980 and 200 9 by Homestake, Cameco,
Newmont, Newcrest and C3 Resources, and included 211 reverse circulation (RC) drill holes totaling
31,614 metres. The results of the drilling indicate that a broad zone of gold-silver mineralization exists over
an area 2,900 metr es long, parallel to the range front, and 1,300 metres wide. Drilling to date has not
delineated the full extents of the mineralized zones nor has it tested the potential for sediment -hosted
mineralization at depth. Preliminary metallurgical work carried out by Aurelio Resources in 2009 consisted
of simple bottle roll tests conducted by ALS Chemex labs and indicate that the oxide material leaches while
the sulphide material does not. The project has remained dormant from 2010 until 2017.
Two previous operators on the project have completed historical non-43-101 compliant estimates: Aurelio
Resource Corp. in 2009, where no distinction between oxide and sulphide mineralization was made, and
Cleath in 2010, who reported estimates for separate oxide and sulphide domains (Table 1, 2).
Table 1: Aurelio 2009 unclassified historical resource estimate
Cut-off Tonnage Au Ag Total Au Total Ag
(ppm) (s.tons) (ppm) (ppm) (oz) (oz)
0.01 406,365,389 0.1398 2.7237 1,826,545 35,585,626
0.10 222,826,300 0.204 3.652 1,484,166 26,513,455
0.25 47,555,637 0.372 6.824 568,590 10,432,796
0.333 21,180,858 0.48 9.065 326,780 6,173,156
0.40 12,414,366 0.563 11.027 224,542 4,401,081
0.50 6,175,529 0.685 14.808 136,005 2,940,117
1.00 387,178 1.1157 14.08 14,402 175,269
Desert Star Resources
-2-
The Qualified Person has not completed sufficient work to verify these resource estimates. The Qualified Person has
not done sufficient work to classify the resource estimates as a current mineral resources and the issuer is not treating
the resource estimates as current mineral resources. These estimates do not use the categories set out in sections 1.2
and 1.3 of the National Instrument 43-101 as defined by the Canadian Institute of Mining, Metallurgy and Petroleum
(CIM), is not compliant with the NI 43 -101 and cannot be relied upon. These resource estimates are only relevant to
obtain a reference to Au and Ag mineralization potential present on the property. Additional drilling would need to
be completed in order to upgrade and verify mineral resource estimates as 43-101 compliant.
Exploration Upside Potential. Desert Star has mobilized field crews to expand the size of the Iron Butte
property. The Company will continue to compile the historical data to create a new robust geological model
on which to identify drill targets to be tested during H1 2017. Numerous untested exploration targets
present on the Property include:
Over 3 kilometres of additional strike length of mapped north-south, north-northeast and east-west
structures which host the gold-silver mineralization in the Red Ridge zone.
Over 1.5 kilometres of contact zone between the Tertiary volcanic rocks and basement sedimentary
rocks including several areas where structures intersect the contact.
Untested anomalous mercury rock samples in the south-eastern part of the project.
Potential across the property to delineate additional zones containing higher grade gold -silver
mineralized veins similar to those intersected within the Red Ridge zone, such as 1.52 metres @
7.48 g/t Au in NC-31 and 12.15 g/t Au in a rock chip sample from a road cut at Red Ridge
Expansion of gold -silver mineralization intersected in several drill holes at the East Zone that
remains open in all directions and further drill testing around the mineralized intercepts at the South
Zone.
Project Outlook. In addition to the exploration potential which could significantly increase the oxide gold-
silver mineralization at Iron Butte, Desert Star believes there is an excellent opportunity to determine the
economic viability of the existing oxide gold-silver mineralization identified to date by defining a NI 43 -
101 compliant resource, conducting metallurgical studies and ultimately producing a PEA on the project.
Table 2: Cleath 2010 unclassified historical resource estimate (0.3 g/t Au cut-off)
Tons (st) Au_ppm Oz Au
RED RIDGE
OXIDE 14,072,175 0.664 300,376
SULPHIDE 9,661,356 0.516 160,410
TOTAL 23,733,531 0.604 460,786
NORTH ZONE
OXIDE 641,179 0.656 13,523
SULPHIDE 6,182,878 0.663 131,877
TOTAL 6,824,057 0.663 145,400
TOTAL
OXIDE 14,713,354 0.664 313,899
SULPHIDE 15,844,234 0.574 292,287
TOTAL 30,557,588 0.617 606,186
Desert Star Resources
-3-
Vince Sorace, President and CEO of Desert Star states, “We see excellent potential to significantly increase
the oxide gold-silver mineralization at Iron Butte by drilling south of the Red Ridge mineralized zone as
well as the East and South Zones. An additional 3 kilometres of strike, along the same and similar, north-
south and east -west structures that host the gold -silver mineralization are currently under-explored with
little or no drilling to date.”
Letter of Intent Terms. The Letter of Intent provides for a 45 day exclusivity period, during which the
parties will endeavor to execute a definitive purchase agreement by March 31, 2017 and close the
transaction by April 17, 2017.
Under the terms of the Letter of Intent, Desert Star can earn a 100% interest in Iron Butte by making a total
of $ 1,000,000 USD in cash payments and issuing 1,500,000 shares in Desert Star over 6 years, in
accordance with the schedule set out in Table 3 below. If a positive production decision is made regarding
Iron Butte, Desert Star will pay a further $1,000,000 USD and issue an additional 500,000 Desert Star
shares. The vendor will also receive a $500,000 USD payment for every 1,000,000 ounces of gold
production and $500,000 USD payment for every 10,000,000 ounces of silver production at Iron Butte. The
vendor will also retain a 2.5% NSR subject to buy down provisions of $1,000,000 USD for the first 1% and
$1,000,000 USD for a n additional 0.5%. The closing of the transaction will be subject to T SX Venture
Exchange (“TSXV”) approval. Desert Star intends to pay a finder’s fee on closing, in accordance with
TSXV policies. All Desert Star shares issuable under the transaction will be subject to a four month hold
period.
Qualified Person. Rory Kutluoglu, B.Sc. P.Geo., a Qualified Person as defined by National Instrument 43-
101, has read and approved all technical and scientific information contained in this news release. Mr.
Kutluoglu is the Company’s Vice President Exploration.
About Desert Star
Desert Star is a Vancouver -based mineral exploration company focused on the identification, acquisition
and development of copper and gold projects located in top -tier mineral belts in the southwestern United
States that contain significant histo rical production, existing mining infrastructure and an established
mining culture.
Table 3: LOI Terms
Cash (USD) Shares Advanced Royalty
Payments (USD)
Within 5 days of TSX-V
approval of the
Definitive Agreement
$20,000 75,000
1st anniversary $50,000 125,000
2nd anniversary $75,000 200,000
3rd anniversary $100,000 250,000
4th anniversary $150,000 350,000
5th anniversary $200,000 500,000
6th anniversary $400,000
$24,000 (total annual)
advanced royalty payments
until production
Desert Star Resources
-4-
On behalf of the Board of
DESERT STAR RESOURCES LTD.
“Vince Sorace” .
Vince Sorace
President and CEO, Desert Star Resources Ltd.
For further information regarding Desert Star, please email [email protected] or visit our website at
www.desertstar.ca.
Neither the 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.