Proposed Spin-Out Of Sugarloaf Peak Gold Project And Kay Royalties To Create Two New Companies

Proposed Spin-Out Of Sugarloaf Peak Gold Project And Kay Royalties To Create Two New Companies

TORONTO – Arizona Metals Corp. reported that it intends to create two new companies through the spin-out of the Sugarloaf Peak Gold Project and two newly-created royalties on its Kay Mine Project. The first company, expected to be named “Sugarloaf Gold Corp.”, will be transferred shares of the Company’s wholly-owned subsidiary, which holds Arizona Metals’ Sugarloaf Peak Gold Project. Sugarloaf has a historic estimate of 1,500,000 ounces of gold (defined in 1982). The deposit is open for expansion in all directions and recent metallurgical testing has demonstrated the potential for excellent recoveries in both oxide and sulphide mineralization.

The second company, expected to be named “Arizona Royalties Corp.”, will hold a newly-created 2% net smelter royalty (NSR) on any potential future mineral production at Arizona Metals’ Kay Mine Deposit, as well as a newly-created 2% NSR royalty on all future potential mineral production from any new deposits discovered through Arizona Metals’ ongoing exploration activities at the Kay Mine Project (collectively the “Royalties”).

Paul Reid, Executive Chairman, said, “The creation of these new companies will provide Arizona Metals’ shareholders an opportunity to be part of two new and exciting ventures. The Sugarloaf Peak Gold Project is a bulk-tonnage, open-pit target that has an historic estimate containing 1.5 million ounces of gold. This historic estimate provides a strong starting point for expansion, with only 1km of a 4km strike length having been fully drill-tested. The deposit is open in all directions with excellent potential to become substantially larger. Drilling by Arizona Metals has encountered gold mineralization at depths greater than 400 metres, well below the average depth of 70 metres defined in the historic estimate calculated in 1982. Previous and recent exploration work gives us confidence in the potential for Sugarloaf to become a multi-million ounce deposit through an aggressive drill campaign. Additionally, recently completed metallurgical testing by Arizona Metals has shown near-surface oxide material can achieve gold recoveries up to 90% using conventional leaching, and deeper sulphide material can achieve 85% recoveries, also using conventional processing methods. Sugarloaf Gold Corp. will provide our shareholders direct leverage to a pure-play gold project at a time the gold price is trading near all-time highs.