| INITIAL PROGRAM AND COSTS Prior to the development of Chebucto into a producing gas field, certain geological and engineering studies must be undertaken to confirm the resource size and production expectations, design the required facilities, and estimate the capital costs. As well, certain commercial and regulatory matters need to be resolved. It is estimated that Sparton?s share of the initial costs will be between $200-300,000 over the next 12 month period. Following completion of this work a further cost of $250-500,000 is estimated to accrue to Sparton during the next 12 months for the final detailed engineering and project execution planning.
SCHEDULE If the study work confirms the viability of development the earliest that first gas could be produced is in 2013.
THE CHEBUCTO GAS FIELD The Chebucto gas field, discovered in 1984, covers two SDL?s (2286 and 2276A) and based on the currently known geometry of the field Sparton?s overall ownership share of the field?s hydrocarbon accumulation after unitization is estimated at 6%. Chebucto is located approximately 16 km east of the North Triumph production platform.
VALUATION TO SPARTON The Company has reported several valuations of its Chebucto interest. The initial evaluation, with an effective date of August 1, 2003, was prepared for the Company by APA Petroleum Engineering Inc. (APA), petroleum engineering consultants of Calgary Alberta. APA has extensive engineering and evaluation experience in the Canadian East Coast and on other projects world-wide. Subsequent updates were prepared by the same organization with the latest being May 11, 2005, (See Sparton news release dated September 4, 2003, Long Form Prospectus dated February 27, 2004, and news release dated June 2, 2005). All these documents are available on www.sedar.com. Based on a review of all available technical data APA reported that Sparton?s estimated unitized 6% share of the Chebucto gas accumulation amounts to approximately 20 Bscf (billion standard cubic feet) in proven and probable categories. Using then current gas prices and a 10% discount rate with a 2010 production startup, and a 20 year production life APA, in 2005 calculated a net present value to Sparton before tax of approximately $27 million. This valuation will be updated to reflect current conditions and reported to shareholders when available.
DISCUSSION
The news of an initial planning program for possible production at Chebucto is a significant event in the potential development of Sparton?s resource assets. Chebucto has historically been difficult to evaluate due to uncertainty in the time frame for development. With the current development planning proposed by the interest representative, Company management believes that Chebucto now has the potential to create significant value for its shareholders. Sparton looks forward to becoming a full participant in the development of the Chebucto natural gas field. New information and results of an updated valuation for Chebucto will be reported when available. For more information contact: A. Lee Barker, President and CEO | Edward G. Thompson, Chairman | Tel.: 416-366-3551 | Tel.: int'l +1-416-366-6083 | Fax: 416-366-7421 | Fax: +1-416-366-2713 | Mobile:416-716-5762 | | E-mail: info@spartonres.ca | Email: egt@interlog.com |
SPARTON RESOURCES INC. | Company website: www.spartonres.ca |
Listed:TSX Venture Exchange
Trading Symbol: SRI
CORRECTION TO SPARTON NEWS RELEASE DATED JULY 20, 2009 In paragraph three, line two of this release under the heading of ?Option Terms? the number $500,000 is incorrect and should be changed to $500,500. 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. |