Kodiak Exploration Ltd (C-KXL) - News Release

Kodiak signs options for Milestone extensions

2010-09-20 10:52 ET - News Release
Shares issued 113,328,087
KXL Close 2010-09-17 C$ 0.34

Also News Release (C-PRM) Pro Minerals Inc

Mr. Brian Maher Of Kodiak reports

KODIAK SIGNS OPTION AGREEMENT ON MILESTONE EXTENSION

Kodiak Exploration Ltd. has signed an option agreement with Teck Resources Ltd. that allows Kodiak to earn a 100-per-cent interest in the 1,280-hectare Adel property located immediately adjacent to Kodiak's Milestone project in the Beardmore-Geraldton gold camp in Ontario. The property hosts the western extension of the Klob shear zone, host to the Pag North gold mineralized structure, which Kodiak has been drilling since late 2009. The option agreement on Adel greatly expands the exploration potential of the Milestone gold system. The Adel property also covers a seven-kilometre portion of the Barton Bay deformation zone, which includes a 1,400-metre segment that hosts the Onesime showings which have produced grab samples with up to 18 grams per tonne gold. Kodiak will immediately commence a ground exploration campaign to define drill targets on the property.

Kodiak is also pleased to announce that it has agreed to purchase a 100-per-cent interest in two mining claims (160 hectares) owned by Pro Minerals Inc. of Vancouver, B.C. The claims cover a prospective extension to the Milestone gold zone 10 kilometres to the east of the area of current exploration drilling. These transactions consolidate Kodiak's land position in the Milestone area and allow systematic exploration of multiple gold-bearing structures in the eastern portion of the Beardmore-Geraldton gold camp. A map depicting the property and regional geology is available on-line.

The principal terms of the Teck agreement, subject to TSX Venture Exchange approval, are as follows:

• Kodiak issues Teck 100,000 Kodiak shares within five days of TSX-V approval.
• By incurring $1-million in exploration expenses on the property prior to December 31, 2012, Kodiak earns 100% interest in the property subject to a 2% NSR royalty in favor of Teck and the Teck earn-back right described below.
  1. 1. Kodiak must spend $100,000 by December 31, 2010 to continue the option. Kodiak must complete an additional $400,000 in expenditures by December 31, 2011 and an additional $500,000 by December 31, 2012. Total expenditures are $1,000,000 and may be accelerated.
  2. After vesting, Kodiak can buy back half of the NSR royalty for $1,000,000.
• After Kodiak completes at total of $3,000,000 in exploration expenditures, Teck has a onetime option, within 60 days of notification, of exercising a right to earn back into the property.
  1. 1. Teck can earn back 60% by completing two times Kodiak's expenditures to a maximum of $6,000,000 of required expenditures within the same time frame that Kodiak completed its $3,000,000 in expenditures.
  2. If Teck completes the earn-back option, the property goes forward as a 60/40 joint venture with Teck as the initial operator. Each company would contribute proportionally; if either party dilutes to a10% interest, the interest becomes a 5% NPI royalty.

The principal terms of the Pro Minerals agreement, subject to TSXV approval, are as follows:

• Kodiak will pay Pro Minerals $50,000 and 300,000 Kodiak shares following acceptance by the TSXV of the transaction.
• The property is subject to a 2% NSR royalty held by a prior owner; Kodiak can purchase half the royalty for $1-million.

The geological information for the Beardmore-Geraldton regional exploration project has been reviewed and approved by Darren Lindsay, Kodiak's Vice President-Exploration, who is a qualified person under the definitions established by National Instrument 43-101.

Kodiak QA/QC procedures

Kodiak channel samples are 5 cm wide cut perpendicular to the strike of the vein and/or shear zone from mapped alteration in the footwall continuously through the vein and/or shear zone and into mapped alteration in the hanging wall. Channels are cut with a motorized circular saw to a depth of 10 cm and removed with a hammer. Channel sample spacing is nominally every 20m along strike, dependent on outcrop size and geometry. Sample intervals are selected according to geologic contacts and visible mineralization, placed into a sample bag, and shipped to the assay lab for quantitative analysis of select elements. Kodiak drill cores are split down the center with a typical table feed circular rock saw. Sample intervals are selected according to geologic contacts, visible mineralization, and alteration, placed into sample bags and shipped to the assay lab where they are quantitatively analyzed for select elements. Drill cores are boxed, covered, and sealed at the drill rig and moved to the Kodiak logging and sample preparation facilities by Kodiak personnel. Kodiak angle core holes are directed perpendicular to the mapped dip of the vein therefore reported drill hole intercepts approximate true thickness of the vein.

All Kodiak samples are currently being assayed by Activation Laboratories Ltd., Ancaster, ON L9G 4V5 and Accurassay Laboratories Inc., Thunder Bay, ON, P7B 5X5. Blank and standard samples are routinely submitted with all sample batches sent to the lab for assay. Screened metallic assays are routinely run on all anomalous gold results as a check on nugget effects. Samples are routinely sent to other labs for additional checks.

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