Mr. Geir Liland reports

ROYCE RESOURCES CORP. SIGNS LETTER AGREEMENT FOR CLAYTON VALLEY LITHIUM PROPERTY

Royce Resources Corp. has signed a letter agreement (LOI) with 1045564 B.C. Ltd. effective Oct. 1, 2015, relating to an acquisition by Royce of all the issued and outstanding securities of 1045564 from the shareholders thereof. 1045564 is a privately held company led by Brian Paes-Braga that holds an option to acquire the NSP lithium claim group from Clayton Valley Lithium Inc.

Transaction summary

The transaction is expected to be effected by way of a share purchase agreement or similar transaction whereby the shareholders of 1045564 will transfer all of the issued and outstanding shares of 1045564 to Royce in consideration for the issuance of five million common shares of Royce to the shareholders, resulting in 1045564 becoming a wholly owned subsidiary of Royce.

1045564 has an option to acquire a 100-per-cent interest in the NSP lithium claim group from Clayton Valley Lithium Inc., a privately held arm’s-length company. 1045564 has paid a non-refundable deposit of $40,000 (U.S.) to Clayton Valley. On the closing date Royce must pay $100,000 (U.S.) and issue one million common shares to Clayton Valley. In addition, in order to exercise the option and earn the 100-per-cent interest in the property, Royce must:

  1. Pay $250,000 (U.S.) in cash to Clayton Valley on each of the first, second, third and fourth anniversaries of the closing date;
  2. Issue to Clayton Valley, on each of the first, second, third and fourth anniversaries of the closing date that number of common shares in four equal tranches (less the one million common shares issued on the closing date) as shall represent, in the aggregate, 9.9 per cent of the outstanding common shares of Royce as at the closing date;
  3. Incur a minimum of $4.5-million on exploration expenditures on the property over a three-year period and deliver a prefeasibility study on the property by no later than the fourth anniversary of the closing date.

On closing it is anticipated that Royce will have approximately 22,329,063 shares outstanding. The annual share payments referenced in the second bullet above will therefore be approximately 302,644 shares each.

In addition, Royce has agreed to issue an additional one million common shares to Clayton Valley upon completion of a inferred resource calculation that confirms the presence on the property of a minimum of 100,000 tons LCE grading no lower than a 28 parts per million (ppm) Li grade average, and shall pay $2-million (U.S.), in cash or in common shares (or a combination) at the option of Royce, upon completion of a positive economic feasibility study on the property.

Clayton Valley will be granted a 2.5-per-cent royalty on revenues derived from the sale of lithium concentrate and other ores or minerals extracted from the property and Royce has agreed to pay a minimum annual advance royalty of $250,000 (U.S.) to Clayton Valley commencing on the fifth anniversary of the closing date. Royce shall have the right to buy 1.5 per cent of the Royalty at any time for $3-million (U.S.).

Upon Clayton Valley locating and recording 186 specified additional claims, Royce has agreed to acquire the claims in consideration for payment to Clayton of $500 (U.S.) per claim. Royce has also agreed to make minimum exploration expenditures on 41 of the additional claims of $250,000 within two years.

In connection with the transaction, Royce has agreed to complete a concurrent financing for aggregate proceeds of $900,000, consisting of six million common shares at 15 cents per share.

The parties have agreed to use their reasonable best efforts to conclude a definitive agreement in respect of the transaction by Oct. 30, 2015.

At closing, it is expected that Mr. Paes-Braga will become the chief executive officer of Royce Resources.

The transaction is subject to the prior approval of the TSX Venture Exchange.

The property

The property consists of 77 unpatented placer claims covering 1,540 acres located in Clayton Valley, Esmeralda county, Nevada. Clayton Valley is the site of the only lithium brine production operation in North America which has been in production since 1966. There are now seven publically acknowledged aquifers on the producing property in Clayton Valley and Pure Energy Minerals, which owns the Clayton Valley South project, has recently released an inferred resource of 816,000 tons of lithium carbonate equivalent on the Clayton Valley South project. The property is contiguous to private lands and placer claims belonging to the lithium production facility of Albermarle Corp. and two Albermarle production wells lie along the boundary of the property. Drilling and exploration are active in the basin and the permitting process is well established.

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