Houston Lake Mining's Corporate Update Positioned for Growth

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Houston Lake Mining's Corporate Update Positioned for Growth

SUDBURY, Ontario--(BUSINESS WIRE)-- Houston Lake Mining Inc. (TSX.V: HLM) announces 2012 has been a very difficult year for small and large cap companies. Although gold prices have remained somewhat stable after a short period of decline, most retail and institutional investors have remained on the sidelines. Share prices of many exploration and gold producing companies have fallen dramatically and in many instances, reached all-time lows. Needless to say, small caps have been hit the hardest. Many well funded companies have had to suspend and defer exploration programs whereas others have been looking for strategic partners. Raising monies for exploration has become very dilutive and somewhat counter-productive insofar as share prices did not reflect the increase in value from having brought assets closer to the production stage. Overall, the market has paid little attention to the investment monies spent to enhance shareholder value.

HLM has taken decisive action on past interests expressed by North American Palladium Ltd. (TSX: PDL, NYSE Amex: PAL) in our Tib Lake property and Coventry Resources ltd. (ASX:CVY) in the West Cedartree property. As you are well aware, HLM has been neighbours at our respective exploration projects with these companies for several years. Both PDL and Coventry put forward proposals to purchase our platinum group metals and gold assets and we have taken advantage of these interests and turn this opportunity into cash and to increase our focus on our Pakeagama Rare Metals Project in Northwestern Ontario.


The focus on our rare metals project positions HLM in a market where demand is growing, supply is under pressure and our project is unique with both the occurrence of cesium and tantalum. Shortly after we closed our deal with PDL and announced the Coventry Letter of Intent, we were able to raise investment dollars to further explore our holdings at Pakeagama. Ultimately, we are expecting to have a drilling program this upcoming winter on our rare-metal asset.

OUR FOCUS ON RARE-METALS

In early 2011, consolidation by HLM enabled the Company to acquire a 100 percent interest in 1,024 hectares (2,530 acres) of mining claims at our Pakeagama Rare Metals Project. This land position covers the known exposures of the Pakeagama rare metal pegmatite and we believe that we hold the key ground identified by the Ontario Geological Survey (OGS) in their 1998-1999 rare metals evaluation of the region. High grade cesium, tantalum, lithium and rubidium oxide values have been reported from the exposed pegmatite which is open in all directions on our project.

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WHY FOCUS ON THE PAKEAGAMA RARE METALS PROJECT?

The market interest in rare metals and more importantly future supply pressures afford the company an opportunity to illustrate the outstanding value thought to be contained in the Pakeagama Rare Metal Project. Independent geologists have indicated that this is a highly prospective target containing rare metal signatures similar to Cabot Corporations' Tanco Mine, located 288km away in southeastern Manitoba.

The Tanco Mine is an underground cesium and tantalum mine. The mine has the largest known deposit of pollucite (sole mineral ore for cesium) and is the world's largest producer. The pegmatite ore body now mined by the Tanco Mine was discovered in the late 1920s and the first mining started in 1929. Cabot Corporation bought the mine in 1993, and began the production of cesium brine from pollucite in 1996, and has recently re-commenced tantalum mining production.

Cesium reserves from the Tanco mine in the mid-90's accounted for approximately 82% of the reported world reserves. The principal end use of cesium is in formate brines, a high-density, low-viscosity fluid used for high-pressure/high-temperature (HPHT) oil and gas drilling and exploration. Cesium formate possesses anti-oxidant and water-structuring properties that protect drilling polymers from thermal degradation and has the required density needed to maintain well control. Other significant end uses are in biomedical, chemical, and electronic applications.

The cesium mineral pollucite has been identified within the Pakeagama Lake pegmatite and is only the fourth pollucite occurrence noted in Ontario. Cesium values to date range from 400 g/t in a prominent lithium-cesium anomaly to a 1,776 g/t average grade over 11m. These highly anomalous values compare favourably to those defining the prolific Tanco mine and attest to the high potential for economic cesium mineralization at Pakeagama.

The main pollucite zone at the Tanco Mine only contains an approximate 400,000 metric tons of pollucite with an average Cs2O content of 24%, and a secondary zone of approximately 100,000 metric tons of pollucite contains an average of 5% Cs2O (USGS Cesium 2012); we see this as an opportunity.

In addition to the cesium based opportunity is the existence of Tantalum on Pakeagama. About 60% of Tantalum production in the world is used in the electronics industry, mainly as powder and wire for capacitors, owing to tantalum's particular ability to store and release electrical energy. This allows components to be exceptionally small and they are therefore favoured in space-sensitive high-end applications in telecommunications, data storage and implantable medical devices. Tantalum is also used for electronic sound filters and as a barrier against copper diffusion in semi-conductors. In addition, Tantalum carbide's hardness makes it ideal for cutting tools.

There has been an average yearly growth rate of 8% to 12% in tantalum demand since 1995. The 2008 recession and the low tantalum prices caused by the oversupply of tantalum in the market led many mines in Australia and Africa to suspend production, leading to a more than 50% decrease in mine production. Increasing demand and conflict free mineral pressures increased prices three-fold in 2011 where currently the price is approximately US$130/lb. with a tantalum oxide grade of 30%.

Tantalum has been identified within the Pakeagama pegmatite. Typical mining grades vary from .03% to .20% tantalum oxide. Tantalum values at Pakeagama have shown comparable to economic pegmatites with an average of .034% tantalum oxide over 11m at surface.

PAKEAGAMA RARE METAL EXPLORATION

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In late 2011, HLM completed a Mobile Metal Ion (MMI) geochemical survey. All results have now been received and we are expecting to announce these results in the near future. The objective of the survey was to aid in the targeting and planning of a Phase I diamond drill program. The combined results from the MMI survey and the planned Phase I diamond drill program will allow us to develop geochemical and geological survey tools that we can use in the exploration for rare-metal pegmatites at Pakeagama and other areas in northern Ontario.

Planning for a surface channel sample program is underway and the program will be completed this fall. Recently HLM has raised $200,000 to primarily complete the channel sample program and bring surface results on the pegmatite to current NI 43-101 standards.

HLM is planning on drilling Phase I in early 2013 as it is preferential to access the project utilizing the winter road network that runs within 4 kilometres of the property in order to eliminate the alternative of a helicopter supported drill program. We expect a program of 900m - 2500m depending on the availability of investment dollars. The intention of this first program on Pakeagama is to determine the orientation and thickness of the pegmatite, to better define the pegmatite zonation, and to refine the mineralogical characterization of these zones by establishing their cesium, tantalum, and also lithium potential.

HLM'S LONGEVITY

Through strategic divesture we have positioned the company to take advantage of the growing global demand for rare metals with the objective of HLM cutting out a unique niche in a boutique market with a focus on elements that are in short supply. With a small number of companies exploring for Cesium in particular, HLM will be well positioned to tap into available funds in order to move the asset ahead, and subsequently gain unique support through its diversification in the market for HLM.

With the increasing pressure of supply on high grade cesium ore in the world HLM is seeing support for exploration on the Pakeagama Rare Metals Project; and, with indirect gains from the continued successes of North American Palladium and Coventry Resources I feel HLM is poised for growth. I would like to thank our highly valued shareholders for your support.

Cordially,

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Trevor R. Walker, MBA
President



Houston Lake Mining Inc.
Henry J. Kloepper, +001 705-897-7622
CEO
F. +001 705-897-7618

KEYWORDS:   North America  Canada

INDUSTRY KEYWORDS:

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