Claim Post Resources Inc.
TSX VENTURE : CPS

Claim Post Resources Inc.

August 27, 2012 15:35 ET

CORRECTION FROM SOURCE: Claim Post Resources Inc. Signs Letter of Intent to Acquire a Frac Sand Project in Southern Manitoba (Canada)

TORONTO, ONTARIO--(Marketwire - Aug. 27, 2012) - This document corrects and replaces the one that was sent this morning, August 27, 2012 at 9:15 AM ET.

Note: Claim Post Resources would like to clarify this press release. The company has withdrawn any discussion of a conceptual frac sand study and sales target.

Claim Post Resources Inc. (TSX VENTURE:CPS) (the "Company") is pleased to announce that it has signed a Letter of Intent with a private company Char-Crete Ltd. to acquire nine contiguous silica sand quarry leases, encompassing approximately 428 hectares (1,050 acres). The property is located 3km from a paved highway near Seymourville, 200km North-East of Winnipeg, Manitoba (Canada).

The Seymourville Silica Sand deposit was discovered in 1977 and was drilled by Manitoba government geologists in 1981 and again in 1989. The deposit is the Lake Winnipeg Formation on-shore extension of the Historical Black Island silica deposit. Black Island silica was mined from 1928 to 2003 when it was incorporated into a park. Black Island sand was used as feed stock to manufacture glass, fiber glass, foundry sand and frac sand by the oil industry.

The Manitoba Government drilled a North-South section through the Char-Crete leases in the 1981 program - the attached map showing all government holes. The sand core is still in storage in Winnipeg. The sand is over-lain by glacial till from shallow at the 250m contour to up to 10m thick at the 240m contour. The Seymourville sand is exposed in a pit along the road. The 250m contour encloses a 400m wide by 1000m long area hosting the thickest sand drilled to date.

Drilling intersected the white silica sand of the Winnipeg Formation at the elevations and thicknesses set out below; along red line on map. Manitoba Government geologists estimated that the entire sand deposit could contain 45 million tonnes of silica sand - Manitoba Government Web site. Seymourville Sand Deposit Map. This historical estimate is non N-I 43-101 conformable and has not been verified by Company geologists; as such, it is not to be relied upon.

Hole Collar Elevation
above sea level
Winnipeg Formation Sand Thickness Precambrian
Greenstone
M-11-89 250 m 247.5 m 20.3 m 227.2 m
M-15-89 250 m 243.0 m 17.8 m 225.5 m
M-20-89 247 m 247.0 m 25.0 m 221.6 m
M-13-89 240 m 231.o m 4.6 m 226.5 m

The large, high grade up to 96% SiO2, unprocessed silica sand in the government drilling lead to detailed feasibility level testwork in the 1980's for making plate glass. Metallurgical test work by I.M.D. Laboratories and ORTECH Corporation both of Ontario showed 80% recovery of well rounded silica sand with sand sizes ranging between 20 and 100 mesh. The silica purity of the processed sand was 98.2% and after an acid wash upgraded to 99.8%. (See Manitoba Open File Reports OF 96-4 and OF 96-7). Glass silica sand feed and frac sand cover the same size ranges.

The Char-Crete leases cover the thickest 2/3 of the deposit, the other 1/3 of the deposit is owned by Gossan Resources (TSX VENTURE:GSS). Gossan has drilled more than 60 holes and has drill indicated white silica sand varying from 5 to over 15m in thickness. Gossan has also completed extensive API testwork using PropTester Inc; the white silica sand meets all minimum API standards. (See Gossan, July 13th 2012, MD&A posted on Sedar pages 19 and 20.)

The old and round sand type of this quality is quite rare. If sold as frac sand it has to meet strict American Petroleum Institute (API) specifications. The Seymourville Silica Sand Deposit has a range of 20/40, 40/70 and 100 mesh sizes and which are ideal for both the Canadian and US oil and gas proppant markets if it meets API specifications. The sand will be evaluated as part of the 43-101 test work. Frac sand sales prices are currently in the $50 to $100 per ton range FOB processing plant, depending on sand size, roundness, crush strength and length of contract term.

The Market

The combination of recently adopted horizontal drilling technology with new hydraulic fracturing technologies has unlocked massive oil and natural gas shale reserves in both the United States and Canada. The American oil industry imported 57% of its oil in 2008; in 2012 the estimate is only 42% as the number of oil rigs increased from 391 to 1329 during the same time period. Frac sand production in the US has increased from 13 million tonnes in 2010, to 22 million tonnes in 2011 to an estimated 28 million tons in 2012. Fracked oil and gas wells have at least a 30% depletion rate per year thus the tonnage of frac sand will continue to increase.

A large portion of Canadian frac sand tonnage used is imported from the US. For example, Badger Mining Company ships frac sand from Wisconsin 1200km to Winnipeg for distribution by CN rail to the Bakken, Montney and Horn basins in Alberta and British Columbia. The Claim Post Seymourville deposit is only 200km from Winnipeg giving a major transportation savings whether to the Bakken in Southern Manitoba or anywhere further West.

Current consumption of frac sand in Canada is estimated to be about 1 to 1.5 million tonnes per year with current Canadian production about 50%; the remainder imported from the US. Extensive market studies by Stikine Energy Corp (TSX VENTURE:SKY) estimate that the Montney, Horn and Laid basins will require 6 million tonnes of frac sand by 2015 to fill the proposed LNG plants planned to be built in Kitimat and Prince Rupert. - See Stikine Energy Website Q1 2012. With a 1000km shorter rail haul and limited current Canadian frac sand production.

The President of Claim Post Resources, Charles Gryba, states: "We are very encouraged about acquiring the nine quarry leases from Char-Crete Ltd for $1,500,000 of cash payments and a royalty payment of $1.00 per tonne frac sand shipped. The Seymourville silica sand deposit is enclosed in a 2km x 3km hill that is about 25 meters thick with a rock base 5 meters above the water elevation of Lake Winnipeg. Our first priority will be to start a drilling program and API testwork towards completing a NI 43-101 report. The next step would be to commission an independent Preliminary Economic Assessment of the deposit to confirm the economics of taking the Seymourville Silica Sand Deposit to commercial production."

Claim Post Resources intends to maintain its exploration properties in Timmins, Ontario which are highly prospective for both gold and base metals. The Company continues to seek joint venture partners and strategic arrangements with other companies in the industry to advance the exploration of the large Timmins land holdings.

Claim Post Resources Inc. is a Canadian based mineral exploration company and a reporting issuer in Ontario, Alberta and British Columbia. The Company currently holds a 100% interest in the mineral rights to about 1145 staked claim units and 63 patented claims (~200 km sq. or 72 sq. miles), wholly within the city limits of Timmins, Ontario. The Company continues to stake ground as it becomes available. There are 36,163,831 common shares of the Company issued and outstanding.

Statements in this release that are forward-looking reflect the Company's current views and expectations with respect to its performance, business, and future events. Such statements are subject to various risks and assumptions, some, but not necessarily all, are disclosed elsewhere in the Company's periodic filings with Canadian securities regulators. Such statements and information contained herein represent management's best judgment as of the date hereof based on the information currently available; however actual results and events may vary significantly. The Company does not assume the obligation to update any forward-looking statement.

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.

Contact Information

  • Claim Post Resources Inc.
    Charles Gryba
    President and Director
    416-203-1681

    Claim Post Resources Inc.
    Peter Gryba
    Corporate Affairs
    416-203-3776
    www.claimpostresources.com