SOURCE: Silica North Resources Ltd.

Silica North Resources Ltd.

December 05, 2011 18:31 ET

Silica North Resources Ltd. Announces Status of Its Frac Sand Project to Supply the Horn River Basin

CALGARY, AB--(Marketwire - Dec 5, 2011) - Silica North Resources Ltd. ("Silica North" or the "Company") is pleased to report its progress on becoming a premium frac sand producer in Canada with plans to supply proppant used in the hydraulic fracturing process to producers and service companies in the Horn River Basin. Silica North has been working diligently on its Fort Liard project (the "Project") and subject to financing, expects to start construction of its operation in 2012 with anticipated production in 2013.

Silica North's Project encompasses 2,479 acres located on federal land (crown land) approximately 47 km northwest of Fort Liard, N.W.T. Based on current plans, the Project's operation has the potential capacity to produce 800,000 tonnes of frac sand per annum, with initial plans to produce 400,000 tonnes of frac sand per annum.

The Company has completed independent industrial scale testing to develop its plant process design. Included in the testing process were several rounds of third-party development performed by Outotec (USA) Inc. and Stim Lab (a division of Core Laboratories). The unique approach of using entire core samples allowed the Company to develop processes to address the organics and any possible metals in processing. Furthermore, this approach provided supportable estimates of waste percentages to facilitate reclamation planning.

Silica North has also embarked on a marketing initiative with favorable results. The Company currently has five letters of intent for frac sand from three producers and two service companies. One producer has completed extensive due diligence on the Company over a three month period and Silica North is now in negotiations with this producer to complete a contract to meet their frac sand needs.

The clear advantage of the Project is its location and the pre-existing infrastructure including roads, potential power sources and water for processing. Strategically located 100 km north of the northwest corner of the Horn River Basin and approximately 630 km north of the Montney Shale Formation, Silica North will be able to reduce transportation and logistical costs as compared to existing frac sand suppliers who are located significantly further away from the Horn River Basin.

The Company's planned budgeted capital expenditure for the Project is considerably less in magnitude when compared to other frac sand projects currently being publically proposed to supply proppant into the Horn River Basin.

Silica North intends to expedite the opening of the Project, increasing the barriers of entry for future potential competitors in the Horn River Basin, based on current market demand. The Company plans to do this by utilizing its highly experienced mining and frac sand team. With the recent addition to Silica North's team of Mr. Jim Sadowski (formerly with Outotec) and the construction expertise of AIC Canada, the Company believes it has the key ingredients to execute on its business plan. Mr. Sadowski has over 36 years of mineral industry experience, which includes numerous years being intricately involved with overseeing several silica processing plant projects. AIC Canada has over 25 years of heavy construction in remote, harsh, northern environments for the oil and natural gas, mining and public works industries.

In addition to the Project, the Company is expanding its reach into other strategic areas of North America as it is in various stages of due diligence on several other potential frac sand projects.

About Silica North Resources Ltd.

Silica North Resources Ltd. is a privately held company, engaged in the exploration, acquisition and development of frac sand projects. Frac sand is a proppant used by oil and natural gas companies in the hydraulic fracturing process to facilitate the extraction of oil and natural gas. For more information, visit www.silicanorth.com.

Forward-Looking Statements

This news release includes certain "forward-looking statements". All statements other than statements of historical fact, included herein, including, without limitation, statements regarding future plans and objectives of Silica North, are forward-looking statements that involve various inherent risks, assumptions, estimates and uncertainties. These statements reflect the current internal projections, expectations or beliefs of the Company and are based on information currently available to the Company. Specific forward-looking statements include: expectations on financing and timeline; expectations on construction and production timelines and amounts; expectations of a supply contract; expectations of frac sand demand; anticipated transportation and logistical costs; potential power sources; planned capital expenditure levels; and availability of necessary expertise. There is significant risk that assumptions, predictions and other forward looking statements will not prove to be accurate. You are cautioned not to place undue reliance on forward-looking statements as a number of factors could cause actual future results, conditions, actions or events to differ materially from expectations, estimations or intentions expressed in the forward-looking statements. Specific risk factors include, but are not limited by: the Company is not able to obtain necessary financing to fund the Project; the Company is not able to retain the necessary expertise to complete the Project or to complete the Project in the expected time period; the Company's operation is not able to meet expected production quantities; the Company is unable to complete a supply contract; demand in the Horn River Basin for frac sand produced by the Company is less than expectations; more cost effective transportation methods are developed by existing suppliers; the Company is unable to access a power source and required capital expenditures are larger than planned. All of the forward-looking statements contained in this new release are qualified by these cautionary statements and the risk factors described above. Furthermore, all such statements are made as of this date and the Company assumes no obligation to update, revise or respond to third parties who may comment on these statements, except as required by law.

Contact Information

  • For further information please contact:

    David L. Brough
    Chief Executive Officer
    (778) 478-0529
    (403) 710-2720

    or

    Monty R. Balderston
    Chief Financial Officer
    (403) 874-7408