TORONTO, ONTARIO -- (Marketwired) -- 06/25/13 -- Claim Post Resources Inc. (TSX VENTURE: CPS) (the "Company") is pleased to announce that the Company has entered an agreement to purchase the Manigotagan Frac Sand Project ("Manigotagan Property") from Gossan Resources Limited GSS-V ("Gossan"). The property encompasses 9 quarry leases (306 hectares) and is contiguous to Claim Post's wholly owned Seymourville Property (428 hectares). The properties are located 3km from a paved highway 200 km north-east of Winnipeg, Manitoba (Canada).
The total payable to Gossan for the purchase of the Manigotagan Property subject to Regulatory Approval will be as follows:
1) 1,000,000 common shares of Claim Post or $50,000, at Claim Post's sole discretion on signing the Agreement;2) 2,000,000 common shares of Claim Post or $200,000, at Claim Post's sole discretion on or before the day which is 6 months after the signing of the Agreement;3) $350,000 payable 12 months after the signing of the Agreement;4) $350,000 payable 18 months after the signing of the Agreement;5) $430,000 payable 24 months after the signing of the Agreement.
By purchasing the Manigotagan Property Claim Post is obligated to pay a Royalty Interest (collectively "The Royalty") to Gossan in the amount of $1.00 dollar per tonne of frac sand plus $0.50 per tonne for other silica sand or clay products sold from the Manigotagan Property. Claim Post can acquire 50% of the Royalty for $1,500,000 any time after the company completes the property payments.
Gossan has previously drilled a 500 m by 1500 m area and recovered silica sand from 41 holes. Sand intersections ranged from 6 m to 18 m thick with an average thickness of 10.1 meters. Gossan also completed ISO testwork at Prop Tester - Cypress, Texas confirming that the sand meets the American Petroleum Institute (API) specifications for frac sand (www.gossan.ca).
The four government drill holes located on the adjacent Claim Post 100% owned Seymourville Char Crete property averaged 16.9 meters thick. (Claim Post Press Release dated Aug 27, 2012). The Manigotagan Property and Seymourville Char Crete Property will be merged into a single project called the "Seymourville Frac Sand Project."
Frac Sand Fundamentals
The main driver for the very rapid, steadily increasing demand of frac sand is the United States focus on becoming self-sufficient in energy by the year 2020 or if not sooner. The demand has been generated by the technology breakthrough of horizontal drilling combined with multiple fracking. Natural sand is the least expensive proppant used in fracking thus the demand for frac sand continues to grow and is now 90% of the market; expensive ceramic proppants are now less than 10%.
Total US frac sand production in 2012 was 31 million tons of which about 3 million tons were exported mainly to Canada. Most (75%) of the US frac sand is currently produced in Wisconsin and neighbouring states. Just in the state of Wisconsin alone; in the past 5 years, a total of 105 frac sand mines feeding 65 processing plants have been put into production. In comparison Canada only has 4 frac sand mines in production producing about 2 million tons of sand per day.