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Frac Sand

Posted by nexvucapital on April 17, 2015

We are believers in the Fracking revolution and see multiple years of above-average returns in this sector as the rest of the world comes to the conclusion that what has happened in North America can happen elsewhere and will. In North America the dominant fracking proppant is sand and a recovery looks to be taking place:

Fairmont Santrol (Z:FMSA)

Fairmont Santrol

The recent recovery/stabalization in energy prices has had a positive effect on the leaders in the Frac Sand space – resulting in a recovery in the share price of Fairmont Santrol.

In the Micro space we have our own participant:

Phoenix Metals Corporation (TSXV: PHC and Q: AKAVF)

The Company is acquiring, for development, long-term Frac Sand/Proppant assets while energy prices are low. Acquired assets in North America are positioned close to Western Basins where current Frac Sand is serviced from the US Midwest. Transport costs and logistics account for between 60% and 70% of the cost of Frac Sand in Western North America. According to Sandsource, the total proppant market in 2014 was 77 billion pounds with Frac Sand making up just under 90% of the total volume.

Today’s News…with some added visuals…

Vancouver, B.C.: Phoenix Metals Corporation (“Phoenix” or the “Company”) (TSX-V Symbol: PHC) is pleased to announce a non-brokered private placement of up to 15.0 million units at a price of two and one half cents per unit ($0.025) to raise proceeds of up to $375,000. Each unit will consist of one common share and one common share purchase warrant (the “Unit Warrants”) with each Unit Warrant entitling the holder to acquire one additional common share at a price of five cents ($0.05) per share for one year from closing. The Unit Warrants are subject to the right of the Company to accelerate the exercise period for the Unit Warrants if the common shares of the Company trade above ten cents ($0.10) for a period of 10 consecutive trading days. The proceeds of the private placement will be allocated toward expenditures on the Peace River Frac Sand Project and the continuing evaluation and potential acquisition of Frac Sand assets in the Western United States and for general working capital purposes. The private placement is subject to regulatory approval nd the Company may pay finders’ fees on the private placement proceeds to certain parties in accordance with the policies of and subject to the approval of the TSX Venture Exchange.

Peace River Frac Sand Project:

The Company has made the initial down payment and permit payments (to 2016) on the 100% acquisition of the “Peace River Frac Sand Project” (see News Release of October 7th, 2014). The Company will not be proceeding with the 60% option of the Project announced on November 3rd 2014.

Map1

Testing is planned as a first step when weather permits. The Peace River Frac Sand Project surrounds the operations of the 500,000 tonne per year silica sand mine privately owned by the Laprarie Group and operated by Canadian Silica Industries. The share issuance under the transaction is subject to the approval of the TSX Venture Exchange.

Picture2

Western USA Frac Sand Project(s):

The Company has entered into a Finder’s Fee arrangement with Harrison Land Services LLC (“Harrison”) of Moab, Utah whereby Harrison is conducting a targeting, sampling and acquisition program for Frac Sand assets in the Western USA. An initial ten targets have been identified on State Lands and results from Phase 1 testing have narrowed the focus to four targets for Phase 2 testing. Upon obtaining the results from Phase 2 testing the Company will proceed to potential acquisition via the State Lease process.

US Frac Sand Map

The Company’s focus is on the acquisition and development of long-term Frac Sand/Proppant assets while energy prices are low. Acquired assets will serve the developed North American market or be proximal to large unconventional oil and gas resources around the world. According to Sandsource, the total proppant market in 2014 was 77 billion pounds with Frac Sand making up just under 90% of the total volume.

Neither the 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.

Forward-Looking Information: This news release contains certain forward-looking information. All information, other than information regarding historic fact that addresses activities, events or developments that the Company believes, expects or anticipates will or may occur in the future is forward-looking information. Forward-looking information contained in this news release includes, but may not be limited to the progress and success of the Company’s projects, including the Company’s goals and business plan with respect to the frac sand business and the future demand for frac sand. The forward-looking information contained in this news release reflects the current expectations, assumptions and/or beliefs of the Company based on information currently available to the Company. With respect to the forward-looking information contained in this news release, the Company has made assumptions regarding, among other things, the Company’s future working capital requirements, the Company’s ability to generate sufficient cash flow from operations and access existing credit facilities and capital markets to meet its future obligations, goals and business plan, future prices for frac sand and by-products and future demand for processed frac sand. The forward-looking information contained in this news release is subject to a number of risks and uncertainties that may cause actual results or events to differ materially from current expectations, including the need to obtain required approvals and permits from regulatory authorities, the volatility of frac sand and by-product prices and demand and geological, technical, drilling and processing problems. Any forward-looking information speaks only as of the date on which it is made and, except as may be required by applicable law, the Company disclaims any obligation to update or modify such forward-looking information, either because of new information, future events or for any other reason. Although the Company believes that the assumptions inherent in the forward-looking information are reasonable, forward-looking information is not a guarantee of future performance and accordingly undue reliance should not be put on such information due to the inherent uncertainty therein.

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