Graphite One Resources Inc. Executes Graphite Creek Lease Agreement
May 28, 2015 (Source: Marketwired) — Graphite One Resources Inc. (TSX VENTURE:GPH)(OTCQX:GPHOF) is pleased to announce that its wholly owned subsidiary, Graphite One (Alaska) Inc. (“Graphite One” or the “Company”), an Alaska corporation, has executed a definitive long-term lease agreement (the “Lease”) with Kougarok LLC for its 24 unpatented federal mining claims (the “Leased Claims”). These 24 claims, together with certain adjoining state mining claims already owned by the Company (the “Owned Claims”), collectively make up Graphite One’s Graphite Creek Property (the “Property”).
Kougarok LLC, a member-managed Alaska limited liability company, optioned the Leased Claims to the Company in 2012. Key provisions of the final Lease include the following:
- Term: an initial 20 year term, commencing effective as of January 1, 2014, with provisions to extend for two successive 20 year periods and, ultimately, for as long as production continues from the Property.
- Advance Royalty: US $30,000 paid upon execution of the Lease and US $30,000 payable on or before January 1 and every anniversary through January 2019, then increasing by US $10,000 each year thereafter until production commences. All advance royalties paid may be recouped from production royalties.
- Production Royalties: a percentage of the net smelter returns on production derived from lands, as follows: from lands in the 4 federal claims located in 1943 (the “Oldest 4 Federal Claims”) – 5%; from lands within the other 20 federal claims (the “Other Federal Claims”) – 2.5%; from lands within state claims staked by the Company within the area of interest – 5%; and from lands within state claims acquired by the Company within the area of interest- 2.5%. The Company has the option during the Lease term to reduce all production royalties by up to 2% by paying US $2 million for each 1% reduction.
- Conditional Relinquishment: the Company may elect to relinquish one or more of the Leased Claims and thereafter to rely on its state mining claims, under the terms set forth in the Lease.
The Company announced on March 3, 2014, that it had earned the right to enter into the Lease as a result of having satisfied its obligations under the Graphite Creek Option Agreement with Kougarok LLC. The Company estimates that over 90% of the 17.95 million tonnes of indicated resources (grading 6.3% graphitic carbon using a 3% Cg cut-off grade) announced on March 17, 2015, are situated within the Oldest 4 Federal Claims.
The United States Department of the Interior, Bureau of Land Management (“BLM”) has advised Graphite One that the 20 Other Federal Claims were located when federal claims could be initiated only for “metalliferous minerals” and graphite is not a metalliferous mineral. The State of Alaska has selected all of the lands within the Leased Claims, however, and Graphite One owns the senior state mining claims covering the same ground. As a result, if any of the Leased Claims are abandoned or relinquished, the State of Alaska can acquire the affected lands as part of its statehood entitlement and recognize Graphite One’s state claims as the senior state claims covering the new state lands. Under the State’s mining law and the current land status, the Company’s Owned Claims, as the senior state claims on the ground, would automatically extend to the new state lands formerly within any abandoned or relinquished federal claims, and the Company would enjoy rights similar to those granted by the federal mining law to the holders of valid federal claims, including the exclusive right to mine and remove the graphite resources contained within such lands, subject only to certain royalties owing to the State of Alaska and Kougarok and others recognized by the Company.
The Company’s Owned Claims comprise 28 state mining claims acquired by the Company in January 2012 (the “Acquired State Claims”) and 77 state claims originally staked by the Company in 2012. In September 2014, a competing claimant advised Graphite One that he believed the 28 Acquired State Claims had been improperly located and thus junior to his 28 state mining locations made later, in October 2012, on the same lands. This competing claimant has alleged that the locator of the 28 Acquired State Claims was not qualified to locate the claims and that such locations were therefore null and void from the beginning, as opposed to being merely voidable until they were acquired in January 2012 by the Company (an Alaska corporation qualified to own state claims).
Graphite One has investigated the allegations of the competing claimant and believes that the best interpretation of the state law relating to qualifications as applied to this situation is identical to that which would follow if federal mining law applied in this situation, namely that (a) state mining locations made by an unqualified person are voidable, not void, and (b) acquisition of such locations by a qualified owner such as Graphite One (Alaska) Inc. cured any defect in the locations due to the original locator’s lack of qualifications. Graphite One will vigorously assert its rights as against this or any other competing claimant, if the matter cannot be resolved by agreement.
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Mr. David Hembree, C.P. Geol., the Company’s General Manager Operations, is a Qualified Person as defined under National Instrument 43-101. He has verified the information contained in, and has reviewed and approved the contents of, this press release.
About Graphite One Resources Inc.
GRAPHITE ONE RESOURCES INC. (TSX VENTURE:GPH)(OTCQX:GPHOF) is exploring with the intent to develop the Graphite Creek Project, USA’s largest known large flake graphite deposit situated on the Seward Peninsula of Alaska about 60 miles north of Nome. The Project is progressing from the exploration to the evaluation phase. Work to date has identified a large, high grade and at-surface resource with simple geology and good mineralization continuity. The Project has the potential to produce products that will effectively compete in the high end battery market (for both electric vehicles and power storage) as well as other markets for purified graphite and graphite by-products.
ON BEHALF OF THE BOARD OF DIRECTORS
“Anthony Huston” (signed)
For more information on Graphite One Resources Inc. please visit the Company’s website, www.GraphiteOneResources.com.
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.
This release includes certain statements that may be deemed to be forward-looking statements. All statements in this release, other than statements of historical facts that address timing of receipt of regulatory approvals, exploration drilling, exploitation activities and events or developments that the Company expects, are forward-looking statements. Forward-looking information in this news release includes statements about inferred resource estimate for the Graphite Creek Project, the potential existence and size of mineralization within the Graphite Creek Project; geological interpretations and statements about Graphite One’s strategy, future operations and prospects. Information concerning inferred mineral resource estimates also may be deemed to be forward-looking information in that it reflects a prediction of the mineralization that would be encountered if a mineral deposit were developed and mined. Information concerning inferred mineral resources estimates also may be deemed to be forward-looking information in that it reflects a prediction of the mineralization that would be encountered if a mineral deposit were developed and mined. Although the Company believes the expectations expressed in such forward-looking statements are based on reasonable assumptions, such statements are not guarantees of future performance and actual results or developments may differ materially from those in the forward-looking statements.
Factors that could cause actual results to differ materially from those in forward-looking statements include market prices, exploitation and exploration successes, continuity of mineralization, uncertainties related to the ability to obtain necessary permits, licenses and title and delays due to third party opposition, changes in government policies regarding mining and natural resource exploration and exploitation, title matters, and continued availability of capital and financing, and general economic, market or business conditions.
Readers are cautioned not to place undue reliance on this forward-looking information, which is given as of the date that is expressed in this news release, and the Company undertakes no obligation to update publicly or revise any forward-looking information, except as required by applicable securities laws. For more information on the Company, investors should review the Company’s continuous disclosure filings that are available at www.sedar.com.
The mineral resource estimates reported in this news release were prepared in accordance with National Instrument 43-101 Standards of Disclosure for Mineral Projects (“NI 43-101”), as required by Canadian securities regulatory authorities. For United States reporting purposes, the United States Securities and Exchange Commission (“SEC”) applies different standards in the classification of mineralization. In particular, while the terms “measured,” “indicated” and “inferred” mineral resources are required pursuant to NI 43-101, the SEC does not recognize such terms. Canadian standards differ significantly from the requirements of the SEC. Investors are cautioned not to assume that any part or all of the mineral deposits in these categories constitute or will ever be converted into reserves. In addition, “inferred” mineral resources have a great amount of uncertainty as to their existence and great uncertainty as to their economic and legal feasibility. It cannot be assumed that all or any part of an inferred mineral resource will ever be upgraded to a higher category. Under Canadian securities laws, issuers must not make any disclosure of results of an economic analysis that includes inferred mineral resources, except in rare cases.
United States investors are advised that current mineral resources are not current reserves and do not have demonstrated economic viability. All figures are rounded to reflect the relative accuracy of the estimate and in keeping with “best practise principles”.
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