|
16 March 2012
NEWS RELEASE KEX2012-03
KENT EXPLORATION AMENDS NON-BROKERED PRIVATE PLACEMENT, ADDS ROYALTY INTEREST FROM FUTURE BARITE MINE REVENUE..
Kent Exploration Inc. KEX: TSX.V, (the "Company" or "Kent") announces that, subject to approval by the TSX Venture Exchange ("TSX-V"), it is amending its previously announced non-brokered private placement (see news release dated Jan 26, 2012) consisting of up to 12 million Units at $0.05 cents per Unit for gross proceeds of $600,000 to 20 million Units for gross proceeds of $1,000,000.
The Company will issue a Gross Revenue Royalty Interest Certificate (the "Royalty") to subscribers to the financing for each twenty (20) Units subscribed for. The Royalty attached to the Unit is based upon 2 Million Royalty Certificates and will entitle the holder to receive a pro-rata share of 10% of any gross revenue from barite sales from the Flagstaff Barite Mine while under control of the Company for the economic life of the mine, which is projected to be ten years.
Graeme O'Neill, the Company President and CEO comments: "More companies are recognizing that generating cash flow is imperative in these markets and we have the ability to commence generating cash flow in 2012. Our immediate goal is to establish sufficient working capital on hand to be used to generate this cash flow from our permitted barite mine this year. Any positive cash flow generated will minimize our need for future financings, reduce future dilution and assist us in advancing our significant gold assets in New Zealand. By providing this Royalty Interest to the subscribers to our current financing we are providing additional security to those who are supporting the Company financially, while at the same time helping secure the Company's future prospects for the benefit of all shareholders."
Barite is used in the oil and gas well drilling industry as a weighting agent and has seen substantial price appreciation in the past few years. The mine gate price has increased by US$15.80 from the US$45.20/ton gate price published by the USGS in 2007 to the current published price of US$61/ton and pricing is expected to continue appreciating in the coming years. Of the 2,800,000 tons used in North America in 2011, only 640,000 tons were produced in the Continental United States, with the balance being imported mostly from China, with a price FOB China of approximately US$109/ton (USGS reports).
Under the current off-take agreement between Albar Industrial Minerals and the Company, the sales price per ton of barite for each annual period is established by the United States Geological Survey ("USGS") in its annual barite pricing survey published at the end of each year. For 2012 that price is US$61/ton at the mine gate.
An example of the pro-rata share distribution would be in the event the Company sold 50,000 tons of barite at US$61/ton, gross revenue would be approximately US$3 million. 10% of the gross revenue (US$300,000) would be distributed among the 2 million Royalty Certificates on a pro-rata basis at the end of each fiscal year. In the example quoted, 10,000 Units would receive approximately $1,500 in distribution at the end of the year. The Company currently has approximately 30,000 tons of barite stockpiled from its 2011operations ready for final processing for sale and is planning to produce 65,000 tons in 2012. The Company is permitted to mine up to 100,000 tons of barite per annum from the Flagstaff barite mine with gross revenue potential of up to US$6.1 million dollars per year. In late 2011 the Company received requests to supply 265,000 tons of barite from the Flagstaff mine.
Shares subscribed for in the Private Placement are subject to a four (4) month and one day hold period.
The proceeds of the financing are to be used for working capital for the Flagstaff Barite Project, and for general and corporate purposes. Finder Fees may be payable according to the policies of the TSX Venture Exchange.
***********************************************************************
Kent Exploration Inc. is a junior exploration company with a 100% interest in all its major projects, and is planning on building shareholder value through establishing cash flow from its Flagstaff Mountain, WA, barite mine. Any positive cash flow is to reduce dilution and fund exploration on its three major high grade gold prospects (Alexander River, Paparoa and Lyell), in the highly prolific West Coast South Island gold fields of New Zealand. Additional shareholder value has been established through its approximately 22% interest in Archean Star Resources Inc, ("Archean") which is listed on the TSX Venture Exchange under the symbol ASP.
The Company has an experienced management and technical team with extensive exploration expertise and offers investors the potential for a major gold discovery on its New Zealand gold projects..
This News Release has been prepared on behalf of the Kent Exploration Inc. Board of Directors, which accepts full responsibility for its contents.
ON BEHALF OF THE BOARD
"Graeme O'Neill"
Graeme O'Neill, President
Neither the TSX Venture Exchange, nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange), has reviewed, nor do they accept responsibility for, the adequacy or accuracy of this news release.
The statements made in this Press Release may contain forward-looking statements within the meaning of applicable Canadian securities legislation that may involve a number of risks and uncertainties. Actual events or results could differ materially from the Company's expectations and projections. These include risks associated with the mineral exploration and mining industry such as economic factors, government regulation and approvals, environmental risks, success of exploration activities, future commodity prices, capital expenditures, requirements for additional capital, changes in project parameters as plans continue to be refined, conclusions of economic evaluations, the Company's history of operating losses and uncertainty of future profitability. Important factors that pertain to the risks and uncertainties associated with the Company's business are discussed more fully in the Company's disclosure documents filed from time to time with the Canadian securities regulators and available on www.sedar.com. While the barite mine is permitted for production at a rate of up to 100,000 tons per year the Company advises the resource is of a historic nature, is not NI-43-101 compliant and the Company is relying upon the historic resource estimates..
|