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TRANSCRIPT
Seymourville Frac Sand Project
in Manitoba (Canada)
January 2014
Disclaimer
This presentation does not constitute or form part of any offer for sale or solicitation of any offer to buy or subscribe for
any securities in Claim Post Resources Inc. (“Claim Post”), nor shall it or any part of it form the basis of, or be relied on
in connection with, or act as any inducement to enter into, any contract or commitment whatsoever. No reliance may
be placed for any purpose whatsoever on the information or opinions contained in this presentation or on any other
document or oral statement or on the completeness, accuracy or fairness of any such information and/or opinions. No
undertaking, representation, warranty or other assurance, express or implied, is made or given by or on behalf of Claim
Post or any of its respective directors, employees or advisers, as to the accuracy or completeness of the information or
opinions contained in this presentation, and (save in the case of fraud) no responsibility or liability is accepted by any of
them for any such information or opinions or for any errors, omissions, misstatements, negligence or otherwise
contained or referred to in this presentation.
The slides and the accompanying verbal presentation are confidential and the slides are being supplied to you solely for
your information and may not be reproduced or distributed to any other person or published, in whole or in part, for any
person. The slides contain forward-looking statements, including in relation to Claim Post’s proposed strategy, plans
and objectives. These forward looking statements are applicable only at the date of this presentation. Such forward
looking statements involve known and unknown risks, uncertainties and other important factors beyond the control of
Claim Post that could cause the actual performance or achievements of Claim Post to be materially different from such
forward-looking statements. Accordingly, you should not rely on any forward-looking statements and Claim Post
accepts no obligation to disseminate any updates or revisions to such forward-looking statements.
2
Strategic Acquisitions and Partnerships
1. On April 16, 2013 Claim Post completed the acquisition of 428 hectares of silica sand quarry
leases located on the east shore of Lake Winnipeg, 200 km NE of Winnipeg, Manitoba. The
purchase price was $1,500,000 in cash(paid) plus a $1.00 per tonne production royalty for frac
sand and $.50 per tonne on other products to Char Crete Ltd.
2. On June 25, 2013 Claim Post completed an option agreement to purchase the 9 contiguous
silica sand quarry leases (306 hectares) from Gossan Resources Limited. The purchase price
was $1,1300,00 cash (payable in 3 instalments every 6 months from June 2014 to June 2015)
and 3 million Claim Post common shares (1 million issued), plus a $1.00 per tonne royalty for
frac sand and $0.50 per tonne on other products.
3. Claim Post has now consolidated the Char Crete and Gossan leases into a single silica sand
deposit totalling 734 hectares, the “Seymourville Frac Sand Project.”
4. Claim Post has met with representatives of Hollow Water First Nation and representatives from
the villages of Manigotagan and Seymourville. Hollow Water and Seymourville have expressed
a desire to joint venture with Claim Post. A draft MOU is in progress.
5. Claim Post has retained P&E Mining Consultants to complete a NI 43-101report using the
Manitoba Government and Gossan drill data which covers about 10% of the total quarry leases
area of 734 hectares.
3
Seymourville Frac Sand Project - Location
4
Black Island
Historical Quarry
Sand Leases
Located 6 km from paved highway and 200km trucking
distance to Winnipeg
White Silica Sand
Black Island
Winnipeg
Seymourville Project
Drilling by Manitoba Government – 1981-1989
5
Char Crete
Gossan
Horizontal Drilling – Multiple Fracking
6
US Oil Industry Drives the Frac Sand Market
7
Key Driver for Demand: Race to North American Self Sufficiency
US Market - Projected Frac Sand Demand vs
Projected Shale Oil Production
8
80-100mt
Estimated
60-80mt
40mt
Actual
31mt
Actual
22mt
Frac Sand
Actual Consumption
of 12 million tons in
2010
Source: Hart Energy Graph - Calgary DUG Conference 2013.
Note: Frac sand tonnage above is plotted only against shale oil production, and excludes
sand demand from an equal amount of millions/BTU of natural gas produced on average from those shale oil wells
Canadian Market – Projected Frac Sand Demand vs
Projected Oil & Natural Gas Production
9
50%
oil
& L
iquid
s +
50%
NG
10mt
7.5mt
2.5 mt
5mt
Hart Energy Graph
Frac Sand Market – US Tonnage Growth
10
0
5000000
10000000
15000000
20000000
25000000
30000000
To
ns
Consumption
(million tons)
2009 6.5
2010 13.0
2011 22.0
2012 31.0
2013 38.0
2017 (estimate) 60.0
2020 (estimate) 100.0
Supply
-Total US frac sand in 2013: 38 million tons for 2.7 million barrels/day new shale oil
- U.S. production comes from Wisconsin (75%), Oklahoma and Texas (25%)
- Wisconsin has 140 frac sand mines in production, 30 processing plants.
- Most mines have $30 to $40 per ton costs loaded on rail or barge.
-The oil industry uses coarser sand, 20- 40, 30 - 50 and 40 - 70 mesh sizes.
-The NG industry uses finer sand 40 -70 and 100 mesh (70-140 mesh) sizes.
Encana - Horn River Basin – Natural Gas
More Fracking - Higher Cash Flow
11
Note: each stage uses 150t of frac sand, now up to 40 fracks
Fracking - Types of Proppants
• Manufactured Proppants - Ceramics >$500t
• Resin Coated Proppants - usually sand $300 to $500t
• Natural sands - RBC BMO long term estimates $90t*
– Ottawa White – Illinois, Wisconsin, Minnesota
– Seymourville White – Manitoba
– Hickory or Brown Sand – Minnesota, Texas
12 (*) BMO and RBC long-term forecasts
Proppant History Review
Sand, 80%
Resin Coated,
10%
Ceramics, 10%
Barnett RCS
Ceramics
1st Frac Job
13
Canadian Imports
Blue color 57
API - ISO 13503-2 for Frac Sand Include
• Roundness > 0.6
• Sphericity > 0.6
• Clusters
• Acid Solubility < 2%
• Turbidity < 250 FTU
• Bulk Density
• Specific Gravity
• Crush strength
• K – Value
14
Gossan PropTester API Test Results
15
Sample Correlation
+0 to 8.999% Variance
ISO & Published Data
Sample Correlation
+9 to 25% Variance
From ISO & Published
Quick Check
ISO
13503-2 Manitoba #155720A
Turbidity (NTU) < 250 4
Krumbein Shape Factors
Roundness > 0.6 0.6
Sphericity > 0.6 0.7
Clusters (%) < 1.0 0
Bulk Density (g/cc) 1.51
Bulk Density (lb/ft3) 94.6
Specific Gravity (g/cc) 2.63
Particle Size Distribution mm Mesh size
0.600 30 < 0.1 0
0.425 40 0.1
0.355 45 18.2
0.300 50 17.4
0.250 60 38.1
0.212 70 24.6
0.150 100 1.6
< 0.150 PAN < 1.0 0
Total 100
In Size -40+70 > 90 98.3
Median Particle Diameter, MPD, mm 0.286
Solubility: 12/3 HCL/HF, 0.5 HR, @ 150 °F, % Wt Loss < 3.0 1.2
pH of Water Extract 8.3
API Crush Analysis, wt.% fines @ 5,000 psi < 8 5.4
ISO Crush Analysis, wt.% fines @ 9,000 psi < 10 9.8
ISO Crush Analysis, wt.% fines @ 10,000 psi < 10 10.4
Source: Qualifying Fluid & Proppant Performance – Nov 20, 2009 – Prepared for Gossan Resources Limited by
PropTester Inc.
Sample Correlation -25 >
X > +25% Variance From
ISO & Published
API Testwork
ISO Proppant Analysis 40/70 mesh
PropTester Sample
ISO 135003-2 for frac sand
Roundness >.6
Sphericity >.6
Strength > 9000psi
Acid Solubility < 2%
Turbidity < 250 FTU
Bulk Density
Specific Gravity
K – Value
Seymourville Sand Deposit – Meets API Guidelines
1. There are many sand deposits in the US and Canada, but very few
meet the rigorous specifications set out by the American Petroleum
Institute (API) as Frac Sand to be used in Hydraulic Fracturing.
2. The specs include crush resistance, roundness and sphericity,
chemical resistance and the amount of fines allowed above and
below the specific mesh size, a few % fines sludge up the hole.
3. Gossan Resources Ltd. (GSS.V) has conducted PropTester API –ISO
tests on samples from its Manitogan Silica Sand Deposit now part of
Claim Post’s Seymourville Frac Sand Project; meets API guidelines
for Frac Sand.(www.gossan.ca)
4. Gossans' test results consistently received ISO 8K or 9K Proppant
ratings for the 20-40 and 30-50 mesh fractions and ISO 9K Proppant
ratings for 40-70 and 70-140 (100 mesh) mesh fractions. The sand is
also well rated in Long Term Conductivity tests. (Gossan Press
release June 25th, 2013)
16
Western Canadian Market for Frac Sand
Seymourville
Project - Manitoba
17
Seymourville Frac Sand Deposit - Main Market
18
Frac Sand Demand – Light Oil Fracking
19
Alberta and Saskatchewan increased light and medium oil 200,000B/d in 2012
556,000 B/D
2012 actual
+150kB/d
Manitoba Oil Industry Facts - 2012
• Produced 15,000 barrels per day - 2010
• Produced 50,000 barrels oil per day - 2012
• 4,365 producing oil wells
• 614 wells drilled in 2012 of which 566 were horizontal wells
• 506 wells produced oil
• There are 510 disposal wells for salt water
• Manitoba Bakken fracking - Estimated 566 wells x 150t/well, or a total
of 80,000t of frac sand imported into Manitoba
• Estevan Bakken area – 800 wells – 120,000t sand
• US Bakken – Main Seymourville coarse sand market - 2,000 wells x
3,000 t/well, or an estimated 6 million tons of sand/year
• Claim Post plans to market 100,000 tons coarse sand from its
Seymourville Deposit to the Bakken area, based on an initial 400,000
tpy plant to be built.
20
Container – Trucking Distance to Bakken
Bakken
Seymourville Frac Sand
Project - Manitoba
Seymourville to Fort
Nelson: 2,500 km by CN Rail
for Montney, Liard and Horn
River Basins
Seymourville to Bakken oil
play - 700km
Bakken oil700 KM
Wisconsin (75% of all US frac
sand comes from a single
sandstone horizon) is 1,000
km further to Western
Canada than Seymourville
Project.
21
Bakkens – Frac Sand Treadmill
22
Frac Sand Demand – Feeding LNG Plants
Frac Sand Demand Increasing
LNG
Apache
Chevron
2015
LNG
Shell
2019
23
Frac Sand Projects in Canada – Very Few
24
Name Capacity Location Status
Moberly – expansion of
silica glass mine
300,000 tpy
(welded sandstone
deposit)
Golden (BC) Feasibility - $30 million
2014 start up
Claim Post (Seymourville
Frac Sand Project)
400,000 - 1,200,000
tpy (sand deposit)
on surface
Seymourville
(Manitoba)
43 -101 Resource Drilling,
Permitting, 2 years to
production, 2015 target
Athabasca Minerals 1,000,000 tpy
(dune sand deposit)
Fort McMurray
(Alberta)
Light rail, high trucking cost,
high Capex ,
Victory Nickel 300,000 tpy plant
Sand deposit - under
60m of solid rock
Medicine Hat
Northern
Manitoba
Mine Capex: $100m pre
strip for frac sand, nickel
zone below needs $12 NI
Stikine – Angus Project
- Nonda Project
Hanson Lake Sands
(Surrounds Winn Bay)
1,000,000 tpy
1,000,000 tpy
(welded sandstone)
800,000 tpy
Prince George,
Nelson (BC)
West of Flin Flon
Capex: C$314 million
Capex: C$496 million
Diesel power, 4:1 stripping
ratio, remote
Sources: Companies Press Releases - SEDAR
Black Island Silica Sand Profile
25
Phase 1 – Area for Initial NI 43-101 Report
26
Gossan
Drilling
Gossan Drilling 40 Sonic holes
10.1m thick silica sand
Phase 2 - 1000m Drilling Program for Global
Tonnage
27
Complete Mining
Rehabilitation Plan
has to be filed to
get mining permit
Phase 3 – Detail Drill Program Near
Proposed Plant site
28
What Seymourville Quarry Will Look Like
29
Proposed Drill Programs for NI 43-101 Updates
Sand within a flat hill (1)
Top of flat hill
Lake Winnipeg
Bedrock; below silica sand
Sand - thickest area
Gossan average – 41 holes
Sand – edges of deposit
Drilling program:
Phase 1 - NI 43 101 based on
Gossan drill data
Phase 2 – Global Tonnage
Phase 3 – NI 43-101 Updates
Drilling Cost for Sonic: $100 to
$150 per meter
2 km x 3 km area to be drilled
– 250 ml (meter level) contour line
– 218 ml water elevation
– 225 ml – 7m above Lake Winnipeg
– 17.3m (within 250ml contour line)
– 10.1 meters thick silica sand
– 6.3m thick ~ 240ml contour line
– 25m depth - 400m & 100m centers
– 40 holes – 1,000 meters
– 40 holes – 1,000 meters
30
(1) See Seymourville Frac Sand Deposit slide for elevation contour lines
Seymourville Deposit – Proposed Mining Phases
• Total area: 734 hectares or 1,600 acres
• Plant site, stockpiles & roads – 40 acres
• Mining cells – 40 acres each, total 40 cells
• Mining Cycle - 160 acres per mining phase (4 cells per phase)
• 40 acres mining, 40 acres being rehabilitated, 40 acres water, clay and
shale storage,, 40 acres next phase
• Manitoba Permitting – up to 2.4 million tpy – 40 year plan
• Phased increases – 400,000 tpy initial to 1,200,000 tpy initial
• Phased expansions to 1.2 or 2.4 million tpy
• Products: frac sand, fine silica products, kaolin clays
• Potential for frac sand resin plant or plated-glass plant
31
Seymourville Deposit – Proposed Mining &
Processing
Mining: 6 summer months of the year
– Loose sand, shallow overburden
– Remove trees (firewood) and strip glacial till materials
– Backhoe and truck operation or slurry pump to plant
– Haul (pump) sand to plant
– Wash clay from sand, cyclone to remove fines
– Wet screen, stockpile 50% of tonnage for winter processing
Processing and Transportation: 12 months per year
– Feed wet sand to dryer, magnetic separator
– Dry screen sand after drying to frac sand size ranges
– Sized frac sand conveyed to individual bins; weight scale below
– Truck sand to Winnipeg – 200km, 3600t storage at rail site
– Load unit trains – 100 cars, 100t per car – 10,000t per train
– Ship by CN, CP or BNSF rail from Winnipeg site
– Truck Containers to Manitoba Bakkens oil plays - 500km
32
Seymourville Deposit – Proposed Plant of
200,000 to 400,000 tpy Capacity
33
CentrePort Rail Yard - Winnipeg
34
Unit Trains CN, CPR, BNSF, Winnipeg
35
3600t
Storage
Designed
Rail 40/70 &100mesh to Fort Nelson – LNG Market
Rail Distances (CN Rail)
Claim Post
Winn Bay
36
Peace River 600 km
Winn Bay 2,200 km
Claim Post 2,500 km
Wisconsin 3,500 km
Railroad freight rates are ~ $0.04 per
ton km based on unit trains of 100,
100 ton railroad cars.
Claim Post’s freight advantage is at
least $40.00 per tonne over sand
imports from Wisconsin by CN
Winn Bay: same overall cost/t as
Claim Post to Fort Nelson but more
trucking distance (approximately
$100 tonne)
Comparative Analysis - Freight Advantage
ALBERTA
Winn Bay or
Seymourville
ProjectTEXAS
NEBRASKA
WISCONSIN
(in $/tonne) Low High Low High Low High Low High
Mining & Processing Costs $65 $65 $50 $50 $50 $50 $40 $40
Margins Earned at Mine Gate $10 $25 $24 $39 $18 $48 $10 $29
Price Charged at Mine Gate (1) $75 $90 $74 $89 $68 $98 $50 $69
Freight to Fort Nelson $100 $100 $96 $96 $165 $165 $171 $171
Handling to Well Site $50 $50 $63 $63 $59 $59 $59 $59
Margins Earned on Final Delivery $10 $25 $10 $25 $10 $40 $10 $29
Delivery Price (FOB Fort
Nelson) $235 $265 $243 $273 $302 $362 $290 $328
Total Margins (Mine Gate &
Delivery) $20 $50 $34 $64 $28 $88 $20 $58
(1) Claim Post's Seymourville Frac Sand Project would have similar economics to the Winn Bay Deposit in Saskatchewan
(2) RBC 2013 Price Estimate $90 per ton of frac sand
Source: www.stikineenergy.com37
CN & CPR - Rail Frac Sand to Canada
38
Seymourville Project
Wisconsin
Winn Bay Mine - Hanson Lake (Saskatchewan)
39
The location of the Seymourville Project would give it the same freight savings as Winn Bay
Source: Talisman DUG 2013 Calgary Logistics Slide
Forward Sales Sand to LNG Market Players
40
Source - Company Reports BMO Capital Markets - ARC Financial Corp
Share Capital
Shares Issued and Outstanding: 95,092,164
Warrants Outstanding (prices between $0.10 and $0.15 expiring in 2014 and 2018): 48,882,983
Options (prices between $0.10 and $0.25 expiring in 2018): 4,050,000
Fully Diluted 148,025,147
Share Price (“CPS” on TSX V):
Recent (January 2014): $0.05
52 week low-high: $0.025- $0.07
Principal Shareholders:Management and Directors 20.01%
John Assman 14.24%
David Wilson 10.52%
41
Liquidity and Work Program
Cash Position (January 2014) $1,000,000
Phase 1 Work Program for 2014:
Drilling (1,000m) and additional API test work $ 200,000
NI 43 101 Report and Scoping Study $ 150,000
Lidar Survey, Engineering and Permitting $ 150,000
G & A, Marketing (1 year) + 10 % contingency $ 500,000
Total $1,000,000
Proposed Additional Financing - Up to 20 million Units at $0.05/Unit $1,000,000(Each Unit consists of 1 common share and 1 warrant which has a strike price of $0.10 and a 3-year term to maturity)
Proposed Uses of Proceeds – Phase 2 Work Program for 2014:
Drilling (1,000m) $ 200,000
Prefeasibility Study $ 300,000
Marketing $ 100,000
Site Work, G&A and contingencies $ 400,000
Total $1,000,000
42
Officers and Directors
Charles Gryba – President, CEO, Director
• Over 40 years experience in gold and base metal exploration plus mining both open pit and underground experience. Patented and now mine proving the DPM mining method with Penoles. President of both TSX and TSX venture companies for past 25 years – extensive experience in raising money for mineral projects. Set up the mining organizations; permitted and started 2 mills and 4 mines in the past 10 years. Industrial minerals experience with talc, magnesite, niobium and tungsten; studied frac sand extensively for past 2 years.
Directors:
John Assman - President CEO Landtran Logistics
Joel Schneyer - Senior Banker Headwaters MB (Denver)
Phil Walford - President and CEO of Marathon Gold
Lowell Jackson - Chairman Kaiser Energy Ltd
Rick Williams - CEO Blackwell Investor Relations
Consultants:Don Hains - Hains Geophysics
Eugene Puritch - P&E Consultants
Richard Wagner - SGS Lakefield
43
Seymourville Frac Sand Project - Summary
1. High quality natural frac sand - meets all API ISO standards.
2. Draft MOU – 70/30 Joint Venture with Hollow Water and Seymourville.
3. Simple mine/mill process with reasonable capital investment
4. Lead time to production is about 2 years; subject to successful
marketing of forward sales of frac sand towards project financing.
5. Strategically located to displace imported Wisconsin frac sand.
6. Railroad access to all major light oil and natural gas plays in Western
Canada.
7. Container access to Manitoba and Estevan and US Bakkens.
8. Major LNG plants being permitted would be production drilling for NG
by the time Claim Post’s Seymourville Frac Sand Project starts
production.
9. Dedicated and experienced team to advance and develop the
Seymourville Frac Sand Project through to production.
44
Contact
45