At the request of IIROC, the Stans Energy Corp. wishes to clarify disclosure from its earlier August 25, 2016 news release titled: Stans Announces MOU for Lithium Stockpile and Mill.
Stans Energy Corp. (“Stans” or the “Company”) is pleased to announce that it has entered into a Memorandum of Understanding (the “MOU”) for an option to acquire 100% of Pervomayskiy GOK LLC (“PGOK”), a Russian limited liability corporation, the owner of a Lithium Mineralization Stockpile (the “stockpile”), the Zabaikalsky Mill (the “mill”) and supporting infrastructure.
Under the terms of the MOU, Stans and PGOK (together the “Parties”) have agreed on consideration for the possible development of the stockpile, re-commissioning of the mill and the addition of a lithium carbonate production facility. After preliminary evaluation of the in-house Technical Economic Assessment (the “TEA”) prepared by PGOK according to Russian standards in 2015, Stans confirms its intention of conducting due diligence on the stockpile of lithium bearing mineralization, the renovation of the mill and the development of a process circuit for producing lithium carbonate, all according to NI 43-101 standards.
Stockpile and Mill
The stockpile and mill are associated with the historic mining operations from the Zavitinsky Lithium and Beryllium Mine (the “mine”), which is about 250 km from Chita City, located in the Trans-Baikal Region of Russia. A full array of infrastructure is available near the stockpile and mill including: electricity generating power station and substation, heat and water supply, tailings storage and railways terminals. The mill is directly connected with the Trans-Siberian Railway.
The mine was in production from 1942 through the mid 1990’s, and was the Soviet Union’s only active lithium mine. The mine and mill produced over 100,000 tonnes of lithium in concentrate form over its life span. A cut-off grade of Li₂0 of 0.3% was set by the state for mining operations, as the primary use of lithium at that time in the Soviet Union was for military purposes and market economics were not a consideration. The mill produced concentrates of both beryllium and lithium while the mine was in production, and after the mine was closed the mill continued to process fluorite, gold, and antimony ore through to 2010 when it was put under care and maintenance due to a lack of feed material. The stockpile contains according to historic estimates approximately 19,000,000 tonnes of mineralized material grading at or below 0.3% Li₂0, This historical estimate does not constitute a current mineral resource or mineral reserve. A qualified person has not done sufficient work to classify the historical estimate as current mineral resources, Stans is not treating the historical estimate as current mineral resources.Stans will be confirming both the volume and grade as part of its’ due diligence process. Upon completion of legal and technical due diligence, Stans will carry out a Definitive Feasibility Study (“DFS”) to evaluate the new lithium carbonate production technology developed by VNIIHT (The Russian Leading Institute of Chemical Technology) and to determine the re-commissioning and upgrading costs and timelines of the mill.
Memorandum of Understanding
The MOU establishes the Parties decision on phased implementation of this project under the following conditions:
Phase 1. Resource estimation and TEA confirmation
1. PGOK shall provide Stans with all legal and technical documentation on the stockpile, the mill, the over-all project, including new lithium carbonate production technology and PGOK corporate structure, on a timely basis.
2. Stans shall then conduct a full geological audit of the stockpile to estimate the lithium mineral resources by the Canadian standards specified in NI 43-101 (Standards of Disclosure for Mineral Projects).
3. Stans will earn the right to acquire a 5% participatory interest of PGOK in exchange for the satisfactory completion of due dilligence at Stans’ expense (up to US$1million)
Phase 2. Definitive Feasibility Study design
Provided that the legal and geological due diligence is acceptable to Stans, Stans shall then be responsible to produce a DFS of the overall project and shall have an option to acquire an additional 25% of participatory interest in PGOK based on Stans completing the DFS at its expense (budget to be determined).
Phase 3. Construction and the start-up of the mine
Stans shall arrange for financing and construction of the stockpile processing operations and shall have an option to acquire up to 100% of PGOK ownership. The final decision of the structure of the participants’ interests in PGOK and the number of Stans’ shares to be owned by the PGOK shall be determined in good faith by the Parties.
“This MOU represents an exciting new opportunity for Stans and our stakeholders as we embark down a path of due diligence for the potential of developing a lithium prospect. The intensive use of lithium and its down-stream products represent a fundamental pivot in global energy consumption and storage. We are proud to be part of this change and look forward to the challenges ahead. Stans’ experience in the redevelopment of the Kutessay-II Mine and Kashka Rare Earth Processing Plant will be utilized in this challenging project, and we are confident that our technical team and Stans’ management are up to the task,” states Rodney Irwin, Interim President and CEO.
The scientific and technical information in this document was reviewed, verified and compiled by Stans Energy Corp.’s geological and mining staff under the supervision of the company’s qualified person, Dr. Gennady Savchenko FGS, Director of International Mining Operations, Stans Energy Corp.
The property description is translated from Russian and taken from historical information.
The source and data of these historical estimates are from a Technical Economic Assessment of the stockpile and mill completed by PGOK in 2015.
About Stans Energy
Stans Energy Corp. is a resource development company focused on advancing rare earth and specialty metals properties in areas of Central Asia and Russia. Stans acquired the past producing rare earth mine, Kutessay II, in the Kyrgyz Republic in 2009. Since that time the Government of the Republic of Kyrgyzstan took expropriatory actions against the Company’s interests in that country, Subsequently Stans Energy applied to international arbitration to resolve the conflict. On June 30, 2014, Stans Energy was awarded US$118 Million by the Arbitration Tribunal at the Moscow Chamber of Commerce and Industry. On October 24, Stans Energy arrested 47 million shares of Centerra Gold (TSX: CG) as security in this matter. This security allows the Company to pursue the recognition of its arbitral award against the Kyrgyz Republic in the Canadian court system. Stans is now seeking recognition by the Ontario Court of Justice to collect US$ 118 Million worth of Centerra Gold shares.
We seek safe harbour.
Interim President & CEO
VP Corporate Development
FORWARD LOOKING STATEMENTS: This document includes forward-looking statements as well as historical information. Forward-looking statements include, but are not limited to, use of proceeds from the Offering, the completion of the Offering, the continued advancement of the company’s general business development, research development and the company’s development of mineral exploration projects. When used in this press release , the words “will”, “shall”, “anticipate”, “believe”, “estimate”, “expect”, “intent”, “may”, “project”, “plan”, “should” and similar expressions may identify forward-looking statements. Although Stans Energy Corp. believes that their expectations reflected in these forward looking statements are reasonable, such statements involve risks and uncertainties and no assurance can be given that actual results will be consistent with these forward-looking statement. Important factors that could cause actual results to differ from these forward-looking statements include the potential that fluctuations in the marketplace for the sale of minerals, the inability to implement corporate strategies, the ability to obtain financing and other risks disclosed in our filings made with Canadian Securities Regulators.