Scientific Metals Corp. has entered into an arm’s-length earn-in agreement with MGX Minerals Inc. (XMG: CNX), pursuant to which MGX has been granted the option to acquire a 50-per-cent interest in STM’s Paradox basin lithium brine property located in Utah in the Western United States.
Under terms of the Agreement, MGX has the option to acquire a 50% interest in the Paradox Property by: (i) making a cash payment of CDN$50,000 to STM upon execution of the Agreement; (ii) issuing 150,000 MGX common shares to STM upon execution of the Agreement; and (iii) incurring minimum exploration expenditures on the Paradox Property of no less than CDN$250,000 over the course of a 12 month period. If MGX earns its 50% interest, the parties will negotiate and enter into a joint venture agreement pursuant to which the parties shall be equally responsible for all future exploration and development expenses on the Paradox Property. Further, MGX will have the right to participate in an amount of up to 15% of the gross proceeds of any equity or debt financings of STM for a period of 18 months from the date of execution of the Agreement.
STM President Wayne Tisdale states: “We are pleased to partner with MGX on our exciting petro lithium project in the Paradox Basin. We benefit from being an early mover in the Paradox Basin and securing what we believe to be key ground which historically demonstrated lithium grades. With deep experience and expertise in the oil and gas sector we feel that MGX is the right partner to help explore this exciting new basin. Cementing this joint venture will allow STM to benefit from their Nanoflotation technology that is exclusive to MGX. We look forward to working together to develop our project.”
The Paradox Property consists of an aggregate of 111 mineral claims covering approximately 2,200 acres located approximately four kilometers northwest of Intrepid Potash’s Cane Creek operation. Approximately eight wells have been drilled on the Paradox Property with additional historic wells in the immediate area. Historic exploration, as reported by Southern Natural Gas and documented by the Utah Geological and Mineralogical Survey, reported 500 ppm lithium from well No. 1 Long Canyon (“Concentrated Subsurface Brines in the Moab Region, Utah”, Utah Geological and Mineralogical Survey, June 1965).
Lithium occurs in the basin in oversaturated mineral brine (40 per cent minerals, 60 per cent water) and was discovered during oil exploration when drill wells intercepted the main brine zone (clastic break 31) of the Paradox formation. (“Concentrated Subsurface Brines in the Moab Region, Utah”, Utah Geological and Mineralogical Survey, June 1965).
The Company has not undertaken any independent investigation of the drill results, fluid analysis or other information contained in this press release nor has it independently analyzed the results of the previous exploration work in order to verify the accuracy of the information or whether the information was prepared in accordance with the requirements of National Instrument 43-101. The Company believes that the historical drill results, fluid analysis and other information contained in this press release are relevant to continuing exploration on the Paradox Property. MGX and STM intend to conduct a review of recent and historic well logs, along with chemical analysis in the area and reprocessing of seismic data focusing on mineral brine.
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