Gold Star acquires Trutch sulphur project
2008-06-05 07:43 MT - News Release
Mr. Patrick Morris reports
GOLD STAR INCREASES ITS SULPHUR HOLDINGS, ACQUIRES AN ADDITIONAL HISTORIC DEPOSIT IN B.C.
Gold Star Resources Corp. has acquired, subject to TSX Venture Exchange approval, the Trutch sulphur project, located in northeastern British Columbia. The Trutch sulphur project consists of approximately 329 square kilometres (81,373 acres) of mineral tenures filed with the British Columbia Ministry of Energy, Mines and Petroleum Resources.
The company's area of interest straddles the Alaskan Highway (No. 97) at a point approximately 250 kilometres northwest of Fort St. John, B.C., or 115 kilometres south of the railhead in Fort Nelson, B.C. Three petroleum exploration wells within this area were drilled during the late 80s and are first referenced in the Province of British Columbia's Geological Fieldwork 1988, page 531, and further sourced both in the Province of B.C.'s Capsule Geology Reports as well as the Society for Mining, Metallurgy & Exploration (SME) 1992 Annual Meeting as follows:
* Hole co-ordinates: 57 46' 07" N, 122 55' 45" W. "A drillstem test run for the depth interval of 10,465 to 10,710 feet intersected a 20ft showing of solid sulphur."
* Hole co-ordinates: 57 49' 52" N, 122 57' 30" W. "A major sulphur showing occurred in this well hole in the Elk Point evaporates of the Middle Devonian age ... from 10,500 to 10,701 feet drill stem testing recovered 90 feet of native sulphur."
* Hole co-ordinates: 57 44' 05" N, 123 09' 15" W. "The Middle Devonian Pine Point beds consist of dolomite with strong secondary mineralization showing pyrite, galena, sulphur and dolomite ... Sulphur crystals are common in dolomite from 10,490 feet. It has been estimated there is 20 percent sulphur in the Pine Point showing."
A paper titled "Frasch Sulphur Opportunities in British Columbia and Alberta," presented by Z.D. Hora of the BCGS, for the SME in 1992 covered the earlier postulations proposed by V.F. Holister in 1977 and 1984 that the Western Canada sedimentary basin's potential for native sulphur or Frasch sulpher deposits exists, having anhydrite as a major component. Interpretations of the company's Coronation sulphur deposit by Hollister in 1984, expanding on its discovery in 1966, can be used as a geologic model for other native sulphur deposits that may be found in the British Columbian parts of the Western Canada sedimentary basin. The above summarized drill hole data, generated subsequent to Hollister's predictions, portray his belief that anticlinal and fault traps have furnished sites for the accumulation of petroleum, natural gas and sulphur.
Readers should note that the above information on historic work performed on the property was done prior to implementation of NI 43-101, therefore the results spoken of do not comply with modern reporting standards and should not be relied upon until such time as additional work is completed on the property, including preparation of an NI 43-101 report.
Sulphur, primarily used to produce sulphuric acid, is an essential element used in the production of many basic global products including the production of diammonium phosphate or DAP, a common fertilizer. With the demand for food production increasing to meet the needs of expanding economies in heavily populated portions of the world, in particular Asia, the use of fertilizers to strengthen plant growth and increase crop production is also growing. To meet the increased demand for fertilizer, sulphur, long relegated to byproduct status, is now gaining attention to meet today's increased demand. Keeping pace with other agricultural products worldwide, sulphur has seen dramatic increases in both demand and pricing, having risen from $50 per tonne to $650 per tonne in the past 15 months.
"What's the real reason food prices are skyrocketing. Is it the corn ethanol and the weak dollar? Yes, but it's also the cost of sulphuric acid, a key ingredient in fertilizer. Sulphur is fetching $500 a ton, up from $50 just a year ago, meaning fertilizer demand has pushed prices for the plant nutrient up 65 per cent in the past year -- faster than the 43-per-cent increase in farmers fuel prices and a 30-per-cent increase in prices for seeds," says the Wall Street Journal.
Currently, the major source of Sulphur in Canada has come as a byproduct extracted from oil and gas production. In limited circumstances, elemental sulphur is found as a native mineral in deposit form where modern mining methods such as Frasch in situ recovery (ISR) can be used to extract the sulphur, while minimizing the footprint associated with this type of well head mining. Historic Frasch sulphur operations existed mainly in Texas dating back as long as 80 years with present day operations by Freeport McMoran being conducted off shore in the Gulf of Mexico with two dedicated molten sulphur bulk carrier ships dedicated to product delivery.
The agreement: Cost of the acquisition of the Trutch sulphur project, acquired from arms-length vendors, includes payment of a total of $210,000 and issuance of 800,000 shares of the company as follows:
* $30,000 payable upon signing;
* 200,000 shares upon the earlier of exchange approval, or 90 days after execution of this agreement;
* $40,000 and 200,000 shares due six months after exchange approval;
* $60,000 and 200,000 shares due 18 months after exchange approval;
* $80,000 and 200,000 shares due 24 months after exchange approval.
The vendors will retain a 2-per-cent net smelter royalty, 50 per cent of which can be purchased from the vendor for the sum of $2-million at any time after commencement of commercial production as defined in the agreement. A finder's fee may be payable on the acquisition as per TSX Venture Exchange regulations.
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