Trading Symbol: ERA:TSXV
Shares Issued: 22,453,163
(Not for distribution to US wire services or for dissemination in the
United States of America)
HALIFAX, May 1, 2014 /CNW/ - Elcora Resources Corp. (TSXV: ERA)
Elcora has entered into a definitive share purchase agreement dated
March 25, 2014 (the "Agreement") with Sakura Graphite (PVT) Ltd of Sri
Lanka ("Sakura"). Upon completion of this transaction Elcora will own
40% of the issued and outstanding shares of Sakura (the
"Transaction"). Sakura operates the Sakura Graphite Mine located on
Sakura's plots totalling 70 acres in Sri Lanka (the "Mine"). In
addition, Elcora will earn 20% of the net income from the Mine as the
Mine operator, and an additional 30% of the net income from the Mine
for managing the processing of the graphite, for the life of the Mine.
Historically, the Mine operated between 1974 and 1985 and produced as
much as 18,000 tons per year of high purity graphite. The graphite from
the Mine is of natural crystalline vein type. Sakura has invested in
and developed the Mine over the last 3 years and is now nearing
readiness to begin commercial production, with much of the mining
equipment having been upgraded over the last two years. Upgrading of
the remaining equipment will continue as Sakura progresses the project
towards becoming a fully integrated graphite producer. Pursuant to the
terms of the Transaction, Elcora will provide the remaining capital
expenditure required to put the Mine back into commercial production.
The Transaction is not a non-arms length transaction. No Finders Fee
is payable for the Transaction.
Pursuant to the Transaction, Elcora will issue a total 6,827,442 common
shares of Elcora at a price of $0.19 per share (the "Shares") to
shareholders of Sakura on the Closing Date. Elcora will also issue
6,827,442 warrants to the shareholders of Sakura to purchase common
shares of Elcora (the "Warrants"). Each Warrant entitles the holder of
such Warrant to purchase one common share of Elcora at a price of $0.19
for a period of 5 years. Sakura shall be entitled to appoint one
director to Elcora's board, but is not appointing a director to
Elcora's board at the closing of this Transaction.
KWA Holdings (Private) Ltd. ("KWA") will own the remaining 60% of the
outstanding shares of Sakura. J.D.K. Wickramaratne, a Sri Lankan
citizen, will be the sole officer, director and shareholder of KWA.
Upon closing, Dr. Ian Flint will become the VP of Mining for Elcora.
KWA and Elcora have entered into a shareholders agreement for Sakura
(the "Shareholders Agreement"). Pursuant to the terms of the
Shareholders Agreement, on closing Troy Grant, the President and CEO of
Elcora will become the President and CEO of Sakura and Theo van der
Linde, the CFO of Elcora will become the CFO of Sakura. Troy Grant
will also become a director of Sakura. J.D.K. Wickramaratne will serve
as Chairman of Sakura. The Shareholders Agreement grants to the CEO of
Sakura control of daily management and conduct of all the company's
business, including completion of other transactions or corporate
actions, choosing and communicating with Sakura's auditors, Sakura's
internal policy for any related party transactions, Sakura's internal
policy and controls to ensure that any material information concerning
Sakura is disclosed in a news release by Elcora, the internal control
system for the financial reporting of Sakura and payment of all mine
management and processing and refining fees by Sakura.
The Transaction is subject to approval by the TSX Venture Exchange (the
"Exchange"), all other regulatory approvals and the approval of the
shareholders of Elcora, if required.
Sakura Graphite Mine and Property Description and Location
A report on the Sakura Ragedara Property was prepared by Marc Filion,
P.Eng. on behalf of Elcora to comply with the Geological reporting and
disclosure requirements set out under National Instrument 43-101 (the
"Geological Report"). The Report has been reviewed by the TSX Venture
Exchange and accepted for filing. The Report will be filed on SEDAR
and can be viewed at www.sedar.com
The Report documents the exploration and operational history and recent
work on the Ragedara graphite property. Extensive prior workings exist
on the nine - one kilometer square grid blocks including historic mines
from approximately the 1920's and 1980's and the currently operating
Sakura Graphite Mine.
The Ragedara Graphite deposit is located at the north west end of a so
called "high purity natural graphite bearing mountain range" (the
villagers call "Miniran Kanda") which stretches in a north-south
direction for about 8 km bordering the Kurunegala and Mathale District
Since the 18th century, during the period of the Industrial Revolution
in Europe and Western Countries (around 1865) and the period of World
Wars I & II, world demand for high purity crystalline graphite was
mainly satisfied by the exports from Sri Lanka (then Ceylon under
colonial rule by British Government).
According to the history of graphite mining in Sri Lanka, more or less
100 graphite pits have been operated in the above mentioned mountain
range from which graphite has been extracted at shallow depths for
commercial exploitation. This is evidenced by more than 10 abandoned
mine openings located over the 30 acres of mine land at Ragedara, such
as Vihara Pathala, Maillagaha Pathala, Hurigahawala, Hunduwala,
Bangalawala, Nugagaha Pathala, Mahawala and No 2 Pathala. During the
period 1900 - 1920 and 1930 - 1950 production by the above named
graphite pits contributed a considerable portion of all graphite
exports from the island.
The owners of Ragedara & Kolongaha mines (H. L. De Mel & Company) and
Kahatagaha mines managed to continue their operations until the 1950s.
Due to a rapid drop in levels of graphite exports since 1950, more and
more pits were abandoned. Between 1976 and 1985 more than 14 veins
were exposed at Ragadara. Of these, 8 were economically mineable,
having vein widths of 25 - 40 cm, with some close to 2m wide. Reported
production figures during that period of activity vary from 15 000 to
18 000 tonnes per year. Production was halted due to limited sales and
increased costs resulting from a ground slippage, although minor
operations continued until 1990. The property was subsequently
acquired by Sakura in 2011.
The graphite mineralization in the Ragedara mine area is of the natural
crystalline vein type and comprises graphite veins, black-blue and lead
gray in color. Veins are tabular or lenticular in shape and have widths
of a few centimeters to a few tens of centimeters. The largest one
observed at Ragedara was close to 2m wide; the largest one found in Sri
Lanka being 6m wide. The massive crystalline graphite shows uniformity
throughout the veins and is composed of massive to millimeter size
closely packed black graphite flakes. The very clearly marked host
rock contact shows evidence of a chill zone demonstrated by the
presence of 1 to 20 mm long acicular graphite. The general strike trend
of veins is N85°W with an angle of dip of 75° to the south. The
thickest parts of the veins coincide with intersections of fracture
planes in the rock that generally have moderate to steep dip angles.
The lateral extension of the veins along the strike is variable and the
workable part can extend from a few meters to about 50m. Along the
longitudinal axis of the veins, the graphite shows evidence of a pinch
and swell behavior thus affecting the width of the veins. The down dip
extension cannot be estimated, but could be more than several hundred
meters as commonly happens in other similar graphite mines in Sri
Lanka. Kahatagaha Mine which is situated about 8 km south of the
present location has graphite veins extending more than 675m deep which
are still being worked commercially.
In 2011 the Dept. of Geology at the University of Peradeniya executed a
geophysical investigation on one 300m long line over the longitudinal
axis of the property. Subsurface conditions of the target area were
also investigated using two dimensional electrical Resistivity and
Induced Electrical Polarization imaging. In January 2012 a second
resistivity geophysical investigation over five N-S resistivity
profiles were carried out, each having a length between 350 to 400m.
Although the depth of penetration of the resistivity profiles is only
about 40 to 60m, the shape of potential mineralized zones on the
profile images clearly indicate that they extend to great depths. This
is probably due to the increasing thickness of individual graphite
veins or increasing frequency of occurrence of veins towards depth.
Metallurgical test (SGS) results indicate the possibility of separating
the massive crystalline graphite into small grains and flakes in a
number of fine size categories. A dry mechanical process of 15 to 45
min with the use of ceramic grinders followed by sieving shows that
more than 63% of the graphite is greater than 32 mesh with a grade of
97.5% C(t), 20% of the graphite between 32 and 80 mesh with a grade of
97.6% C(t), and the smaller residual material with a grade of 97.2%
Name of the Mine:
Ragedara Graphite Mine
Number of the Mining License
Number of the Exploration License
Unrestricted Exploration License 4 km2 (400 ha)
Industrial Mining License
Category A: Renewable yearly
Two plots totaling 70 acres on a long term government lease (with option
to buy after 35 years) + one of 19 acres which is private property
The land rights and titles to the mine are owned by Sakura, a company
that is wholly owned by KWA Ceylon Holdings Ltd and Fayolle Ceylon Ltd.
prior to the closing of this Transaction.
The mining license has been granted under the condition of a five (5%)
royalty paid to the Sri Lankan government on graphite sales prior to
refining and a two (2%) royalty payable to the Sri Lankan government on
the sale of building stone materials from the FOB value on the
exploitation plus a levy on export of ca 10 USD/t. The industrial
mining license allows for an unlimited production per month. The
project was approved by Parliament of Sri Lanka on April 24, 2012. The
license will automatically renew every year if Sakura conforms to the
conditions of operating the mine. Sakura has also been granted the
right to exploit the granite that will be extracted from the mine when
blasting for building stone materials. Sakura has signed a contract to
sell the stone for road works and is currently building a shredding
plant on an adjacent piece of land.
On April 23, 2012, Sakura was granted an environmental mining
certificate by the Provincial Environmental Authority (North Western
Current graphite extraction totals approximately 20 tonnes per month at
a cost of $136 per tonne of graphite ranging in grade between 94% and
99% which is currently being stockpiled. No mineral processing is
currently performed on the product.
Sakura Graphite (PVT) Limited
All figures presented in USD
10 month Period Ended January 31,
Total Shareholders' Equity
(Loss) Profit for the year /10 month period
Retained loss for the year / 10 month period
These financial statements have been prepared in accordance with
International Financial Reporting Standards ("IFRS") as issued by the
International Accounting Standards Board ("IASB")
Elcora also intends to complete its previously announced non-brokered
private placement offering at $0.16 per common shares with a full
warrant attached entitling the holder to acquire one common share of
Elcora for $0.30 for 18 months (the "Offering") for a minimum offering
of $1,100,000 and a maximum offering of $1,500,000.
The Offering is subject to certain conditions, including but not limited
to the receipt of all required regulatory approvals and consents,
including the approval of the Exchange. The securities issued pursuant
to the Offering will be subject to a hold period expiring four months
and one day after the closing of the Offering in accordance with
applicable securities laws and, if required, the policies of the
This press release was prepared under the supervision of Marc Filion,
P.Eng., who is a Qualified Person. Marc Filion, P.Eng. is the author
of the Geological Report. Marc Filion, P.Eng. has read this press
release and confirmed that it fairly and accurately represents the
information in the Geological Report.
Completion of the transaction is subject to a number of conditions,
including but not limited to, Exchange acceptance and approval and all
other required regulatory approvals.
It is expected that Elcora's stock will resume trading at the open on
Monday, May 5, 2014.
The TSX Venture Exchange does not accept responsibility for the adequacy
or accuracy of this release. No stock Exchange, securities commission
or other regulatory authority has approved or disapproved the
information contained herein. This News Release includes certain
"forward-looking statements". All statements other than statements of
historical fact, included in this release, including, without
limitation, statements regarding potential mineralization and reserves,
exploration results, and future plans and objectives of Elcora, are
forward-looking statements that involve various risks and
uncertainties. There can be no assurance that such statements will
prove to be accurate and actual results and future events could differ
materially from those anticipated in such statements. Important
factors that could cause actual results to differ materially from
Elcora's expectations are exploration risks detailed herein and from
time to time in the filings made by Elcora with securities regulators.
Investors are cautioned that, except as disclosed in the filing
statement prepared in connection with the transaction, any information
released or received with respect to the transaction may not be
accurate or complete and should not be relied upon.
SOURCE: Elcora Resources Corp.
For further information:
Troy Grant, Director, President and CEO, Elcora Resources Corp., T: 902 802-8847 F: 902 446-2001.