Stikine Energy Corporation - QwikReport

STIKINE ENERGY CORPORATION : http://www.stikineenergy.com/ : QwikReport

Frac Sand / Silica Project

Stikine¹s new focus on the potential production of Frac Sand from silica sources in north eastern BC (NEBC) represents a strategic opportunity in the market and a first for what is shaping up to be a massive gas play in region.

It is becoming apparent that there is enormous gas potential in the Horn River Basin, Cordova Embayment, Slave Point Platform and Montney Basin (see map). Development of those areas is entirely reliant on simple sand products to be injected into hydro-fractured (frac) gas wells to facilitate the flow of gas from shales and other rock formations. Billions of dollars are being spent to develop and test the gas potential and for infrastructure in the area. Since the play is relatively new, frac sand products are currently being imported in large quantities from great distances to complete the early wells. Gas exploration companies and well developers are paying hundreds of dollars per tonne for frac sand delivered to the well head, the bulk of which is cost related to shipping thousands of kilometers.

As more and more unconventional gas is tested and developed around North America, supplies of appropriate frac sand will be constrained, and as fuel prices rise delivery costs from far away locations will cause prices for frac sand to rise dramatically too. Stikine has realized an early opportunity; to mine silica/quartzite deposits that are located within only a few hundred kilometers of these gas plays and to process them into various sand products. Importantly, frac sand delivery costs will be minimized, and on an appropriate scale of mining and processing, costs of production are anticipated to provide the foundation of profitable mining operations in the heart of these major gas plays.

In keeping with Management¹s plan to move quickly beyond exploration and to become a near term cash-flowing company, Stikine is uniquely positioned within the region to evaluate, test and develop its properties. Initial testwork will focus on liberating the high-quality silica grains in quartzite to make sand products in various grain sizes, and to further process them into appropriate particle shapes. Processes and equipment to do this are readily available and analagous process operations are common at many mining operations.

In order to properly focus our efforts, both in defining industry requirements and product marketing, the Company has assembled a team of experienced gas completion consultants, with current experience in the NEBC area play and important contacts within the gas industry. Stikine¹s management group and sister company, Roca Mines Inc. (ROK.TSXv) recently developed the first new metal mine in BC in a decade, having successfully permitted and constructed the MAX Molybdenum Mine.

Stikine is positioned early to deliver a critical component to the success of the NEBC gas plays, and intends to maximize its opportunity to develop new silica mining and sand processing operations in the heart of what may become a major gas producing region of Canada. Initial field work and sampling is taking place during the summer of 2009 and the Company will accelerate the definition of resources and advance process alternatives during the coming months.

Maps
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Northern BC Quartz Claims