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MGX Minerals Inc. (CSE:XMG) reported that it signed a Mining Lease Agreement for the exploration, development and mining of the Needles magnesite deposit in San Bernardino County, California. Under the Agreement, MGX has the right to lease Needles for up to 100 years, with renewal options occurring every 10 years, and by making annualized lease payments (USD) of $12,000, $24,000, and $36,000 in years 1-3 respectively and $36,000 per annum plus cost of living adjustment thereafter. The Company also must pay $5,000 within 30 days and issue $10,000 in MGX common shares.
As quoted in the press release:
Needles has been explored intermittently since the 1930’s. Exploration to date has focused mainly on an area of interest located within patented claims, where mineralized magnesite beds occur discontinuously across an approximate strike length of 800 meters and are believed to reach widths of up to 200 meters in areas. A 1985 evaluation by the California Geological Survey (DMG Open-File Report 85-18) noted the unusually pure magnesite mineralization and suggested that Needles may contain in excess of 500,000 short tons of magnesite based on the 43 samples collected previously by the United States Geological Survey (USGS).*
“We believe the acquisition of Needles further solidifies our portfolio of magnesite properties and expands our operations into the United States,” stated MGX President and CEO Jared Lazerson. “Needles is strategically located to provide magnesium oxide wallboard to the southwestern United States, which represents one of the largest construction markets in North America.”
The Company has begun preliminary planning at Needles to build and operate the only magnesium oxide (MgO) wallboard production plant in the United States. Initial production is targeting 10 million sheets of wallboard annually.
Magnesite ore will be calcinated to produce caustic calcined magnesia (CCM), which will act as a feedstock to produce MgO wallboard. MgO wallboard is generally known to be stronger and lighter than traditional wallboard as well as being fireproof and non-toxic. MgO wallboard is often used in areas prone to flooding as the boards can retain moisture, dry out, and still retain their shape and integrity.
Pursuant to the Agreement, MGX has the right to lease Needles for up to 100 years, with renewal options occurring every ten years, and by making annualized lease payments (USD) of $12,000, $24,000, and $36,000 in years 1-3 respectively and $36,000 per annum plus cost of living adjustment thereafter. Additionally, the Company must pay $5,000 within 30 days and issue $10,000 in MGX common shares. The Company must incur a minimum of $350,000 in exploration and development expenditures before June 15, 2018. The underlying landowner will retain a 10% net profit interest which may be purchased by MGX at any time by making a one-time payment of US$10 million.
Click here to read the MGX Minerals Inc. (CSE:XMG) press release