US Frac Sand Deposit Dubbed a Potential 'Company-Maker'

CALGARY, Alberta and VANCOUVER, British Columbia, June 23, 2014 (GLOBE NEWSWIRE) -- The oil and gas industry needs more frac sand. Lots more.

The market is expecting double-digit growth in 2014. While Canadian suppliers are attempting to offset the quality and amount of product coming from the US Midwest and making some in-roads, the US is still by far the largest supplier of premium sand with 30 million tons currently used per year and 3.5 million tons in Canada.

And primarily for higher quality sand, measured by 'sieve cuts'; 20/40 being the lowest cut and 70/140 the highest.

Rainmaker Resources (TSX-V:RMG) just inked a huge deal by way of a binding Letter Agreement with Arkansas Silica LLC (ASL) to option the 304 acre Bray Frac Sand Property in NE Arkansas. ASL currently has a purchase option on the property from the landowners. RMG has tested and assessed the initial potential and plans to deliver an NI 43-101 resource estimate in 90-120 days.

The Company has engaged BRS, Inc. of Denver, Colorado; led by Doug Beahm P.E., P.G., an extremely well respected mining industry veteran to complete an NI 43-101 compliant technical report, with a resource estimate.

RMG believes that it can be shipping sand in less than two years, which is significantly less than the nearby property, which took more than three years to get through the permit process.

Recently, Rick Patmore, RMG President and CEO stated: "The Bray Frac Sand property is ideally situated to service the Eagle Ford, Fayetteville and New Albany shale plays. The Ottawa sands are of a top pedigree of frac sand in this industry. Mexico lifted its moratoriums opening another potential and significant revenue stream. This property could quickly turn Rainmaker into a major contender in this market for many years to come."

While the quality of the sand is extremely high, the key to this deal is the location. The property is 20 miles from rail, which is already set up to load sand. Being close to transportation infrastructure means RMG can not only service Canadian clients, but more importantly any customer from Pennsylvania to the massive oil and gas fields of the southern US and into Mexico.

Prior to securing the property, Rainmaker drilled three initial holes and found sand thicknesses of 80, 90 and 120 feet. The quality of the initial tests showed that approximately 80% was top quality sieve cuts of 40/70 (58%) and 70/140 (33%). While there is a great market for all sieves, the higher cut product is exactly the quality in highest demand by the oil and gas industry.

Industry veteran and Director and CFO of RMG Alan Young states: "The particle size distribution will result in good revenue streams and value for application for fracture stimulations in Canada, the US and Mexico. Compared in particular to proppant from Canada, this product is stronger and has a better particle distribution, making it applicable to more stimulation applications."

The only other property in the state is 5 miles away and operated by Bluebird Sand LLC. Both properties share the same formation.

It gets better. Mexico has lifted its moratorium on fracing and has stated that it is open for business. Given the proximity, Rainmaker is in excellent position to supply that market as well.

Hydraulic fracturing is used in the oil and gas industry to increase the flow of oil and/or gas from a well. The producing formation is fractured open using hydraulic pressure and then proppants (propping agents) are pumped into the oil well with fracturing fluid to hold the fissures open so that the gas and oil can flow into the wellbore.

The proppant size, shape, and mechanical strength influence the conductivity of the newly created fractures, and therefore the amount of oil and gas recovered from the well.

The test results in the Bray samples so far, exceed the values laid out by ISO and API making it an excellent source of frac sand for all types of stimulation applications.

Investors should find the terms of the deal with Arkansas Silica compelling: ASL will assign its interest in and to the Option in consideration of payment of $175,000 and the issuance of 2,500,000 shares of Rainmaker's capital stock, payable in five installments over a four year period from the effective date of the agreement. In addition, Rainmaker will pay ASL a royalty of $1.00 per short ton of frac sand extracted, processed, sold and delivered.

Patmore continues: "We are very excited about this opportunity as we believe that the size of this property could turn Rainmaker into a major contender in this arena for years to come. We are definitely looking forward to seeing the results of the more extensive drilling program and quickly moving forward with our development plans."

Rainmaker trades at $0.18 with a market cap of $3 million.

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CONTACT: Corporate Head Office: 706 - 7th Ave. SW Suite 600 Calgary, Alberta T2P 0Z1 Vancouver Office and Mailing Address: 217 - 179 Davie St. Vancouver, BC V6Z 2Y1 Phone: 604 638 8030 Fax: 604 689 4626Source:Rainmaker Resources Ltd.