Sparton Resources Announces Receipt of Payment for Battery Commissioning
TORONTO, ONTARIO--(Marketwired - Jun 9, 2016) - Sparton Resources Inc. (TSX VENTURE:SRI) ("Sparton" or the "Company") is pleased to announce that the full payment of RMB 15.265 million (approximately $C3.2 million) was received by the Company's client for the commissioning of the Zhangbei Project's 8 Megawatt Hour Vanadium Flow Battery on June 7, 2016, from the battery's owner, State Grid North China Company Limited ("State Grid"). (Please see Sparton news release dated April 4, 2016 for background).
Commissioning Acceptance and Payment Confirmation
The Company's China operating subsidiary, Jiujiang Sparton Vanadium Trade and Tech Co. Ltd. ("JJSP"), had successfully completed commissioning of the battery and it was accepted by State Grid in late February 2016, at which time, State Grid was invoiced by JJSP's client, the battery builder.
Proceeds of the payments will be disbursed by the client under a court-supervised payment process. After certain payments are deducted by the court, expected to be in the range of RMB13 million (approximately C$2.6 million), the balance (approximately C$600,000) will be paid to JJSP by its client. JJSP will then repay VanSpar, the Company's funding vehicle for this project (see below for further details).
A three-year monitoring and maintenance program for the Zhangbei Project battery has been prepared and accepted by State Grid. This program will result in annual payments of approximately C$1.14 million, which will fully accrue to JJSP from its client. After deduction of annual expenses and estimated warranty costs (estimated at C$250,000) it is expected that payments of up to C$900,000 will accrue to JJSP and VanSpar annually under this program.
Funding
Funding for the commissioning work and ongoing maintenance has been arranged by VanSpar Mining Inc. ("VanSpar"), a 90.4% owned Sparton subsidiary. The funds were raised through an offering of convertible debentures which would, if the conversion feature is exercised by all of the current debt holders, reduce Sparton's ownership in VanSpar to approximately 84%, fully diluted. Funds raised by VanSpar were advanced to JJSP, which is 90% owned by VanSpar. JJSP, as a Chinese incorporated entity, has the commissioning and maintenance contract with the builder of the battery. Additional financing efforts by VanSpar are continuing to support the ongoing monitoring and maintenance of the battery.
Company President, Lee Barker, commented: "Payment by State Grid, after a rigorous commissioning program, is another positive step forward for the Company. The funds received will ensure coverage of repayment for the debt financing we arranged to support this work. The ongoing maintenance program revenue over the next 3 years will also provide cash flow. As an extension to our subsidiary's success in assisting with the commissioning and maintenance program, we are continuing to pursue the opportunity to become directly involved in this industry. Advanced negotiations are underway, related to funding and potential acquisition of an international vanadium battery manufacturing group in association with strategic partners. The payment deductions would be applied as a reduction to the purchase price of the battery manufacturer should the Company proceed with this acquisition. Both of these opportunities arose out of our activities in pursuing vanadium exploration and mining opportunities in China. Those vanadium exploration and mining objectives continue to be part of Sparton's long-term plans."
About the Zhangbei Project
The Zhangbei Project, jointly launched in May 2010 by the Ministry of Finance, the Ministry of Science and Technology and the National Energy Bureau, is operated by State Grid. It is located approximately 180 km north of downtown Beijing, near Zhangjiakou, in Hebei Province. It integrates wind power, solar power, energy storage and smart grid transmission technologies. Clean power generated by this project supplies a portion of north China's energy needs. The energy storage equipment currently installed includes the 8 Megawatt Hour Vanadium Flow Battery commissioned through the efforts of JJSP.
Zhangbei is China's largest wind and solar energy electricity generation and storage installation. It currently includes 500 megawatts of wind power and 100 megawatts of solar power, as well it is the world's largest battery energy storage station. It covers a total land area of 200 square kilometres and is a key component of China's Golden Sun Photovoltaic Solar Pilot Project.
The project is in Phase 2 of development and proposals for up to 100 megawatt hours of additional energy storage may be forthcoming. A Phase 3 is also planned.
Because the renewable energy generated and stored by this project supplies a portion of north China's energy needs, it will play an important role in China's "clean, green" 2022 Winter Olympics, which has several competition sites based nearby. The 8 Megawatt Hour Vanadium Flow Battery is a key element in the storage and release of clean electricity into the north China power grid. Currently, about 25 megawatt hours of energy storage capacity is installed at Zhangbei and project planning forecasts this to increase to approximately 100 megawatt hours. State Grid is expected to install additional vanadium flow batteries to support this expansion.
International Energy Storage Initiatives
In parallel to many international programs supporting energy storage projects in Europe, Asia and North America, the China Central State Energy Authority announced this week that is was instituting subsidy programs for energy storage projects in approximately 20 provinces in northwest, central and northeast China. These are expected to be similar to programs in Europe, the US and several provinces in Canada. It is clear that vanadium flow battery installations will be a large component of these projects and the international demand for this technology is now gaining wide acceptance and recognition in the marketplace.
Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
Forward-Looking Statements
Information set forth in this news release involves forward-looking statements under applicable securities laws. The forward-looking statements contained herein include, but are not limited to, financings, equipment commissioning processes and other transactions being pursued, and all such forward-looking statements are expressly qualified in their entirety by this cautionary statement. The forward-looking statements included in this news release are made as of the date hereof and the Company disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as expressly required by applicable securities legislation. Although the Company believes that the expectations represented in such forward-looking statements are reasonable, there can be no assurance that such expectations will prove to be correct and, accordingly, undue reliance should not be put on such forward-looking statements. This news release does not constitute an offer to sell or solicitation of an offer to buy any of the securities described herein.
We Seek Safe Harbour.
Contact
Sparton Resources Inc.
A. Lee Barker, M.A Sc., P. Eng.
President and CEO
647-344-7734 or Mobile: 416-716-5762
647-344-7734
info@spartonres.ca
www.spartonres.ca