February 25, 2016 |
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Sparton Resources Announces Vanadium Flow Battery Accepted for Operation |
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TORONTO, ONTARIO-- Sparton Resources Inc. (TSX VENTURE:SRI) ("Sparton" or the "Company") is pleased to announce that the commissioning of the Zhangbei Project's 8 Megawatt Hour Vanadium Flow Battery has been officially approved and an acceptance letter was received on February 22, 2016 from the battery's owner, State Grid North China Company Limited ("State Grid"). (Please see Sparton news release dated January 26, 2016). Commissioning Acceptance The battery acceptance was received following preparation of performance reports by engineers and technicians from both State Grid and the Company's subsidiary, JJSP (see below), confirming that the battery met all design and performance protocols. This work completed the final phase of the commissioning program. Representatives of both State Grid and JJSP indicated they are extremely pleased with the battery performance and State Grid has put the unit into operation at the Zhangbei Project. The commissioning contract further provides for JJSP to continue to provide and fund the service obligations for this battery by providing three years of maintenance at the installation. A proposal for the three-year monitoring and maintenance program is currently being prepared. This proposal will be submitted shortly to State Grid for acceptance. After acceptance of the proposal, State Grid will be invoiced for the next payment. Subsidiary Funding Funding for this commissioning effort has been carried out by VanSpar Mining Inc. ("VanSpar"), a 90.4% owned Sparton subsidiary. In the past two months, VanSpar has raised C$215,000 in convertible debt which could, if the conversion feature is exercised by all of the current debt holders, reduce Sparton's ownership in VanSpar to approximately 85% fully diluted. Funds raised by VanSpar have been advanced to Jiujiang Sparton Vanadium Trade and Tech Co. Ltd. ("JJSP"), a Sino Foreign Chinese joint venture company which is 90% owned by VanSpar. JJSP has the commissioning contract with the builder of the battery. Additional financing efforts by VanSpar are continuing to support the ongoing monitoring and maintenance of the battery. With the battery now accepted by State Grid, the payment for the commissioning, which is expected to be up to RMB 16.44 million (equal to approximately US$2.64 million), will become payable by State Grid to JJSP's client, the battery builder, under a court-supervised payment process. After certain deductions, expected to be in the range of RMB13 million (approximately US$2.0 million), are approved by the court for payment, the balance will be available for payment to JJSP by its client and JJSP will then repay VanSpar. For the ongoing maintenance program, JJSP is to receive from its client annual payments of RMB5.5 million (approximately US $880,000) which are required to be paid by State Grid to the client. The amounts payable at each step of this process are subject to change and the exact timing for each step is not yet fixed. |
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