THE WOODLANDS, Texas, Aug. 9, 2005 (PRIMEZONE) -- Tekoil & Gas Corporation (Pink Sheets:TKGC), an oil and gas exploration and production company, is pleased to announce a follow-up to its press release dated July 28, 2005, whereby Tekmining, LLC, a 100 percent wholly owned subsidiary of Tekoil and Gas Corporation, has approved and executed the Purchase Agreement of a mining concession of Calcium Carbonate in The Dominican Republic known as "La Descubierta." Tekoil's Executive Vice President, Eric Ottens stated, "Notwithstanding our being close to finalizing the Eastern Canadian oil and gas project, this is indeed a very exciting mineral acquisition for The Group."
The mine has been purchased for an undisclosed amount, but the value of the proven un-mined mineral asset is in excess of $75,000,000, using an un-mined value of $0.25 per ton. Roskill Metals and Minerals is recognized as one of the world leaders in comprehensive research reports in the mineral industries www.roskill.com. They quote: "The lowest cost of coarse GCC is $21 FOB per short ton. The highest cost quoted for ultra fine GCC is in a price range of $140-$290 FOB per short ton."
In the first year of operations (2006), at an anticipated production of 200,000 tons, Tekmining expects to generate revenue in excess of $6,000,000. Tekmining has just appointed a new Board Member, Mr. Mike Studley, Jr. Mr. Studley is a Six Sigma specialist, and he will be commissioned to install a "state-of-the-art" production facility at the mine in the first half of 2006, to streamline and maximize the output in 2007. The company expects to mine in excess of 500,000 tons, generating revenue of close to $15,000,000. Eric Ottens also stated that, "Annual production is expected to increase by a minimum of thirty percent (30 percent) per year during the first five (5) years of operations. The key is to secure long term contracts with the paper producers and the pharmaceutical companies."
There are 320 million tons of proven reserves (500 million tons probable) of high grade calcium carbonate, which has been independently tested by three different laboratories. In each test the purity is proven to be high quality and in excess of 99.1 percent, which is considered "select grade." The chemistry and quality of this deposit makes it particularly suited for use in the pharmaceutical and food industries.
The calcium only requires mechanical processing, as no chemical processing is necessary to prepare it for market. The quality of this mineral meets all regulations set forth by the Food Chemical Codex fourth edition and the United States Pharmacopia XXV. Additionally, the mineral is USP and CA Proposition 65 compliant, and has been certified for use in high quality food products by two major U.S. corporations.
The concession occupies an area of about 580 acres and the proven reserves that are mostly above ground, which means that the capital expenditure and operating expenses are significantly reduced for this "open ceiling" mining. The mine has already completed the permitting process for reserve extraction, and the permits will transfer to Tekmining with the acquisition of the reserves.
Additionally, the location allows for significant distribution and cost reduction opportunities. The mine is adjacent to a major highway which leads directly to Barahona, one of the Dominican Republic's largest ports. Another benefit is that a rail stop is located a few miles south of the site. For a minimal capital outlay, Tekmining plans to extend the rail line to the site, thus lowering the company's overall distribution costs. The concession also attracts a 25-year tax exemption from the local authorities.
Eric Ottens also went on to say, "It was of great interest to note that another Amex listed oil and gas company, Tri-Valley, TVC, had just recently acquired a smaller calcium carbonate mine in the Alaskan region."
About Tekoil & Gas Corporation:
Houston based Tekoil & Gas Corporation, is a technology driven, oil and gas exploration and production company that utilizes advanced production technologies. The company is focused on the development, acquisition, stimulation, rehabilitation, and asset improvement of small to medium-sized oil and gas fields throughout the North American continent. The combination of energy fuel reserves and advanced yield technologies, are anticipated to generate value for Tekoil and its stakeholders, as the company targets above average growth in the 21st century energy sector. The company has recently formed a wholly-owned subsidiary, Tekmining, LLC, and plans to acquire a number of high-grade mineral assets for development and distribution. Additional news and information will be made available on the new Tekoil website at www.tekoil.com, and through further press releases as acquisitions and development projects are executed.
Forward-Looking Statements:
This news release may contain certain forward-looking statements, including declarations regarding Tekoil and its subsidiaries' expectations, intentions, strategies and beliefs regarding the future within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. All statements contained herein are based upon information available to Tekoil management as at the date hereof and actual results may vary based upon future events, both within and without the control of Tekoil management, including risks and uncertainties that could cause actual results to differ materially including, among other things, the impact that additional acquisitions may have on the company and its capital structure, exploration results, market conditions, oil and gas price volatility, uncertainties inherent in oil and gas production operations and estimating reserves, unexpected future capital expenditures, competition, governmental regulations and other factors.