Phoenix Metals Corporation

  • Date: 2016-01-21

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Item 1 Name and Address of Company Phoenix Metals Corporation 700 – 1199 West Hastings Street Vancouver, BC V6E 3T5 Item 2 Date of Material Change January 21, 2016 Item 3 News Release The news release January 21, 2016 was disseminated through Canada Stockwatch and Market News under section 7.1 of National Instrument 51-102. Item 4 Summary of Material Change Please refer to attached news release. Item 5 Full Description of Material Change

5.1 Full Description of Material Change Please refer to attached news release. 5.2 Disclosure for Restructuring Transactions N/A Item 6 Reliance on subsection 7.1(2) or (3) of National Instrument 51-102 N/A Item 7 Omitted Information N/A Item 8 Executive Officer Brian Leeners, CEO & Director Item 9 Date of Report January 21, 2016

2 January 21, 2016

News Release

NEX Symbol: PHC.H

PRIVATE PLACEMENT FINANCING Vancouver, B.C.: Phoenix Metals Corporation (“Phoenix” or the “Company”) (NEX Symbol: PHC.H) announces a non-brokered private placement of up to 10.0 million units at a post-consolidated price of five cents per unit ($0.05) to raise proceeds of up to $500,000. Each unit will consist of one common share and one common share purchase warrant (the "Unit Warrants") with each Unit Warrant entitling the holder to acquire one additional common share at a post-consolidated price of ten cents ($0.10) per share for one year from closing. The Unit Warrants are subject to the right of the Company to accelerate the exercise period for the Unit Warrants if the common shares of the Company trade above twenty cents ($0.20) for a period of 10 consecutive trading days. The proceeds of the private placement will be allocated toward expenditures on the Peace River Frac Sand Project and for general working capital purposes. The private placement is subject to the completion of the current one share for four shares consolidation and to regulatory approval and the Company may pay finders' fees on the private placement proceeds to certain parties in accordance with the policies of and subject to the approval of the TSX Venture Exchange. The Company currently has 47,513,524 common shares issued and outstanding. Following the Consolidation, it is anticipated that the Company will have approximately 11,878,381 common shares issued and outstanding prior to the closing of this Private Placement. Peace River Frac Sand Project: The Project is located north of the community of Peace River, Alberta and extends for approximately 40 kilometres along the Peace River, straddling both the East and West banks of the river. The Project is in proximity to infrastructure including rail and roads and also surrounds the Peace River Frac Sand Quarry, which is owned and operated by Canadian Silica Industries (CSI). Additionally, it is located close to the Horn River, Montney, and Cardium, Canol and Bluefish basins, and is central to the Frac Sand market within northwestern Alberta, northeastern British Columbia and the Northwest Territories. The trend toward increasing optimization techniques in fracking is resulting in higher usage of frac sand per well (using 2x to 5x more sand is becoming the new standard), especially fine-mesh sand that can be sourced close to major unconventional oil and gas basins to reduce the costs of transportation. Commodity price pressures have spurred the use of new technological advancements in hydraulic fracking which demonstrate significant improvements in recoveries and lower decline rates.  U.S. Silica (SLCA), one of the major silica sand producers in North America, stated in their Q2 2015 earnings call that their Oklahoma Mill Creek project will go through expansion as U.S. Silica cannot meet customer's demand for the finer mesh sand. 

Emerge Energy Services (EMES) - Q1 2015 call: “As the market shrinks the demand for the finer grade frac sands has increased proportionally over the course of the products. At least for now, 40-70 and 100 mesh sand is being used more heavily in both oil and liquid gas stimulation processes.”

Fairmont Santrol (FMSA) - Q1 2015 call: “certainly we are seeing an evolution of frac treatments to include more 40-70 and 100 mesh. There are a number of reasons why that is and it’s mainly around costs…..40-70 and 100 mesh is the prop of choice when

3 you do slick water fracs which also provides the cost savings as it relates to water and other additives. The increase in the amount of sand most companies are using per well would explain why energy industry intel firm PacWest expects total demand for frack sand will not decline significantly in 2015 despite the decrease in the number of wells being drilled. RBC Securities (June 8 2015) stated that fine mesh was taking market share and they expect it to keep that market share as sand volumes increase. The CSI operation surrounded by the Peace River Frac Sand project has a total annual capacity of 500,000 tonnes of silica sand (producing 20/40 mesh and 100 fine mesh). An extensive Alberta Geological Survey Report titled Frac Sand Evaluation - Peace River Silica Sand Deposit Final Report was completed in 1998 and can be downloaded at: On behalf of the Board of Directors of Phoenix Metals Corporation "Brian Leeners" Brian Leeners, CEO & Director For further information please contact: Brian Leeners, CEO and Director [email protected] Neither the 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 Information: This news release contains certain forward-looking information. All information, other than information regarding historic fact that addresses activities, events or developments that the Company believes, expects or anticipates will or may occur in the future is forward-looking information. Forward-looking information contained in this news release includes, but may not be limited to the progress and success of the Company's projects, including the Company's goals and business plan with respect to the frac sand business and the future demand for frac sand. The forward-looking information contained in this news release reflects the current expectations, assumptions and/or beliefs of the Company based on information currently available to the Company. With respect to the forward-looking information contained in this news release, the Company has made assumptions regarding, among other things, the Company's future working capital requirements, the Company's ability to generate sufficient cash flow from operations and access existing credit facilities and capital markets to meet its future obligations, goals and business plan, future prices for frac sand and by-products and future demand for processed frac sand. The forwardlooking information contained in this news release is subject to a number of risks and uncertainties that may cause actual results or events to differ materially from current expectations, including the need to obtain required approvals and permits from regulatory authorities, the volatility of frac sand and by-product prices and demand and geological, technical, drilling and processing problems. Any forward-looking information speaks only as of the date on which it is made and, except as may be required by applicable law, the Company disclaims any obligation to update or modify such forwardlooking information, either because of new information, future events or for any other reason. Although the Company believes that the assumptions inherent in the forward-looking information are

4 reasonable, forward-looking information is not a guarantee of future performance and accordingly undue reliance should not be put on such information due to the inherent uncertainty therein.