UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) July 7, 2014
| NORTHERN MINERALS & EXPLORATION LTD. |
| (Exact name of registrant as specified in its charter) |
| Nevada | 333-146934 | 98-0557171 | ||
|
(State or other jurisdiction of incorporation) |
(Commission File Number) |
(IRS Employer Identification No.) |
| 1301 Avenue M, Cisco, TX | 76437 | |
| (Address of principal executive offices) | (Zip Code) |
Registrant’s telephone number, including area code (254) 442-2627
| (Former name or former address, if changed since last report.) |
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Item 1.01 Entry into a Material Definitive Agreement.
Effective July 7, 2014, Northern Minerals & Exploration Ltd. (the "Company", "we", "us", "our") entered into a Terms of Farm-Out Agreement with Grasshoppers Unlimited Inc. (“Grasshoppers”) to acquire a working interest in two oil and gas leases both located in Callahan County, Texas:
The first lease, known as the Callahan County Shallow Oil Play, has 3 fully equipped wells, 1 injection well, production flow lines, injection flow line, Tank battery consisting of two 150 BBL tanks with separator, Injection system has a 150 BBL tank with Injection Pump, 8 un-drilled locations. The Company has agreed to acquire a 75% working interest in the lease including the existing wells and equipment by committing to do the following:
| · | Bringing the existing three wells back into production (these three wells have been inactive since November 2012) |
| · | Conducting a H-5 pressure test on the injection well |
| · | Agreeing to drill two (2) new wells prior to August 1, 2015 |
| · | Agreeing to drill six (6) new wells prior to August 1, 2016 |
| · | Paying $25,000 in cash on or before October 1, 2014 |
| · | Issueing to Grasshopers or its designee(s) 5,000,000 restricted shares of the Company’s common stock |
| · | Enter into an Operating Agreement (A.A.P.L. Model Operating Form 610) with J.V. Rhyne, a licensed oil and gas operator in the State of Texas to operate the wells |
The total consideration that we must pay to acquire the 75% working interest is estimated at $275,000, which amount does not include all work requirement and drilling commitments. The common stock is valued at $0.05 per share based upon our current share price of $0.10 as at June 30, 2014. The Net Revenue Interest is 70% and consists of approximately 60 acres, more or less, in Callahan County, Texas. This lease has a depth limit to no more than 1,000 feet.
The second oil & gas lease, know as the Callahan/Eastland Mississippi Reef Play, is located near the Callahan and Eastland County line in Central Texas. The Company has agreed to acquire 60% of the working interest in this lease by conducting the following:
| · | Preparing an independent geological report on the lease. |
| · | Agreeing to drill one (1) new well prior to August 1, 2015 |
| · | Paying $15,000 in cash on or before October 1, 2014 |
| · | Issueing 1,000,000 restricted shares of the Company’s common stock to Grassphopers or its deisignees. |
The total consideration that we must pay to acquire the 60% working interest is approximately $65,000, which amount does not include the cost of drilling and completing a well on the acreage. The common stock is valued at $0.05 based upon our current share price of $0.10 as at June 30, 2014. The Net Revenue Interest is 75% and consists of approximately 220 acres, more or less, in Callahan County, Texas. This lease has no depth limit requirement.
The foregoing description is a summary only and qualified by and subject to the actual terms and conditions of the Terms of the Farm-Out Agreement, attached hereto as Exhibit 10.1 and incorporated by reference herein.
8.01 Other Items
On July 8, 2014, we published a news release announcing the Terms of Farm-Out Agreement with Grasshoper Unlimited Inc. That news release is included in this report as Exhibit 10.2.
| Item 9.01 | Financial Statements and Exhibits |
| 10.1 | Terms of the Farm-Out Agreement |
| 10.2 | Press Release dated July 8, 2014 |
| 2 |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| NORTHERN MINERALS & EXPLORATION LTD. | |
| /s/ Howard Siegel | |
| Howard Siegel | |
| Director, President, Principal Executive Officer and Principal Financial Officer | |
| Date: July 22, 2014 | |
3
Exhibit 10.1
TERMS OF FARM-OUT AGREEMENT
This Agreement shall set forth the terms and conditions of the FARM-OUT AGREEMENT entered into on the 7th day of July 2014 by and between the following parties for the consideration stated herein:
First Party: Northern Minerals & Exploration Ltd., a public Corporation, registered and existing under the laws of Nevada, USA with offices located at 1301 Avenue M, Cisco, Texas, hereinafter referred to as Lessee.
Second Party: Grasshoppers Unlimited Inc., a private Corporation, registered and existing under the laws of Texas, USA with offices located at 717 Conrad Hilton Blvd., Cisco, Texas 76437, hereinafter referred to as Lessor.
WHEREAS Lessor has good and valuable title in the two oil and gas leases identified as follows and more fully described in EXHIBIT I and EXHIBIT II:
Callahan County Shallow Oil Play:
| ● | 3 fully equipped wells |
| ● | 1 injection well |
| ● | Production flow lines |
| ● | Injection flow line |
| ● | Tank battery – two 150 BBL tanks with Separator |
| ● | Injection system – 150 BBL tank with Injection Pump |
| ● | Producing interval – Cook/Hope Sandstone at approximately 450 feet |
| ● | 8 un-drilled locations – spacing 2.5 acres per well |
| ● | 60 acres, more or less, in the lease – See Exhibit I for description of lease |
| ● | Net Revenue Interest of the lease is 70% |
| ● | Depth Limit is 1,000 feet |
Lessee agrees to earn 75% of the working interest in the lease, including the wells and equipment, from Lessor by causing and/or conducting the following on the acreage/wells stated above:
| ● | Bring the existing three wells back into production (these three wells have been inactive since November 2012) |
| ● | Conduct a H-5 pressure test on the Injection well |
| ● | Prepare a geological report on the acreage |
| ● | Agree to drill two (2) new wells prior to August 1, 2015 |
| ● | Agree to drill six (6) new wells prior to August 1, 2016 |
| ● | Pay $25,000 in cash on or before October 1, 2014 |
| ● | Cause the issuance of 5,000,000 restricted shares of the Company’s common stock to be issued to Lessor or Lessor’s designee |
| ● | Enter into an Operating Agreement (A.A.P.L. Model Operating Form 610) with J.V. Rhyne, a licensed oil and gas operator in the State of Texas to operate the wells |
Lessee further agrees that any failure to meet the work commitments as stated herein will result in a forfeiture of the un-earned portion of the lease.
Page Two
Terms of Farm-Out Agreement
July 7, 2014
Callahan/Eastland Mississippi Reef Play in a Multiple Pay Area:
Lessee further agrees to earn a 60% working interest in the oil & gas lease located near the Callahan and Eastland County line in Central Texas by conducting the following:
| ● | Prepare a geological report on the lease |
| ● | Agree to drill one (1) new well prior to August 1, 2015 |
| ● | Pay $15,000 in cash on or before October 1, 2014 |
| ● | Cause the issuance of 1,000,000 restricted shares of the Company’s common stock |
The total consideration for acquiring the 60% working interest is $65,000. The Net Revenue Interest of this lease is 75% and consists of approximately 220 acres, more or less, located in Callahan County, Texas. This lease has no depth limit requirement on this lease.
Lessee further agrees that any failure to meet the work commitments as stated will result in a forfeiture of the un-earned portion of the lease.
LESSOR’S WARRANTIES AND REPRESENTATIONS:
To the best of Lessor’s knowledge, there is no existing or threatened litigation, arbitration or administrative proceedings relating to these two leases being conveyed to Lessee;
Lessor is not in violation of any existing laws, rules or regulations of the Railroad Commission of Texas (“RRC”).
Lessor has not entered into, or agreed to enter into, any agreement, arrangement or understanding with any third party relating to these two leases which may preclude Lessee from earning the Lessee’s Interest under this Agreement.
Lessor acknowledges that there are no environmental or other liabilities, claims or circumstances relating to the conduct of oil and gas operations on either of these two leases and are in good standing with the RRC.
TIME
Time shall be of the essence as regards the provisions of this Agreement, both as regards the times and periods mentioned herein and as regards any times or periods which may, by agreement between the Parties, be substituted for them.
ENTIRE AGREEMENT
This Agreement supersedes any previous written or oral agreement between the Parties in relation to the matters dealt with in this Agreement and contains the whole agreement between the Parties relating to the subject matter of this Agreement at the date hereof to the exclusion of any terms implied by law which may be excluded by contract. Each of the Parties acknowledges that it has not been induced to enter into this Agreement by any representation, warranty or undertaking not expressly incorporated herein. So far as permitted by law and except in the case of fraud, each Party agrees and acknowledges that it’s only right and remedy in relation to any representation, warranty or undertaking made or given in connection with this Agreement shall be for breach of the terms of this Agreement to the exclusion of all other rights and remedies (including those in tort or arising under statute).
| 2 |
Page Three
Terms of Farm-Out Agreement
July 7, 2014
AMENDMENT:
Save as otherwise expressly provided herein, no modification, amendment or waiver of any of the provisions of this Agreement shall be effective unless made in writing specifically referring to this Agreement and duly signed by both Parties.
GOVERNING LAW:
This Agreement shall be governed by, construed, interpreted and applied in accordance with the laws of Texas.
SUCCESSORS AND ASSIGNS
This Agreement shall inure to the benefit of and be binding upon the successors and assigns of the Parties.
COUNTERPARTS:
This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original but all of which together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the Parties have executed this Agreement as of the date first written above.
NORTHERN MINERALS & EXPLORATION LTD
(LESSEE)
/s/ Howard Siegel
Howard Siegel, President & Director
GRASSHOPPERS UNLIMITED INC.
(LESSOR)
/s/ Ginger Bunn
Ginger Bunn, President
| 3 |
EXHIBIT I
The following is a legal description of the 60 acres, more or less, located in Callahan County comprising of three tracts:
Tract 1: 20 acres, more or less, out of the Northwest corner of Survey No.7, Bayland Orphan Home Survey, described by metes and bounds as follows:
BEGINNING at the Northwest corner of said Survey; THENCE East 625 feet;, THENCE South parallel with the West line of said Survey No. 7, 1394 feet; THENCE West 625 feet to West line of said Survey No. 7, THENCE West 625 feet to West line of said Survey No. 7; THENCE North with West line of said Survey No. 7; 1394 feet to the place of beginning;
Tract 2: 20 acres, more or less, out of the Northwest part of Survey No.7, Bayland Orphan Home Survey, described by metes and bounds as follows:
BEGINNING at a point in the West line of said Survey, 1394 feet South of the Northwest corner of said Survey; THENCE East 625 feet; THENCE 625 feet; THENCE South parallel with the West line of said Survey No. 7, 1394 feet; THENCE West 625 feet to the West line of said Survey No. 7, 1394 feet; THENCE West 625 feet to the West line of said Survey No.7; THENCE North with the West line of said Survey No. 7, 1394 feet to the place of beginning;
Tract 3: 20 acres, more or less, out of the Northwest corner of Survey No.8, Bayland Orphan Home Survey, described by metes and bounds as follows:
BEGINNING at the Northeast corner of said Survey; THENCE West 330 feet; THENCE South parallel with the East line of said Survey No. 8, 2,788 feet; THENCE East 330 feet to East line of said Survey No. 8; THENCE North with East line of said Survey No. 8; 2788 feet to the place of beginning.
Depth limitation on all three tracts shall be limited down to 1,000 feet only.
| 4 |
EXHIBIT II
The following is a legal description of the 220 acres, more or less, located in Callahan County, Texas:
220 acres, more or less, of the Wm. J. Morgan Survey, Cert. 16/14, Abstract 272, Patent 224, Vol. 20, dated June 11, 1874, situated in Callahan County, Texas and described as follows:
BEGINNING at a stake in the middle of the South boundary line of said Wm. J. Morgan Survey; THENCE North 1050 varas, a stake for corner; THENCE East 1181 varas, a stake for corner; THENCE South 1050 varas to stake in South boundary line of Morgan Survey; THENCE West with said South boundary line of Morgan Survey 1181 varas to the place of Beginning.
No depth limit.
5
Exhibit 10.2
Northern Minerals & Exploration (NMEX) Enters into Agreements to
Acquire Interests in Two Texas Oil and Gas Leases
Cisco, Texas - July 8, 2014 - Northern Minerals & Exploration Ltd. (OTCQB: NMEX) (“Northern Minerals” or the “Company”), www.northernmineralsexploration.com, is pleased to announce that it has taken its first step toward building oil & gas revenues from relatively conservative and lower risk joint ventures. The two joint venture acquisitions are located within management’s niche area of operations in Central Texas where our team has over 30 years experience in drilling, completing, acquiring and operating oil and gas wells. The following is a summary of these two projects:
Callahan County Shallow Oil Play: Northern has entered into an agreement to earn a 75% working interest in an oil and gas lease located in Callahan County, Texas. This lease has three existing fully equipped wells ready for placing into production. This lease also has one approved injection well plus eight (8) un-drilled potential locations. The acreage next to (directly adjoining) this lease has had 25 new wells drilled on it within the past three months. The principle target is the Cook/Hope sandstone formation at less than 500 feet, which is noted to have excellent porosity and permeability in the leased acreage.
Callahan/Eastland Mississippi Reef Play in a Multiple Pay Area: Northern has entered into an agreement to earn a 60% working interest in an oil & gas lease located near the Callahan and Eastland County line in Central Texas. This lease is situated in an area with several Mississippi Reef formation discoveries. One of these Mississippi Reef discovery wells in the immediate area has already produced over 128,000 barrels of oil and 140 MMCF of natural gas. Also, a number of notable historic Mississippi Reef discoveries have been located in the area using seismic surveys. Seismic surveys have been conducted on this leased acreage which the Company intend to utilize to identify possible drill targets. While the Mississippi Reef is the primary target, there are seven (7) other additional formations known to produce in the area of this acreage.
About the Company: Northern Minerals & Exploration Ltd. is a natural resource company focused on both domestic and international exploration and development projects. The Company is focused on building a solid cash flow from various low risk joint oil and gas ventures in Central Texas and exploration for gold and silver on the Winnemucca Mountain Property in Nevada.
| Contact Information: | Northern Minerals & Exploration Ltd. |
| Email: info@northernmineralsexploration.com | |
| Tel: (254)-442-2627 |
Forward Looking Statements: Some information in this press release constitutes forward-looking statements or statements which may be deemed or construed to be forward-looking statements. The words "may," "will," "expect," "potential," "anticipate," "forecast," "believe," "estimate," "project," "plan," and similar expressions are intended to identify forward-looking statements. Forward looking statement include but are not limited to statements regarding current and future exploration plans and potential or anticipated exploration results in relation to the future plans and objectives of Northern Mineral & Exploration Ltd. These forward-looking statements involve, and are subject to known and unknown risks, uncertainties and other factors which could cause the Company's actual results, performance (financial or operating) or achievements to differ from the future results, performance (financial or operating) or achievements expressed or implied by such forward-looking statements. The risks, uncertainties and other factors are more fully discussed in the Company's filings with the U.S. Securities and Exchange Commission. All forward-looking statements attributable to Northern Minerals & Exploration Ltd herein are expressly qualified in their entirety by the above-mentioned cautionary statement. Northern Minerals & Exploration Ltd disclaims any obligation to update forward-looking statements contained in this press release, except as may be required by law.