Mr. Denis Clement reports

DNI'S INITIAL SAMPLING CONFIRMS GOOD QUALITY SANDS AT TWO FRACSAND TARGETS ON ITS ALBERTA SBH PROPERTY

Initial reconnaissance sampling recently completed over two of the frac sand targets on DNI Metals Inc.'s Alberta SBH property (see press dated July 11, 2014) has confirmed sections within the Pelican sandstone formation containing coarse clean sand of good roundness and sphericity with potential to meet frac sand specifications. The presence of high-quality sands within this formation had previously only been interpreted from downhole geophysical information from a random selection of oil/gas wells in the area.

The Pelican sandstone formation is known to contain poorly cemented, hard, clean white coarse sand with smooth round grains, and has been shown to be suitable for use as frac sand elsewhere in Alberta and at locations adjacent to the property. The two areas sampled represent only a small part of a broader sand-bearing corridor across the property over this formation, which is intermittently exposed in valley walls along the 100-kilometre trace marking the erosional edge of the Birch Mountains on the property. The formation is under progressively thicker overburden to the west and eroded away to the east of the property. Five additional large frac sand project areas have been designated over the property comprising a portfolio of seven contiguous properties with collective potential as a new frac sand district in northeast Alberta adjacent to oil sands operations in the Fort McMurray area.

Twenty-two one-kilogram to five-kilogram trenching and grab samples were collected from large exposures of the Pelican sandstone formation at the Tar River and Asphalt Creek Valleys located at the southern parts of the property, which are nearest road access. The two areas sampled comprise 200-metre- to 300-metre-long scarp exposures of the formation surrounded by other similar outcrops on strike, one kilometre to two km away, which sampling was deferred. A single scarp was sampled at Tar, whereas two scarps, one km apart, were sampled at Asphalt. The Pelican formation continues beyond the areas sampled under talus rubble and extends under the entire 1,812-square-kilometre SBH property with a thickness typically ranging 30 m to 60 m as demonstrated by DNI's subsurface stratigraphic database, based on nearly 600 oil/gas wells drilled by others over the SBH property. The downhole geophysical information also shows presence of 20-metre- to 30-metre-thick sections of porous clean sand in the formation. The current sampling confirmed presence of these sections at the locations sampled.

The current sampling confirmed sections in the Lower Pelican formation of high-quality coarse clean sand of moderate to high roundness and sphericity at both the Tar River and Asphalt Creek exposures. Samples of this section measuring over 20 m thick at the Tar River reveal clean sands with smooth surfaces ranging in sphericity from moderately oblong to perfect spheres. Photographs of typical samples of the Lower Pelican sections are posted on DNI's website. The website also includes a new section describing DNI's new frac sand projects.

Subsamples from the material collected were sieved by DNI under field conditions to enable review of the various size fractions. Initial results, currently regarded as a guideline only, show yields upward to 66 per cent, 96 per cent and 80 per cent for the 20/40-mesh, 16/70-mesh and 16/140-mesh grain size fractions (U.S. mesh). Detailed review of the samples is in progress to select samples for analysis and for more rigorous frac sand testing to quantify Krumbein shape factors, crush profile and conductivity, among others.

The Tar River and Asphalt Creek frac sand project areas are sufficiently large enough that they each hold realistic potential for hosting sand deposits of reasonable dimensions suitable as a long-term source of frac sand. They have, accordingly, been designated distinct frac sand properties located approximately 20 km apart. The sampling program examined only a small fraction of the Pelican sandstone formation at the SBH property, and sampling of several other similar large areas identified on the property was deferred to be completed in the course of a broader field sampling program with a view to advancing toward drilling and resource definition as soon as possible. These include the Buckton Creek, the Gos Creek, the Mid Creek, the Pierre River and the Joslyn Creek frac sand project areas. The projects collectively represent a portfolio of seven frac sand properties, which are located approximately 10 km to 20 km apart along a 100-kilometre-long corridor across the property where the Pelican sandstone formation is intermittently exposed in valley walls.

DNI has not yet explored permits recently acquired adjoining the northeast and southeast parts of the SBH property to secure localities over new targets which have potential for hosting large volumes of sand which might be suited for use as frac sand. Additional project areas might be identified on these through field reconnaissance. Based on encouraging results from the current sampling, DNI has decided to expand its frac sand field program to sample the Tar River and Asphalt Creek frac sand properties in greater detail, in addition to reconnaissance sampling of the other frac sand project areas on the SBH property before winter. DNI is seeking financing or third party collaboration to complete these programs.

DNI's qualified person in respect of its Alberta polymetallic black shale projects, and this announcement, is Shahe F. Sabag, PGeo, president and chief executive officer of DNI.