African Queen Mines Acquires Key Helium Leases in Arizona’s Prolific Holbrook Basin

Vancouver, British Columbia — AFRICAN QUEEN MINES LTD. (the “Company”) is pleased to announce that its wholly-owned U.S. subsidiary DESERT ENERGY CORP (“Desert Energy”) has now acquired 12,256 acres under lease for helium, oil & natural gas from the Arizona Department of Land within the prolific Holbrook Basin of Eastern Arizona. An additional 12,041 acres of leases are pending approval. Two of the world’s richest historic producing helium gas fields, the Pinta Dome and the Navajo Springs, are situated in this region. They are noted for their exceptionally high grades of helium gas produced, ranging up to 8% and more versus the industry benchmark of 0.3% to 1% for commercial grade. As previously announced (PR January 31, 2018), Desert Energy was formed by the Company to engage in exploration and development of oil & gas and mineral properties in the Southwestern United States and will be operating as a separate division of the Company. It recently signed a definitive agreement to acquire the Kight Gilcrease Sand Unit oil & gas project in Oklahoma (PR February 19, 2018).

Helium has many unique characteristics which lend itself to diverse strategic uses in our growing high tech economy. It is a small atom, extremely mobile, with a very low boiling point and it is completely inert. It now plays a critical role in the manufacture of semiconductors, LCD panels and fibre optic cable; as a refrigerant in cryogenics research; as a coolant for nuclear reactors, MRI machines and space vehicles; as a shield gas for welding; for leak detection in high pressure piping systems; mixed with oxygen to produce a safe breathing gas for divers; and as a lighter than air lifting gas. Helium has now emerged as the” high tech rare gas” of today’s economy. Current world demand is approaching 8 Billion cubic feet of gas per year. Surging demand has caused He prices to double in the past ten years to over U.S. $164 per mcf, with many private sales at considerably higher prices. The U.S. used to account for over half of world-wide production, but has now fallen to approximately 32%, with Qatar providing approximately 25%. Other major producers include Algeria.

There is a global He shortage despite continued liquidation of helium inventories by the U.S. Government from its National Helium Reserve. Within another two-three years, that Reserve is projected to be essentially exhausted and the U.S Government will have ended decades of active involvement in the He business. That should lead to further acceleration of price increases for He commensurate with the growing demands of our high tech economy.

The leases acquired by Desert Energy in the Holbrook Basin are highly prospective for helium as well as oil & natural gas. They are situated within Coconino County in NE Arizona. The leases are characterized by a geologic anticlinal feature with multiple anhydrite cap rock and salt trapping mechanisms, analogous to those typically associated with existing He wells found in the Holbrook Basin. Helium being one of the smallest molecules, it has an inherent ability to move or migrate through almost all known rock formations such as shales and dissipate naturally. Therefore, to find it in commercial quantities there must be a series of trapping mechanisms. The draping effect of the Anhydrite and Halite layers coupled with faulting on three sides, (SW/NE on two sides and a NE/SW on the northern side,) serve to provide the trapping mechanisms on Desert Energy’s leases. These same trapping mechanisms can also serve to trap oil and other natural gases. The makeup of the reservoir rocks in this area is typically a combination of sandstone and vuggy dolomites. Relatively shallow wells of approximately 3850 ft total depth would be likely to encounter He gas from 3250 to 3450 ft in the Mississippian limestones associated with dolomites. Oil and natural gas would likely be found in the Devonian Sands between 3700 and 3800 ft.

Helium has two potential sources, primordial (i.e., part of the original formation of the Earth), or radioactive decay of Uranium and Thorium in the Earth’s crust. Both mechanisms could potentially have contributed to the presence of He in the Holbrook Basin. Most production of He in the United States is derived from natural gas fields. It is initially processed as a crude Helium product, which varies from 50% to 80% He, and is ultimately purified into a Grade-A He product which is 99.995% or better. Most He is shipped as liquid to distribution centers in trucks where it is sold as bulk liquid helium, then gasified and compressed into tanks or small cylinders for delivery to end users.

According to Irwin Olian, CEO of the Company, “We are very excited to have acquired strategic leases in Arizona’s Holbrook Basin for helium, oil and natural gas. As an early mover among junior explorers in the He space in one of the world’s greatest addresses for helium, the Company is well positioned to participate in future growth of He in our high tech economy.”

About African Queen
The Company is an exploratory resource company engaged in exploration and development of mineral properties in Canada. In addition, its wholly-owned U.S. subsidiary Desert Energy Corp. is engaged in exploration and development of oil and gas and mineral properties in the Southwestern United States. The Company has recently been focusing on development of its Yellowjacket Gold Project in Atlin, British Columbia, which covers an aggregate of approximately 291.54 km2. The Company has its executive offices in Vancouver, Canada. The Company was incorporated under the laws of the Province of British Columbia, Canada, on April 30, 2008, and received certain southern African assets in a spin off transaction related to the acquisition of Pan African Mining Corp. by Asia Thai Mining Co., Ltd.

We seek Safe Harbor.

On Behalf of the Board of Directors of African Queen Mines Ltd.

“Irwin Olian”
Irwin Olian
Chairman & CEO

For more information, contact:

Irwin Olian
President and CEO
E-mail: tigertail@africanqueenmines.com
Tel:  +1-604-899-0100
Fax: +1-604-899-0200

Carrie Howes
Corporate Communications
Email: carrie@africanqueenmines.com
Telephone:
Dubai: +971 55 997 0427
London: +44 (0) 7780 602 788
Germany: +49 (0) 21141 740411
U.K.: +44 (0) 870 490 5443

The TSX Venture Exchange has not reviewed and does not accept responsibility for the adequacy or accuracy of the content of the information contained herein. The statements made in this press release may contain certain forward-looking statements that involve a number of risks and uncertainties. Actual events or results may differ from the Company’s expectations.

African Queen Mines Signs Agreement for Acquisition of the Kight Gilcrease Sand Unit Oil & Gas Project in Oklahoma

Vancouver, British Columbia — AFRICAN QUEEN MINES LTD. (the “Company”) is pleased to announce that its wholly-owned U.S. subsidiary DESERT ENERGY CORP (“Desert Energy”) has now entered into a definitive agreement with SEMINOLE PRODUCTIONS LLC, an Oklahoma private company (“Seminole”), pursuant to which Desert Energy will acquire the Kight Gilcrease Sand Unit oil and gas project in Seminole County, OK (the “KGSU”). As previously announced (PR January 31, 2018), Desert Energy was formed by the Company to engage in exploration and development of oil & gas and mineral properties in the Southwestern United States and will be operating as a separate division of the Company. KGSU is the first of several major projects that Desert Energy has targeted for potential acquisition in the near future.

Under terms of the Purchase Agreement, Desert Energy is acquiring all leases covering the KGSU above the Base of the Gilcrease Sand Formation, subject to an aggregate gross overriding carried royalty on hydrocarbon production of 22% payable to various royalty holders (2% of which is payable directly to Seminole). Hence Desert Energy is acquiring a 0.78 Net Revenue Interest in the KGSU. In addition, Desert Energy is acquiring all wells and associated surface and downhole equipment on site, including pumping rigs, piping, storage tanks, supplies, etc., and all rights to any additional hydrocarbon bearing zones which may exist above the Base of the Gilcrease Sand Formation. The underlying leases are extendible year-to-year by maintaining minimal prescribed production levels.

The total consideration payable for the acquisition is U.S. $400,000. Of this amount, Desert Energy is paying Seminole cash in the sum of U.S. $180,000 by April 15, 2018 (subject to extension); and the Company is issuing to Seminole Units (the “Units”) at a deemed price of CAD $0.05 per Unit, where each Unit is comprised of one share of Common Stock of the Company (“Share”) and one Share Purchase Warrant (“Warrant”) where each Warrant permits the holder to purchase one Share for a period of 3 years from the date of issuance at a price of CAD $0.075 per Share. The number of Units to be issued to Seminole shall be equal in value to U.S.$220,000 converted into Canadian currency on the date all applicable regulatory approvals shall be received. At today’s exchange rate, Seminole would be entitled to receive approximately 5.5 Million Shares and 5.5 Million Warrants. The transaction is subject to completion of due diligence by Desert Energy and approval by the TSX Venture Exchange and the OCC.

The KGSU was permitted and approved by the Oklahoma Corporation Commission Oil & Gas Conservation Division (“OCC”) by Order #375263 dated July 19, 1993, as an enhanced recovery project primarily utilizing water-flood secondary recovery operations, in an administrative proceeding which consolidated and unitized all working and royalty interests in the project. It was subsequently acquired by its present owner/operator Seminole in 2003. The KGSU has had historic production estimated at 1,690,240 BO by the OCC and presently has 7 wells on site, one of which is operational. The oil produced is a light sweet crude that varies from 34 API to 43 API gravity.

The KGSU comprises an area of approximately 883.7 acres, which is substantially underlain by the Gilcrease Sandstone common source of oil supply. The KGSU leases are located 8 miles S of Wewoka directly astride State Highway 56, in a portion of the S/2 of Section 6, all of Section 7 and the NW/4 of Section 18, T6N R8E Seminole County, Oklahoma. It is not located within an environmentally sensitive area or on a known Native American reservation. The oil-bearing pay zone was estimated by the OCC to be from 10 ft to 40 ft in width and to occur at a subsurface depth of approximately 2726 ft to 2810 ft, as reflected in geophysical logs from the Adams #1 Maverick Well drilled in the SW/4 SE/4 SW/4 of Section 7-6N-8E, Seminole County.

The Gilcrease Sands are part of the Atoka Formation Series which ranges from about 160 ft to 250 ft in thickness. It is comprised of limes, sands and sandy limes and occurs at depths of approximately 2650 ft to 2950 ft. Recent geological studies and particularly drill logs from two recent wells on the KGSU , 3PB’s and Sears 18-H, suggest that the pay zone width may be significantly greater than estimated by the OCC. In addition, they suggest higher porosity and permeability than estimated. The overall Gilcrease Sand Formation, named after iconic Oklahoma oilman Tom Gilcrease, has produced in excess of 580 million BO since the early days of oil production in Oklahoma in the 1920’s and 1930’s. The KGSU forms a small portion of the historic area which is within a radius of about 30 mi from the KGSU. As the Gilcrease Sand Unit is relatively shallow at about 2800 ft subsurface, vertical wells are the most efficient manner of drilling for oil production. Most of the primary oil has been produced by conventional means, i.e. first flowing, then simple down hole tubing pumps with traditional pump jacks at surface.

The Gilcrease Formation was originally characterized as a “gas drive” formation, where the gas in the formation helped force or drive the oil out of the pore spaces within the sand layer up into the wellbore. However, original low-cost production methods in the 1920’s and 30’s unduly depleted this “drive” mechanism. The early depletion of this drive resulted in only a fraction of the original oil in place within the KGSU being produced and creates an opportunity for substantial new production by Desert Energy at relatively low cost using a modern secondary recovery techniques. Management believes the optimal recovery technique for the KGSU involves the injection of CO2 or Nitrogen into the uppermost portion of the sand layer, whilst injecting water into the lowest part of the sand. This “water-flood” technique works to squeeze and drive the oil to the producing well bores in much the same manner as the old gas drive mechanism of early days. Variants of this type of technique have been developed over a period of many decades and are now highly refined and efficient.

Water-flood secondary production calls for the drilling of some new wells for both water injection and oil production, along with the conversion of existing wells into an injection well format. The technique has been used very successfully to generate production in the offsetting Sasakwa Gilcrease Sand Unit (“Sasakwa”), located within one mile directly S of the KGSU. Sasakwa has historic reported production of 1,233,009 BO from primary production and 1,000,730 BO from water-flood enhanced recovery secondary production. By comparison, the KGSU has produced 1,690,240 BO from primary production to date but has not yet had water-flood enhanced recovery techniques applied. This suggests considerable potential for future oil recovery from the KGSU utilizing such techniques, though there can be no guarantee that future results from the KSGU will be similar to those achieved at Sasakwa.

Desert Energy’s development strategy contemplates initially reconditioning the existing wells on site and drilling several new shallow vertical wells to create new primary production and cash flow in the short-term. This would be followed by instituting a comprehensive water-flood program to optimize long-term production from the KGSU and fully exploit the reserves in place. It is to be noted that water-flood recovery is totally unrelated to “fracking” which involves hydraulic injection to fracture underlying rock and is typically associated with horizontal drilling. Water-flood is designed to create pressure by filling porous spaces without disturbing in situ rock.

According to Irwin Olian, CEO of the Company, “We are very excited to be acquiring the Kight Gilcrease Sand Unit and view it as great opportunity to add cash flow and value to the Company for the benefit of our shareholders. It is an established oil field with significant untapped potential in one of America’s most prolific historic oil producing regions. We believe the U.S. Energy Sector holds out great promise in coming years under a favorable Government Administration and are working diligently to bring significant opportunities to African Queen to participate in future grown in this sector, together with exploiting opportunities in precious metals.”

About African-Queen
The Company is an exploratory resource company engaged in exploration and development of mineral properties in Canada. In addition, its wholly-owned U.S. subsidiary Desert Energy Corp. is engaged in exploration and development of oil and gas and mineral properties in the Southwestern United States. The Company has recently been focusing on development of its Yellowjacket Gold Project in Atlin, British Columbia, which covers an aggregate of approximately 291.54 km2. The Company has its executive offices in Vancouver, Canada. The Company was incorporated under the laws of the Province of British Columbia, Canada, on April 30, 2008, and received certain southern African assets in a spin off transaction related to the acquisition of Pan African Mining Corp. by Asia Thai Mining Co., Ltd.

We seek Safe Harbor.

On Behalf of the Board of Directors of African Queen Mines Ltd.

“Irwin Olian”
Irwin Olian
Chairman & CEO

For more information, contact:

Irwin Olian
President and CEO
E-mail: tigertail@africanqueenmines.com
Tel:  +1-604-899-0100
Fax: +1-604-899-0200

Carrie Howes
Corporate Communications
Email: carrie@africanqueenmines.com
Telephone:
Dubai: +971 55 997 0427
London: +44 (0) 7780 602 788
Germany: +49 (0) 21141 740411
U.K.: +44 (0) 870 490 5443

The TSX Venture Exchange has not reviewed and does not accept responsibility for the adequacy or accuracy of the content of the information contained herein. The statements made in this press release may contain certain forward-looking statements that involve a number of risks and uncertainties. Actual events or results may differ from the Company’s expectations.