Stratos Resources (ASX:SAT) should trade higher after entering...

Stratos Resources (ASX:SAT) should trade higher after entering into an exclusive option to acquire the 3,400 hectare Manitouwadge graphite project in Ontario, Canada.

Initial metallurgical test work on samples taken from site indicates 55% of the graphite is large or jumbo flake size, which is the highest value and most sought after.

The terms of the option are a non-refundable deposit of C$10,000 and a final payment of C$149,000 no later than 7 March 2015.

There is also a minimum expenditure requirement of $15,200 to advance exploration of the property and reimburse property taxes.

Upon exercise of the Manitouwadge Project option the vendor will be granted a 2% gross production royalty, 50% of which may be purchased for C$250,000.

Its use in new technologies expected to rapidly expand over the next decade.

Stratos has commenced a review of historical information including geological reports and electromagnetic data. 

The company will shortly commence a channel sampling program which will seek to confirm graphite grades and grain size distribution in the existing trenches and then finalise drill locations for an initial due diligence drill program.

An application for a permit to allow drilling is in the process of being lodged on behalf of Stratos.

In addition, the proposed acquisition includes a separate option for the Hinton North project which comprises 2,700 hectares of mineral leases located in Alberta.

The terms of this option are a non-refundable deposit of C$20,000, C$200,000 by 6 January 2015, C$400,000 by 6 January 2016, and a final payment of C$400,000 by 6 January 2017 at which time title to 100% of the project will pass to Stratos.

Hinton North has a granted coal mining lease prospective for high quality thermal coal, and is located 10 kilometres from open access rail and is in the heart of the coal and energy market of Alberta. 

The market for coal in the area includes domestic coal consumption with potential for export via rail transport to British Columbia, and to the key coal consumers in Japan, South Korea and China.