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Canadian Zeolite Continues To Develop Its Zeolite Deposits By Pursuing Additional Zeolite Opportunities

By Steven Ralston, CFA


Canadian Zeolite (TSX:CNZ.V) (OTC:CNZCF) continues to develop and further commercialize its zeolite deposits located in British Columbia. Management  continues to actively pursue sales and increase awareness of natural zeolite in the agricultural and animal feed industries, along with applications in water filtration, aquaculture, road salt replacement, moisture & odor control, radioactive waste containment and artificial turf infill.
Considerable progress has been made over the last few months: certification by the CFIA as an animal feed supplement in Canada and by 14 States in the US, in addition to collaborative efforts with the University of Havana and the University of Northern British Columbia in the field of zeoponics (utilizing zeolite to improve nutrient retention and moisture control). Management’s goal is to Canadian Zeolite as the leading producer and supplier of natural zeolite in Canada.
During late 2016, Canadian Zeolite began shipping zeolite from the mill in Kamloops, British Columbia to end-users and began generating cash flow (royalties and commissions) from operations.

Quarterly Results – Growing Zeolite Shipments
For the second fiscal quarter ending December 31, 2016, royalties & commissions from zeolite shipments sequentially increased 307% from $4,822 to $19,642 as zeolite product was shipped from the mine site. However, the company’s expenses expanded 41.6% sequentially from $251,303 to $355,797, primarily due to share-based compensation being paid to  consultants. As a result, Canadian Zeolite reported a loss of $352,895 (or $0.01 per diluted share).
During the first six months of fiscal 2017, the company received net proceeds of $613,705 from private placements and the exercise of options and warrants to fund operations. The working capital deficit improved from $1.17 million to $640,230; nevertheless, the company will need to raise additional capital to meet its financial commitments.

Canadian Zeolite Receives Approval from CFIA (Canada) & in 14 States (U.S.)
In November 2016, Canadian Zeolite submitted natural zeolite from Bromley Creek to the Canadian Food Inspection Agency (CFIA) for certification for the animal feed market. By the beginning of December, the company announced its premium clinoptilolite formula Z-Lite and the product label had received approval as an animal feed additive (up to 2% of the finished feed) under registration #991198.
Also, in November 2016, Canadian Zeolite submitted zeolite to the United States for state by state registration. By mid-January, 2017, Canadian Zeolite’s Bromley Creek natural zeolite had been registered as an animal feed additive under the name Z-Lite in 14 States (Arizona, Arkansas, Connecticut, Georgia, Hawaii, Idaho, Iowa, Kansas, Massachusetts, New Hampshire, New York State, Oklahoma, Pennsylvania and Texas).

In December 2016, Canadian Zeolite applied to the Organic Material Review Institute (OMRI) for Organic Certification and by April 2017, the company’s Bromley Creek natural zeolite (under the name Z-Lite Feed Additive) was approved by OMRI and registered as an organic additive for livestock feed ingredient in accordance with the United States Department of Agriculture (USDA) National Organic Program Rule.
Recent New Relationships
Avocado and Citrus Products: In late January 2017, Canadian Zeolite reached a Memorandum of Understanding (MOU) with a California-based grower and distributor of avocados and citrus products. Under the MOU, Canadian Zeolite will supply the unnamed grower with zeolite, along with specifically developed zeoponics and zeolitic substrates, in order to enhance the health of these crops by means of the property of zeolite to absorb water and slowly release it to the roots of the avocado plants and citrus trees. An addition benefit of zeolite is to reduce the amount of overall water consumption significantly.
Swine Market: In early March 2017, the company announced that Orange Hill Farms began utilizing Bromley Creek natural zeolite in test program as an additive in animal feed, as a deodorizer in bedding, as odor reduce and as a sanitizing drying agent. Orange Hill Farms is a member of the Conestoga Meat Packers Association and produces 10,000 market hogs and 20,000 weaner pigs annually with a 1,200 sow herd.
Poultry Bedding: On March 6, 2017, Canadian Zeolite reported that Bromley Creek natural zeolite had been shipped to Piller Poultry Ltd. in Southern Ontario to be used a poultry bedding material. Positive results (up to a 70% reduction in ammonia at the barns) motivated the launch of new product line for the poultry production industry that reduce ammonia and odor as well as provide cleaner, dryer bedding in late March.  Canadian Zeolite introduced the natural zeolite bedding products of Poultry Sense, Zeolite/Citric Acid Blend, Activated Poultry Sense and Activated Barn Sense). The animal bedding market (which in addition to poultry includes dairy, beef, hog, pig, horse and pet) represents a substantial opportunity.
Medical Marijuana: In early November 2016, Canadian Zeolite reported that the company will begin shipping natural zeolite to several medical marijuana growers in Canada and the United States. The unique ion-exchange, dehydration/re-hydration and absorption properties of natural zeolite can contribute significantly to improving yields and shortening production cycles in agriculture and aquaculture, including the medical marijuana industry.
In late November 2016, Canadian Zeolite announced that it had reached a Supplier Agreement with Natural Ventures, a Puerto Rico-based licensed grower and manufacturer of medical marijuana. With a 100,000 square-foot indoor growing facility, Natural Ventures will be utilizing natural zeolitic fertilizer for its 2017 crop.

Research Initiatives
In December 2016, Canadian Zeolite announced an agreement with Isodiol, a Southern California-based hemp Cannabidiol (CBD) innovator. Isodiol and its partners grow, harvest and process hemp on an industrial scale to produce high-grade, non-psychoactive CBD for worldwide distribution. Isodiol will micronize Bromley Creek zeolite and infused it into products designed for human and animal consumption.
Canadian Zeolite is also pursuing research collaboration opportunities with the University of Havana and the University of Northern British Columbia (UNBC). In the Zeolite Engineering Laboratory, Material Science and Technology Institute at the University of Havana, Dr. Gerardo Rodriquez-Fuentes is one of the world’s leading experts in the applications of natural zeolite and has been a guest speaker at conferences around the globe. In October 2016, Dr. Rodríguez-Fuentes became an Advisor to the Board of Directors of Canadian Zeolite. UNBC is known for its focus on sustainability and adopted the trademark “Canada’s Green University” in 2007.  With a long history in zeolite R&D, the Northern Analytical Lab Services at UNBC will help test and evaluate Bromley Creek zeolite as an active ingredient for applications such as an animal feed additive, a catalyst for agricultural yield enhancement and a soil remediation product.
Distribution Deal
In late January 2017, Canadian Zeolite announced a non-exclusive distribution deal with an unnamed Canadian-based distributor. The distributor has an animal feed network in Manitoba, Saskatchewan and Alberta and can used up to 2% of CFIA-approved Bromley Creek zeolite as an additive in its finished animal feed.
Formation of Sales Division
In March 2017, the company launched formed a sales division (headed by Tyler Adair) in order to build and maintain the company’s established relationships and by develop markets and bringing in new customers for Canadian Zeolite’s natural zeolite.

Proposed Spin-out of Bullard Pass Property
In order to fully focus on the expanding the distribution of the company’s natural zeolite products, on February 17, 2017, Canadian Zeolite announced its intention to spin-out its Bullard Pass Property, which is located within the Pierce Mining District in southern Yavapai County, Arizona.
The company commissioned a NI 43-101-compliant Technical Report on the Bullard Pass Property to facilitate the spin-off. Filed in March 2017, the report describes the USD$688,000 worth of geological work conducted on the property, including 8 vertical HQ diamond drilling holes ranging from 400 to 500 feet during a 2010 exploration program and concludes that the property is of merit and warrants further exploration.
The proposed transaction consists of distributing one (1) common share of Canadian Mining Corp. for every five (5) common shares held in Canadian Zeolite held. Warrants will be similarly issued and exchanged. Closing is subject to Canadian Mining closing an offering of least $650,000 and shareholder approval, along with certain customary regulatory and court approvals.
Management’s Strategy
Management’s focus is to aggressively market the company’s zeolite in order to generate incremental market demand. The applications of animal feed additives, agricultural zeolitic soil conditioning, zeolitic substrates for greenhouse growing mediums (zeoponics), municipal composting, and odor/moisture control are being specifically targeted. The initial goal is to generate near-term royalties, but management is vigorously seeking to formalize longer-term (2-5 year) supply contracts by which the company will earn commissions between 6% and 20%.
Management continues to pursue business development activities with potential customers and value-added processors for agricultural, absorbent, adsorption, environmental and other applications. The foremost goal is to develop new markets for the company’s zeolite in order to generate a growing revenue stream. Management continues to research and develop new zeolite products for additional opportunities. We await a breakthrough application (possibly several) for the company’s zeolite in western Canada that will enable Canadian Zeolite to more rapidly monetize the resources at its Bromley Creek and Sun Group Properties.

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