Graphene & Solar Technologies Limited
433 Camden Drive, Suite 600
Beverly Hills CA 90210
October 31, 2019
Securities and Exchange Commission
Division of Corporation Finance, Office of Beverages, Apparel and Mining
100 F Street NE,
Washington, DC 20249
Attention:John Coleman
Re: Graphene & Solar Technologies Limited (the "Company")
Form 10-K for the fiscal year ended September 30, 2018 Filed
January 23, 2019
File No. 333-174194 ("Form 10-K")
Ladies and Gentlemen:
By letter dated September 18, 2019, the staff (the "Staff") of the
Division of Corporation Finance provided
the Company with certain comments on the Company's Form 10-K.
This letter sets forth the Company's response to the Staff's comments.
The numbered comments and headings
set forth below correspond to the numbered comments and headings in the Staff's
letter of dated September 18, 2019.
Item 2. Properties, page 4
1. Please disclose the information regarding your land and mineral rights for
each of your material properties
pursuant to paragraph (b)(2) of Industry Guide 7. If you have identified
properties in your filing that are not
material, include a statement to that effect in your disclosure and clarify
your intentions. For each material
property include the following information:
The nature of your ownership or interest in the property.
COMPANY'S RESPONSE:
The Company's wholly owned subsidiary, Solar Quartz Technologies Limited
(SQTL), has a total of 5 leases
registered with the Queensland Department of Natural Resources, Mines and
Energy (DNRME), the governing
authority under state and federal legislation in Australia. Reference is made
to the attached five (5) DNRME public
search reports dated Oct 25, 2019. Leases are identified as ML30235, 30236,
30237 (known collectively as Quartz
Hill) and ML 30238 and 30239 (known collectively as White Springs).
Securities and Exchange Commission
October 31, 2019
Page 2
A description of all interests in your properties, including the terms of
all underlying agreements and
royalties.
COMPANY'S RESPONSE:
In Australia all mineral resources for the entire continent that lie at least
10 centimeters below the land surface are
owned by the Australian Federal government (AFG). The AFG authorizes each
individual state government to manage
the business of the mineral resources in its particular state regardless of who
owns the land over which the resources
lie beneath. The Queensland Government manages these resources on behalf of the
state of Queensland. Terms of
these leases are subject to the Queensland State Government Resources Acts
including the Mineral Resources Act
1989 (and amendments) ("MRA"). Mining and exploration rights are issued and
managed by the DNRME
The DNRME public search reports show all leases are held solely by SQTL.
Environmental and land compensation agreements are in place for all leases.
Land compensation fees become payable
once leases become operational. Annual total compensation fees for all leases
are AU$27,400 per annum, with annual
inflation indexed for the duration of the mining lease.
The lease arrangements are automatically required to be renegotiated (RTN) as
result of the leaseholder being an
affiliate of a public company. This RTN is progressing accordingly. However,
royalties are yet to be concluded under
the RTN process.
An outline of the process by which mineral rights are acquired at the
location including details concerning
the basis of entitlement and duration of your mineral rights, surface
rights, mining claims or concessions.
COMPANY'S RESPONSE:
The DNRME public reports confirm the lease area applications were originally
lodged on November 16, 2012. Lease
initial term is 15 years from commencement of grant and operations.
An indication of the type of rights or claims such as placer or lode,
exploration or exploitation, State or
Federal, patented or unpatented, lease or concession.
COMPANY'S RESPONSE:
Rights to mine pursuant to the leases has been completed. As registered in the
DNRME public search reports, the
Purposes are: Processing plant, Tailings / settling dam, Water supply, Workshop
/ machinery / storage; and the
Minerals are: Quartz / Quartzite / Silica/ Silica / Silicon /Rock Crystal.
Securities and Exchange Commission
October 31, 2019
Page 3
Please include certain identifying information, such as the property names,
claim numbers, grant numbers,
mining concession name or number, and dates of recording and expiration such
that your claims may be
distinguished from other claims that may exist in the area or your
properties. If necessary, include this
information as an exhibit to your filing.
COMPANY'S RESPONSE:
Reference is made to the identifying details in the attached DNRME Public
Search reports.
The conditions that must be met to retain your rights, claims or leases,
including the quantification and
timing of all necessary payments.
COMPANY'S RESPONSE:
The Company is required to meet all the obligations under the lease
conditions; once operational, the following
requirements would apply:
- statutory reporting (quarterly and/or annually) e.g. production, royalty
and environmental reporting
- annual lease fees (currently AU$63.70 per hectare per annum x Total area
of leases being 233.38 hectares) =
AU$14,229.31 per annum
- government royalty fees of AU$0.90 per tonne minerals (quartz)
sold/extracted
- annual Department of Environment and Heritage Protection (DEHP) fees
approx. AU$800 per annum
- initial security deposit yet to be adjudicated by DEHP/DNRME
The area of your claims, either in hectares or in acres.
COMPANY'S RESPONSE:
233.38 hectares total across the 5 lease areas.
2. Please disclose the information required under paragraph (b) of Industry
Guide 7 for all material properties
listed under this heading. For any properties identified that are not material,
please include a statement to that
effect, clarifying your intentions. For each material property include the
following information:
The location and means of access to your property, including the modes of
transportation utilized to and
from the property.
Securities and Exchange Commission
October 31, 2019
Page 4
COMPANY'S RESPONSE:
The mining leases are all adjacent to existing state or local government roads.
All access is therefore available by road
and private road within lease areas. Such access is the requirement of DNRME
and is likewise documented within the
registered leases where access points and routes must be approved and recorded
as condition of the leases.
A brief description of the rock formations and mineralization of existing or
potential economic significance
on the property.
COMPANY'S RESPONSE:
Reference is made to the independent geological Asset and JORC reports for
White Springs and Quartz Hill leases
respectively which is concurrently being furnished by a supplemental filing.
A description of any work completed on the property and its present
condition.
COMPANY'S RESPONSE:
Exploration and geological surveying and mineral quartz sampling has been
undertaken per attached independent
geological Asset and JORC reports for White Springs and Quartz Hill leases
respectively. Further drilling programs
may be undertaken to optimize the quarrying program as main quartz lodes are
mined and/or for updating JORC
reports.
The details as to modernization and physical condition of the plant and
equipment, including subsurface
improvements and equipment.
COMPANY'S RESPONSE:
Not applicable at this stage. Contract miners will be engaged and be
responsible for all site preparation and majority
of equipment under a subcontract services agreement. It should be noted that
the Company will not engage in recovery
of the minerals from the site in its own right. The majority of substantial
mining companies within Australia use
Contract Miners for mineral recovery. The Company will contract with a mining
firm, in this case the Company plans
to use NORDEV, a local Townsville company with respect to which management has
experience, to conduct all
mining and mineral recovery for the Company. Utilising the services of a
Contract Miner is much more cost-effective
and financially sound. Contract Mining firms all have their own equipment staff
and resources required to extract
minerals and normally charge a fee price on a per tonne basis to the deposit
owner. Management expects that there
will be a fee of $110 per tonne, which fee will include the cost of mining,
crashing, sorting, sizing to 25 mil to 75 mil,
bulka bags, shipping the bags to the Port of Townsville, and loading them onto
the ships, on behalf of the Company.
A description of equipment, infrastructure, and other facilities.
Securities and Exchange Commission
October 31, 2019
Page 5
COMPANY'S RESPONSE:
Not applicable at this stage.
The current state of exploration of the property.
COMPANY'S RESPONSE:
Completed.
The total costs incurred to date and all planned future costs.
COMPANY'S RESPONSE:
Only US$30,000 has been capitalized in respect of these mining leases on the
audited consolidated financial accounts
of the Company.
The source of power and water that can be utilized at the property.
COMPANY'S RESPONSE:
All mining operations will be powered from on-site generation (diesel
generators/renewables) Most plant and
equipment will be mobile, powered from the vehicles own diesel motors. Water
will be sourced from bores on the
lease areas.
If applicable, provide a clear statement that the property is without known
reserves and the proposed
program is exploratory in nature.
COMPANY'S RESPONSE:
Not applicable. The program is not exploratory.
Securities and Exchange Commission
October 31, 2019
Page 6
3. Please expand your disclosure concerning the exploration plans for the
properties as required by paragraph
(b)(4)(i) of Industry Guide 7. The exploration plan should address the
following points:
Disclose a brief geological justification for each of the exploration
projects written in nontechnical language.
Give a breakdown of the exploration timetable and budget, including
estimated amounts that will be
required for each exploration activity, such as geophysics, geochemistry,
surface sampling, drilling, etc. for
each prospect.
If there is a phased program planned, briefly outline all phases.
If there are no current detailed plans to conduct exploration on the
property, disclose this prominently.
Disclose how the exploration program will be funded.
COMPANY'S RESPONSE:
There are no further exploration plans beyond work already completed and
reported in the geological reports filed
supplementary.
4. We note your disclosure regarding 15 million tons of 99% pure high purity
quartz. Please note that only
proven and probable reserves based on a final feasibility study may be
disclosed in filings with the United States
Securities and Exchange Commission pursuant to the Instructions to Paragraph
(b)(5) of Industry Guide 7.
Please forward to our engineer as supplemental information and not as part of
your filing, the information that
establishes the legal, technical, and economic feasibility of the materials
designated as reserves, as required by
paragraph (c) of Industry Guide 7. The information requested includes, but is
not limited to:
Property and geologic maps.
Description of your sampling and assaying procedures.
Drill-hole maps showing drill intercepts.
Representative geologic cross-sections and drill logs.
Description and examples of your cut-off calculation procedures. Cutoff
grades used for each category of
your reserves.
Securities and Exchange Commission
October 31, 2019
Page 7
Justifications for the drill hole spacing used to classify and
segregate proven and probable reserves.
A detailed description of your procedures for estimating reserves.
Copies of any pertinent engineering or geological reports, and
executive summaries of feasibility studies or
mine plans including the cash flow analyses.
Copies of any pertinent marketing studies.
A detailed permitting and government approval schedule for the project,
particularly identifying the
primary environmental or construction approval(s) and your current
location on that schedule.
COMPANY'S RESPONSE:
Please refer to geological reports which are being provided by a
supplementary filing. Also filed is:
a) a confidential project feasibility report covering the leases,
mining plan of operations and the post processing
of raw high purity quartz materials for the various ranges of high
purity quartz (HPQ) products and high purity
quartz sands products.
b) an independently prepared overview of the GSTX/GAET Project
Proposal.
Except for the five DNRME public search reports which are filed with
this letter via EDGAR, the other
documents are included in a supplemental response sent via Federal Express.
If you desire to receive additional information, pleaes advise our
counsel, David Ficksman of TrouGould PC, at
(310)789-1290.
Very
truly yours,
Roger
May
Executive Chairman
cc: David Ficksman, Esq.
Nils Ollquist
Copyrighted Material Omitted