Balcatta-based gold and copper explorer Carnavale Resources Ltd will acquire a molybdenum project in Brazil for $4.9 million and the issue of 1 million shares to Metal Land Capital Brasil Mineracao Ltda, the company announced today.
Balcatta-based gold and copper explorer Carnavale Resources Ltd will acquire a molybdenum project in Brazil for $4.9 million and the issue of 1 million shares to Metal Land Capital Brasil Mineracao Ltda, the company announced today.
Newly-listed Australian based resources company Carnavale Resources Limited ("Carnavale") has signed a binding Letter of Intent with Metal Land Capital Brasil Mineracao Ltda ("Metal Land") to acquire 100% ownership of the Frei Martinho Molybdenum Project in Brazil, South America.
The Frei Martinho Molybdenum Project (FMM) is located in the Paraiba State of Brazil, an area known for historical molybdenum mining leases and has a combined area of 1,996 hectares. (See project background)
On completion of due diligence, Carnavale will commence exploration at the FMM project by carrying out an extensive diamond drilling program to define the extent and depth of the high grade mineralized skarn.
Under the terms of the agreement, Carnavale will pay US$4m and issue 1,000,000 fully paid ordinary shares to Metal Land after meeting a series of milestones including the completion of due diligence, the calculation of a JORC reserve as defined by a completed bankable feasibility study and the commencement of mining at the project.
The FMM project is situated in an area well known for historical molybdenum mining and has never been explored using modern mining technology. The company is excited about the potential of the high-grade project and believes the market price for molybdenum will deliver strong value to shareholders as the project moves forward.
About the Frei Martinho Molybdenum Project
The Frei Martinho Molybdenum Project (FMM) is located in the Paraiba State of Brazil. The FMM prospect has a combined area of 1,996 hectares, consisting of historical mining leases.
The project area occupies the eastern flank of the Timbauba Hill structure. The core of the structure is underlain by muscovite quartzites of the Ecuador Formation. Immediately above the quartzite, there occurs a persistent skarn1 horizon, which has been locally mined for its scheelite (tungsten) mineralisation.
The FMM mineralization is developed in a skarn zone 400m stratigraphically above the scheelitebearing skarn. The FMM skarn zone has a strike extent of approximately 1.6km and a width of up to 3m.
This FMM skarn is host to two previously exploited molybdenum (Mo) mines, the Luis and the Timbauda de Cima. The Luis Mine was worked by means of shallow pits and a 25m long decline.
The skarn varies in width from 20cm to 2m.
The Timbauba de Cima has been mined by means of a 100 metre long shallow pit to a depth of 10m. A 60m long decline followed the skarn down dip.
The molybdenum mineralisation occurs predominantly as disseminated fine-grained flakes but massive blocks sometimes weighing 200kg have been encountered. These blocks of massive molybdenum occur in zones of quartz-plagioclase enrichment and follow the local plunge.
The fine-grained molybdenum was concentrated by floatation and the coarser mineralisation was hand picked. The Geological Survey of Brazil report an average grade for the Timbauba prospect of 0.4% Mo. The hand picked high grade blocks would have added to this total.
Proposed Exploration programme
On completion of a successful technical and legal due diligence, Carnavale intends to explore the FMM project by carrying out an extensive diamond drilling programme in order to define the extent and depth of the high grade mineralized skarn.
Terms of the Agreement
Under the terms of the Letter of Intent Carnavale has paid Metal Land US$20,000.00 and has thirty days to carry out technical and legal due diligence on the Projects before entering into a definitive agreement expanding on the Letter of Intent. Assuming the successful completion of due diligence and the execution of a definitive agreement, Carnavale will pay Metal Land US$50,000.
In addition to this Carnavale will also make instalment payments to Metal Land as follows:
- Will pay USD$50,000 and issue 1,000,000 fully paid ordinary shares to Metal Land upon confirmation of the transfer of the mineral rights from the DNPM. The shares will be issued subject to shareholder approval at a shareholders' meeting to be held in July 2007. Metal Land have agreed to a voluntary escrow for a period of up to six months from allotment, whereby they have agreed not to sell any of the above mentioned shares for the first month after the date of allotment, and after that not to sell more than 20% of the remainder shares in any one month for the next 5 months;
- Twelve months following the execution of the definitive agreement, Carnavale shall pay USD$100,000,
- Twenty four months following the execution of the definitive agreement, Carnavale shall pay USD$130,000;
- Thirty six months following the execution of the definitive agreement, Carnavale shall pay USD$200,000;
- Upon calculation of JORC standard mineable reserves as defined by a completed bankable feasibility study in the Projects, Carnavale shall pay USD$450,000;
- On the commencement of mining activities, Carnavale shall pay USD$1,000,000.
Additionally, Carnavale shall pay Metal Land a royalty of 2.5% net smelter return. The net smelter return can be exchanged by payment by Carnavale of US$2,000,000.
Carnavale reserves the right to, at its sole discretion, end this agreement at any time, provided that a written notice is delivered to the other party. Upon delivery of such notice, Carnavale shall not be held responsible for any of the terms and conditions set-forth in the Letter of Intent and full ownership of the mineral rights in the Project will revert to Metal Land.
This announcement follows recent confirmation that Carnevale Resources has signed an intent to acquire three iron ore projects in Brazil. Each of the Três Cores, Parmegiana and Ilha Redonda iron ore projects has been acquired after successful completion of technical and legal due diligence.
