THE BOURSE WHISPERER: Trafford Resources (TRF: ASX) has entered an option agreement to acquire the Rancheria project, located in the Caribbean coastal state of La Guajira in Colombia, South America.
As well as the Rancheria project, Trafford, in conjunction with its local partners, has applied for a further nine concessions, located in what the company considers to be five highly prospective regions throughout Colombia.
Trafford explained these concession areas were chosen for their prospectivity for major gold and copper deposits.
“The Rancheria prospect is the culmination of three years’ work by Trafford personnel,” Trafford resources said in its ASX announcement.
“In 2011 research into worldwide commodity opportunities led to the establishment of a small base office in the city of Medellin, west of the capital Bogota.
“Critical local partnerships were established during a period when projects were becoming available due to poor market conditions and lack of working capital.”
Rancheria is the first Colombian project to be secured by Trafford, however the company indicated it intends to increase its presence in the country by the acquisition of similar, high quality projects, over time.
The Rancheria project area contains six established prospects – Rio Negro Norte, Rodrigo, Daniel, La Gloria, Duarte, and El Naranjal.
Rancheria project showing selected past sampling results. Source: Company announcement
Trafford claims all have returned elevated gold and silver assays from historical rock chip and channel sampling.
“Copper becomes more dominant to the South, at Duarte and El Naranjal, where individual channel samples returned over nine per cent copper in conjunction with gold assays in excess of 25 grams per tonne,” the company said.
The Option Agreement over Rancheria allows a 90 day due diligence period.
If this is successful, Trafford, through its 90 per cent-owned Colombian subsidiary, may exercise the Option by payment of USD$30,000.
It will then have the right to earn up to 70 per cent of the project by expenditure of USD$1.2 million over three years and project payments of USD$100,000 per year of expenditure.
Additional payments of $50,000 are due upon granting of two of the five licences and $30,000 per licence on the remaining three.
Trafford will also retain the right to purchase the remaining 30 per cent of the project for USD$3 million at any time.
Following the earn-in period a Joint Venture will be formed where each party will contribute ongoing costs on a pro rata basis.