Transit Holdings Limited (“TRH”) has signed a Heads of Agreement with Corvus Coal Limited (“Corvus”) to acquire 100% interest of its coal exploration rights, covering 320,000 hectares in Cordoba Province, Colombia. The agreement, which is subject to due diligence and TRH shareholder approval, provides for a 90 day exclusivity period for due diligence in return for a non-refundable deposit of A$25,000.
TRH aims to develop a portfolio of coal projects which are large in size and well located, with outstanding coal quality. This will harness the strengths and experience of the TRH Board and management in identifying, exploring and developing large projects in bulk minerals.
The Cordoba Coal Project (“the Cordoba Project”) The Project consists of 45 separate “solicitudes”, or “first in line rights” which give the holder exclusive rights to the formal granting of a concession over that area. Typically, concessions are granted with a 30 year duration, commencing with a renewable 3 year exploration period, followed by a renewable 3 year construction and commissioning period. The annual cost in year 1-3 of holding land under concession is approximately US$9.00 per hectare per year (approximately US$2.8m per annum if all of the land area were to be retained).
TRH intends to explore using historical knowledge of the better coal measures, focusing initially on shallower and prospectively open pit coal inventories. The Company aims to delineate between 3 and 5 priority targets during 2011 within the project area as a whole and reduce the costs of holding concessions.
The Cordoba project offers the prospect of a large inventory of coal, with potential for a considerable resource, which will be washed to upgrade coal to export quality. TRH’s vision is of a large resource of coal, with significant volumes of coal produced, washed and then trucked or railed to a dedicated port. Most concessions lie within an accessible 120-160 kilometres of the coast.
TRH is to acquire Corvus’ obligations and rights in the Cordoba Project on the following terms and conditions, and subject to shareholder approval. TRH will issue 5 million fully paid ordinary TRH shares to Corvus upon shareholder approval of the transaction and refund Corvus’ expenses capped at A$100,000. A further payment of US$10m per 100 million tonnes (pro rata) placed into JORC compliant Proven Reserves will be paid on the publication of a JORC compliant statement of Proven Reserves, and a sales royalty of US$1.20 per tonne of coal produced and sold, will be paid to the vendors 14 Business Days after the end of each calendar quarter.