Gladiator Resources (ASX: GLA) has exercised its option pursuant to the Option Agreement announced to the market on 11 January 2010 with Orosur Mining Inc. (TSX: Venture OMI) (LSE: OMI).
The Option enables Gladiator to earn an interest in the iron ore, manganese ore and base metals located within OMI’s project area in the Isla Cristalina Belt (ICB) in Uruguay.
The project area comprises 750 km2 and is located 400 km north of the Montevideo, the capital of Uruguay, and 50 km south of the Brazilian border.
The Option has been exercised subject to the execution of a Definitive Agreement and the presentation of the report as referred to in the Option Agreement detailing the farm-in joint venture arrangements.
As announced on 11 January 2010, upon execution of the Definitive Agreement, GLA will issue AU$100,000 worth of fully paid shares to OMI at market value, calculated over the preceding five day trading period.
The exercise of the Option entitles GLA to commence earning the initial 20% interest in the venture by expending USD $1,000,000.
The company has been in negotiations with the inventors to finalise the licensing arrangements for the DPC process. An extension of time to 30 June 2010 has been agreed by the parties to enable the finalisation of licensing documentation.
GLA may, at its discretion, earn a further 31% by expending a further USD $4,000,000 taking its interest to 51%.
GLA may elect to earn a further 29% taking its interest to 80% by producing a Bankable Feasibility Study on or before 31 December 2014.
To date the project area has been explored by OMI for gold and precious metals. OMI retains the rights to gold, silver and diamonds over the project area.
Based on Gladiator’s initial understanding of the resource potential of the project area, a number of development possibilities are expected to be considered such as production of: iron ore concentrates; maganiferrous iron ore concentrates; iron ore pellets; pig iron and ferro alloys.
In the assessment of the production of pig iron, Gladiator understands that the region about the ICB also hosts extensive areas of eucalypt plantations. Accordingly there is the potential for the development of a charcoal based pig iron project.