Navaho Gold Limited (ASX: NVG) should trade firmer after its execution of a non-binding Term Sheet for the acquisition of Excarb Pty Ltd, a company with rights to acquire several prospective coal projects in Argentina.
The acquisition will be scrip based, retaining Navaho's existing cash reserves - Navaho will issue 27,824,374 shares to the vendor as consideration, subject to shareholder approval.
The coal projects cover both thermal and coking prospects in Tertiary and Triassic aged coal measures on the eastern side of the Andes.
Excarb and Navaho have identified potential for significant tonnages of thermal and coking coal in mining friendly environments in the San Juan and Rio Negro provinces.
The depths and dips of the coal seams are such that a good proportion of any coal reserves defined could be mined by
open-cut, lending to a low cost operation.
In addition, both projects are within close proximity to access to existing rail networks with links to industrial areas and ports.
Access to developing markets for local Argentinean power generation, steel making, mineral processing, general industry
and export applications are a key drawing card for this acquisition and its location.
The coal occurs in 6 main banded seams which can be in excess of 2 metres thick, with coal content making up approximately 90% of the seam.
The seams dip at 5 to 15 degrees to the west and extend over 50 kilometres of strike length north to south on the tenements.
Navaho is capitalised at just $1 million, offering plenty of potential upside.
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