Strickland Resources (ASX: STK) is poised to acquire the unlisted Orinoco Resources Ltd, which is a recently established Brazilian focused gold explorer.
Consideration for the deal is 19 million Strickland ordinary shares, plus some options (outlined below).
Importantly - Orinoco’s Curral de Pedra Project in central Brazil represents a drill‐ready advanced exploration opportunity with numerous historic workings and underground sampling returning bonanza grades of up to 2,500g/t gold.
The project is located 20 kilometres along strike from Troy Resources' (ASX: TRY) Sertão gold mine which between 2003 and 2007 produced 247,000 gold ounces at the exceptional grade of 29g/t.
The Curral de Pedra Project consists of four granted tenements and one tenement application, covering a total area of 23.5 square kilometres.
The project is located on the Faina Greenstone Belt, in a region where there has been significant historical gold production and is now the focus of modern exploration by large companies such as Yamana Gold Inc (TSX:YRI). Importantly - significant historic gold workings occur on the project around the Cascavel Prospect.
Capital raising
Strickland also plans to raise $2.7 million through a share placement and rights issue to existing shareholders to underpin the exploration program at Curral de Pedra, which offers the opportunity for rapid delivery of exploration results.
Very experienced board
A major plus for Strickland's transition to focus on gold exploration in Brazil, is a strong management team with includes mining executives Mark Papendieck and Dr Klaus Peterson - who both helped the establishment of Brazilian iron ore developer Centaurus Metals (ASX: CTM).
Papendieck will become the Strickland managing director, with Petersen the key technical executive.
Full consideration terms
Subject to Satisfaction of the Conditions Precedent outlined below, Strickland will acquire
100% of the issued capital of Orinoco in consideration for:
- 19 million Strickland ordinary shares;
- On a 1:1 basis Orinoco option holders will be issued 10 million Strickland unlisted options exercisable at $0.25 expiring on the same date as the current Orinoco options, in exchange for the current Orinoco options;
- 5 million A Class Performance Shares, which expire 3 years from the date of issue and are convertible (1:1) upon the announcement of a JORC inferred resource of >0.5M oz Au or a decision to mine based upon a 25,000 oz pa economic gold mine;
- 10 million B Class Performance Shares, which expire 4 years from the date of issue and are convertible (1:1) upon the announcement of a JORC inferred resource of >1M oz Au or a decision to mine based upon a 50,000 oz pa economic gold mine.
All consideration securities will be escrowed for a period of 12 months from the date of issue.
Proactive Investors is a market leader in the investment news space, providing ASX “Small and Mid-cap” company news, research reports, StockTube videos and One2One Investor Forums.