Overland Resources (ASX:OVR) will trade higher today after entering into an agreement with Colombian Mines Corporation (TSXV:CMJ) for the right to earn a 90% interest in the Rio Negro copper-gold project in Northern Columbia.
The Rio Negro Project comprises 3 contiguous concession contracts together with 3 pending concession applications covering 2,245 hectares of highly prospective ground along the Bucaramunga Fault Zone.
Mapping has identified zones of intense sericite-silica alteration and potassic feldspar-magnetite-biotite alteration in intrusive rocks across the project. This is characteristic of porphyry related intrusive and epithermal mineralisation.
Early stage exploration between 2009-2012 by CMJ highlighted significant gold and copper results, with gold assays of up to 23 grams per tonne gold from rock chip and channel samples.
Modern mineral exploration activity at the Rio Negro Project area has been limited to rudimentary geological mapping and rock chip sampling at exposures along road cuts and within incised drainage areas through the northern and central portion of the project.
Notably, there has been no previous drilling in the area. Overland is to commence a low cost exploration program shortly, and is continuing to evaluate other Columbian assets for potential acquisition.
The project is interpreted to lie at the intersection of this major fault zone and another oblique north-west trending structure that hosts the 10 million ounce Angostura gold mine and the 3.5 million ounce La Bodega gold deposit in the California gold fields of Colombia.
The deep seated Bucaramunga Fault Zone is believed to be the primary control for the gold bearing magmas and fluids that resulted in the creation of the California field.
Overland will pay CMJ US$75,000 cash upon execution of the agreement, and issue US$75,000 of Overland shares within six months of signature at an issue price based on the 30 day VWAP preceding the date of signing or 30 day VWAP preceding the date of the issuance, whichever is lower.
On the first anniversary of signing Overland will pay CMJ US$150,000, or at Overland’s discretion, US$75,000 cash and US$75,000 worth of Overland shares based on the 30 day VWAP immediately prior to the issue of the shares. On the second anniversary Overland will make a further payment of US$150,000 on the same terms.
Overland is also required to spend US$150,000 at the project in year one, $250,000 in year two, and a minimum $200,000 to $700,000 in years three to seven.
In order to finalise its 90% interest Overland's minimum exploration expenditure must total US$5,000,000, including completion of a feasibility study.
The Rio Negro project is located 20 kilometres north of Bucaramanga, a city with a population of over 1 million people and an international airport. A major sealed highway runs the 16 kilometre length of the Project providing year-round access. Accommodation, food, fuel and electricity are readily available.
Given the absence of modern or detailed exploration, this project offers an exciting opportunity for Overland to make a new major discovery in an area displaying all the traits of a major mineralised field.
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