Dot Resources to acquire San Alfredo project
2014-11-17 08:08 ET - News Release
Mr. John Komarnicki reports
DOT RESOURCES LTD. ANNOUNCES SIGNING OF A MOU FOR THE ACQUISITION OF MAJOR NI-CU-PGE PROJECT IN PARAGUAY, SOUTH AMERICA
Dot Resources Ltd. has executed a memorandum of understanding for the acquisition of 100 per cent of a 37,500-hectare (92,666-acre) mineral concession in Paraguay, South America. The San Alfredo project is located in northeast Paraguay, approximately 70 kilometres from the town of Concepcion. The property is considered to be very prospective for nickel, copper and platinum-group-element mineralization.
The MOU, which will be superseded by a purchase and sale agreement, describes the terms for the acquisition of 100 per cent of the shares of Minera Itape SA, a private company under the laws of Paraguay that currently controls the concession. Upon execution of the agreement, Dot agrees to issue one million common shares of the corporation's stock to the vendor. In addition to certain obligations as to maintaining the concession in good standing, the corporation will invest at least $100,000 (U.S.) in qualifying expenditures during the first 12 months after closing the transaction. Closure of the agreement is subject to the approval of the TSX Venture Exchange and other customary requirements and contingencies.
About Paraguay
Paraguay is significantly underexplored in comparison with the bordering mineral-rich countries of Brazil, Bolivia and Argentina. Changes to the mining laws and foreign investment policies in 2007 and 2011 have resulted in increased foreign investment in the natural resource sectors. Today the country is a pro-development and pro-mining jurisdiction with considerable untapped mineral potential. Paraguay has highly favourable tax laws, an economy based on highly efficient agriculture and an excess of low-cost hydroelectricity.
Important mineral projects in the country include a continuing gold mining venture at Paso Yobai and titanium sands projects in Alto Parana and Canindeyu provinces.
John Komarnicki, president and chief executive officer, commented on the acquisition and the potential of the project: "We are very pleased to grow Dot through the acquisition of the San Alfredo property. This exciting project includes a huge land position with significant potential to host a large nickel-copper-PGE deposit. Yet the terms of the MOU allow us to conserve capital and focus on milestone-driven exploration. The first-year requirements are very modest, and we expect to use this time to advance our understanding of the mineral system and demonstrate the value of the project."
The San Alfredo project
The project was spawned by a major geophysical anomaly identified in the late 1970s by the Anschutz Corp. and later investigated, but not rigorously tested, by INCO and others. The geophysical target strikes almost east-west and is at least 40 kilometres long and two kilometres wide. The geophysical anomaly and geological setting have characteristics of a large magmatic nickel-copper-PGE system. The intensity and large scale of the feature prompted INCO and joint venture partners to visit the site and conduct early-stage exploration in the late 1990s. Smaller exploration companies advanced the project through limited geophysics, geochemistry and small-scale drilling between 2000 and 2008.
The source of the geophysical anomaly does not outcrop, but drilling confirmed the presence of a significant body of ultramafic rocks, primarily dunite and peridotite. These are igneous rocks containing very low silica, but high magnesium and iron. They are sourced from very deep within the Earth and tend to be enriched in elements such as nickel, copper, cobalt, chromium and platinum group elements. The geological setting suggests that the ultramafic rocks at San Alfredo are Precambrian or early Paleozoic in age.
Little is known about the details of the drilling on the project. However, technical reports describe sparse indications of chalcopyrite (copper iron sulphide), pyrrhotite, pyrite and rare millerite (nickel sulphide) in the drill core. The drilling reportedly did encounter nickel values up to 3,000 parts per million, along with anomalous copper (340 parts per million) and cobalt (100 parts per million). There are also reports of weakly anomalous assays for platinum and palladium (up to 20 parts per billion). The presence of anomalous concentrations of nickel, copper, cobalt and PGEs in non-sulphide horizons is considered a favourable indication of the potential for economic concentrations of these metals within the ultramafic complex.
The descriptions of the rocks and mineralogy from drill core at the project are consistent with the large stratiform (or layered) type of ultramafic complex. Large examples of these complexes, such as the Bushveld complex in South Africa, Voisey's Bay and Thompson nickel belt in Canada, and Pachenga in Russia are host to some of the largest deposits of nickel and PGEs in the world.
These ultramafic complexes tend to differentiate as they crystallize; sulphide and platinum group minerals segregate into layers, often near the base of a magma pulse or magma chamber. Economic concentrations of nickel, copper, cobalt and PGEs, if present, are most often associated with these sulphide-rich layers. Given the huge scale of the anomaly, the project has not been significantly explored. While details are not yet available, widely spaced drilling has reportedly tested only a 3,000-metre strip along the central axis of the anomaly (less than 10 per cent of the strike length of the feature). It does not appear that drilling has penetrated the margins or border zones of the ultramafic complex.
While the corporation is confident as to the quality of the technical work performed by previous workers, the reader is cautioned that Dot has been unable to verify these assays, or confirm that they were generated with sufficient quality assurance or other oversight as dictated by National Instrument 43-101. The corporation considers these data as historic indications and places no economic significance on the values.
The corporation is engaging specialty expertise to evaluate the project and recommend an appropriate exploration program. The corporation believes that the potential is very significant. The key to success will be a systematic program aimed at achieving the important milestones that will confirm that potential and advance it toward a major discovery.
Details of the transaction
While the closure of the transaction is dependent upon the execution of a definitive agreement and approval by the TSX Venture Exchange, the parties have executed in good faith the MOU that provides substantial detail that will govern the terms of the agreement. The corporation expects the final agreement to be executed before the end of December, 2014.
The material terms and conditions of the proposed acquisition are summarized as follows:
- Upon closing, Dot will assume the obligations associated with the terms of the concession, in compliance with the laws of Paraguay, for the exploration and development of the property.
- Upon closing, the corporation will issue one million common shares of Dot to the vendor. Dot will issue a further four million common shares upon achieving several key exploration and development milestones. If exploration and development milestones are not met and Dot decides not to continue toward the next milestone, some or all of the additional four million shares will not be issued, at which point Dot's right to the property will terminate.
- Dot will invest a minimum of $100,000 in qualifying expenditures on the project in the first 12 months after closing. Subsequent property investment will be contingent on technical merits and project milestones.
- The vendor will retain a net smelter royalty of 2.5 per cent on the production and sale of all products from the property.
The report, entitled "Technical Report on a Diamond Drill Program and Mineral Resource Estimate for Dot Resources Ltd.'s Dot Property," dated Nov. 30, 2010, was prepared by Aurora Geosciences and complies with National Instrument 43-101 and the Canadian institute of mining standards for reporting mineral resources. A full copy of the Aurora report can be obtained directly from Dot, the corporation's website or the corporation's profile on SEDAR
Following are a number of highlights from the Aurora report:
- At a 0.20-per-cent-copper cut-off, the estimated indicated resource was 5.33 million tonnes grading 0.45 per cent copper, 3.28 grams per tonne silver, 0.05 gram per tonne gold and 0.006 per cent molybdenum.
- At a 0.20-per-cent-copper cut-off, the estimated inferred resource was 4.28 million tonnes grading 0.46 per cent copper, 1.99 grams per tonne silver, 0.02 gram per tonne gold and 0.004 per cent molybdenum.
- The five zones of mineralization included in the resource estimate are open along strike and down dip.
Patrick Highsmith, MSc, a certified professional geologist (AIPG CPG-11702), is a member of the corporation's technical advisory committee and a qualified person under the meaning of the term in National Instrument 43-101. Mr. Highsmith has reviewed and approved the technical information contained in this news release.
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