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MENAFN - ProactiveInvestors - Australia - 12/11/2012

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(MENAFN - ProactiveInvestors - Australia) Gulf Mines (ASX: GLF) has advanced its assessment of two projects in South America the company plans to acquire from the Kiwanda Group.

The company is looking to add the Pelaya coal project in Colombia and the Bahia Inglesa phosphate project in Chile to its portfolio.

Importantly, through the acquisition of these projects, Gulf Mines will become a significant player in the commercial commodities industry.

Kiwanda, a U.S.-based investment and resources company, has two alliance agreements with Lara Exploration (TSX-V: LRA).

The alliances are to acquire and develop phosphate rock projects in Chile and coal projects within the Andean Region of South America, specifically Colombia, Peru and Chile.

Under the alliances, Kiwanda may nominate a project once initial exploration has been completed as a Designated Project, which will proceed to definitive resource exploration and project feasibility.

The alliances allow Kiwanda to increase ownership of a project to 75% following expenditure on it as a Designated Project.

Under the Phosphate Alliance, Kiwanda is funding a US1.5 million exploration program over three years, with US500,000 committed in year one.

Meanwhile, under the Andean Coal Alliance, the company is funding a US1.8 million program over three years with US600,000 committed in year one.

Andean Coal Alliance

Pelaya covers 3,288 hectares of licensed exploration area on the Umir Geological Formation, which already hosts significant coal discoveries.

Kiwanda has nominated it as a Designated Project.

Cesar Department, the region in which the coal project is located, is a mature coal mining jurisdiction hosting many of the world's largest producers and mining groups such as Vale, Drummond Itochu, Prodeco Group (Glencore), and Colombian Natural Resources (Goldman Sachs).

Based on the analysis of historical hydrocarbon drilling, it has been determined that there are around 30 significant coal layers under a thin layer (less than 20 metres) of alluvial deposits.

Previous drilling at Pelaya, comprising 20 vertical electric drill holes, has established five priority diamond drill targets.

A drill program of 2,000 metres is planned for Pelaya by the current owners to identify a conceptual Resource exploration target of up to 240 million tonnes of metallurgical coal.

The Pelaya project is in close proximity to major rail, river ports and highway transport infrastructure.

In addition, Kiwanda has offered Gulf Mines a producing Colombian coal project under the Andean Coal Alliance for consideration.

This project is a newly producing coal mine currently at low start-up levels but with the capacity to significantly increase production.

Gulf Mines is including this project in its assessment of the South American projects.

Phosphate alliance

Kiwanda has nominated the Bahia Inglesa phosphate project in Chile as a Designated Project and the Phosphate Alliance has agreed to acquire 6,090 hectares of mining licences for that purpose.

A 1,500 metre sonic drill program has been planned with an exploration target of 100 million tonnes of phosphate rock at target grades of between 6% and 18% phosphorus pentaoxide (P2O5).

Previous drilling undertaken by the Chilean Government provides the basis to convert the Bahia Inglesa project to a JORC resource.

The Bahia Inglesa project already produces direct application phosphate concentrates, with about 17% P2O5, on a smaller scale for distribution to farmers within Chile.

Phosphate grades can be upgraded to 25% through basic beneficiation.

Bahia Inglesa is a coastal property adjacent to deepwater iron ore and copper loading ports.

The demand for phosphate rock is very strong due to the escalating use of phosphate fertilisers in South America with Brazil alone accounting for nearly 10% of the world's consumption.

The Copiapo Province has a significant history of successful exploration and mining and in particular of fertiliser production.

Kiwanda holds an additional 6,200 hectares of exploration licences adjacent to and covering extensions of the Bahia Inglesa project.

All preliminary reviews have been completed with onsite due diligence assessment currently under way.

Additional projects

Kiwanda has a number of active projects under the alliances and as these are turned into Designated Projects, the company has agreed to offer them to Gulf Mines as additional opportunities on a preferred basis.


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