Latin Resources (ASX:LRS) announced it acquired the Borborema iron ore project in Brazil from Rio Tinto Exploration. Chip samples have returned values of up to 41% iron ore which is quite decent for surface sampling. The positive thing about the Borborema project is the fact that it has (or will have) access to existing infrastructure, which will definitely help to keep the capital expenditures down.
The project is still in the early stage and requires a lot more exploration efforts before Latin Resources has a better idea of its value. As a lot more exploration is needed (the project has never been drilled before), we are surprised to see the management thinks this project ‘has the potential for near term production’.
Latin Resources was able to acquire the project quite cheaply, as it paid just $200,000 (plus legal costs and taxes) and issued a 3% Net Smelter Royalty (NSR) to the vendor.
Latin also announced it signed a binding term sheet on its Ilo Norte project in Peru whereby Compania Minera Zahena can earn a 70% interest in the project by making staged cash payments totaling $3.65M, starting a diamond drill program to drill 4,800 meters and to carry out another $4M worth of work commitments on the property.
Disclosure: The author holds no position in Latin Resources. Please see our disclaimer for current positions.