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Colt Resources: MOU with Star Mining on Borba Lease

Contributed by Fox-Davies Capital

Colt has announced that it has executed a memorandum of understanding regarding jointly exploring the Borba Licence, with the privately owned Star Mining, setting the key terms for the definitive agreement which the parties intend to execute within the next 60 days.

The Borba Licence was only acquired this February. It is located due east of Lisbon, covers an area of 636km2 and runs up to the Spanish border. Historically small scale copper mining was conducted on the leases and between 1986 and 2006 several mining companies explored for gold, concentrating on the gold content of the old copper mines and gold occurrences and anomalies that were poorly explored. It must also be remembered that exploration techniques are improving all the time.

Colt and Star Mining will jointly explore the Borba Licence and have agreed that Star Mining will develop a work programme and has the right to earn-in progressively full ownership of the Borba Licence. Upon the completion of a work programme and expenditures of not less than US$350,000 over a period of up to 12 months, Star Mining may initially earn a 25% interest in the Borba Licence. Subsequently and upon the completion of a work programme and expenditures of not less than US$750,000 over a further period of up to 24 months, Star Mining may earn a 35% interest in the Borba Licence. Star Mining may then elect to spend a further US$1M by carrying out additional technical, commercial and environmental programmes on the Borba Licence area for the purposes of working towards the completing a National Instrument 43-101 technical compliant resources report to earn a further 20% ownership of the concession. Once Star Mining has obtained an 80% ownership interest in the Borba Licence, Colt's remaining 20% ownership will revert to a carried interest. Star Mining will also have the option to purchase this remaining 20% interest of the Borba Licence at either US$5M within 18 months of obtaining an 80% interest or for US$10M at any time during a subsequent 42 month period. We see this as an excellent opportunity for Colt to gain exposure to any significant discover whilst preserving its own cash to spend on its 100% owned gold and tungsten deposits at Tabuago and Armamar-Meda respectively, where Colt was recently granted Experimental Mining Leases.