Galway Resources Ltd has successfully re-negotiated the deal terms with Rio Tinto for the Carboluis coal project located in Santander, Colombia.
The total land package for the concessions represents roughly 50% of the San Luis coal basin, comprising 7,500 hectares. Nineteen historic drill holes, along with extensive surface sampling, have shown strong potential for the basin and the concession package.
"The new deal terms are more attractive and provide us with greater flexibility to bring in a joint venture partner to advance the project. Also, by pushing off the payments by one year, it enables Galway to potentially fund the next step of development internally, as market and funding conditions improve for coal exploration," says Robert Hinchcliffe, president and CEO of Galway Resources.
The highlights of the modified deal terms with Rio Tinto include: -
The $122,000 payment due in the present quarter of 2009 has been postponed for one year, all future payments have been pushed off one year as well.
Payment terms per ton for coal discovered are now payable with a 2% royalty on production for the life of the project. The prior arrangement was based on $1.25/ton for any economical coal found paid over the first five years of commercial production.
Galway implemented a drilling campaign with some success in the 4th quarter of 2008 and the 1st quarter of 2009.
Management believes that a more aggressive drilling program is needed to determine the economic potential of the coal contained in the concessions. The company is seeking out a joint venture partner to fund the next level of development, which would be an aggressive drilling program.
The basin is recognised as having high grade coal containing a mixture of thermal and metallurgical coal. There is one producing mine in the San Luis basin, directly adjacent to Galway's land package.
