Galway Resources Limited announced that Prodeco has begun drilling the first of 19 holes in the initial drill program at Galway's Galca coal project. The company has an exploration and JV agreement with Prodeco which is the third largest coal producer in Colombia, with 11 million tonnes of annual coal production. The GALCA coal project comprises 132,000 hectares that Galway believes could host a new undiscovered coal basin that occurs close to surface. This drilling program will be focused on 2 areas that appear to have the highest prospect of coal near the surface.
Mr Robert Hinchcliffe president and CEO of Galway Resources said that "We are very pleased that our joint venture partner Prodeco has begun the drilling program which could be very exciting. This area has the potential to host several new coal deposits with great existing infrastructure. The upside could be tremendous.”
1. Terms of the Transaction
The terms of the GALCA exploration and joint venture agreement include the following: Prodeco will fund the first 19 drill holes and in consideration for agreeing to fund the feasibility drilling program will be granted a 60% equity interest in the project. Prodeco will then earn the remaining 40% equity interest in the project by paying Galway an already agreed value per tonne of economically mineable open cut reserves determined in accordance with the JORC Code up to USD 70 million.
2. GALCA Project
The GALCA project comprises 77 concessions and is located in the Cesar State. The project has very favourable infrastructure, with the Fenoco rail line running through the middle of the concession area and the Rio Magdalena River and the National Road to the Caribbean coast and ports running along the western edge of the project.
Extensive analysis of various seismic data and other geological studies derived from petroleum drilling carried out over the years, have been conducted. Geological analysis indicates the presence of coal and this land package was put together targeting the areas where it is believed that coal is closest to the surface. As such, the focus for the 19 hole drilling program will be on the more prospective northern and south eastern flanks. Click here to see the location of the 2 priority areas for drilling.
3. Colombian Coal Overview
Colombia is the largest exporter of coal to the US and is by far the largest coal producer in Latin America. More specifically, the total annual coal production is currently about 70 million tonnes and that figure is expected to double by 2015 as levels of foreign direct investments continue to increase with high energy prices. Colombia is recognized for its vast high grade coal resources along with its highly motivated and skilled labour force.
4. Changes to the Board of Directors
The Company also reports the resignation of Mr Ron Guill as a member of the Board of Directors. The Company would like to thank Mr Guill for his contribution as a Director and wish him the best in the future. Galway Resources is pleased to announce that Mr Robb Doub has agreed to join the Board of Directors.
Mr Doub has over 16 years of investing in high growth, international emerging businesses. He is currently a general partner of New Markets Venture Partners and sits on the Board of several different companies. Prior to this position, Mr Doub was a MD of SEAF, an emerging market venture capital company managing over USD 200 million in Central and Eastern Europe, Latin America and Asia. He currently serves on the Board of K2 Alternative Strategies Offshore LTD, a hedge fund of funds managed by K2 Advisors, a leading multibillion dollar hedge fund of funds. Mr Doub also serves on the Conflicts Advisory Board of the off-shore hedge funds managed by Deutsche Asset Management's Absolute Return Strategies Group. Mr Doub graduated from the University of Vermont, with a major in History and received a MBA with Honors from Georgetown University.
