Bahia Inglesa Phosphate Acquisitions, Chile
November 14, 2012 (TSX Venture: LRA) - Lara Exploration Ltd., (“Lara” or the “Company”) is pleased to announce that it has signed a Letter of Intent to acquire 6,090 hectares of mining licenses and that it has also claimed in its own right a further 6,200 hectares of exploration licenses, covering known sedimentary phosphate deposits in the Bahia Inglesa district of Chile, on behalf of the Kiwanda Phosphate Alliance.
Lara, on behalf of the Kiwanda Phosphate Alliance (“Kiwanda”) has signed a Letter Agreement with two related Chilean companies SCM Bahia Inglesa (“SCM”) and Compania Minera de Fosfatos Naturales Limitada (“Bifox”) to acquire 6,090 hectares of mining licenses that were originally drilled for sedimentary phosphates in the 1980’s by the Chilean Government and from which SCM and Bifox currently produce phosphate concentrates (with approximately 17% P2O5) on a small scale. The option is subject to due diligence, completion of a Definitive Agreement, cash payments and a sliding scale production royalty on the following terms:
Date of signature
Cash payment 12 months after date of signature
Cash payment 24 months after date of signature
Payable only if phosphate concentrate (+30% P2O5) prices are greater than US$200/tonne
Payable on any production if phosphate concentrate (+30% P2O5) prices are less than US$200/tonne
Payable on any production if phosphate concentrate (+30% P2O5) prices are between US$200 and US$300/tonne
Payable on any production if phosphate concentrate (+30% P2O5) prices are greater than US$300/tonne
Bifox and SCM will continue their current operations up to a total production of 200,000 tonnes (time measured from the date of signature of the Purchase Option Agreement) of phosphate rock with approximately 17% P2O5 content and will have an exclusive agreement to market and sell production by Kiwanda into the local Chilean market for a period of 10 years. Kiwanda will have access to and use of the laboratory and other facilities on-site for a period of 3 years, with an option to purchase them at market prices.
Kiwanda has also applied for 6,200 hectares of exploration licenses adjacent to and covering extensions of the SCM and Bifox deposits. Under the terms of the agreement between Lara and Kiwanda (see Company news release of January 10, 2012 for details), the combined Bahia Inglesa property will become a Designated Project, whereby Kiwanda will invest US$5 million over a four-year period (US$1 million of which is a firm commitment) in exploration and development to raise its interest to 65%. Kiwanda may then raise its interest to a total of 75% by delivering a Feasibility Study as defined by NI 43-101 within a further two years (subject to spending a minimum of US$2 million per year).
Andre Gauthier, Lara’s President, a member of the Quebec Order of Engineers, is a Qualified Person as defined by National Instrument 43-101 Standards of Disclosure for Mineral Projects and is responsible for the preparation and verification of the technical information in this release.
Lara is an exploration company following the Prospect Generator business model, which aims to minimize shareholder dilution and financial risk by generating prospects and then exploring them in joint ventures funded by partners. The Company currently holds a diverse portfolio of prospects and deposits primarily in Brazil and Peru where it has signed agreements for fifteen joint ventures and three Strategic Alliances. Lara’s common shares trade on the TSX Venture Exchange under the symbol “LRA”.
For further information on Lara Exploration Ltd. please consult our website www.laraexploration.com, or contact Chris MacIntyre, VP Corporate Development, at +1 416 703 0010.
Neither the TSX Venture Exchange nor the Investment Industry Regulatory Organization of Canada accepts responsibility for the adequacy or accuracy of this release.