AM Resources owns an 80% interest in the Mina Luz property.
The Mina Luz property consists of mining concession No DJU-071 covering 40 hectares. The mining title is valid for a period of 22 years from the date of inscription (2002). The property is located to the south-west of the town of Popayan in the department of Cauca, approximately 150 km to the SSW of the town of Cali, in the SW portion of Colombia, municipality of Patia. AM has applied for an extension in November of 2016 (Solicitud de Contrato No. RKG-09241). This extension has actually been granted although the administrative process has not yet been finalized with the authorities. The extension (3,596 ha), wholly owned by AM, is considered as being part of the property.
The concession (No DJU-071) was wholly held by El Gran Porvenir Limitada (Porvenir), a Colombian corporation, since October of 2002. In October of 2015, Porvenir entered into an agreement with AM for the sale of an 80% interest in the property. This agreement was amended in June 2016 and October 2017, and as of the date hereof AM had acquired an 80% in the property in consideration for aggregate cash payments of $1,200,000, and disposed of a 15% interest and granted NQ a $2 per tonne royalty on the property’s production pursuant to an asset transfer and royalty agreement entered into in October 2016 in consideration of a $1,200,000 loan to its holding company A&M USA Resources 2015 LLP.
Geology and previous work
Government geologist carried out a complete geological reconnaissance program of the Cauca coal belt (some 80 km along the Tertiary age Mosquera sedimentary Formation which host the resource) including channel sampling of outcrops, trenches, pits and the drilling of 6 HQ and NQ drill holes. International standards in place at the time were then applied to evaluate the coal potential of the entire belt.
In the area, three different productive levels of the Mosquera middle Formation contain a total of 25 plies (called mantos) ranging in thickness between 0.60 m and 2.68 m. Nine plies are 1.0 m thick or more. It is noted that faulting and folding are quite intense and that the resource is found in a complex structural environment. Drill holes PC-3, 4 and 6 were drilled in the vicinity or on the property.
The quality of the coal in the area ranges from Bituminous High Volatile C and B to Subbituminous B (medium quality). This type of coal is mostly used to generate electricity in Colombia.
The potential for small scale underground or surface mining for medium quality, structurally complex coal is well established in the area. The complexity of the ore, however, indicates that a fair amount of delineating work is necessary in order to properly define the folded and faulted coal plies.
Since the beginning of fall 2016, AM has carried out various surveys in the area including: geological reconnaissance, surveying and trenching. AM has also made the acquisition of various equipment to initiate mining on the property as well as support local miners who sell their product to AM. The goal of the Company is to increase production in the area from 3,500 tpm to 15,000 tpm.