Under the terms of the agreement, the Australian Securities Exchange-listed company will acquire 100% of the issued shares in Spanish company Carbones de Uraba, which is fully owned by the vendor, Hampshire Mining.

Carbones de Uraba has an agreement to acquire a 90% interest in Colombian company Carbones de Golfo, the holder of the Uraba concession.

In order for Ascot’s acquisition to go ahead, Carbones de Uraba must complete its acquisition of Carbones de Golfo.

The agreement is also conditional upon the satisfactory completion of due diligence and relevant shareholder approvals.

Ascot said the vendors were associated with two of the directors of the company and all necessary related party approvals would be sought before the company proceeded with the transaction.

The 5000-hectare Uraba concession is located only 25km from the coastline and port infrastructure and is 360km from Ascot’s Titiribi coal project.

Ascot said the acquisition would provide potential for the company to consider synergies between the two projects, such as coal blending and logistics.

Preliminary geological research has identified 16 major coal seams ranging from 0.8m to 2.2m thick, with a 5m thick coal outcrop identified in the southern part of the concession.

Geological surveys suggest that the coal-bearing zone is continuous from north to south through the length of the concession.

The coal dips to the east at varying degrees between 45 and 70 degrees.

Preliminary assay results from coal surface samples and trenching of weathered outcropping coal indicate a reasonably high rank coal with the potential to contain metallurgical qualities.

The concession is 25km from the port of Turbo, which is the northern terminus of the main route of the Pan-American Highway in South America.

Given the short distance to the port and relatively flat terrain, the company said it would investigate the potential to transport coal via a conveyor belt transportation system.

Alternatively coal could be trucked to the coal port of Morrosquillo, located 260km away along relatively flat roads.

If the acquisition is successful, Ascot will begin a drilling program to define the resource, which would also include information from existing preliminary surface geology, field mapping and sample analysis from outcropping.

“The acquisition of the Uraba project expands the company’s geographical footprint in Colombia and is in line with the company’s objective of targeting projects that exhibit potentially near term production and low development capital,” Ascot managing director Andrew Caruso said.

“With the recent delivery of its maiden JORC resource at the Titiribi project and the agreement to acquire the Uraba concession, the company continues to demonstrate its ability to fast-track its interests in Colombia.”

On completion of the acquisition, Ascot will pay the vendor an initial $US120,000, as well as the costs incurred by the vendor as a result of payments it must make to the 10% minority interest of Carbones Golfo.

These are in respect of certain concession maintenance costs and the corporate restructuring of Carbones Golfo required to enable the acquisition to proceed.

Within 6 months of completion, Ascot must make a further payment to the vendor equivalent to the reimbursement of direct costs it incurred in connection with securing its interest in Carbones Golfo and costs associated with completed geological work, such as surface mapping.

Ascot said this would not exceed $500,000.

In addition to the initial $120,000 and deferred $500,000 to the vendor, Ascot must also make a number of milestone payments to Carbones Golfo if the acquisition goes ahead.

Ascot must pay the company 0.9c per ton of indicated and measured resource once it has been defined, staggered over a period of 240 days.

Also, 0.3c/t of proven and probable reserve is to be paid within 24 months of reserve definition.