For personal use only · Registered Office: Level 2, 679 Murray Street, West Perth, W.A. 6005 Correspondence to: PO Box 1124, West Perth, W.A. 6872 Contact email: [email protected]

Registered Office: Level 2, 679 Murray Street, West Perth, W.A. 6005 Correspondence to: PO Box 1124, West Perth, W.A. 6872

Contact email: [email protected] www.traffordresources.com ABN 93 112 257 299 ACN 112 257 299

ASX Announcement 29th August 2012

TRAFFORD TAKES STAKE IN SOUTH AMERICAN GOLD

EXPLORER

� Trafford is a 24% cornerstone investor in Orinoco Resources Ltd

� Orinoco Owns 70% of the High Grade Gold – “Curral de Pedra” Project in

Brazil

• Underground Channel Samples up to 2,560 g/t gold*

• Drill ready, aggressive exploration planned

• Curral de Pedra located 20kms along strike from Sertao mine where

Troy Resources mined 247,000oz of gold at 29 g/t

� ASX Listed Strickland Resources (ASX : STK) to Purchase Orinoco

� Trafford to Underwrite $1.5 million Placement as part of Strickland’s

planned $2.7 Million Capital Raising to Fund Exploration

� Trafford to retain 18.17% in final entity of Strickland (after equity raisings)

� Experienced Management Team in Place

� Trafford to be offered a Board Position

Perth-based Trafford Resources (ASX : TRF) – already with a highly-promising gold project on South

Australia’s Eyre Peninsula – today announced plans to take a significant interest in several Brazilian gold

projects.

ASX-listed Trafford is taking an initial 24% stake in private exploration company, Orinoco Resources Ltd

(Orinoco) which in turn is to be acquired by ASX-listed Strickland Resources Ltd (ASX : STK).

Trafford will retain a final 18.17% interest in Strickland after the various transactions and capital raisings.

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This acquisition by Trafford is a result of Trafford’s previously announced intention to use proceeds from

the sale of Trafford’s holding in Robust Resources Limited to fund involvement in new opportunities that

will be of value to Trafford shareholders.

Orinoco has assembled a portfolio of three prospective gold projects in Brazil, including its 70% owned,

high grade gold Curral de Pedra Project, located near the high grade Sertão gold mine, previously

operated by Troy Resources.

Curral de Pedra is located in Goiás state, approximately 250 kms from the capital city of Brasilia. Goiás

State in central Brazil is a focal point for gold exploration and mining by companies such as Anglogold

Ashanti and Yamana Gold Inc.

Strickland Resources Limited (ASX : STK) has entered into a binding agreement to acquire all of Orinoco’s

stock.

Under the agreement two Orinoco directors will be appointed to the Board of Strickland. Orinoco’s

highly experienced Managing Director, Mr Mark Papendieck, will assume the role of Managing Director,

whilst Mr Ian Finch, Managing Director of Trafford, will take up a non executive position. In addition Dr

Klaus Peterson will become an alternate director. Both Mr Papendieck and Dr Klaus Peterson played

instrumental roles in the establishment of successful Brazilian iron ore developer Centaurus Metals

Limited.

Figure 1: Orinoco's Brazilian Gold Projects

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Strickland plans to raise $2.7 million through a share placement and rights issue to existing shareholders

to underpin an aggressive exploration program at Curral de Pedra, which offers the opportunity for

rapid delivery of exploration results.

With significant surface and underground workings, Curral de Pedra is highly prospective with high-

grade mineralisation clearly displayed in sub-horizontal ore shoots in a shear hosted alteration zone

extending to a minimum of 85m below surface and rock chip samples returning bonanza grades of up to

2,560g/t Au. Orinoco believes it has the potential to host a significant high-grade gold system.

With an existing exploration and management team, Orinoco and Strickland plan to utilise established

networks in Brazil to develop the Curral de Pedra Project and identify additional high-quality exploration

assets and targets that it can advance towards mining.

Projects

Curral de Pedra (Orinoco 70%)

Orinoco holds a 70 per cent interest in the Curral de Pedra Project, which is located in Goiás State in

Central Brazil, approximately 250km from the capital city, Brasilia, in an area with established

infrastructure. The Project lies immediately adjacent to the Sertão Gold Mine, which was operated by

Troy Resources between 2003 and 2007 and delivered approximately 247,000 ounces of gold at the

exceptional grade of 29g/t Au.

The Curral de Pedra Project consists of four granted tenements and one tenement application, covering

a total area of 23.5km2. The Project is located on the Faina Greenstone Belt, in a region where there has

been significant historical gold production and is now the focus of modern exploration by large

companies such as Yamana Gold Inc. Significant historic gold workings occur on the Project around the

Cascavel Prospect.

There are several greenstone belts in the state of Goiás of which the Faina/Goiás greenstone belt is the

largest and least explored. Previous exploration has outlined numerous promising exploration targets on

the tenements which Orinoco considers to be either untested or inadequately tested. Yamana Gold has

recently acquired a significant tenement package in the Faina/Goiás greenstone belt and is actively

exploring the region.

The Curral de Pedra Project includes approximately 17km of highly prospective thrust faults, of which

only 650m have so far been explored by Orinoco. These thrust faults are associated with reported gold

anomalism on the State’s greenstone belts including the Sertão Mine in the Faina greenstone belt and

Yamana’s planned 130,000oz pa Pilar mine in the Pilar greenstone belt.

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There have been eight historic winzes (circa 1720-1750)

identified in this 650m long zone (the Cascavel Target), some

of which have recently been mined by the landowner with

evidence that the workings yielded significant gold for the

artisanal workers.

The existence of these old workings, which are estimated to

expose over 600m of the gold-bearing alteration zone,

provides the Company’s geologists an invaluable opportunity

to view the mineralised zone in situ rather than in drill core

alone. An initial topographic survey of two of these winzes

shows that the longest one continues for a length of 130m

and concludes in a widening area of mineralisation. Several

transverse drives up to 50m in length extend perpendicular

to the surveyed winzes, exposing thicknesses of up to 15m in

the mineralised zone.

Coarse gold is evident throughout the alteration zone, and bonanza grade quartz veins within the

mineralised alteration zone have returned rock chip samples of between 3.5g/t gold and 2,560g/t gold

from approximately nine rock chips taken from the zone. Full results are set out in Table 1 and location

of samples shown in Figure 2.

Figure 3: Three-dimensional view of surveyed underground workings and topography at the Cascavel Prospect, Curral de

Pedra Project.

Figure 2: Visible gold from the Curral de Pedra

Project

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Table 1: Analytical results for rock chip samples and Channel Sampling

from the Cascavel Prospect, Curral de Pedra Project.

Channel &

Sample Number SAD East SAD North RL

Au Grade

(G/t)

1 C29 – 12520 561494 8288350 551 187.0

2 C29 – 12521 561494 8288350 551 79.9

3 C31 - 12528 561492 8288353 551 3.7

4 C33 - 12536 561427 8288355 592 28.9

5 C33 - 12537 561427 8288355 592 138.8

6 C34 - 12539 561418 8288353 596 247.9

7 C35 - 12544 561404 8288348 603 181.0

8 C36 - 12547 561397 8288345 606 25.5

9 CdP RC1 561399 8288348 605 2,560.0

* Ranges from 3.7 g/t Au to 2,560 g/t Au

In addition to the old workings within the Cascavel Target, there are additional untested workings along

the same thrust fault that have the potential to extend the strike of the Cascavel target. The Cascavel

target is open along strike and down plunge.

Preliminary work conducted to date by Orinoco includes the completion of geological mapping,

continuous sampling (assays pending), the surveying of the known winzes and the collection of a one-

ton bulk sample from the alteration zone, which will be used for metallurgical test work and grade

estimation.

The planned exploration program will seek to test continuity of the gold bearing alteration zone along

strike and down plunge with the aim of defining a JORC compliant resource at the Cascavel Target.

Additionally, the program will explore for repetitions and extensions of the mineralised zone, along the

17km of prospective thrust faults within its tenements.

Ipoéma Project (Orinoco 100%)

The Ipoéma Project comprises eight granted Exploration Licences, two applications for Exploration

Licences and a contractual right to explore for gold and other minerals (excluding iron ore) at a further

licence. The Project covers an area totalling approximately 12,000 hectares located in Minas Gerais

State, central Brazil, about 140km north-north-east of the state capital Belo Horizonte.

The Ipoéma Project contains what are believed to be intrusion related gold occurrences in and around

the recorded banded iron formation. Gold was artisinally mined at the site around the mid-18th Century,

with nine historic gold winzes remaining. These winzes were channel sampled by a previous explorer for

iron ore. In addition to iron ore, gold assays were submitted and the explorer reported significant

intersections. Samples were composited to two metre intervals and submitted for analysis by screen fire

assay. Reported gold results were as follows:

IBP GA 003: 8m @ 1.8g/t gold including 2m @ 5.63 g/t gold

IBP GA 004: 6m @ 5.29g/t gold including 2m at 9.66 g/t gold

IBP GA 009: 4m @ 3.4g/t gold including 2m @ 6.36 g/t gold

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Orinoco believes that the near-surface mineralisation evident in the historic winzes may form part of a

larger intrusion-related gold system.

Brusque Project (Orinoco 100%)

The Brusque Project comprises three granted tenements covering a total area of 23.07 km2. The Project

is located in the north east of Santa Catarina State, within 50km of the coastal city of Itajaí, and

approximately 100km north of the state capital Florianópolis.

At the Brusque Project, exploration will be aimed at identifying orogenic gold and intrusion related gold–

copper style mineralization. The aim is to identify a large gold-copper deposit by using new conceptual

models and innovative exploration tools in combination with detailed knowledge of the local geology.

Gold was first discovered in the region in the 1970’s and several small mines and Garimpeiros were

established in the region following the discovery. Despite this, the Brusque Project is located in a region

of Brazil that has still been minimally explored, with only a few discrete exploration programs having

been conducted in modern times with very limited drilling. In addition to two existing gold mining

operations in the immediate area, Garimpeiros have been active in the region.

Experienced Exploration Team

At completion of the transaction, Strickland will appoint Orinoco’s highly experienced Brazilian

exploration team to manage the exploration program and the review of new project opportunities.

Details on the key members of this management team are provided below:

Dr Klaus Petersen – Technical Director M.Sc (Mineralogy & Petrology), PhD (Minerology &

Petrology,) AusIMM, CREA

Dr Petersen is a Brazilian national who has over 20 years’ experience in the Brazilian resources

industry. Dr Petersen has spent the last eight years in management roles at ASX-listed, Brazilian-

focused companies where he was responsible for project generation and exploration. This has

included the last six years in Chief Geologist roles at Centaurus Resources (now Centaurus Metals)

where he was one of the co-founders. Before this, Dr Petersen worked with Vale’s exploration

division on gold targets in Brazil’s Iron Quadrangle and later completed his PhD on Anglo Gold

Ashantis’ Crixas mine in Goiás State, Brazil. In 2003 he moved to Australia to work with the University

of Western Australia on the gold mineralization of complex hydrothermal systems in the Western

Australian Goldfields.

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Dr Marcelo de Carvalho – Country Manager & General Manager, Exploration M.Sc

(Metalogeny), PhD (Metalogeny & Geochemistry), CREA

Dr de Carvalho has spent the last seven years working with Yamana Gold Inc, a large Canadian gold

company, most recently as the Generative Exploration Manager for Brazil. During this time, Dr de

Carvalho was instrumental in identifying new opportunities for Yamana Gold and in advancing these

exploration projects, such as the planned 150,000oz pa. Pilar gold mine through to feasibility study

and mine construction. Prior to working at Yamana Gold, Dr de Carvalho worked for Anglo Gold as a

geologist in their exploration division in the Amazon region and as a contractor for Vale. In addition

to Dr de Carvalho’s Brazilian exploration experience, he has conducted exploration campaigns and

due diligence work throughout South America, working in countries like Honduras, Nicaragua, British

Guiana and Argentina.

Strickland Acquisition Terms

The proposed terms of the acquisition of Orinoco by Strickland are as follows:

(a) Consideration

Subject to Satisfaction of the Conditions Precedent outlined below, Strickland will acquire 100% of

the issued capital of Orinoco in consideration for:

(i) 19 million Strickland ordinary shares;

(ii) 5 million A Class Performance Shares, which expire 3 years from the date of issue and are

convertible (1:1) upon the announcement of a JORC inferred resource of >0.5M oz Au;

(iii) 10 million B Class Performance Shares, which expire 4 years from the date of issue and are

convertible (1:1) upon the announcement of a JORC inferred resource of >1M oz Au;

All Consideration Securities will be escrowed for a period of 12 months from the date of issue.

(b) Conditions Precedent

Completion is conditional upon the following events occurring;

(i) Formal agreements being negotiated and executed by Strickland and Orinoco including the

standard terms expected from an agreement of this type;

(ii) Completion by Strickland of legal, technical and financial due diligence on Orinoco and its

assets to the satisfaction of the Strickland directors.

(iii) Approval from Strickland shareholders, ASX and other regulatory authorities as necessary.

(iv) Strickland being satisfied that Orinoco has satisfied all liabilities at Completion;

(c) Completion is to occur no later than 50 days after the date of the Heads of Agreement, unless

otherwise agreed;

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(d) As soon as possible after Completion, on a 1:1 basis Orinoco option holders will be issued 10

million Strickland unlisted options exercisable at $0.25 expiring on the same date as the current

Orinoco options, in exchange for the current Orinoco options;

(e) As soon as possible after Completion, Strickland will issue the shares and options to Centaurus

Metals, in satisfaction of obligations under the Centaurus Sale Agreement as noted above.

The issue of securities in relation to the acquisition is subject to Strickland shareholder approval.

Board Changes – Trafford Representation

Strickland will appoint Mr Mark Papendieck as Managing Director of the Company as part of the

acquisition of Orinoco.

Mr Papendieck has held a range of senior executive roles in Australia and overseas in both the Mining

and the financial services industry. He has experience with gold, copper, iron ore and manganese

exploration companies at both management and board level, and has spent the past six years focusing

predominantly on Brazilian resource companies.

Mr Papendieck was the founding Chairman of Centaurus Resources Limited from 2006 and was

appointed as the Managing Director in 2008 to oversee the Company’s emerging operations in Brazil. A

successful merger of Centaurus Resources Limited and Glengarry Resources Limited was completed in

early 2010 and Mr Papendieck was appointed the General Manager, Commercial for the combined

group, which was renamed Centaurus Metals Limited, until August 2011.

Mr Papendieck brings to his directorship a solid understanding of the resources industry gained through

his involvement in both the resources and financial services industries and a detailed knowledge of

conducting an exploration business in Brazil. In addition to his expertise in iron ore, Mr Papendieck has

been involved in the identification, assessment, structuring and management of gold and copper

projects in Australia and South America.

Mr Papendieck holds a Diploma of Law from the NSW Legal Practitioners Admission Board (Dip. Law,

NSW LPAB). He is also a Non Executive Director of the listed company Southern Crown Resources Ltd

and the unlisted Supergene Resources Limited.

Strickland will also appoint Mr Ian Finch as Non-Executive Director. Mr Finch’s career as an exploration

and mining geologist spans over 40 years in which he has driven major exploration programs across

three continents.

In 1993, Mr Finch co-founded and listed Taipan Resources Ltd (later Intrepid Resources ltd) which

successfully pioneered exploration for large gold deposits in the Ashburton District of Western Australia,

leading to the development of the successful Paulsen’s gold mine and in 1999 he founded and became

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President of Canadian listed Goldminco Corporation. There he established an extensive portfolio of large

porphyry copper-gold prospects in New South Wales. Mr Finch was the first chairman of Uranium

explorer and developer, Bannerman Resources Ltd and the founding chairman of successful Indonesian

explorer, Robust Resources Ltd.

Mr Finch is currently Managing Director of Trafford Resources Ltd, a company that he established in

2006 to explore for iron oxide, copper, gold, lead-zinc, silver, and uranium deposits in South Australia.

He is also the Executive Chairman of IronClad Mining Limited.

Mr Klaus Petersen has agreed to be appointed as Alternate Director for both Mr Papendieck and Mr

Finch. Mr Morgan Barron has agreed to step down from his position as Non-Executive Director of

Strickland at completion of the transaction.

Capital Raising – Trafford $1 million underwriting to $2.7 million issue

Strickland intends to proceed with a capital raising of up to $2.7 million which will include;

(1) An entitlements issue of one new Strickland Ordinary Share for every three Strickland

Ordinary Shares held at the Record Date at a price of 15 cents a share, to raise up to

$1.2million; and

(2) Private Placement of 10 million shares at 15 cents each to raise up to $1.5 million, subject to

shareholder approval.

Trafford Resources, a company of which Mr Ian Finch is Managing Director, and which currently has a

shareholding of [24%] of Orinoco, has agreed to underwrite the placement, and take a minimum of

$1.0 million under the placement. Following completion of the transaction and raisings, Trafford will

have approximately 18.17% of the undiluted share capital of Strickland.

Capital Structure Post Transaction and Capital Raising

The indicative effect of the Capital Raising and Transaction on the capital structure of the Company will

be as follows:

Description

Ordinary

Shares Options

Performance

Shares

Current Issued Capital 24,000,000 16,700,000(1) -

Securities to be issued pursuant to the

Transaction

20,000,000(2) 11,000,000(2) 15,000,000(3)

Estimate of securities to be issued pursuant to

the Capital Raising

18,000,000 - -

Capital Structure on completion of the Capital

Raising and Transaction(4)

62,000,000 27,700,000 15,000,000

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(1) Consisting of:

a. 8,000,000 STKO Listed Options exercisable at $0.25 and expiring 31 May 2015

b. 8,600,000 Unlisted Options exercisable at $0.25 and expiring 31 May 2015

c. 100,000 Unlisted Options exercisable at $0.35 and expiring 30 November 2015;

(2) Refer to acquisition terms above. This amount also includes the 1 million shares and 1 million

options to be issued to Centaurus Metals as noted in the Key Terms of Orinoco’s acquisition

of the Ipoéma and Brusque Projects;

(3) Performance Shares on the terms set out in (a)(ii) and (iii) of the acquisition terms above;

Assumes no options are exercised prior to completion of the Capital Raising and Transaction

For further information, please visit www.traffordresources.com or contact

Ian D. Finch Managing Director

(08) 9485 1040

Disclosure statement

Competent person statement:

The information in this announcement that relates to Exploration Results is based on information compiled by Ian

D. Finch, who is a Member of The Australasian Institute of Mining and Metallurgy and who has more than five

years experience in the field of activity being reported on. Mr. Finch is the Managing Director of the company.

Mr. Finch has sufficient experience which is relevant to the style of mineralisation and type of deposit under

consideration and to the activity which he is undertaking to qualify as a Competent Person as defined in the 2004

Edition of the ‘Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves’. Mr.

Finch consents to the inclusion in the report of the matters based on his information in the form and context in

which it appears.

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Documents

For personal use only · Registered Office: Level 2, 679 Murray Street, West Perth, W.A. 6005 Correspondence to: PO Box 1124, West Perth, W.A. 6872 Contact email: [email protected]