Cerrado Gold Inc. (TSXV:CERT | OTCQX: CRDOF) has entered into an option agreement with Amarillo Mineração do Brasil Ltda., a wholly-owned subsidiary of Hochschild Mining PLC, whereby Cerrado has granted Amarillo the option to purchase a 100% interest in the company’s Monte Do Carmo project (MDC), Brazil, for total consideration of US$60M (approximately C$80M), subject to the fulfilment of certain conditions.
Mark Brennan, CEO, and chairman commented, “The proposed transaction improves Cerrado’s immediate short-term capital position and addresses short-term working capital needs while injecting development capital into the Minera Don Nicolas project. Going forward, Cerrado will be well capitalized with a strong gold production profile and leaves the company positioned to pursue growth programmes at our operating Minera Don Nicolas gold mine and our Mont Sorcier high grade iron project.”
The purchase price would be payable in the following stages:
- US$15M, initially advanced by way of a 10% interest-bearing secured loan, of which US$7M has been advanced as of the date of the grant of the option, US$1M may be advanced within 60 days, and the balance of US$7M may be advanced two days following the mailing by Cerrado to its shareholders of a notice of meeting and management information circular in connection with a meeting to approve the proposed transaction to be held by 30 June 2024. Upon the Cerrado shareholder approval being obtained, the signing loan, together with all accrued and unpaid interest and related expenses, shall be deemed to be repaid in full by Cerrado by the concurrent set off of an amount equal to the signing loan due by Amarillo as part of the purchase price. If Cerrado fails to secure the shareholder approval on or before 30 June 2024, the signing loan will mature on 30 September 2024
- An aggregate of US$45M, payable in four installments over the next three years
Mr. Brennan added, “In just five years at MDC, the Cerrado team has defined a proven mineral reserve of approximately 1Moz of gold, has completed a robust feasibility study, is in the final stages of permitting approval, and has attracted strong capital partners for the majority of a potential project debt construction funding. Despite the achievement of these significant milestones, the company has been unable to raise the funds necessary to reach the final investment decision for construction.”
To find out more, please visit www.cerradogold.com
To read more articles like this, please visit www.theassay.com/news
