Canada’s Cerrado Gold has signed a $20m stream financing agreement with Sprott Resource Streaming and Royalty for its Monte do Carmo gold project in Brazil.
The proceeds will be used by Cerrado Gold to fund ongoing works to deliver a feasibility study for the advanced-stage exploration property, as well as other general corporate and working capital purposes.
Under the gold and silver stream agreement, Cerrado Gold will sell 2.25% of all gold and silver produced from the property to Sprott Resource.
Cerrado will have the option to buy back 50% of the agreed stream. This will be based on a buyback schedule.
Cerrado Gold CEO and co-chairman Mark Brennan said: “We are very pleased to be partnering again with Sprott to fully finance our feasibility study and development works at Monte do Carmo.
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“The facility is a non-dilutive, attractive financing that allows full flexibility to add additional project financing for construction beginning in 2023.”
Sprott Resource issued a secured note of $20m to Cerrado Gold that bears a 10% per annum interest rate.
The secured note will mature either on 14 March 2031 or the achievement of the project’s commercial production, along with other conditions, whichever is earlier.
Sprott managing partner Mike Harrison said: “The results of the Monte Do Carmo PEA Technical Report demonstrate a tier-one, high-return, low-cost gold project with excellent exploration potential in a good jurisdiction.
“This funding provides catalytic capital to advance the project to a construction decision, and also provides the opportunity for Sprott to provide construction financing as the company advances the project.”
Located immediately east of Monte do Carmo, the Monte do Carmo project comprises 14 exploration permits that cover a total area of 67,785ha.
The project is expected to have 149,000oz of average annual gold production during the first five years of operation.