UK-based precious metals producer Hochschild Mining has signed a deal with Canadian miner Cerrado Gold that opens the door to an acquisition of the Monte Do Carmo gold project in Tocantins, Brazil.

Hochschild said in a statement that its wholly owned subsidiary, Amarillo Mineração do Brasil, had entered into an option agreement and certain ancillary agreements with Cerrado. On Monday, Cerrado granted Amarillo the option to acquire a 100% interest in its Monte Do Carmo project.

Amarillo has already advanced $15m (74.31m reais) through a 10% interest-bearing secured loan, with further payments due in the coming days and weeks. The company also agreed to spend at least $5m in exploration expenditures at the site in the 12-and-a-half-month period ending on 19 March 2025.

Hochschild can chose to exercise the option laid out in the deal to buy a 100% interest in Monte Do Carmo during this period by repaying the loan and making a $45m cash payment to Cerrado, in instalments, over the next three years.

The project, currently owned entirely by Cerrado Gold, comprises 21 mineral concessions over 82,542ha and hosts multiple identified gold targets along a 30km mineralised trend. These include the principal Serra Alta gold deposit, which has measured and indicated resources of 1.01 million ounces (oz) of gold and inferred resources of 66,000oz. It was also the subject of a feasibility study in October last year.

According to that study, Monte Do Carmo can generate an annual average output of 95,000oz during its predicted nine-year life.

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“We are pleased to have secured the option to acquire Monte Do Carmo,” Hochschild CEO Eduardo Landin said in the statement. “With the project holding significantly advanced permitting and compelling exploration upside potential, the transaction aligns with our strategy of adding high-quality, pre-production assets.”

In May last year, Cerrado secured a preliminary licence from the Tocantins state environmental agency for the Monte do Carmo project. The licence was the first in a three-stage permitting process required before the mine can begin production.