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Jangada Mines has signed a binding letter agreement for the divestment of 100% of Pedra Branca do Brasil Mineracao, an entity that holds Pedra Branca, to TSX-V listed ValOre.

Jangada Mines is developing the Pedra Branca project, which is reported to be South America’s largest platinum group metals and nickel project, and the Ptombeiras West vanadium project in Brazil.

Under the proposed deal, the Ptombeiras project will continue to be completely owned by Jangada.

The agreement covers issuance and allotment of 25 million ValOre common shares on the closure date of the proposed deal, and cash payments totalling C$3m to Jangada.

Of this amount, Jangada has already received an exclusivity payment of C$250,000. About C$200,000 of this amount is refundable if Jangada breaches the exclusivity covenant as per the agreement, which runs for the next 100 days. About C$750,000 is payable on closure of the deal, C$1m is to be paid on, or before, three months after the closing of the proposed deal and C$1m on, or before, six months after the closing of the proposed deal.

The total consideration payable to Jangada, as per the closing price of a ValOre common share on 23 May 2019, is around £4.1m ($5.1m).

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By GlobalData

With the issue of the consideration shares, Jangada would get an interest of around 33% in the current share capital of ValOre.

Following completion of the deal, Jangada would also have the right to nominate one individual to the board of directors of ValOre and one observer to the board.

Jangada may gain the right to nominate up to two directors if mutually agreed in writing by the two firms.