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Metalla Royalty & Streaming picks up royalty on large gold development project in Brazil for up to US$18M

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Metalla Royalty & Streaming Ltd (NYSEAMERICAN:MTA) (CVE:MTA) (FRA:X9C) revealed it had acquired a further accretive royalty on a large development project in Brazil that covers over 2 million ounces of gold. 

The company has struck a deal to acquire an existing 1% to 2% net smelter return royalty (NSR) on OZ Minerals’ (ASX:OZL) (OTCMKTS:OZMLF) (FRA:OXR) CentroGold project from Jaguar Mining (TSE:JAG), which includes an upfront payment of US$7 million in cash payable at closing and then up to US$11 million in cash and shares.

READ: Metalla Royalty & Streaming adds new royalty on Eldorado Gold’s high-grade Tocantinzinho project in northern Brazil

“The CentroGold project has a highly prospective land package that covers over 1,200 square kilometers within a proven geological gold belt in northern Brazil,” Brett Heath, the CEO of Metalla, told investors in a statement.

“The CentroGold project is being advanced by Australian-based major producer OZ Minerals, with a significant presence in Brazil operating the Pedra Branca and Antas mine. We believe the CentroGold project has a strong potential for growth with significant exploration upside.”

The asset lies in the state of Maranhão, between the Carajas mining district and the Atlantic coast, and is one of the largest undeveloped gold projects in Brazil, operated by OZ Minerals with three main open pit deposits -  Blanket, Contact, and Chega Tudo.

A recent pre-feasibility study outlined a seven-year life of mine with output in the first two years expected to average between 190,000 and 210,000 ounces of gold a year, with around 1.1 million ounces (Moz) in the first six years.

In the next two years, Oz expects to publish an updated feasibility with the potential addition of the Chega Tudo deposit, with production expected to begin in 2024.

The CentroGold Contact and Blanket deposits remain open at depth and the expansive land package presents a great deal of exploration potential including eight identified targets, noted Metalla.

The current mine plan does not include the Chega Tudo deposit, which lies around eight kilometers to the west of the Contact and Blanket deposits.

The purchased royalty is a 1% NSR on the first 500,000 ounces of gold production, followed by a 2% NSR on the next 1 Moz of output. It reverts to a 1% NSR royalty on gold production thereafter.

The total purchase price is up to US$18 million to Jaguar upon achieving two milestones relating to the CentroGold project. Metalla will satisfy the upfront payment of US$7 million in cash on closing.

The first milestone payment will be satisfied by Metalla issuing shares valued at US$7 million priced at the 15 trading day volume-weighted average price on the NYSE American, on a date that is within 120 days following completion of the trigger.

The second milestone will be triggered by achieving commercial production and will be satisfied by Metalla through US$4 million in cash. The transaction is expected to close in the first quarter this year.

Contact the author at [email protected]

Story by ProactiveInvestors


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