Canadian miner Cerrado Gold (TSXV:CERT) has signed a $20 million revenue funding agreement with Sprott Resource Streaming Royalty, which the company intends to use to fund ongoing work and deliver a reliability study for the Monte do Carmo gold property in Brazil.
The Monte do Carmo project, located east of Monte do Carmo, consists of 14 exploration permits covering a total area of 67,785 hectares.The project is expected to produce 149,000 oz per year during the first five years of operations.
Cerrado Gold CEO and co-chairman Mark Brennan said in a press release: “We are very pleased to be partnering again with Sprott to fully finance our feasibility study and development works at Monte do Carmo. The facility is a non-dilutive, attractive financing that allows full flexibility to add additional project financing for construction beginning in 2023.”
Under the agreement, Cerrado Gold will sell 2.25% of all gold and silver produced at the Sprott Resource property with the option to repurchase 50% of the agreed flow-through. This is based on a buyback program.
Sprott Resource issued a $20 million secured promissory note to Cerrado Gold with an interest rate of 10% per annum scheduled to mature on March 14, 2031 or upon achievement of commercial production from the project among other conditions.
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.”
Cerrado’s South American Project Pipeline
Cerrado Gold is a Toronto-based precious metals exploration and mining growth company with assets in South America. The Company’s 100% owned Minera Don Nicolas Project, located in Santa Cruz, Argentina, is a new producing gold and silver mine with significant optimization, expansion and exploration potential. The company is also focused on exploration at its 100% owned Monte do Carmo Gold Project in the state of Tocantins, Brazil, expanding the high grade mineral resource base through extensive exploration in 2022.