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.

The above references an opinion and is for information purposes only. It is not intended to be investment advice. Seek a licensed professional for investment advice. The author is not an insider or shareholder of any of the companies mentioned above.