Serabi, Vale to jointly explore for copper in Brazil

Brazil-focused Serabi Gold (TSX: SBI; LSE: SRB) has partnered up with top miner Vale (NYSE: VALE) to scout for copper discoveries within its exploration tenements around its Palito Complex tenement area, including the Matilda prospect and other regional targets in Para state.

The gold producer said the strategic exploration deal with Vale’s subsidiary Salobo Metais was structured over four phases.

Vale will fund up to US$5 million for the exploration program in the first phase.

In the second, the Rio de Janeiro-based iron ore and nickel giant can choose to continue exploration activities and fund one or more selected copper projects to the prefeasibility study stage.

In a third phase, Vale would have the option to acquire a 75% share of a joint venture company incorporated by Serabi.

The gold miner would then transfer the copper project to a joint venture entity, and Vale would purchase 75% of it for US$5 million, continuing to solely fund the joint venture through to completion of a feasibility study.

The fourth and last phase gives Vale the option to buy an additional 15% interest in the JV, or pay the higher of US$5 million or 1.5% of the net present value of the project, increasing its interest to 90%.

Serabi would then have a put option to sell its remaining 10% interest in the JV for a further US$10 million and a 1.5% net smelter royalty.

If the JV acquires additional copper projects from Serabi, the firm said it would then be entitled to additional payments of the higher of $5 million, or 1.5% of the net present value of each project when a definitive feasibility study was complete.

“Bringing in a partner with the expertise and resources of Vale, will enable us to properly evaluate Matilda and the other significant targets within our tenement area, and move them forward more quickly,” Serabi’s chief executive officer Michael Hodgson said in a statement.

The gold company owns 610 sq. km of tenements in the Palito Complex tenement area, where the Matilda discovery was made last year. 

The complex and Serabi’s Coringa gold project lie in the Tapajos region of northern Brazil, which has been known as a major producer of gold since the 1970s.