Serabi Gold enters strategic alliance with Vale
By Josh White
Date: Wednesday 10 May 2023
(Sharecast News) - Brazil-focussed gold miner and developer Serabi Gold announced the signing of a strategic exploration alliance with Vale on Wednesday, aimed at discovering large-scale copper projects in the Tapajos region of Para in Brazil.
The AIM-traded firm said Vale, through its subsidiary Salobo Metais, would focus on Serabi's Palito Complex tenement area, including the Matilda prospect and other large regional targets.
It said the exploration alliance was structured over four phases, with Vale initially funding up to $5m for the exploration programme in the first phase.
In the second, Vale could choose to continue exploration activities and fund one or more selected copper projects to the pre-feasibility study stage.
After that in the third phase, Vale would have the option to acquire a 75% share of a joint venture company incorporated by Serabi.
After incorporation, Serabi said it would transfer the copper project to the joint venture entity, and Vale would purchase 75% of it for $5m, continuing to solely fund the joint venture through to completion of a definitive feasibility study.
In that phase, Serabi said it would retain a 25% interest in the joint venture company.
Finally, in the fourth phase , Vale would be able to acquire an additional 15% interest in the joint venture company, or pay the higher of $5m 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 joint venture for a further $10m and a 1.5% net smelter royalty.
Its board said that if the joint venture company acquired additional copper projects from Serabi, the firm would then be entitled to additional payments of the higher of $5m, or 1.5% of the net present value of each project when a definitive feasibility study was complete.
"Making the discovery of the Matilda porphyry prospect in 2022 was a major milestone for Serabi," said chief executive officer Michael Hodgson.
"However, 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."
Hodgson said the exploration alliance would be focussed on large-scale copper projects, allowing Serabi to maintain its attention on its gold exploration targets.
"Vale represents an excellent partner for Serabi and we are delighted to be working with them to begin unlocking the potential of the Tapajos Region."
At 1200 BST, shares in Serabi Gold were up 7.42% at 33.3p.
Reporting by Josh White for Sharecast.com.
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