JOHANNESBURG (miningweekly.com) – Australian gold explorer Gold Aura on Thursday said that it had entered into an agreement to buy an effective 60% stake in the Sao Chico gold property, in Brazil, in a move to protect its interest in the asset.

The company would acquire a 100% of Sao Chico, but would pay a 40% net profit royalty.

Brazilian subsidiary Gold Aura do Brasil Mineração (GOAB) had previously acquired a 60% interest in the Sao Chico project through an agreement entered into with Brazilian citizens Ademir and Jandira, who in turn had acquired 100% of the project through a separate agreement entered into with the original owner, Waldimiro.

However, Waldimiro then initiated a court action to rescind his agreement with Ademir and Jandira.

An interim court judgement was handed down in favour of Waldimiro, where by an injunction was granted to suspend the agreement, and provisionally transfer the total control of the Sao Chico project back to Waldimiro. This control included the right for Waldimiro to undertake exploration on a granted exploration licence within the project area, and apply for the conversion of Garimpeira Permits, into exploration licences for all the permits within the project area.

Following the court decision, GOAB has now entered into a binding agreement with Waldimiro to protect its interest.

A final court decision on the injunction is expected following a hearing of an interlocutory appeal, filed by Ademir and Jandira in early July.

The agreements with Ademir and Jandira, and with Waldimiro protected GOAB’s interest in the Sao Chico project, regardless of which party won the court case.

The company had also entered into an agreement with Waldimiro, which detailed the operational and financial nature of the parties’ relationship, in an effort to further protect its interest in the project. The agreement would become operational upon a provisional court judgement in Waldimiro’s favour, coming into effect.

GOAB believed that the Sao Chico project could be put into limited production by the end of this calendar year, building up to a yearly production rate of some 20 000 oz/y, at a cash operating cost of less than $200/oz, and less than $340/oz after the net profit interest royalty payment.

As production was initially planned from near surface mining, using equipment that could mostly be hired from local sources, capital expenditure needed to start production was expected to be less than $450 000.

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