PERTH (miningweekly.com) – Gold miner Troy Resources has agreed to sell its 70% interest in the Sertao gold mine, in Brazil, to fellow ASX-listed Orinoco Gold.
Orinoco has also reached an agreement with Amazonia Minceracao to acquire all the company’s issued share capital, giving it ownership of the remaining 30% interest in the Sertao project, as well as ownership of the Antena mining lease.
Orinoco would issue a total of seven-million unlisted options, with 70% of these options going to Troy. The ASX-listed miner would also assume a A$236 000 debt to the Brazilian taxation office, which represented a disputed item from a 2008 tax return.
Orinoco would also share future tax credit benefits with both Troy and Amazonia Minceracao, which were currently estimated to be around A$3.5-million, while also paying royalties to the vendors for gold produced at the mining leases.
The Sertao leases are located some 28 km from Orinoco’s Cascavel project and have previously been the site of opencut mining operations, with a historic production of some 280 144 oz.
Orinoco MD Mark Papendieck said on Tuesday that the addition of the Sertao mining leases to the company’s project portfolio represented a major step forward in its strategy of becoming a near-term, high-grade gold producer.
“We now have several options for processing material from the decline at Cascavel, including toll treatment and the establishment of a mobile plant at Sertao, while we apply for a full-scale mining lease at Cascavel.”
Papendieck pointed out that the other significant dimension to the purchase was that the historical drill results indicated that there was potential to define additional ounces immediately beneath the Sertao openpit, and for Orinoco to add a second high-grade project to its portfolio.
“This is a major coup for the company and we are pleased that part of the consideration includes the issue of options, which we hope will see Troy join our securities register.”
Troy CEO Paul Benson told shareholders that although the transaction was relatively small, it was a win-win for both companies.
“It will enable Orinoco to get their exciting Cascavel project into production quicker than they otherwise would have, at lower cost. From Troy’s perspective, it not only cleans up the portfolio and removes a small tax liability, it gives us a mechanism to potentially share in some future tax credits.”
Benson said that more importantly, the transaction also gave Troy indirect exposure to the Cascavel project.