PERTH (miningweekly.com) – ASX-listed Centaurus Metals has executed a formal sale and purchase agreement with Brazilian major Vale over the Jaguar nickel sulphide project, following board approval from Vale.

Under the terms of the agreement, Centaurus would make an initial $250 000 cash payment and transfer its Salobo West exploration licence and exploration licence applications to Vale.

On the start of a bankable feasibility study or construction funding being secured, or three years from the signing of the agreement, Centaurus would pay Vale a further $1.75-million.

A further $5-million will become payable on first commercial production, with Vale also due a 0.75% net operating revenue royalty on all concentrate produced at Jaguar.

Furthermore, Centaurus would also take on Vale’s obligations to Brazil’s National Bank for Economic and Social Development for a 1.8% net operating revenue royalty.

The two companies have also agreed to enter into a future offtake agreement under which Vale could purchase all of the production from the Jaguar project on standard arm’s length prevailing market prices.

Centaurus MD Darren Gordon on Thursday said that Vale board approval for the transaction represented a key step in completing the transformational acquisition.

“Being able to acquire such an outstanding asset with genuine company-making potential is a great result for the company and our shareholders, and reflects the strong and deep relationship which Centaurus has built up in Brazil over the past ten years.

“We have developed a strong working relationship with Vale through the negotiation process, and to be able to complete this transaction with them is testament to Vale’s strong belief in the mutual benefits that can be created under their recently rolled-out mini-mines model for base metals and Centaurus’ credentials in Brazil and the Carajas as a project developer.”

The Jaguar project is estimated to contain a resource of 40.4-million tonnes, grading 0.78% nickel for a total of 315 000 t of contained nickel.

Gordon said that the acquisition of Jaguar would immediately place Centaurus into rarefied space in the nickel sulphide development sector.

“And the timing of this acquisition could not be better. The nickel price recently soared to five-year highs after the Indonesian government confirmed a ban on ore exports from December this year, putting further pressure on an already tight supply pipeline.

“We believe the acquisition of the Jaguar nickel project will provide Centaurus with a unique growth opportunity at the perfect time in the nickel market cycle. The opportunity to fast-track a new nickel sulphide development over the next two years could well prove to be a game-changer for the company.”

Centaurus will focus its initial drilling and project development efforts on high-grade targets and infill and extensional drilling.

The settlement of the acquisition remains subject to approval from the Brazilian National Bank for Economic and Social Development, which is anticipated at the end of October.