Cabral Gold Inc (TSX-V:CBR) said it has reached an agreement with Osisko Gold Royalties Ltd for the purchase of a 1% net smelter return (NSR) royalty on the Cuiú Cuiú gold project.
Under the agreement, Osisko will provide a total cash consideration of US$5 million. The cash consideration will be paid in two tranches, with US$2.5 million upon closing and the remaining US$2.5 million following the registration of certain security pledges, expected in July 2023.
The royalty will apply to the area containing the existing resources of the Cuiú Cuiú gold project, as well as the surrounding land package.
This investment will enable Cabral Gold to accelerate the ongoing Prefeasibility Study being conducted by Ausenco do Brasil Eugenharia Ltda.
In a statement, Alan Carter, president and CEO of Cabral Gold, commented: "This transaction with Osisko allows us to take a major step forward in achieving our objective of near-term production, and as a result, should deliver meaningful value to our shareholders."
He said: "It will also reduce share dilution and provide us with a strong balance sheet moving forward. Perhaps most importantly, it will provide us with strategic flexibility and options regarding future project financing processes.
"This financing will enable us to accelerate the Prefeasibility study regarding the trial mining and heap-leach processing exploiting near-surface oxide gold mineralization at Cuiú Cuiú that is being undertaken by Ausenco".
The Cuiú Cuiú gold project, located in Para, Brazil, is an advanced gold exploration and development project neighboring the Tocantinzinho gold project, which is currently under construction. With a compliant mineral inventory of 21.6 million tonnes in the Indicated Resources category and 19.8 million tonnes in the Inferred Resources category, the project shows promising potential.
Cabral Gold's collaboration with Osisko, a leading public royalty company with respected technical expertise, is seen as a strong endorsement of the Cuiú Cuiú gold project. This agreement provides Cabral Gold with strategic flexibility and options for future project financing processes.
The parties have also agreed to a registration and pledge of shares in Cabral Gold and its wholly-owned subsidiary in Brazil. The transaction includes additional rights for Osisko regarding future royalty and stream financings.
Contact the author at jon.hopkins@proactiveinvestors.com