LONDON: Hochschild Mining PLC, a London-based precious metals producer, announced that it has secured an option to buy the Monte Do Carmo gold project in Brazil from Cerrado Gold Inc., a Canadian exploration and development company.

The project, located in the state of Tocantins, has a resource estimate of over one million ounces of gold and a feasibility study completed in 2023. It also has a favourable infrastructure and permitting situation, with access to a nearby hydropower plant and an environmental licence granted by the state agency.

Under the terms of the option agreement, Hochschild’s subsidiary, Amarillo Mineração do Brasil Ltda., will pay Cerrado $15 million as a secured loan and spend $5 million on exploration within a 12.5-month period. If Hochschild decides to exercise the option, it will pay Cerrado an additional $45 million in cash over three years. The option is subject to the approval of Cerrado’s shareholders and other customary conditions.

Eduardo Landin, Chief Executive Officer of Hochschild, commented: “We are pleased to have secured the option to acquire Monte Do Carmo, an exciting project in the mining-friendly state of Tocantins. With the project holding significantly advanced permitting and compelling exploration upside potential, the transaction aligns with our strategy of adding high quality, pre-production assets where our construction, operational and brownfield exploration expertise provides us with a competitive advantage.

With our Mara Rosa mine, also located in Brazil, in the state of Goiás, recently achieving first production, we are looking forward to commencing a brownfield exploration programme at Monte Do Carmo which will allow us to assess the next steps for its development and its potential to generate sustainable value for Hochschild and local stakeholders.”