Hochschild takes option to buy Monte Do Carmo
Project hosts a measured and indicated resource of more than 1Moz
Hochschild Mining has entered into an option agreement to acquire the Monte Do Carmo gold project in Tocantins, Brazil from Cerrado Gold.
The project hosts a measured and indicated resource of more than 1Moz at the principal Serra Alta gold deposit and includes 21 concessions covering 82,542 hectares. Hochschild's Mara Rosa mine in Goiás, Brazil, recently achieved first production, and is expected to produce 83,000-93,000oz this year at an all-in sustaining cost (AISC) of US$1,090-1,120/oz.
A feasibility study was completed on Tocantins in October 2023 detailing a project to produce just under 95,000ozpa of gold for nine years at an average AISC of $711/oz, initially from an open pit that will transition into an underground operation with a cyanide leach circuit. The initial capital cost was estimated at $186.6 million.
The feasibility was based on a Monte do Carmo reserve of 16.8Mt grading 1.66gpt gold, containing 895,000oz, mainly in the Serra Alta deposit and the Gogo Do Onca satellite deposit.
The project benefits from existing site infrastructure including year-round access via a paved highway and proximity to the Isamu Ikeda hydropower plant. Permitting is substantially advanced, with the environmental impact assessment approved and the preliminary licence granted by the Tocantins state environmental agency in May 2023.
Hochschild will pay $15 million for its option by way of 10% interest-bearing secured loan and has committed to incur a minimum of $5 million in exploration expenditures at the project through March 2025. It can exercise the option by deemed repayment of the loan and by making cash payments totaling $45 million over the next three years.
"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," said Hochschild Mining chief executive Eduardo Landin.
Prior to the transaction, Hochschild expected a 20% increase in production and 24% reduction in costs over the next three years. For 2024, production guidance is at 343,000-360,000oz of gold equivalent and costs $1,510-1,550/oz.
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