Brazauro And Eldorado To Partner On The Tocantinzinho Project And Tapajos District Exploration
VANCOUVER, BC, -- Eldorado Gold Corporation (“Eldorado”) is pleased to announce that we have reached an agreement for Eldorado to earn an interest in Brazauro Resources Corporation’s (“BZO”) 43,000 hectare Tocantinzinho Project (“TZ Project”) in the Tapajos District of Para State, Brazil. In addition the agreement provides for a partnering of extended exploration in the Tapajos District.
This agreement ensures that the TZ Project will be explored and developed in a timely manner through the access to Eldorado’s exploration and project development expertise in Brazil.
Eldorado can earn up to a 75% interest in the TZ Project by undertaking $9.5 million of exploration and development expenditures and making payments to Brazauro in the aggregate of $90.0 million plus a production decision fee of up to $10.0 million.
Eldorado will subscribe for 8,800,000 units of Brazauro at a price of $0.95 per unit (the “Private Placement”). Each unit is comprised of one common share of Brazauro and one warrant. Each warrant will entitle the holder to acquire one half of one common share of Brazauro at a price of $1.30 per share for a period of 18 months. The proceeds of the Private Placement will be used by Brazauro to fund exploration activities in Brazauro’s other properties in Brazil including the Tapajos District and for general corporate purposes.
Eldorado will incur a minimum of $9.5 million of expenditures on the TZ Project within a 24 month period and will then have the option to acquire an initial 60% interest in the TZ Project by paying Brazauro $40 million. Eldorado will have a further option to increase its interest in the TZ Project to 70% by making an additional payment to Brazauro of $30 million within 90 days of the executive committee of the joint venture (the “Executive Committee”) approving the construction of the mine based on a NI 43-101 compliant feasibility study (the “Feasibility Study”).
Provided Eldorado has exercised both the first and second option, at any time within 2 years of the construction decision, Eldorado can exercise a third option by paying $20 million to Brazauro in exchange for an additional 5% interest in the TZ Project. If a production decision is made by Executive Committee and the proven and probable gold reserves included in the Feasibility Study are greater than 2.0 million ounces Eldorado will pay an additional production decision fee to Brazauro based on the following:
Proven and Probable Gold Reserves Payment
2.0 million ozs to 2.5 million ozs $5.0 million
Greater than 2.5 million ozs $10.0 million
Exclusive to the TZ Project Brazauro will grant Eldorado a Right of First Offer (“ROFO”) in the event that Brazauro wishes to either sell an interest in or enter into a joint venture in respect to the development of any additional property in Brazil.
The TZ Project is located in the Tapajos District of north central Brazil. Gold mineralization occurs as stockwork veinlets within Proterozoic granite. Work to date has successfully defined a resource base consisting of 1.05 million ounces of gold in the indicated category and 1.04 million ounces of gold in the inferred category. Brazauro has planned a 7500 meter drill program in 2008 designed to both upgrade inferred resources and increase total resources. Eldorado anticipates that the scope of the planned programme managed by Eldorado will be enhanced consistent with our view of the TZ Project’s excellent prospectivity.
Eldorado’s President and Chief Executive Officer, Paul Wright commented, “We are excited with the opportunity the TZ Project provides and the ability to partner with Brazauro in the Tapajos District. With an initial significant resource base established at the TZ Project we have a unique entry point into a prolific gold district in a jurisdiction in which we have explored and operated for more than 10 years. We have retained our senior management team from our Sao Bento mine in Brazil and are ready to take on the responsibility to advance the TZ Project to a construction decision in a timely manner.”
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