Serra Pelada is a high grade gold-platinum-palladium deposit located in the mineral and mining prolific Carajas region in Para State, northern Brazil, and is operated by Colossus Minerals Inc. (TSX:CSI). The existing infrastructure and accessibility to the site are excellent due to the close proximity of a number of major mines. During the 1980’s, Serra Pelada hosted the largest ever gold rush in Latin America with up to 80,000 artisanal miners producing 2 million ounces of gold, plus platinum and palladium, from a hand dug open pit. Colossus Minerals has been involved with Serra Pelada since 2007 and is targeting initial gold production by the end of 2013. Serra Pelada is fully permitted and is expected to be a high grade, low-cost polymetallic producer.
SERRA PELADA PRECIOUS METALS STREAM
Sandstorm has a precious metals stream agreement to purchase 1.5% of the gold and 35% of the platinum produced from Serra Pelada at a per ounce price of US$400 per ounce of gold and US$200 per ounce of platinum. Sandstorm made an upfront payment of US$60 million to acquire the stream in September 2012.
Until April 1, 2015, Colossus has the option to repurchase up to 50% of the agreement by making a US$48.75 million payment to Sandstorm Gold, upon receipt of which, the percentage of gold and platinum that Sandstorm is entitled to purchase shall be decreased to 0.75% and 17.5% respectively.
The Serra Pelada Mine does not contain a reserve as defined by National Instrument 43-101 (“NI 43-101”). Serra Pelada contains pods of exceptionally high-grade material that have short scale geometric and spatial variability and as a consequence, there is significant uncertainty with reporting these high-grade resources in accordance with NI 43-101 standards.