Brazil-focused Horizonte Minerals (LON:HZM, TSX:HZM) revealed it is to sell its subsidiary, including its gold project, to Guyana Frontier Mining (CVE:GYG).
In return for the Falcao gold asset owned by HM Brazil, Horizonte will be given 84 mln shares in the buyer at 5 cents per share, giving it a 47.1% stake in Guyana Frontier, worth C$4.2 mln.
Horizonte said the deal was part of its plan to sell its gold assets to focus on the development of the advanced Araguaia nickel project in northern Brazil, where an 8,000 metre infill drill programme is currently underway to upgrade the resource.
The company is working towards the award of the pre-feasibility contract in the first half of 2013.
“This is an important step for the company and forms part of our development plan to monetise our gold projects and allow us to focus on developing our 100% owned Araguaia nickel project in Brazil,” said chief executive Jeremy Martin.
He added that the deal would still give it exposure to Falcao, as well as to Guyana, which it said was “highly prospective for gold”.
“The geology and gold mineralisation of the Guiana Shield is similar to that of northern Brazil and represents an excellent corporate and exploration fit,” Martin continued.
“With this in mind, I look forward to updating shareholders on the developments of this transaction and working with Guyana Frontier going forward as it focuses on building a new South American gold company.”
The deal will also see two Horizonte representatives join Guyana Frontier’s five-person board.
Falcao, located in the southern Carajás mining region of northern Brazil, is a joint venture between Horizonte and AngloGold Ashanti.
Anglo can earn a 51% interest in the project by spending US$4.5 mln over three years with the right to take a further 19% interest by completing a pre-feasibility study.
Horizonte has also bought 8 mln units in Guyana Frontier at 5 cents each for C$400,000 through a private placement.
Each unit consists of one share and one common share purchase warrant entitling the holder to acquire one additional share at an exercise price of 10 cents within 24 months.
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