Cancana Resources Corp. (CVE:CNY) has extended its agreement to purchase Rio Madeira, the company which holds the adjacent property to its flagship Valdirâo manganese site in Brazil, to allow time to consider various financing proposals.
The closing date of the share purchase agreement with Rio Madeira has been extended to October 4th, with CEO of Cancana, Andrew Male, saying that he is encouraged by Rio Madeira's co-operation and willingness to be involved in the process of achieving a "workable solution" for the deal to be completed.
Male says he has received several different offers for the financing of the agreement, which would see Cancana acquire 100 per cent of Rio Madeira, and all of its associated assets, mineral claims and operations. The offers have ranged from big to small, with the two companies now working together to consider some alternative proposals.
"We had an open discussion with Rio Madeira, and they agreed to be a part of the solution. They're interest in selling, and we're interested in buying, which is a good opportunity for us to continue moving forward."
The chief executive says that over the next week, the two parties will consider alternate proposals using some of the financial offers already on the table, with Male encouraged that the discussions will yield a "positive result".
In a statement released Friday, Cancana said that Rio Madeira has "expressed their willingness to consider all aspects and have provisionally agreed to modifications of terms as needed to facilitate financing."
Rio Madeira is a producing manganese mine operation, producing lump ore of varying sizes and is located adjacent to, and mainly contiguous with, Cancana's manganese claims. The target company holds title to 15 mineral claims that total around 62,000 hectares in size, with the deal, which was announced in February, also including three full mining licenses known as a "Lavra".
In the interim, the Calgary, Alberta-based company is marketing a financing of a minimum $1.5 million for the development of its own greenfield project, Valdirao, with Male expecting to close a first phase of the offering in the coming weeks.
After the funds are raised from both institutional investors and family offices, the company is looking to start production imminently at the site, and is projecting to produce 20,000 tonnes of high grade manganese within the next 12 months.
"Once we commence sales, we will be self-funding at Valdirao," says Male, adding that he expects the Brazilian site will generate $5 million of gross revenue and $1.6 million in net profit, with the product predominately to be sold to the Brazilian marketplace.
One massive advantage that accrues to the project is its proximity to infrastructure -- Valdirao is within 20 kilometres of the Brazilian National Highway, which itself is accessible by municipally-maintained roads, for transportation of ore out of region. Last month, the company announced that it had been issued a trial mining license on its manganese claim, providing approval for mining operations, extraction, processing and sales of manganese ore.
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