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Colossus Minerals Inc. (TSX:CSI,OTCQX:COLUF) entered into a US$75 million agreement with Sandstorm Gold Ltd. to sell refined precious metals in an amount equivalent to a portion of the life-of-mine payable platinum, palladium and gold produced from Colossus’ Serra Pelada Project.
As quoted in the press release:
Transaction Highlights
• Attractive source of capital: The transaction provides a non-dilutive source of capital by selling 35% of payable platinum and palladium production and a small portion (1.5%) of payable gold production. Colossus will deliver all metals due under this agreement from its 75% of the Serra Pelada project.
• Fully funded for construction and beyond: The US$75 million is in excess of the remaining funding required for the construction and ramp up of production at Serra Pelada. The excess funds provide a construction contingency and may also be used to advance the Company’s regional exploration program or other value-enhancing activities.
• Third party validation: Partnering with Colossus demonstrates Sandstorm’s confidence in Serra Pelada and its potential to deliver low cost production. Sandstorm completed significant due diligence on the property including a review of the geological and metallurgical work being used as the basis for construction of the mine and the substantial exploration potential that remains at Serra Pelada.
• Maintain significant commodity exposure: Under the terms of the Transaction Colossus and its shareholders maintain significant exposure to all precious metals produced from Serra Pelada, particularly gold.
Colossus President & CEO Claudio Mancuso said:
This transaction is an endorsement of the quality and potential of Serra Pelada and the emergence of Colossus as a high-grade near-term gold producer. The transaction provides a favourable, non-dilutive source of funding and the necessary capital to ensure the successful completion of construction. Development of Serra Pelada remains on schedule and we look forward to having Sandstorm as a partner as we advance the Serra Pelada project towards initial production in mid-2013.
Click here to read the Colossus Minerals (TSX:CSI,OTCQX:COLUF) press release
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