Pacific Bay Minerals signs LOI to acquire gold property, Alagoas State, Brazil
Pacific Bay Minerals Ltd. [TSXV: PBM] reported the signing of a non-binding Letter of Intent (LOI) with Appian Capital Advisory LLP to acquire 100% of the Pereira-Velho gold prospect in Alagoas State, Brazil, containing 11 mineral claims totaling 14,596 Hectares.
The Pereira-Velho Project, located in inland Alagoas State, Brazil, is a jurisdiction where copper ore and concentrates represent the state’s second-largest export. The area features access to significant infrastructure, an experienced local workforce that supports mining development, and is road accessible.
Regional geology features Paleo-Proterozoic rocks from the Borborema Suite within the claims and local units comprised of steeply-dipping quartzite packages striking up to 10 km long on a SE-NW trend. Mineralization consists of free gold hosted in hydrothermal quartz veins associated with a shear zone positioned between gneisses and a banded iron formation at the foot and hanging walls. Sulphide content, mostly pyrite, is typically less than 3% in volume.
Mineralization comes to surface, hosted in fractured quartzites with negligible clay content, making for an excellent potential deposit with a low-stripping ratio.
“I am pleased to present the agreement for the potential outright purchase of this exceptional property. My prior experience with the project underscored its outstanding economic potential and scale, making this acquisition a pivotal step forward. With this purchase, we are strategically positioned to advance the project and unlock significant value for our stakeholders,” said Elton Pereira, VP Exploration. “I view Alagoas, Brazil, as an excellent mining jurisdiction, and I am eager to revisit and further explore this promising project.”
The LOI, signed January 6, 2025, outlines how Pacific Bay and Appian will work exclusively towards the execution of a binding, definitive agreement in respect of the acquisition in an arm’s length deal. It also sets out a strategy to derisk the Acquisition for both parties, with provisions granting both Pacific Bay and Appian certain return and reversion rights.
The LOI gives the parties until January 31, 2025 to complete a due diligence study, determine the final structure of the acquisition (based on advice from legal, tax and professional advisors and in accordance with applicable corporate, tax and securities laws) and to enter into a binding, definitive agreement.
It is proposed that the following consideration be paid by Pacific Bay for the acquisition: CAD$710,000 in cash payments and CAD$700,000 worth of common shares or cash, at the company’s discretion, to be issued in two tranches, as follows: upon signing a definitive agreement and obtaining necessary approvals including TSX Venture Exchange approval: CAD$280,000 in cash; and CAD$250,000 in cash or common shares; and upon the 1-year anniversary of the date of the definitive agreement: CAD$430,000 in cash and CAD$450,000 in cash or Common Shares.
Appian will retain a 1.5% net smelter royalty on production from the project that can be purchased back by Pacific Bay at any time for the total aggregate amount of USD$3.5 million.
Appian will be subject to an ownership restriction of 19.9% and have agreed that, if at any time an issuance of common shares under the option agreement would result in Appian holding more than 19.9% of the issued and outstanding common shares, Pacific Bay shall reduce the number of common shares issuable to Appian and substitute cash consideration for the unissued Common Shares.
There will be no change of control nor change of management. Trading will remain halted pending receipt and review of acceptable documentation. No Finder’s Fees will be paid by Pacific Bay. The acquisition will be subject to TSX Venture Exchange approval.
Pacific Bay currently has a portfolio of properties in British Columbia including the Haskins Reed and Sphinx Mountain Rare-Earth Element Project. Focus will be directed to actively exploring and developing all three projects.