South Atlantic Gold Inc. [SAO-TSXV; JLRRF-OTC] entered into a memorandum of understanding agreement (MOU) with the government of Ceará state, Brazil, to support the company in the advancement and development of the 100%-owned Pedra Branca project, located 280 km southwest of Fortaleza in Ceará state, Brazil.
Douglas Meirelles, CEO stated, “This signed MOU with the state government of Ceará represents a pledge to assist, promote and aid the financing for the development of Ceará’s first gold mine. Although our short-term exploration programs remain unaffected and while we work on the proper licensing and permitting, this pledge represents a significant step in the Pedra Branca region and, more specifically, a significant leap forward in the development of our asset.
“With this unprecedented Agreement in the state of Ceará , South Atlantic will work to advance its permits and unlock a non-dilutive indicative funding of R$120 million ($30 million) which will come from various sources and programs with governmental agencies, ranging from tax-exemption programs to direct funding from economic development funds, all of which can ultimately add to and minimize future dilutive financing of exploration and development activities of our asset Pedra Branca.”
The government of Ceará pledges to support the company with permitting, license reviews and financial and benefits programs that would advance the construction of a small-scale mining operation at Pedra Branca. South Atlantic pledges to work cooperatively to encourage economic growth in the communities surrounding the project area through sustainable ESG programs, local human resources development and local supply chain prioritization, as the project advances.
The government of Ceará also pledged to assist South Atlantic with upwards of R$120 million (C$30 million) in direct and indirect funding from activities related to tax-exemption and economic development programs to support the exploration and future construction of the Pedra Branca project.
The impetus behind the government’s decision is to help expedite the advancement of the project in the region along with its associated economic development with jobs generation, supply chain development and necessary investments to support the economic endeavor of this project.
For the Pedra Branca asset, the licensing and permitting process of a potential small scale mine will take time. However, with the possibility to receive such non-dilutive funding, the company will work in parallel to advance its permits and license to unlock the proposed funding. The MOU does not, at this point in time, provide clear and distinct reference to the financing amount that will be in tax-exemptions or the amount of direct non-dilutive funding from the economic development programs. The final amount is defined as part of the licensing and permitting process of the small scale or trial mine, at such point the definition of the total size and necessary estimated funds for the complete endeavor will be made.
In parallel and going forward, the exploration team led by Marcelo Batelochi, Senior Exploration Manager, and the recently formed Technical Committee will continue the exploration activities which seeks to advance the exploration and unlock further project value both inside and outside the target areas of the current mining concession. As such, the company plans to report on additional results from the recent drilling campaign on areas that were previously never tested before, outside the main mining concession areas, in the near future.