Aura to Acquire Brazilian Project

Vancouver — Aura Gold (ORA-T, AUGIF-O) is expanding its asset base in Brazil by acquiring an advanced copper-gold project in a $293-million all-stock deal that transfers control of the junior to the property vendors.

The move comes about a year after Aura was launched by Yamana Gold (YRI-T, AUY-N) chairman Victor Bradley to acquire exploration projects in Brazil that he believed could be reactivated.

In keeping with that plan, Aura has agreed to buy the 1,500-sq.-km Arapiraca project in northeastern Brazil from two private companies, Zoneplan and Repalla Holdings.

The land package includes the advanced-stage Serrote da Laje copper-gold-iron deposit, which was previously drilled by Brazilian mining giant Companhia Vale do Rio Doce (RIO-N) in the mid-1980s and late 1990s.

Subject to due diligence and regulatory approvals, Aura Gold will issue 341 million units in consideration for those assets, each consisting of one Aura share and half a warrant.

Each whole warrant will entitle the holder to buy one share for $1.00 within four years. Cash that would be raised upon exercise of all warrants and options totals about $190 million.

As a result, Repalla and Zoneplan will wind up owning about 85% of Aura’s outstanding shares on closing. Repalla is an entity related to Aura director Peter Marrone, although it does not hold a controlling stake in the Arapiraca project.

The other 15% will be held by the junior’s existing shareholders. Bradley will act as chairman, while former Viceroy Exploration head Patrick Downey becomes president and chief executive officer.

On the news, Aura shares closed down 11 at 75.

“Completion of this major acquisition has the potential to turn Aura Gold into a mine developer and production company — a significant move for a one-year- old exploration company,” Bradley said.

Steve Dawson, Aura’s vice-president of corporate development, said the plan is to target Serrote da Laje, which hosts a measured and indicated resource (not compliant with National Instrument 43-101) of 116.7 million tonnes averaging 0.53% copper and 0.16 gram gold, as well as 10.2 million tonnes of inferred resources grading 0.27% copper and 0.25% gold.

Aura says an in-house scoping study completed by CVRD in 2002 shows that about 80% of the Serrote da Laje deposit could be mined via open-pit methods.

“The advanced-stage Serrote de Laje is similar to Yamana Gold’s very successful Chapada mine with significant infrastructure and iron ore potential,” Bradley said, noting that Chapada went from an advanced exploration project to a commercial copper and gold producer in less than three years.

Subject to regulatory and shareholder approvals, Aura is proposing to consolidate its stock on a seven-for-one basis. Following the consolidation, there would be 57.3 million shares outstanding, rising to 86.3 million on a fully diluted basis.

After the Arapiraca deal, Aura entered into an agreement with a syndicate led by Canaccord Capital to raise $70 million in the form of 87.5 million subscription receipts priced at 80 apiece. Funds are to be directed towards developing Arapiraca.