Aura Gold to acquire Brazilian copper-gold project

Vancouver Aura Gold (ORA-T) 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) Chairman Victor Bradley to acquire exploration projects in Brazil that he believed could be reactivated.

In keeping with that plan, Aura has agreed to acquire a 150,000-hectare Arapiraca project in northeastern Brazil from private companies, Zoneplan Ltd. and Repalla (Holdings) Ltd.

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

Subject to due diligence, definitive documentation, minority and regulatory approvals, Aura Gold will issue 341 million units in consideration for those assets, each comprised of one Aura common share and one-half common share purchase warrant.

Each whole warrant will entitle the holder to purchase one common share of the junior for $1 for up to four years after the transaction closes. Cash that would be raised upon exercise of all warrants and all options totals about $190 million, Aura said.

As a result, Repalla and Zoneplan will wind up owning about 85% of Auras 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 held by the juniors existing shareholders. Bradley will act as Chairman, while former Viceroy Exploration head Patrick Downey becomes president and chief executive officer.

On March 27, 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.

Aura spokesman Steve Dawson, said the immediate plan will be to target Serrote da Laje, a non NI 43-101 compliant measured and indicated resource of 116.7 million tonnes, averaging 0.53% copper and 0.16 grams gold, as well as 10.2 million tonnes of non NI 43-101 complaint inferred resources , grading 0.27% copper and 0.25% gold.

Aura said an in-house coping study completed by CVRD in 2002 showed that approximately 80% of the Serrote da Laje deposit could be mined via open pit methods.

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

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