Big River Gold’s Brazil plans buoyed as interest in sector runs hot

Special Report: Big River Gold’s Borborema project is on track according to a recently completed water study which de-risked the supply of process water to the operation, and also identified a way to double production up to 4Mtpa. All at a time of heightened interest in the Brazilian gold sector.

Big River Gold (ASX:BRV) has received a shot in the arm with encouraging results from a water study derisking the highly prospective Borborema Gold Project in Brazil for what was initially considered to be a 2-million-tonne-per-annum (Mtpa) production operation. The study identified a water source that could support production expansion up to double the previously forecast production to 4Mtpa.

The positive results from studies completed by SRK Consulting come at a time of hot mergers and acquisitions (M&A) action in the gold sector in both Brazil and Australia. There’s also renewed interest in the safe haven metal due to uncertainty over the Omicron COVID variant following a slide in prices from its all-time high of around $US2,070 per ounce in August last year.

Confirming that Big River Gold’s optimism on the 29sqkm project’s water security is well founded, the water study established that minimal additional external water will be required to support a 2Mtpa operation.

“Borborema has always suffered from the perception that there is a lack of water,” executive chairman Andrew Richards told Stockhead. “The completion of the water studies has been a big step forward in de-risking the project in that regard, but also provides us opportunities to look at different size production scenarios.”

Richards said that as the project in northeast Brazil progressed towards production the water study results were an important part of the larger engineering study update.

“Any upscaling we were looking at had to be considered in conjunction with the water issue. Water has always been an integral part of the development of Borborema,” Richards said.

“The study results mean we can either stay at 2 million tonnes per annum without any additional water for most of the time but, if we’re looking to expand up to say 4 million tonnes per annum, we can base that more on the underlying economics given that process water supply is no longer the bottleneck it was.”

Big River Gold — View to the south west over the Borborema pit showing the exposed ore zone and infrastructure

A hot mining jurisdiction

As Brazil emerges from the pandemic with a more optimistic economic outlook, the latest data shows M&A activity in the South American powerhouse grew eightfold to $56.8 billion in the first half of 2021, compared to the same period last year.

Banks expect activity to remain buoyant into 2022 as economic activity recovers and interest rates remain low, while increasing COVID vaccination rates boost Brazil’s profile as an investment destination.

And there are some glittering pickings for investors in the gold-rich nation.

Thanks mainly to its Tucano gold mine in Brazil, Great Panther Mining’s revenue soared a whopping 2,947.1% in 2020. Like Borborema, Tucano is in Brazil’s northeast and it contributed $US234m, or 85% of total revenue, to the Canadian listed miner.

While Great Panther’s world-leading leap in revenue was a definite standout, gold miners in general have been buoyed by the renewed, COVID-induced interest in the safe haven metal. This has led to some major deals in the sector in both Australia and Brazil.

Last month, Amarillo Gold, owner of the Posse gold project in Brazil, agreed to a $US128.36m takeover offer from UK’s Hochschild Mining, a $US1.5bn cashed up South American mining house looking to invest more outside of Peru.

The deal values Amarillo Gold at A$/165 per reserve ounce, and A$65/resource ounce.

As part of the deal, Amarillo shareholders will also receive shares in a newly formed company, Lavras Gold Corp, which will hold a stake in the 22,278-hectare Lavras do Sul gold project in Brazil’s south.

FTSE 250 miner Hochschild affirmed Brazil’s reputation as a solid location for resources projects, saying the deal “enhanced its portfolio by adding a long-life asset located in a mining-friendly jurisdiction”.

The heightened interest in the South American nation and the yellow metal, alongside the highly encouraging results just out from the all-important water study, bode extremely well for Big River Gold.

“These results really just derisk the project and give us the ability to go to a bigger scale operation to achieve economies of scale,” Richards said.

This article was developed in collaboration with Big River Gold, a Stockhead advertiser at the time of publishing.

This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.