Canada-based Ero Copper has agreed to earn a stake of 60% in Vale Base Metals’ Furnas copper project located in the Carajás Mineral Province in Pará State, Brazil.

In this regard, Ero Copper has entered into a binding term sheet with Salobo Metais, which is part of the Vale Base Metals (VBM) business.

Ero Copper will be able to earn the majority stake in the project in three phases. This will be upon achieving various exploration, engineering and development milestones over a five-year period, which begins from the signing of a definitive earn-in agreement.

Ero Copper CEO David Strang said: “We are delighted for the opportunity to partner with VBM to advance the Furnas copper project. We are fully committed to unlocking value for all stakeholders by accelerating what we believe is a world-class project.

“This partnership will leverage VBM and Ero’s collective strengths as well as our shared vision for sustainable mine development.”

During phase 1, Ero Copper will have to carry out a minimum of 28,000m of exploration drilling and produce a scoping study for the copper project within 18 months of executing a definitive earn-in agreement.

Following the completion of phase 1, Ero Copper has to execute an additional exploration drilling of minimum 17,000m and produce a pre-feasibility study of the Furnas project within 18 months. This will mark phase 2 of the earn-in.

In the third phase, the copper production company will conduct an additional minimum of 45,000m of exploration drilling and develop a definitive feasibility study (DFS) for the Brazilian project within 24 months of completing phase 2.

The DFS is subject to customary technical review periods.

Upon the completion of a DFS and with Ero Copper’s positive investment decision, the parties will sign a joint venture (JV) agreement. Under the JV deal, Vale Base Metals will transfer majority interest in the Furnas copper project to Ero Copper.

During the earn-in period, Ero Copper will be solely responsible for funding the phased exploration and engineering work programme.

Ero Copper will also give Vale Base Metals an initial 11% free carry and fund 71% of the first $1bn of the capital expenditures of the Furnas project.

Vale Base Metals will have 100% offtake rights on the copper concentrate produced by the Furnas copper project if it maintains a stake of more than 30%.