Meridian Mining has signed an option agreement to purchase 100% interest in the Cabaçal copper-gold project in Brazil.

The company has agreed to purchase the Cabaçal project, located in the state of Mato Grosso, from two Brazilian companies Prometálica Mineração and IMS Engenharia Mineral.

Meridian Mining will pay $8.75m and 4.5 million of its shares to acquire the project. The cash and shares payments are milestone based, and span over a period of 39 months.

The copper-gold deposit at Cabaçal project was discovered in 1983 by BP Minerals. Later, it was acquired by Rio Tinto (at the time RTZ), as part of its $4.3bn acquisition of BP Minerals in 1989.

The project was acquired by the Brazilian companies Prometálica Mineração and IMS Engenharia Mineral, in 2005.

Cabaçal Cu-Au project is located in historical hub of gold and base metal mining

The Cabaçal project is located in the Alto Jauru Belt, which is a historical hub of gold and base metal mining. BP-M and RTZ mined the property as a shallow, selective high-grade underground operation in in the late 1980’s to early 1990’s.

It has an undeveloped Cu-Au mineralization zone extending from near surface to 175m depth, traced over 1.8 km in historical drilling.

In July, Meridian Mining announced plans to reinitiate exploration programmes in August, after raising a capital of $3.5m capital raising.

The company has a portfolio of advanced exploration and resource development projects in the state of Rondônia, Brazil.

The projects include the Espigão project, focussed on exploration for copper-gold mineralization; Mirante da Serra, a resource definition project for sediment-hosted manganese oxide; and the Ariquemes project.