Brazil-focused explorer Alvo Minerals (ASX:ALV,OTC Pink:ALVMF) has signed a non-binding letter of intent with Pan American Silver (TSX:PAAS,NYSE:PAAS) to acquire the Lavra Velha gold-copper project.

According to Alvo, the project and surrounding exploration ground were considered by Pan American to be ‘non-core’ after the company completed its acquisition of Yamana Gold in 2022.

Mineralization was discovered at Lavra Velha in 2010, and the site was explored from 2010 to 2013, and then from 2018 to 2022. The project covers 55,000 hectares in Brazil’s Bahia state.

Lavra Velha has a NI 43-101 resource estimate of 9.2 million tonnes at 1.76 grams per tonne (g/t) gold for 520,000 ounces. That includes an indicated resource of 4.5 million tonnes at 1.96 g/t gold for 282,000 ounces, as well as an inferred resource of 4.7 million tonnes at 1.56 g/t gold for 238,000 ounces.

“We are very excited about the proposed acquisition of the Lavra Velha Gold-Copper Project,’ Alvo Managing Director Rob Smakman said in a Monday (March 31) announcement, adding that the property is complementary to the company’s Palma copper-zinc project. He also commented positively on current gold and copper market dynamics.

The company plans to update Lavra Velha’s NI 43-101 resource to meet JORC standards. Among other adjustments, it will use the current gold price instead of the previous US$1,650 per ounce price.

As part of the acquisition plan, Alvo will be opening an entitlement offer to raise up to AU$3.5 million among its shareholders, with each share priced at AU$0.06. Once raised, the amount is proposed to cover the US$1 million upfront cash payment portion of the transaction, along with initial exploration of Lavra Velha.

The entitlement offer is set to open to eligible Alvo shareholders on Friday (April 4).

Completion of the transaction with Pan American is subject to Alvo’s satisfaction of due diligence and the execution of an asset purchase agreement. The due diligence completion has a 45 day exclusivity period.

Shares of Alvo rose as high as AU$0.066 following the announcement, up 10 percent from the firm’s previous AU$0.06 close. Pan American finished at US$25.55, a 1.47 percent dip from its US$25.94 close last week.

According to Global Business Reports’ Brazil Mining 2024 report, mining in Brazil continues to be fueled by iron ore, but is slowly seeing diversification through a growing number of gold, rare earths and lithium projects.

Securities Disclosure: I, Gabrielle de la Cruz, hold no direct investment interest in any company mentioned in this article.