TORONTO, ONTARIO--(Marketwire - March 30, 2010) - Colossus Minerals Inc. ("Colossus") (TSX:CSI) is pleased to announce that its joint venture partner, COOMIGASP (Cooperativa de Mineração dos Garimpeiros de Serra Pelada) has signed an option agreement with Vale SA ("Vale Option Agreement") to acquire a 100% interest in a 700 hectare land package ("Area B") contiguous to the existing 100 hectare Serra Pelada Project ("Area A") currently being developed by Colossus and COOMIGASP. In turn, Colossus through its Brazilian subsidiary ("Colossus Brazil") has signed an agreement with COOMIGASP ("CC Agreement") covering the transfer of the Vale Option Agreement into Serra Pelada Companhia de Desenvolvimento Mineral ("SPC"), a Colossus/COOMIGASP joint venture company, as well as the transfer to SPC of an approximate 74-hectare tenement currently owned 100% by COOMIGASP ("Area C"). Both the Vale Option Agreement and the CC Agreement are conditional on COOMIGASP acquiring shareholder approval.
The CC Agreement obligates Colossus to pay COOMIGASP $12 million Reais (approximately US$6.7 million) plus a fee of $300 Reais for each kilo of gold, platinum, palladium or other platinum group elements sold from Area B (equivalent to US$5.23 per ounce) to cover all obligations of the Vale Option Agreement, and to pay COOMIGASP $1450 Reais for each kilo of gold, platinum, palladium or other platinum group elements produced and sold from Area C (equivalent to US$25.26 per ounce). The currency conversion rate used in this news release is $1.00 Real equals US $0.56.
Details of the Vale Option Agreement are as follows:
- A three year option agreement was signed to acquire a 100% interest in Area B.
- COOMIGASP commits to a minimum exploration expenditure of US$5 million over three years on Area B.
- An estimate of the mineral reserves (proven + probable) ("Mineral Reserves") under internationally accepted guidelines must be completed by the end of the 3 years in order to exercise the option.
- Colossus, through SPC, will pay US$35 per ounce of gold, platinum or palladium (the "fee") based on the Mineral Reserves and 20% of the fee will be paid 30 days after exercising the option with the remaining 80% to be paid 90 days after the publication of the transfer of the mineral rights of Area B from Vale to COOMIGASP and subsequently to SPC.
Details of the CC Agreement are as follows:
- Colossus will pay COOMIGASP $12 million Reais (approximately US$6.7 million), of which $8 million Reais (approximately US$4.5 million) is for assignment of the Vale Option Agreement to SPC and $4 million Reais (approximately US$2.2 million) is for the acquisition of Area C.
- Colossus assumes all financial responsibilities of COOMIGASP under the Vale Option Agreement.
- Colossus will pay COOMIGASP $300 Reais for each kilo of gold, platinum, palladium or other platinum group elements sold from Area B (equivalent to US$5.23 per ounce).
- Colossus will pay COOMIGASP $1450 Reais for each kilo of gold, platinum, palladium or other platinum group elements produced and sold from Area C (equivalent to US$25.26 per ounce).
Below is a property map that represents the anticipated property position of SPC for the combined Areas A, B and C under the CC Agreement.
To view the SPC Land package Tenements map, please visit the following link: http://media3.marketwire.com/docs/CSISPCLANDPACKAGE.pdf
In all cases, funding required by SPC to fulfill the terms of the CC Agreement and the Vale Option Agreement commitments will be supplied by Colossus Brazil as an equity contribution to SPC such that the shareholding of SPC remains at 75% for Colossus and 25% for COOMIGASP.
"Increasing our land package not only provides us with a possible down-plunge extension of the Serra Pelada deposit but also provides us with comfortable space for future mine infrastructure, stated Ari Sussman, CEO of Colossus. "Additionally, we intend to commence an aggressive exploration program in search of other mineralized zones."
Colossus is a minerals development company focused on the Serra Pelada high-grade gold-platinum-palladium project in Para State of Brazil. Between 1980 and 1986, Serra Pelada was host to the largest precious metals rush in Latin American history. Coverage by 60 Minutes of this famous mining rush can be viewed at: http://sixtyminutes.ninemsn.com.au/article.aspx?id=299887.
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION
Except for statements of historical fact relating to Colossus, certain statements in this press release constitute "forward-looking information" within the meaning of the Securities Act (Ontario) or "forward-looking statements" within the meaning of the United States Private Litigation Reform Act of 1995. These forward- looking statements represent management's best judgment based on current facts and assumptions that management considers reasonable, including the anticipated approval of the CC Agreement by Coomigasp members and the assignment by Coomigasp of the Vale Option Agreement to SPC. Forward-looking statements are frequently characterized by words such as "target", "plan", "expect", "project", "intend", believe", "anticipate" and other similar words, or statements that certain events or conditions "may" or "will" occur. Forward-looking statements are based on the opinions and estimates of management at the date the statements are made, and are subject to a variety of risks and uncertainties and other factors that could cause actual events or results to differ materially from those projected in the forward-looking statements. The factors include but are not limited to risks related to the joint venture operation, actual results of exploration activities, the inherent risks involved in the exploration and development of mineral properties, changes in project parameters as plans continue to be refined, delays in obtaining government approvals, the uncertainties of project cost overruns or unanticipated costs and expenses, uncertainties relating to the availability and costs of financing needed in the future, the uncertainties inherent to conducting business in Brazil and the rest of Latin America, the availability of supplies, unexpected adverse climate conditions, the reliance on only a few key members of management, as well as those factors discussed in the section entitled "Risk Factors" in the Company's most recent Annual Information Form filed with Canadian provincial securities regulatory authorities and other regulatory filings which are posted on SEDAR at www.sedar.com. Colossus undertakes no obligation to update forward looking statements if circumstances or management's estimates or opinions should change. The reader is cautioned not to place undue reliance on forward-looking statements.