Brazil-focused Serabi Gold has partnered with miner Vale to scout for copper discoveries within its exploration tenements around its Palito Complex area, including the Matilda prospect and other regional targets in the country’s Para state.

The gold producer said the strategic exploration deal with Vale’s subsidiary Salobo Metais was structured over four phases.

Vale will fund up to $5 million for the exploration program in the first phase.

In the second, the Rio de Janeiro-based iron ore and nickel giant can choose to continue exploration activities and fund one or more selected copper projects to the pre-feasibility study stage.

In a third phase, Vale would have the option to acquire a 75% share of a joint venture company incorporated by Serabi.

The gold miner would then transfer the copper project to a joint venture (JV) entity, and Vale would purchase 75% of it for $5 million, continuing to solely fund the joint venture through to completion of a definitive feasibility study.

The fourth and last phase gives Vale the option to buy an additional 15% interest in the JV, or pay $5 million, or 1.5% of the net present value of the project, increasing its interest to 90%.

Serabi would then have the option to sell its remaining 10% interest in the JV for a further $10 million and a 1.5% net smelter royalty.

“Bringing in a partner with the expertise and resources of Vale will enable us to properly evaluate Matilda and the other significant targets within our tenement area, and move them forward more quickly,” Serabi’s chief executive officer Michael Hodgson said in the statement.

The gold company owns 61,000 hectares of tenements in the Palito Complex tenement area, where the Matilda discovery was made last year. 

The complex and Serabi’s Coringa gold project lie in the Tapajos region of northern Brazil, which has been known as a major producer of gold since the 1970s.