IPO Planned for Mid-Year
The – still – private gold company Tucano Gold announces the assignment of a silver royalty to Silver Crown Royalties. The deal stipulates that Tucano will deliver 90% of its silver production from Brazil to Silver Crown over the next ten years. In return, Tucano receives a 7% stake in Silver Crown.
According to the company, the expected silver output accounts for only about 0.1% of the estimated future revenue. Silver is a by-product of Tucano’s gold production, which accounts for 99.9% of revenue based on current prices, the company further stated.
Bonus payments have been incorporated into the agreement to motivate Tucano to produce as much silver as possible. If Tucano delivers more than 10,000 ounces of silver to Silver Crown, they will receive an additional 500,000 CAD in Silver Crown shares.
First Gold Production from Mina Tucano at the End of April
According to the company, the first gold production from Mina Tucano is planned for the end of April and is expected to ramp up to 6,000 ounces per month by July. Tucano anticipates that the mining fleet will arrive in February and the mill, with a capacity of 10,000 tons of ore per day, can be commissioned by the end of March. The company also explained that the AB1 pit is already ready for mining, after the previous operator Great Panther completed the large pushback in 2022 at a cost of $35 million.
Tucano CEO Jeremy Gray commented on the deal with Silver Crown: “We are pleased to work with Peter and his team at Silver Crown, who distinguish themselves by growing in the same historic way as Wheaton Precious Metals, creating pure silver royalties for the benefit of both sides of the transaction. We are proud to be the third largest investor in Silver Crown, which we believe will prove to be a very smart investment.”
Peter Bures, Chief Executive Officer of Silver Crown, added: “We are very excited to execute this royalty transaction – with the minimum deliveries starting next year, we are increasing our silver base by 70%. We are confident that this represents an excellent enhancement for our shareholders (our largest to date in terms of short-term revenue contribution).”
Go-Public Strategy for June/July
Tucano Gold says it is in advanced negotiations with a Canadian listed issuer regarding a go-public strategy, which is expected to be completed in June/July. In this regard, it is significant that the replacement costs for Mina Tucano’s infrastructure alone would likely amount to more than $300 million today, not to mention investments in exploration and mine development. Tucano currently has approximately 52 million shares fully diluted outstanding, implying a current valuation of approximately CAD 26 million (USD 20 million) based on the completion of the private placement at C$0.50 in the seed round. However, the company believes that Tucano shareholders can expect a significant share price increase in view of the resumption of production and a future stock market listing.
