LONDON, Nov 14 (Reuters) - Brazilian miner Serabi Gold SRB.L said on Tuesday it would buy Brazil's Coringa gold project for $22 million from Anfield Gold Corp ANF.V , a move that will double its production and lower its overall costs.
The purchase price for Coringa would be paid in three staggered tranches, while the project was in the process of being fully permitted, Serabi said in a statement issued with its results.
London-listed Serabi runs the Polita and Sao Chico mines in Brazil. The Coringa project will churn out 32,000 ounces per annum of gold at a cost of $783 per ounce, adding to the 38,000 ounces now produced from Serabi's two mines.
"It's exactly the same construction of a mine that we have done at Polita, it's almost a carbon copy deposit," CEO Michael Hodgson told Reuters, adding that the operations were close together, allowing resources to be shared.
Serabi plans to fund the acquisition from its own cash reserves, an extension of some of its loan agreements with its lender Sprott and a cash raise from the shareholders.
Hodgson said Serabi could tap its shareholders for cash for the second and third part of the payment as well as for the construction of the mine.
Serabi's cash stood at $9.7 million at the end of September from $4.2 million at the end of December, boosted by a weak Brazilian real and higher gold prices.
"I would be astonished if we can't have this up and running within two years," Hodgson said.
The deal was conditional on completing a due diligence report and approval from Anfield shareholders, among others.
Peel Hunt analysts said Coringa had large exploration opportunity and should benefit from its proximity to Serabi's operating mine.
Coringa's construction was expected to cost $20 million to $25 million, a lower figure than the initial $28 million forecasted by the mine's previous owners, Hodgson said.
Serabi also reported that its gold production for the three months to September totalled 9,657 ounces, slightly higher than the 8,147 ounces in the previous quarter.