Brazil is becoming more mining friendly, including modernization of mining laws in 2018. With a weakening local currency relative to the US Dollar industries like mining with much of their costs in local currency and revenues in US Dollars are seeing an upswing.
The Tapajos region is interesting for several reasons. It's in the state of Pará, which is one of the most mining friendly states in Brazil. It also had one of the world's largest gold rushes in history. 20-30Moz of gold were estimated to be recovered from the streams and rivers of the area. The placier mining is still active today with an 18kg (not a typo) gold nugget being found in the Tapajos region in May 2020. Despite that history of placer gold mining the source of the eroded gold still in hard rock deposits has been underexplored. That is starting to change.
I expect that there will be some consolidation in the region. Here are the current players in the district. It's also very plausible that one of the gold companies elsewhere in Brazil, of which there are many, might turn their eye towards the Tapajos region.
Serabi is the first hard rock producer in Tapajos. Their Palito and Sao Chico mines are narrow vein high grade underground mines that feed a single mill that runs at full capacity. From their cashflow they acquired Coringa, another narrow vein high grade underground mine in advanced development. They plan to start construction on Coringa in the second half of 2021 with a second mill of similar capaicty to their existing mill. They are also funding an exploration program to expand resources at their current deposits and find new deposits on their current land package.
The $25 million capex for Coringa will partially be funded by their current cash balance, partially from expected cash flow from their current mining operations, and partially funded through external financing yet to be determined.
Serabi has a maret cap around $54 milion CAD. At this size they can consolidate land from smaller independents in the area, which they have done to a limited extent already. They can also acquire small projects either that are non-core to larger companies or that are from even smaller companies. But mostly the seem like a ripe target for a larger company with deeper pockets looking to consolidate the district.
This gold explorer focused entirely on the Tapajos region has a decent sized land package and seems to be on the gold.
Cabral has a market cap around $100 million CAD, almost twice that of Serabi. Yet they produce no gold. The market is giving a lot of weight to their surface sampling, drilling results, and the proximity of Cabral's CuiúCuiú project to Eldorado Gold's Tocantinzinho project. Given their proxmity it would make a lot of sense to develop the two projects together as a single project. Eldorado Gold has the deep pockets that they could make that happen.
With a $2.1 billion USD market cap Eldorado is a big company. They are advancing their Tocantinzinho project through permitting and built a 70km road to the project. The 2019 technical report was done at $1400 gold, well below current market prices. Big companies with bulk tonnage open pit projects like this often like to consolidate a district to get operational scale. That could happen here, which is largely fueling Cabral Gold's stock price.
Gold Mining Inc bought a lot of properties across North and South America with defined resources during the low in the gold market. One of these companies they bought was Brazillian Gold Resources. With that acquisition they got Sao Jorge and Surubim with 43-101 deposits. Despite their name Gold Mining Inc doesn't actually do any mining, so expect them to try to sell these projects. Especially since they like to buy defined resources in low gold prices markets for less than it cost to drill them. In today's high gold price market their resources have much higher economic value and they will likely be looking to cash in.
Anglo American is something like a $53 billion USD diversified miner. But they spun out their gold operations around the time they went public. So why do they own a bunch of mining rights in Tapajos? Who knows. Could be they just got them as part of some of the many acquisitions they have done in Brazil over the years and don't even notice them. The same way you or I wouldn't notice if some spare change fell out of our pockets and got stuck in the couch.
Nexa Resources is a Brazilian Zinc miner and smelter. They also produce a little copper and lead as by-products of their Zinc mining. Speculation is they are looking for copper in the Tapajos region. Getting involved in gold mining would be a major change of direction for them.