Private equity firm Greenstone Resources II has reached an agreement to divest a 29.82% interest in Serabi Gold through a subscription arrangement.

The deal will see Greenstone make an investment of $15m via a subscription for 297,759,419 new ordinary shares in exchange for the interest in Serabi, which owns projects in Brazil.

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The transaction is expected to help Serabi to realise its target of becoming a 100,000 ounce (oz) per annum gold producer within the next two years.

"The new funds generated by their subscription will significantly strengthen Serabi’s financial position as the company looks to expand and develop its Palito, Sao Chico and Coringa projects."

Greenstone will use the proceeds from the subscription to conduct drilling to delineate additional resources and expand the mine life at the Palito and Sao Chico projects.

A portion of the funds will also be used to finance a second instalment related to the company’s acquisition of the Coringa site, as well as advance the development of the project.

In addition, the financing is slated to be used for working capital needs and other corporate purposes.

Serabi Gold CEO Michael Hodgson said: “We are delighted to welcome Greenstone as a long-term strategic investor in the company, and look forward to working closely with them to unlock the full potential of Serabi’s gold projects and pursue other growth opportunities.

“The new funds generated by their subscription will significantly strengthen Serabi’s financial position as the company looks to expand and develop its Palito, Sao Chico and Coringa projects, as well as providing a platform to pursue further regional opportunities.”