Oceana’s Serra Negra acquisition unlocks the next drilling phase

Serra Negra acquisition reaches completion

Oceana Metals Ltd (ASX:OCN) has completed the acquisition of 100% of Songeo Mineração, securing control of the Serra Negra Rare Earths and Niobium Project in Minas Gerais, Brazil. Completion occurred on 16 October after the remaining conditions precedent were satisfied or waived.

The transaction delivered the project to Oceana for US$2.95 million in cash and 15,537,600 fully paid Oceana shares, issued at a deemed A$0.36 each. The shares include 14,537,600 issued to the vendors and 1 million issued to an intermediary. The acquisition was funded in part by the company’s A$20 million placement announced in April, with its second tranche completed in July.

Drilling moves from preparation to resource definition

Completion shifts the focus firmly to the ground. Four diamond rigs are now operating across the 1.5 kilometre by 1.5 kilometre Central rare earths target, within the roughly 10-kilometre-wide Serra Negra carbonatite complex. The approximately 20,000-metre program is being drilled on nominal 100-metre spacing to depths of about 150 metres, with assay results expected throughout the fourth quarter of 2026.

The campaign follows a placeholder. Oceana has re-assayed all 68 available historical drill holes, with results from 45 holes covering about 4,750 metres still pending. Earlier work had already expanded the known rare earths mineralisation footprint to more than 4.5 square kilometres, while reported historical intercepts included 50 metres at 4.0% TREO within a 114-metre zone and 22 metres at 4.7% TREO within an 84-metre zone.

Those figures are historical exploration results rather than a mineral resource, and the company’s announcement contains no new exploration results. The immediate test is whether the current drilling can convert the target’s scattered evidence of mineralisation into a JORC-compliant maiden Mineral Resource Estimate.

Mining-right amendments remain the key regulatory uncertainty

Oceana waived a condition requiring a formal response from Brazil’s National Mining Agency on two titles, 830.280/1985 and 831.298/1984. The agency’s final determination on amendments covering rare earth elements and niobium is expected in the first quarter of 2027, but the company said there is no certainty over either timing or outcome. Oceana says it has the licences and approvals needed for its current exploration program.

The company estimates it held approximately A$16.5 million in cash after paying the upfront consideration, before acquisition costs and ongoing operating expenditure. Its capital structure now comprises 250,935,110 shares, alongside 16.5 million options and 44.97 million performance rights. A total of 3,699,530 consideration shares may be released from escrow through a cleansing prospectus expected in the coming weeks, while the balance is subject to a two-year escrow followed by staged release.

Further consideration and project milestones

One transaction detail remains open: a third party has an entitlement to 4,462,400 shares under a separate pre-existing agreement with Songeo. Oceana and that party are documenting a proposal to settle the entitlement in cash on deferred terms, but binding documentation has not yet been executed.

Up to US$2.25 million in further cash consideration could become payable if project milestones are met. US$750,000 is linked to the announcement of a maiden JORC resource, while US$1.5 million is tied to a resource of at least 100 million tonnes at 4% TREO or equivalent. The vendors also receive a 2.5% net smelter royalty on non-iron-ore production, while a separate 1% royalty has been granted to Karri Capital for acquisition facilitation services.