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First Majestic to sell its La Parrilla silver mine to Golden Tag for up to $33.5 million

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(Kitco News) - First Majestic Silver (NYSE: AG; TSX: FR) announced Wednesday that it has entered into an asset purchase agreement dated December 7, 2022 to sell its 100% owned past producing La Parrilla silver mine located in Mexico to Golden Tag Resources (TSX.V: GOG) for total consideration of up to US$33.5 million.

The company said that on closing of the transaction, it will receive 143,673,684 Golden Tag shares at a deemed price of CDN$0.19 per share having an aggregate value of US$20.0 million and representing approximately 40% of the outstanding shares in Golden Tag.

First Majestic added it will receive up to US$13.5 million in the form of three milestone payments in either cash or shares in Golden Tag with the share price and number of shares to be determined upon the anniversary date (where applicable).

“Pursuant to a support agreement to be entered into at closing, First Majestic will agree to support the board of directors of Golden Tag and will be granted a pre-emptive right to maintain its shareholdings (up to a maximum of 19.9%),” the company said in a statement.

First Majestic noted it has also agreed to participate in a future Golden Tag equity financing of up to CDN$9 million, with participation of US$2.7 million by First Majestic.

The La Parrilla silver mine is a past producing silver, gold, lead and zinc operation located 65 km southeast of Durango in the western part of the Mexican Altiplano that was placed under care and maintenance by First Majestic in September 2019.

First Majestic is a publicly traded mining company focused on silver and gold production in Mexico and the United States. The company presently owns and operates the San Dimas silver/gold mine, the Jerritt Canyon gold mine, the Santa Elena silver/gold mine and the La Encantada silver mine.

Golden Tag is a Toronto based mineral resource exploration company focused on the exploration and development of the San Diego project, located in Durango State, Mexico.

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