(Kitco News) - First Majestic Silver (TSX: FR) announced Wednesday that it has entered into a definitive agreement to sell its 100% owned past producing La Guitarra silver mine in Mexico to Sierra Madre Gold & Silver (TSX.V: SM) for total consideration of US$35 million.
The company said that total consideration consists of 69,063,076 Sierra Madre shares at a deemed price of $0.65 per Sierra Madre Share, having an aggregate value of US$35 million.
Upon closing, First Majestic will also be granted a 2% net smelter return royalty ("NSR") on all mineral production from the La Guitarra concessions, with the NSR subject to a 1% buy-back option for US$2 million.
Once closed, First Majestic will hold approximately 47% of the outstanding shares in Sierra Madre, which will be subject to a statutory holding period of four months and one day following the date of closing and contractual resale restrictions.
The La Guitarra silver mine is a past producing silver and gold operation that was placed under care and maintenance by First Majestic in August 2018. The La Guitarra mine presently consists of two underground operation centers and a flotation mill with a capacity of 500 tpd.
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Sierra Madre is a mineral exploration company currently focused on the acquisition, exploration and development of the Tepic and La Tigra properties in Nayarit, Mexico.
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.
