First Majestic Silver (AG) to Sell La Guitarra Silver Mine for $35M
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First Majestic Silver Corp. (NYSE: AG) is pleased to announce that it has entered into a definitive agreement dated May 24, 2022 to sell its 100% owned past producing La Guitarra Silver Mine located in the Temascaltepec mining district, Mexico State to Sierra Madre Gold & Silver Ltd. for total consideration of US$35 million (the "Transaction"). It is a condition to closing of the Transaction that Sierra Madre raise a minimum of CDN$10 million in a private placement concurrent with or prior to closing of the Transaction.
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. The equity component of the consideration will be paid upon closing of the Transaction.
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. Closing of the Transaction remains subject to the approval of the TSX Venture Exchange and other customary closing conditions and is expected to occur in the second half of the year.
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. 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. Sierra Madre has an experienced management team that had previously operated the La Guitarra mine from 2006 to 2009 and has a proven track record of wealth creation in Mexico through project discovery, advancement, and monetization.
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