Bear Creek Mining has agreed to purchase a 100% stake in the Mercedes gold-silver mine in Mexico from Equinox Gold in a cash and stock deal worth C$125m ($96.6m).

Under the deal, Equinox Gold will receive C$75m on closing of the transaction and C$25m within six months of closing of the deal.

The consideration also includes issuance of common shares of Bear Creek valued at approximately C$25m.

Situated in Sonora, the Mercedes gold-silver mine consists of 43 mineral concessions with an area of 69,285ha.

The mine, which is around 300km northeast of the city of Hermosillo and 300km south of Tucson of Arizona, is said to be hosted within epithermal, low sulphidation veins, stockwork, and breccia zones.

Utilising a fully mechanised cut-and-fill mining, the Mercedes mine is a ramp-access underground operation and  the ore is processed by conventional milling, which is followed by agitated leach with Merrill-Crowe recovery of gold and silver.

It has produced a total of around 781,800 ounces of gold and 3,356,200 ounces of silver produced  up to 31 December 2020.

The average gold and silver recovery rates were 95.4% and 39.2% between 2012 and 2020.

Equinox Gold CEO Christian Milau said: “We acquired Mercedes in April this year as part of our acquisition of Premier Gold Mines and the large-scale Greenstone Gold Project. Mercedes is non-core to Equinox Gold, representing 5% of our 2021 production guidance and 2% of our resources.

“The sale of Mercedes strengthens our balance sheet with $100 million as we focus on growth through expansion and development of our larger gold projects, including Greenstone.”

Subject to certain regulatory approvals including approval of the Mexican Comisión Federal de Competencia Económica and other customary closing conditions, the deal is expected to be completed in the first half of next year.

Borden Ladner Gervais is serving as legal advisor to Bear Creek in the current deal.