The operating gold mine is being bought for more than $470m in an all-stock deal by the Canadian miner
First Majestic Silver has agreed to acquire the Jerritt Canyon mine in Nevada, US, from Sprott Mining in an all-stock deal worth $470m plus five million of its share purchase warrants.
As per the terms of the deal, the Canadian miner will acquire all of the issued and outstanding common shares of Jerritt Canyon Canada, the holding company of the producing gold mine.
Concurrent with the transaction, Sprott Mining’s president Eric Sprott will complete a private placement investment of $30m in First Majestic Silver.
Sprott Mining will be issued the five million common share purchase warrants at an exercise price of $20 per share for a term of three years.
Upon closing of the deal and private placement, Eric Sprott, either through himself or affiliated controlled firms, will own nearly 13.1% of stake in First Majestic Silver.
Sprott said: “This deal is a win-win for both parties and we look forward to having continued exposure to Jerritt Canyon’s bright future through our increased ownership in First Majestic.”
Located in Elko County, the Jerritt Canyon mine was discovered in 1972 and was put into production in 1981. The mine is said to have produced more than 9.5 million ounces of gold through its 40-year production history.
Presently, it is operated as an underground mine and has a gold processing plant with a capacity of 4,500 tonnes per day (tpd). Last year, the Jerritt Canyon mine yielded 112,749 ounces of gold at a cash cost of $1,289 per ounce.
First Majestic Silver claims to have identified various opportunities to boost the cost and also production profile of the Jerritt Canyon mine. The company is also said to have identified near-term brownfield potential between the SSX and Smith mines and long-term exploration potential throughout the property.
With its existing three operating silver mines in Mexico, First Majestic Silver expects to become a premier silver and gold producer in North America, post-acquisition.
First Majestic Silver CEO Keith Neumeyer said: “The acquisition of Jerritt Canyon is a highly compelling transaction that further enhances First Majestic’s operating platform, adding a producing asset in a world-class jurisdiction.
“Nevada is ranked as one of the most attractive jurisdictions, if not the most attractive, for mining operations and we are delighted to add another cornerstone asset to our portfolio.
“While we remain focused on maintaining our peer-leading exposure to silver, Jerritt Canyon is a unique opportunity to create value for First Majestic’s shareholders and provides a new geographic operating platform while preserving our pristine balance sheet.”
The deal, which is subject to meeting the closing conditions, is expected to be completed by the end of April 2021.