Australia-based Mitre Mining has signed a share purchase agreement to acquire the Cerro Bayo silver-gold project in Chile from Equus Mining in a deal worth A$5m ($3.31m).

The company has also entered into an asset purchase agreement with Equus Mining and its 75% owned subsidiary Equus Patagonia to acquire the Los Domos silver-gold project situated adjacent to the Cerro Bayo mine.

Mitre Mining will carry out a two-tranche placement to raise A$8.3m ($5.49m). This will finance the acquisition as well as allow the company to soon establish a near mine rapid resource growth programme to increase the high-grade silver-gold resource base.

Located in the Asyen region in Southern Chile, the Cerro Bayo project started production in 1996. It comprises two distinct main districts separated by about 4km, namely the Cerro Bayo mining district and the Laguna Verde mining district.

Cerro Bayo has been on care and maintenance since October 2022 after being in production for more than 15 years. During that period, it produced over 45 million ounces (Moz) of silver and 650,000oz of gold.

The Chilean silver-gold project includes the 500,000 tonnes per annum (tpa) Cerro Bayo flotation plant and mining infrastructure, existing mineral resources, and more than 300km2 mining claim package which was previously operated by Equus Mining.

Besides, the Cerro Bayo project has more than A$150m ($99.29m) worth of infrastructure on site to support exploration and low-cost restart of the mine.

Mitre Mining executive director Ray Shorrocks said: “The Cerro Bayo acquisition is an exceptional company- making opportunity for Mitre because it comes with a significant Resource, huge scope for rapid Resource growth and the option of near-term production thanks to the existing plant and infrastructure.

“The infrastructure alone has a replacement value of more than $150m. And in addition to the significant Resource, there is abundant known mineralisation which will help underpin rapid Resource growth and immense district-scale potential.”

Subject to various conditions, the acquisition is anticipated to be completed in early 2024.