With this acquisition, Primero has gained access to highly prospective Cerro Del Gallo gold project, alongside other assets in Mexico. Cerro holds 69% interest in the Cerro Del Gallo project that is currently in the feasibility stage.

Primero president and CEO Joseph Conway stated that the closure of the transaction marks a significant step for the company to become an intermediate gold producer.

"The Cerro del Gallo project provides our shareholders immediate improved leverage to gold with a significantly larger reserve and resource base, production and cash flow profile," added Conway.

"Primero has the operational and financial strength to advance the project on a timely basis which will be beneficial for all stakeholders."

It is reported to have one-million ounces of gold-equivalent proven and probable reserves and a further 2.3-million ounces of gold-equivalent measured and indicated resources.

As a part of agreement, a new company, Santana Minerals, was formed to retain Cerro’s non-Cerro del Gallo projects and interests, with existing Cerro shareholders receiving 80.1% interest in the new company.

Meanwhile, Primero is gering up to acquire 19.9% stake in the new company making an investment of A$4m ($3.87m) in funding for Santana with anti-dilution rights for two years.