First Majestic Silver Corp. (AG: NYSE; FR: TSX) (the "Company" or
“First Majestic”) is pleased to announce that it has agreed to
acquire from Gold Canyon Resources Inc., a wholly-owned subsidiary
of First Mining Gold Corp., (“First Mining”) a stream on 50% of
payable silver produced from the Springpole Gold Project
(“Springpole” or the “Project”) located in Ontario, Canada. First
Majestic will pay First Mining total consideration of $22.5 million
in cash and shares, over three payments, for the silver stream
which covers the life of the Project. In addition, First Majestic
will make ongoing cash payments of 33% of the silver spot price per
ounce, to a maximum of $7.50 per ounce, for all payable silver
delivered by Springpole. First Mining is also granting First
Majestic 30 million common share purchase warrants, each of which
will entitle the Company to purchase one common share of First
Mining at CAD$0.40 over a period of five years commencing at
closing.
TRANSACTION HIGHLIGHTS
- First Majestic acquires a stream on
50% of the payable silver produced from Springpole over the life of
the project for 33% of the silver spot price per ounce, to a
maximum of $7.50 per ounce, for all payable silver delivered.
- According to the 2019 Preliminary
Economic Assessment (“PEA”), average silver production from
Springpole in years two through nine of the mine plan is expected
to be 2.4 million ounces of silver per year. A total of 22 million
ounces of silver is expected to be recovered over the life of the
project - of which 50% would be purchased by First Majestic.
- Springpole is one of Canada’s
largest, undeveloped gold projects with permitting underway and the
results of a Pre-Feasibility study anticipated in early
2021. The project contains NI 43-101 compliant resources of
24.19 million ounces of silver in the Indicated category and 1.12
million ounces of silver in the Inferred category, plus 4.67
million ounces of gold in the Indicated category and 0.23 million
ounces of gold in the Inferred category.
- The Springpole Project offers
substantial exploration upside over its large land holdings of
41,913 hectares which are fully encompassed under the silver
streaming agreement.
- Increases First Majestic’s silver
exposure and is the Company’s first investment outside of Mexico in
a mining friendly jurisdiction within Canada.
- Provides First Majestic with equity upside potential as First
Mining increases shareholder value throughout the Springpole
Pre-Feasibility and permitting process.
"This new silver stream gives First Majestic
significant upside potential to higher silver prices while
minimizing risks and costs," said Keith
Neumeyer, President and CEO of First Majestic Silver. "With
approximately 22 million ounces of silver expected to be produced
over the life of the project, and additional exploration upside,
Springpole has both the scale and location to make this an ideal
investment for our long-term portfolio. In addition, this silver
stream marks our first investment outside of Mexico in the
Company’s 18-year history.”
TRANSACTION TERMS
- First Majestic has acquired a
stream on 50% of the payable silver production from the Springpole
project over the life of the project for a total consideration
of $22.5 million, payable in cash and shares over three
payments.
- Upon closing of the transaction,
First Majestic will make an upfront payment to First Mining of
$10.0 million consisting of $2.5 million in cash and $7.5 million
in First Majestic common shares.
- Upon the completion and public
announcement by First Mining of the results of a Pre-Feasibility
Study for Springpole, First Majestic shall pay an additional $7.5
million to First Mining consisting of $3.75 million in cash and
$3.75 million in First Majestic common shares.
- Upon receipt by First Mining of a
Federal or Provincial Environmental Assessment approval for
Springpole, First Majestic shall pay an additional $5.0 million to
First Mining consisting of $2.5 million in cash and $2.5 million in
First Majestic common shares.
- First Majestic shall make ongoing
cash payments to First Mining for each ounce of silver purchased
under the stream equal to 33% of the average spot price of silver,
subject to a price cap of $7.50 per ounce of silver (the “Price
Cap”). The Price Cap shall be subject to annual inflation
escalation of 2%, commencing at the start of the 3rd anniversary of
production at Springpole.
- First Mining shall have the right
to repurchase 50% of the silver stream for $22.5 million at any
time prior to the commencement of production at Springpole leaving
the Company with a reduced silver stream of 25%.
- On the closing date, First Mining
will issue to First Majestic, subject to regulatory approval, 30
million common share purchase warrants (“Warrants”), and each
Warrant will entitle First Majestic to acquire one common share of
First Mining. The exercise price of the Warrants shall be CAD$0.40,
and the Warrants shall expire on the date that is five years after
the closing date. The Warrants shall be subject to a statutory four
month and one day hold period pursuant to applicable Canadian
securities laws.
OTHER CONDITIONS AND TIMING
- The issuance of First Majestic
shares as payment are subject to the approval of listing by the
Toronto Stock Exchange (”TSX”) and the number to be issued will be
based on the volume-weighted average trading price on the TSX for
the 20 trading days up to the day prior to any payment. In
addition, the shares shall be subject to a statutory four month and
one day hold pursuant to applicable Canadian securities law.
- Closing of the transaction is
expected to occur in early July 2020 and is subject to
the completion of certain corporate matters and customary
conditions.
ABOUT THE SPRINGPOLE GOLD
PROJECTSpringpole is one of Canada’s largest, undeveloped
gold projects with the project covering a land position totaling
41,943 hectares. The Project is located in northwestern Ontario,
approximately 110 kilometres northeast of the town of Red Lake, and
is situated within the Birch-Uchi Greenstone Belt.
Figure 1: Map of Springpole is
available
at https://www.globenewswire.com/NewsRoom/AttachmentNg/dab73308-2145-450c-9706-91cb4d5c551e
The Springpole property contains a large,
open-pittable deposit having an Indicated Resource of 139.1 million
tonnes at 1.04 g/t gold and 5.4 g/t silver, containing 4,670,000
ounces of gold and 24,190,000 ounces of silver. In addition, the
project has an Inferred Resource of 11.4 million tonnes at 0.63 g/t
gold and 3.1 g/t silver, containing 230,000 ounces of gold and
1,120,000 ounces of silver. The project has significant
infrastructure at site including a 72-person camp, winter road
access, and nearby logging road and power lines.
Below are the total gold and silver resources in
respect of the Springpole Project as of November 5, 2019.
Category |
Tonnes |
Au Grade (g/t) |
Ag Grade (g/t) |
Contained Au (oz) |
Contained Ag (oz) |
Indicated |
139,100,000 |
1.04 |
5.4 |
4,670,000 |
24,190,000 |
Inferred |
11,400,000 |
0.63 |
3.1 |
230,000 |
1,120,000 |
1. Based on the technical report titled
"Preliminary Economic Assessment Update for the Springpole Gold
Project, Ontario, Canada", dated November 5, 2019, which was
prepared for First Mining by SRK Consulting (Canada) Inc. in
accordance with NI 43-101 and is available at www.sedar.com under
First Mining's SEDAR profile. Readers are cautioned that the
PEA is preliminary in nature, it includes inferred mineral
resources that are considered too speculative geologically to have
the economic considerations applied to them that would enable them
to be categorized as mineral reserves, and there is no certainty
that the PEA will be realized. Mineral resources that are not
mineral reserves do not have demonstrated economic viability.2.
Cut-off grades are based on US$1,400/oz. Au price and Au recoveries
of 80%; and a US$15/oz. Ag price and 60% Ag recoveries.3. All
composites have been capped where appropriate.4. The rounding of
tonnes may result in apparent differences between tonnes, grade and
contained ounces.5. Mineral resources that are not mineral reserves
do not have demonstrated economic viability. The estimate of
mineral resources may be materially affected by environmental
permitting, legal, title, taxation, sociopolitical, marketing or
other relevant issues.
ABOUT THE COMPANY
First Majestic is a publicly traded mining
company focused on silver production in Mexico and is aggressively
pursuing the development of its existing mineral property assets.
The Company presently owns and operates the San Dimas Silver/Gold
Mine, the Santa Elena Silver/Gold Mine and the La Encantada Silver
Mine.
FOR FURTHER INFORMATION contact
info@firstmajestic.com, visit our website at www.firstmajestic.com
or call our toll-free number 1.866.529.2807.
FIRST MAJESTIC SILVER CORP.
"signed"
Keith Neumeyer, President & CEO
Cautionary Note Regarding Forward
Looking Statements
This press release contains “forward‐looking
information” and "forward-looking statements” under applicable
Canadian and U.S. securities laws (collectively, “forward‐looking
statements”). These statements relate to future events or the
Company's future performance, business prospects or opportunities
that are based on forecasts of future results, estimates of amounts
not yet determinable and assumptions of management made in light of
management's experience and perception of historical trends,
current conditions and expected future developments.
Forward-looking statements include, but are not limited to,
statements with respect to: the Company’s business strategy; future
planning processes; commercial mining operations; cash flow;
budgets; the timing and amount of estimated future production;
recovery rates; mine plans and mine life; the future price of
silver and other metals; costs of production; costs and timing of
the development of new deposits; capital projects and exploration
activities and the possible results thereof; closing of the stream;
completion of milestones thereunder; payment of future tranches and
issuance of additional shares under the stream; purchases of silver
under the stream increases in shareholder value of First Mining;
and development of and production from the Springpole
mine. Assumptions may prove to be incorrect and actual results
may differ materially from those anticipated. Consequently,
guidance cannot be guaranteed. As such, investors are cautioned not
to place undue reliance upon guidance and forward-looking
statements as there can be no assurance that the plans, assumptions
or expectations upon which they are placed will occur. All
statements other than statements of historical fact may be
forward‐looking statements. Statements concerning proven and
probable mineral reserves and mineral resource estimates may also
be deemed to constitute forward‐looking statements to the extent
that they involve estimates of the mineralization that will be
encountered as and if the property is developed, and in the case of
measured and indicated mineral resources or proven and probable
mineral reserves, such statements reflect the conclusion based on
certain assumptions that the mineral deposit can be economically
exploited. Any statements that express or involve discussions with
respect to predictions, expectations, beliefs, plans, projections,
objectives or future events or performance (often, but not always,
using words or phrases such as “seek”, “anticipate”, “plan”,
“continue”, “estimate”, “expect”, “may”, “will”, “project”,
“predict”, “forecast”, “potential”, “target”, “intend”, “could”,
“might”, “should”, “believe” and similar expressions) are not
statements of historical fact and may be “forward‐looking
statements”.
Actual results may vary from forward-looking
statements. Forward-looking statements are subject to known and
unknown risks, uncertainties and other factors that may cause
actual results to materially differ from those expressed or implied
by such forward-looking statements, including but not limited to:
the duration and effects of the coronavirus and COVID-19, and any
other pandemics on our operations and workforce, and the effects on
global economies and society, risks related to the integration of
acquisitions; actual results of exploration activities; conclusions
of economic evaluations; changes in project parameters as plans
continue to be refined; commodity prices; variations in ore
reserves, grade or recovery rates; actual performance of plant,
equipment or processes relative to specifications and expectations;
accidents; labour relations; relations with local communities;
changes in national or local governments; changes in applicable
legislation or application thereof; delays in obtaining approvals
or financing or in the completion of development or construction
activities; exchange rate fluctuations; requirements for additional
capital; government regulation; environmental risks; reclamation
expenses; outcomes of pending litigation; limitations on insurance
coverage as well as those factors discussed in the section entitled
"Description of the Business - Risk Factors" in the Company's most
recent Annual Information Form, available on www.sedar.com, and
Form 40-F on file with the United States Securities and Exchange
Commission in Washington, D.C. Although First Majestic has
attempted to identify important factors that could cause actual
results to differ materially from those contained in
forward-looking statements, there may be other factors that cause
results not to be as anticipated, estimated or intended.
The Company believes that the expectations
reflected in these forward‐looking statements are reasonable, but
no assurance can be given that these expectations will prove to be
correct and such forward‐looking statements included herein should
not be unduly relied upon. These statements speak only as of the
date hereof. The Company does not intend, and does not assume any
obligation, to update these forward-looking statements, except as
required by applicable laws.
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