VANCOUVER, BC, Feb. 28,
2022 /CNW/ - Zacatecas Silver Corp. ("Zacatecas
Silver" or the "Company"), (TSX Venture: ZAC) (OTC Markets: ZCTSF)
(Frankfurt: 7TV) is pleased to
announce that it has entered into a share purchase agreement dated
February 28, 2022 (the "Share
Purchase Agreement") with Minas De Oro Nacional, S.A. De C.V.
("Minas De Oro"), a subsidiary of Alamos Gold Inc. ("Alamos"), to
acquire the advanced stage Esperanza Gold Project, located in
Morelos State, Mexico (the
"Transaction").
Highlights:
- Esperanza Gold Project is a high-grade oxide gold deposit
with scalable upside.
- Historic measured and indicated resource of 34,352,000
tonnes at 0.98 g/t gold and 8.09 g/t silver for 1,084,000 ounces of
gold and 8,936,000 ounces of silver and inferred resource of
718,000 tonnes at 0.80 g/t gold and 15.04 g/t silver for 18,000
ounces of gold and 347,000 ounces of silver (see below for
details).
- Priority to prepare an updated resource estimate in 2022 and
complete a current economic study on the Esperanza Gold Project
based on the updated resource estimate.
- To date, significant core and reverse circulation drilling
has occurred at the Esperanza Gold Project resulting in a total of
389 drill holes for 69,716 metres of drilling.
- Alamos becomes significant
cornerstone shareholder of Zacatecas Silver.
The Esperanza Gold Project as an attractive low-cost, low
capital intensity, and low technical risk growth project located in
Morelos State, Mexico.
Alamos has advanced the project
through advanced engineering, including metallurgical work, while
also focussing on stakeholder engagement including building
community relations.
Through the completion of this transaction, the Esperanza Gold
Project will receive the full focus and attention of a proven team
of mine builders and financiers while also providing Alamos significant potential upside as the
Project is developed with Alamos
being a large shareholder of Zacatecas Silver.
The total consideration of the transaction is approximately USD
$60 million with most of the payments
not made until significant steps towards commercial production are
achieved. The initial consideration consists of USD $5 million in cash, USD $10 million in Zacatecas Silver shares and a
silver stream in favour of Alamos
valued at USD $6 million.
Bryan Slusarchuk, Chief Executive Officer of Zacatecas Silver
comments, "This is a transformational transaction for our company.
Prior to entering into this agreement with Alamos, we have been advancing an excellent
silver project with a current resource and significant exploration
upside. Zacatecas has a great
shareholder base and an excellent share structure with just 53
million shares issued and outstanding. Emerging from this
transaction with Alamos, we
maintain ownership of our current silver projects but will now also
have an advanced stage, high-grade, low cost gold project with a
clear path to permits and production. This is among the highest
grade oxide gold development stage projects in the world of this
size, and we look forward to working with all stakeholders to
advance the project into production.
We are also exceptionally pleased that Alamos has expressed confidence in the project
and the technical team via their share ownership in Zacatecas
Silver. I've been fortunate to have been involved transacting
with large gold companies in the past on divestitures and this has
created some outstanding wins for shareholders. In this case,
we appreciate the fact that Alamos will become an important shareholder of
the Company as we move the project forward."
In conjunction with this transaction, Zacatecas Silver has
arranged a CAD $15 million private
placement financing to increase the size of our treasury as we
satisfy the initial USD $5 million
cash consideration, begin advancing Esperanza towards production, fund the ongoing
drill program at the Company's existing silver project and general
working capital.
Dr. Chris Wilson, Chief
Operating Officer and a Director of Zacatecas Silver comments,
"Our acquisition of the Esperanza Gold Project is a tremendous
step in moving Zacatecas Silver towards becoming a serious precious
metals producer. The Esperanza Gold Project represents one of the
best undeveloped open pit deposits in Mexico and will complement our high-grade
silver resource Zacatecas Properties. This is extremely exciting
for a technical team and all shareholders of Zacatecas
Silver."
Esperanza Gold Project
The Esperanza Gold Project is an advanced stage, low technical
risk growth project located in Morelos State, Mexico.
Alamos has reported a resource
estimate of a measured and indicated resource of 34,352,000 tonnes
at 0.98 g/t gold and 8.09 g/t silver for 1,084,000 ounces of gold
and 8,936,000 ounces of silver and inferred resource of 718,000
tonnes at 0.80 g/t gold and 15.04 g/t silver for 18,000 ounces of
gold and 347,000 ounces of silver. The Company has not
independently verified this resource estimate and is not treating
this resource estimate as a current resource. See below for
further details.
To date, significant core and reverse circulation drilling has
occurred at the Esperanza Gold Project resulting in a total of 389
drill holes for 69,716 metres. Four targets adjacent to or
close to the historical resource were identified to expand the
historical resource. The project also hosts seven regional
targets that also merit drill testing.
Mineralization at the Esperanza Gold Project is associated with
the intrusion of a stock of Granodiorite composition into the
carbonate rocks of Guerrero-Morelos Platform, specifically the
rocks of Xochicalco Formation. Spatially related to the intrusive
contact with the carbonate rocks are varying degrees of skarn and
marble development. Intruded by the granodioritic stock are the
limestone of the Xochicalco Formation of Aptian age (early
Cretaceous), that have beds of varying thickness from very thin to
medium. Primary mineralization consists of gold, and to a lesser
extent silver, associated with the skarn zones spatially related to
the intrusive.
Based on previous preliminary assessments completed by previous
owners, the Company anticipates that the project would be amenable
to a conventional open pit, heap leach operation with two-stage
crushing. Crushed material would be conveyed to the leach pad and
irrigated with dilute cyanide solution. Gold will be recovered from
pregnant solutions utilizing carbon adsorption, subsequent
electrowinning and on-site smelting to produce gold and silver doré
bars.
The Company plans to carry out an extensive work program to
prepare an updated resource estimate, undertake economic studies on
the project, and conduct an infill drill program on the deposit as
well as drilling on nearby exploration targets.
Terms of the Transaction
Under the terms of the Share Purchase Agreement, Zacatecas
Silver has agreed to acquire all the issued and outstanding shares
of Esperanza Silver de Mexico,
S.A. de C.V. ("Esperanza Mexico"), which holds title to the
Esperanza Gold Project In consideration of Esperanza Mexico, Zacatecas has agreed to pay Minas de Oro US
$5,000,000 and issue a total of
12,140,000 common shares of Zacatecas Silver at a price of
$1.05 per share for a deemed value of
US $10,000,000 (the "Consideration
Shares") on closing of the Transaction. Upon satisfaction of
these payments and entering into the silver stream agreement,
Zacatecas Silver will be transferred 100% ownership of Esperanza Mexico.
The Share Purchase Agreement further provides that Zacatecas
Silver will make certain contingency payments (the "Contingent
Payments") upon key milestones being accomplished in developing the
Esperanza Gold Project.
(a)
|
pay US $5,000,000
within sixty (60) days after approval of an Environmental Impact
Assessment Report by the applicable governmental authorities (the
"EIA Payment")
|
|
|
(b)
|
Pay US $14,000,000
within 60 days of the earlier of (i) completion of a feasibility
study on the Esperanza Gold Project or (ii) Zacatecas Silver
announcing its decision to commence construction of a mine on the
Esperanza Gold Project (the "FS Payment")
|
|
|
(c)
|
Pay US $20,000,000
within 180 days after commencement of commercial production on the
Esperanza Gold Project (the "Production Payment").
|
Zacatecas Silver may, at its sole election, satisfy up to 50% of
the Contingent Payments by issuing shares at a price equal to the
10 day VWAP prior to the issuance of such shares provided that such
share issuance does not cause Alamos to exceed 19.99% of the issued and
outstanding shares of Zacatecas Silver (on a partially diluted
basis).
Zacatecas Silver has also agreed to incur US $7,500,000 in expenditures to advance the
Esperanza Gold Project over the next three years, excluding G&A
(the "Expenditure Commitment"). If Zacatecas Silver fails to
meet the Expenditure Commitment, an amount equal to the shortfall
will be added to the next Contingent Payment.
On closing of the Transaction, the parties will also enter into
a stream agreement that will provide that Alamos may purchase up to 20% of any silver
produced from the Esperanza Gold Project with a transfer price of
20% of the market price payable to Zacatecas Silver. The
silver stream is limited to 500,000 ounces of silver. The
stream agreement contemplates an amount of US $6,000,000 that will be credited to the purchase
price under the Share Purchase Agreement.
In recognition of Alamos being
a significant shareholder of Zacatecas Silver, Alamos and Zacatecas Silver will enter into an
investor rights agreement that will provide, among other things, a
board position to Zacatecas Silver and a right of first refusal to
maintain its share position on any future financings.
Pursuant to the terms of the investor rights agreement that will be
entered into on the closing of the Transaction, the Consideration
Shares will be subject to the following voluntary restrictions on
resale: (i) 33% will be restricted for a period of six months from
closing of the Transaction, (ii) an additional 33% will be
restricted for a period of twelve months from closing of the
Transaction, and (iii) 34% will be restricted for a period of
eighteen months from closing of the Transaction.
Zacatecas Silver will also pay a finder's fee of US $500,000 on closing of the Transaction. The
Share Purchase Agreement and the transactions contemplated therein
are subject to customary conditions for transactions of similar
size, completion of the Financing by Zacatecas Silver and approval
of the TSXV Venture Exchange.
Private Placement Financing
As part of the Transaction, Zacatecas Silver will complete a
brokered private placement of up to 13,636,364 subscription
receipts (a "Subscription Receipt") at a price of $1.10 per Subscription Receipt for total proceeds
of up to $15,000,000 (the
"Offering"). The Subscription Receipts will be convertible into
units (each a "Unit") upon satisfaction of the closing conditions
of the Transaction. Each Unit will consist of: (i) one common
share (each a "Common Share"), and (ii) one-half of one common
share purchase warrant (the "Warrants"), Each whole Warrant
will entitle the holder purchase a Common Share at an exercise
price of $1.50 for a period of 24
months following closing of the Offering. The lead agent will
be announced by the Company in a subsequent news release.
Zacatecas Silver intends to use the net proceeds of the offering
for the acquisition, exploration and development of the Esperanza
Gold Project, exploration of the Zacatecas Properties and for
general working capital purposes.
Closing of the Offering is subject to regulatory approval
including that of the TSX Venture Exchange.
The securities being offered have not, nor will they be
registered under the United States Securities Act of 1933, as
amended, and may not be offered or sold within the United States or to, or for the account or
benefit of, U.S. persons in the absence of U.S. registration or an
applicable exemption from the U.S. registration requirements. This
release does not constitute an offer for sale of securities in
the United States.
Qualified Person
The contents of this news release have been reviewed and
approved by Chris Wilson, B.Sc.
(Hons), PhD, FAusIMM (CP), FSEG, Chief Operating Officer of
Zacatecas Silver. Dr. Wilson is a Qualified Person as defined
by NI 43-101 and is responsible for all technical information
in this news release.
Alamos Resource Estimate
Alamos reported in its most
recent annual information form a resource estimate of a measured
and indicated resource of 34,352,000 tonnes at 0.98 g/t gold and
8.09 g/t silver for 1,083,366 ounces of gold and 8,936,201 ounces
of silver and inferred resource of 718,000 tonnes at 0.80 g/t gold
and 15.04 g/t silver for 18,375 ounces of gold and 347,192 ounces
of silver. The Company considers this to be an historical resource
for the purposes of National Instrument 43-101. Resource
blocks were defined using with dimensions of 10 x 10 x 5 m. The estimation of grades was performed
with the ordinary kriging method on capped composites. An added
step in the estimation strategy was the utilization of the dynamic
anisotropy technique in Vulcan's
unfolding options. This added capability allows for a more
realistic outcome of the estimated grade's spatial distribution as
it follows the folded shape of the deposit. Assumptions used
in the resource include the following metal prices: gold price of
US $1,400/oz and silver price of US
$22/oz. The resource assumed the
following economic assumptions: recovery of 60.4% at 0.2 g/t to
71.9% at 1.6 g/t for gold, 25% for silver, $2.60/t mining costs, $0.64/t General and Administrative costs,
$4.20/t milling costs and a pit slope
of 45 degrees. The Company considers the resource relevant
due to its identification and modelling of the Esperanza deposit.
The Company has not done sufficient work to classify the
resource as a current mineral resource or mineral reserves, and the
Company is not treating the historical estimate as current mineral
resources or mineral reserves. Although the resource estimate
is considered reliable, the Company will re-sample a portion of the
drill core for the purpose of carrying out a new resource estimate.
Further, additional data verification including resurveying of
select diamond drill holes collars; review of graphic drill core
logs, comparison of these logs with remaining half-cut core, and a
cross-check of select geological logs agonist database entries; and
a check of original assay certificates against the assays and drill
hole database.
Advisors
Osler, Hoskin & Harcourt
LLP is acting as legal advisor to Zacatecas Silver. Haywood
Securities Inc. is acting as financial advisor to Alamos, with Torys LLP acting as legal advisor
to Alamos.
About Zacatecas Silver Corp.
The Zacatecas Silver property is in Zacatecas State,
Mexico, within the highly
prospective Fresnillo Silver Belt, which has produced over 6.2
billion ounces of silver. The company holds 7,826 ha (19,338 acres)
of ground that is highly prospective for low and intermediate
sulphidation silver-base metal mineralization and potentially low
sulphidation gold-dominant mineralization. On December 15, 2021, Zacatecas announced a mineral resource
estimate at the Panuco Deposit consisting of 2.7 million tonnes at
187 g/t AgEq (171 g/t Ag and 0.17 g/t Au) for 16.4 million ounces
AgEq (15 million ounces silver and 15 thousand ounces gold) (see
news release dated December 15,
2021).
The property is 25 km south-east of MAG Silver Corp.'s
Juanicipio Mine and Fresnillo PLC's Fresnillo Mine. The property
shares common boundaries with Pan American Silver Corp. claims and
El Orito which is owned by Endeavour Silver. There are four main
high-grade silver target areas within the Zacatecas concessions: the Panuco Deposit,
Muleros, El Cristo and San Manuel-San Gill. The Property also
includes El Oro, El Orito,
La Cantera, Monserrat, El Peñón,
San Judas and San Juan silver-base metal vein targets. These
targets are relatively unexplored and will be the focus of rapid
reconnaissance.
About Alamos Gold Inc.
Alamos is a Canadian-based
intermediate gold producer with diversified production from three
operating mines in North America.
This includes the Young-Davidson and Island Gold mines in northern
Ontario, Canada and the Mulatos
mine in Sonora State, Mexico.
Additionally, the Company has a significant portfolio of
development stage projects in Canada, Mexico, Turkey, and the
United States. Alamos
employs more than 1,700 people and is committed to the highest
standards of sustainable development. The Company's shares are
traded on the TSX and NYSE under the symbol "AGI".
On behalf of the Company
Bryan Slusarchuk
Chief Executive Officer and Director
Forward-Looking Statements
Information set forth in this news release contains
forward-looking statements that are based on assumptions as of the
date of this news release. These statements reflect management's
current estimates, beliefs, intentions and expectations. They are
not guarantees of future performance. Zacatecas Silver cautions
that all forward looking statements are inherently uncertain and
that actual performance may be affected by many material factors,
many of which are beyond their respective control. Such factors
include, among other things: risks and uncertainties relating to
Zacatecas Silver's limited operating history, its proposed
exploration and development activities on is Zacatecas Properties
and the need to comply with environmental and governmental
regulations. Accordingly, actual and future events,
conditions and results may differ materially from the estimates,
beliefs, intentions and expectations expressed or implied in the
forward-looking information. Except as required under applicable
securities legislation, Zacatecas Silver does not undertake to
publicly update or revise forward-looking information.
Neither TSX Venture Exchange nor its Regulation Services
Provider (as that term is defined in the policies of the Exchange)
accepts responsibility for the adequacy or accuracy of this
release.
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SOURCE Zacatecas Silver Corp.