First Majestic Sells La Parrilla Mine to Golden Tag Resources
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First Majestic Sells La Parrilla Mine to Golden Tag Resources

Photo by:   Omid Roshan
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Fernando Mares By Fernando Mares | Journalist & Industry Analyst - Tue, 08/15/2023 - 16:01

Canada-based First Majestic Silver announced the sale of its past-producing La Parrilla mine in Durango to Golden Tag Resources after the Federal Commission for Economic Competition (COFECE) greenlighted the transaction. Golden Tag reported mineral resources at La Parrilla are located near existing underground development and infrastructure. 

The La Parrilla Silver mine has 69,478ha and is an old mining complex with its permits in order for production. It has five underground silver mines of high-grade silver and one open pit mine. The complex was online from 2004 until September 2019, when First Majestic put it under care and maintenance because of low silver, lead and zinc prices.  

According to the agreement, First Majestic received 143,673,684 common shares of Golden Tag at a deemed price of CA$0.19 (US$0.14) per common share, for an approximate value of CA$27 million (US$20 million). Also, First Majestic will receive up to US$13.5 million divided into three deferred payments, either cash or Golden Tag shares, with the share price and number of shares to be determined upon the anniversary date.

Additional deferred payments include: US$2.7 million due either 18 months after the closing date or upon obtaining specific approvals from the Mexican government; US$5.75 million due upon the declaration of either a 5Moz AgEq reserves from La Parrilla or 22Moz AgEq measured and indicated resources. Finally, US$5.05 million will become payable in the event of a new zone discovery at La Parrilla, accompanied by a NI 43-101 resource estimation of 12.5Moz AgEq. 

The transaction resulted in First Majestic owning over 40.8% of the issued and outstanding Golden Tag common shares and 9,004,500 warrants, which, if exercised, would mean First Majestic would hold 42.2% of Golden Tag shares.  

The purchase was made after Golden Tag announced the completion of SRK Consulting's update to the La Parrilla mine’s mineral resource estimate (MRE). The MRE was completed for 22 veins of the Rosarios, San Marcos and Quebradillas zones. According to the findings, indicated mineral resources are 615,000t grading 263g/tAgEq divided into 176g/t Ag, 0.08g/t Au, 1.55% Pb and 1.39% Zn, which equates to 3.48Moz Ag, 1,700oz Au, 9,600t Pb and 8,500t Zn or 5.19 Moz AgEq.

According to Greg McKenzie, President and CEO, Golden Tag Resources, the MRE is a major milestone for the company as the mine has produced over 34.3Moz AgEq from 2005 to 2019.  “Our new, independent MRE provides a reliable foundation to grow the mineral resources and will form the basis of a targeted exploration program, testing extensions of the main La Parrilla veins along strike, at depth and towards the surface," he added.

Photo by:   Omid Roshan

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