The Canada-based silver-gold producer First Majestic Silver announced it has entered into a royalty purchase agreement with Metalla Royalty & Streaming, selling the royalties of eight of First Majestic’s Mexican assets. The transaction is valued at US$20 million, to be paid out in shares.
According to the companies, the agreement consists of the purchase of eight assets royalties from First Majestic in exchange for 4,168,056 Metalla shares for US$4.8 per share, reaching an aggregate value of US$20 million.
First Majestic’s royalty portfolio includes the properties of La Encantada in Coahuila, La Parrilla in Durango, Del Toro in Zacatecas, San Martin in Jalisco, La Guitarra in the State of Mexico, Plomosas in Sinaloa, La Luz in San Luis Potosi and La Joya in Durango.
According to Metalla, the transaction represents several benefits to the company since it offers advanced projects with significant added value. The company expects immediate cash flow from the La Encantada gold-silver property, the only asset that is currently producing. In 2021 it produced over 3.2Moz of silver and 460oz of gold. The agreement establishes that Metalla will be granted a 100 percent gross value royalty on the gold produced at the La Encantada mine, limited to 1,000oz annually. Additionally, there are four near-term silver development royalties, most of which are fully permitted and feature infrastructure and mine development that will require a lower CAPEX and less time to restart production.
Overall, the royalty portfolio covers more than 175,000ha of land in some of the most prolific silver districts in Mexico. The acquisition will expand Metalla’s portfolio to 79 royalties and streams. “This transaction marks another important milestone in our continued growth at Metalla. It provides shareholders with eight new royalties that have a significant amount of exposure and leverage to silver. We want to thank First Majestic for entrusting the Metalla team with unlocking additional value from their royalty assets and welcome them to our registry,” said Brett Heath, President and CEO, Metalla Royalty & Streaming.
Once the transaction is finished, First Majestic will hold over 8.5 percent of Metalla’s shares, which will be subject to a statutory holding period of four months and one day following the date of closing.
Metalla is a Canada-based precious metals royalty and streaming company. It aims to become one of the major global silver and gold companies for the next commodities cycle.