Sierra Madre Gold and Silver announced it has signed an agreement with First Majestic Silver to fully purchase the La Guitarra silver-gold mine in Temascaltepec, State of Mexico. This transaction will increase Sierra Madre’s project portfolio to three projects.
Sierra Madre will acquire all of the issued and outstanding shares of La Guitarra Compañia Minera, a wholly-owned subsidiary of First Majestic, which in turn holds 100 percent of the interest in La Guitarra. According to the contract, Sierra Madre will issue 69,000,000 of the company’s common shares to First Majestic at a price of US$0.65 each, with a total value of US$35 million. The La Guitarra Project will be added to a project portfolio that currently consists of the La Tigra and Tepic projects.
The transaction will transform First Majestic into the main shareholder of Sierra Madre and further the latter company’s mission to become a mid-tier precious metals company. “We would like to thank First Majestic for entrusting us with this opportunity and look forward to welcoming them as our largest shareholder and their guidance for the development of La Guitarra,” said Alexander Langer, President and CEO, Sierra Madre Gold and Silver.
The company reported that its team has experience working on the La Guitarra project. It highlighted the participation of Greg Liller and Luis Saenz, the COO and Director of Exploration and Development respectively. Further details of the planned work program and the team members are to be released in the coming months.
Liller believes La Guitarra is one of the largest underdeveloped projects in the country. Its eastern part of the district hosted high-grade ore mines that were significant during the Spanish colonial period. Nevertheless, the area has not seen significant development in recent times. He recognized the work First Majestic has done in maintaining the required permits and preparing development plans to restart operations. These works include a fully-permitted new tailing facility with a 5.8Mt capacity.
La Guitarra is a high-grade underground silver mine that produced plenty of silver in the past, with an extension of over 39,000ha. It produced over 1.5Moz/y of gold and silver between 2015 and 2018, when the mine stopped operations. Its current infrastructure includes two underground centers, La Guitarra and Coloso, as well as a 500t/d flotation mill and tailings facilities, among other features.