Sierra Madre Gold and Silver provided an update on its acquisition agreement with First Majestic Silver for the La Guitarra silver-gold mine in Temascaltepec, the State of Mexico. With the new agreement, the La Guitarra Project will be added to the company’s portfolio, which currently consists of the La Tigra and Tepic projects.
In December 2022, 99.99 percent of the shareholders voted in favor of the acquisition of all the issued and outstanding shares of La Guitarra Compañia Minera. According to the contract, Sierra Madre will issue 69,063,076 of the company’s common shares to First Majestic at a pricateach, with an aggregate value of US$44.89 million.
Sierra Madre reported that TSX Venture Exchange has conditionally accepted the transaction. Moreover, the company has been advised to obtain Mexican antitrust approval before the restart of trading. It estimates that this permission will be obtained in 1Q23.
"We are incredibly excited to close the acquisition of La Guitarra with the support of our shareholders, First Majestic, and the Mexican authorities. The acquisition of La Guitarra will provide near-term production and cash flow from the restart of the fully permitted mine and the 500t/d mill while we continue to explore and develop the Tepic and La Tigra properties as part of our multi-pronged strategy," said Alexander Langer, CEO,Sierra Madre Gold and Silver.
On May 25, 2022, Sierra Madre Gold and Silver signed an agreement with First Majestic Silver to fully purchase the La Guitarra mine. Previously, Sierra Madre Gold and Silver highlighted that its team, especially Greg Liller and Luis Saenz, the COO and Director of Exploration and Development respectively, has experience working on the La Guitarra project.
Liller said that La Guitarra might be 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.
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.