Great Panther Mining Limited (TSX:GPR, NYSE:GPL) said it has entered into an agreement to sell its Mexican subsidiary Minera Mexicana El Rosario SA de CV (MMR) to Guanajuato Silver Company Ltd (TSX-V:GSVR, OTCQX:GSVRF) (GSilver) for an upfront consideration of $14.7 million and up to $2 million in additional payments.
The Mexican subsidiary holds the Guanajuato mine complex, the Topia mine, and the El Horcon and Santa Rosa projects, all located in Mexico.
"The sale of the company's silver mines in Mexico will allow us to focus on maximizing the full potential of the Tucano gold mine in Brazil and complete the pivot to gold started by the company in 2019,” Alan Hair, chair and interim CEO, said in a statement.
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“Our capital allocation priorities are focused on Tucano as this is where we see the greatest value creation potential for our stakeholders. We expect Tucano to return to steady-state production in the second half of the year and intend to continue investing into unlocking value both from the underground, as well as the regional, potential of the district. Our long-term objective is to grow further in Brazil. Divesting the Mexican silver assets best positions the company to achieve these goals,” he added.
Under the terms of the agreement, the consideration will be payable as follows:
- $8 million in cash payable on closing;
- A total of 25,787,200 common shares of GSilver valued at approximately $6.7 million based on current trading prices;
- $500,000 upon producing 2.5 million ounces of silver from the GMC and Topia;
- $750,000 upon the price of silver closing at or above $27.50 per ounce over a 30-day period in the two years following the agreement;
- $750,000 upon the price of silver closing at or above $30 per ounce over a 30-day period in the two years following the agreement.
In conjunction with the closing of the deal, MMR will repay the balance outstanding of the Samsung lead concentrate prepayment facility. Great Panther has engaged GenCap Mining Advisory Ltd. as its sole financial adviser, and McCarthy Tetrault LLP and RB Mexico Law-Abogados as its legal advisers in connection with the agreement.
The deal is expected to close in the third quarter of 2022, subject to satisfaction of certain conditions, including receipt of all third-party and regulatory approvals.
"This is a strategic transaction that places the GMC and Topia mines in the hands of an operator who is well-positioned to unlock additional value from the assets and maintain a strong commitment to employees and local stakeholders. Furthermore, GSilver's processing and tailings facilities in the district provide the platform for a near-term restart of operations at the GMC,” added Hair.
Great Panther is a growth-oriented precious metal producer focused on the Americas. The company owns a portfolio of assets in Brazil, Mexico and Peru that includes three gold and silver mines, an advanced development project, and a large land package with district-scale potential.
Contact the author at jon.hopkins@proactiveinvestors.com