FULL DISCLOSURE: First Majestic Silver is a sponsor of theDeepDive.ca.
First Majestic Silver (TSX: AG) (NYSE: AG) has elected to monetize a non-core past producing asset, with the company on Wednesday evening announcing a definitive agreement for the sale of the Del Toro Silver Mine. The sale, which will see the mine sold to Sierra Madre Gold & Silver (TSXV: SM), will generate gross proceeds for the company of up to US$60 million.
The Del Toro Silver Mine is a past producing asset within First Majestic’s portfolio that was first placed into production in 2013. The mine was placed into care and maintenance in January 2020, with the company at the time indicating the decision was driven by the need to improve operating cash flows and profit margins.
Del Toro in 2019, the last full year of operations, produced 493,636 silver equivalent ounces at a cash cost of $28.26 an ounce. The property has a historical resource estimate of 7.6 million silver equivalent ounces at 398 g/t in the measured and indicated category, and 11.2 million silver equivalent ounces at 293 g/t in the inferred category.
Initial consideration under the terms of the transaction is pegged at US$30 million, which is payable upon closing of the transaction, of which US$20 million is to be paid in cash and US$10 million in the form of common shares at $1.30 per share. The remaining US$30 million is in the form of delayed and contingent consideration.
Delayed consideration is to consist of a US$10 million payment within 18 months of closing, which is to be paid in either cash or shares. If Sierra Madre elects to issue shares as payment, the issuance will be conducted at a price per share equal to the market price on the day prior to issuance, subject to a maximum of 10,575,385 shares being issued.
Contingent consideration of $10 million is to be paid in the event that a resource estimate of at least 100 million ounces of silver equivalent is established within 48 months of closing. Further consideration of $10 million is to be paid if Sierra Madre achieves commercial production of at least 4,000 tonnes per day for 30 consecutive days within 60 months of closing. Both contingent consideration items can be paid in the form of cash or shares at Sierra Madre’s election, subject to share maximums. If the numbers of shares issued does not equal US$10 million, then cash will be used to satisfy the remainder.
The transaction is subject to Sierra Madre managing to raise C$40 million in gross proceeds, along with customary regulatory approvals and shareholder approval from Sierra Madre investors.
Sierra Madre acquiring the Del Toro project follows the company acquiring the past producing La Guitarra mine from First Majestic back in 2023, which they returned to commercial production in early 2025.
First Majestic Silver last traded at $23.30 on the TSX.
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