Guanajuato Silver (TSXV: GSVR) is set to add a fifth operating mine to their portfolio, following the announcement this morning that they will be acquiring the Bolanitos gold-silver mine from Endeavour Silver (TSX: EDR).
The acquisition will add a second primary gold mine to Guanajuato’s portfolio, while also allowing for improved economics at their San Ignacio mine, which is contiguous to Bolanitos. Upon closing of the transaction, material mined at San Ignacio will be processed at the 1,600 tonne per day flotation plant in place at Bolanitos, improving utilization at the mill while reducing transportation costs at San Ignacio.
“The numerous advantages of integrating our San Ignacio Mine into the Bolanitos Mines Complex are obvious; we have already begun preparations to ensure seamless integration of this asset into our production portfolio, allowing us to quickly realize the economic rewards from this acquisition. By expanding our production platform within the prolific Guanajuato Mining District we have taken another positive step towards building Mexico’s next mid-tier precious metals producer,” commented James Anderson, CEO of Guanajuato Silver.
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Endeavour Silver meanwhile has entered the transaction as a means of focusing on their core silver assets.
“By focusing our resources on our core silver assets, particularly delivering at Terronera and advancing the world-class Pitarrilla project, we are sharpening our operational focus and positioning the company for sustainable growth. We remain committed to maximizing the potential of our silver portfolio and reinforcing our leadership in the sector,” commented Dan Dickson, CEO of Endeavour Silver.
Under the terms of the transaction, Guanjuato Silver is to pay total consideration of up to US$50 million for Bolanitos, comprised of upfront consideration of US$40 million payable on closing and contingent consideration of US$10 million. The initial payment is set to consist of US$30 million payable in cash and US$10 million payable in common shares of Guanajuato.
Contingent payments meanwhile are to consist of two US$5 million payments, upon the production of two million and four million ounces of silver equivalent from the Bolanitos Mine. Contingent payments are to be payable 50% in cash and 50% in common shares.
The transaction is currently expected to close in January.
Guanajuato Silver last traded at $0.355 on the TSX Venture.
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