Canadian Mining Journal


SILVER: SantaCruz Silver picks up Penoles asset in US$20M deal

Santacruz Silver Mining is buying the Zimpapan mine from Penoles. Credit: Santacruz Silver Mining

VANCOUVER – Mexico-focused Santacruz Silver Mining has signed a deal to acquire the Zimapan property in Hidalgo state from Grupo Penoles for a total of US$20 million, plus US$3.2 million in value added tax.

The agreement follows Santacruz’s acquisition last October of Carrizal Mining, which has a mine leasing agreement with Penoles’ subsidiary, Minera Cedros. Carrizal has been mining the Zimapan property for the last 10 years; its lease agreement expires at the end of 2020.

Over the past five years, the operation has produced an average of 12,400 tonnes of zinc, 3,300 tonnes of lead, 1,850 tonnes of copper and 1.3 million oz. of silver annually, from average annual throughput of 700,000 tonnes.

The acquisition includes a 75,000 t/d mill and surface and underground infrastructure on the 51.4-sq.-km property.

“This would be a transformational transaction for Santacruz to add the Zimapan mine, which I have had the privilege to lead throughout the last 12 years, to the company’s existing mining projects,” said Santacruz CEO Carlos Silva, in a release. “This acquisition is expected to pave the way for the future growth of Santacruz towards becoming a mid-tier silver producer.”

Silva was a co-founder of Carrizal and became COO of Santacruz after its acquisition of the private company last year. He was appointed CEO of Santacruz in May.

Under the agreement with Penoles, if the acquisition is not completed Dec. 15, the party responsible will have to pay the other a break fee of 20% of the purchase price. If Santacruz can’t secure the funding for the deal before that date, an extension may be granted, provided it pays outstanding royalties owed to Penoles of US$1.05 million before the end of October and provides a $1-million bank letter of credit in favour of Minera Cedros with an expiry date of Feb. 15, 2021 or later.

As Santacruz acquires a new asset, it lets go of another. Last week, it signed a deal to sell its Zacatecas exploration project in Zacatecas state for US$1.5 million and 5 million shares to Zacatecas Silver. The first US$500,000 payment is due when Zacatecas completes a listing on the TSX Venture Exchange, which it has agreed to do before the end of the year.

Santacruz Silver Mining’s portfolio includes the producing Rosario mine in San Luis Potosi state, the Veta Grande mine in Zacatecas state, where mining has been suspended, and the Minillas and Zacatecas exploration properties.

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