Americas Silver Corporation (TSX: USA) (NYSE MKT: USAS)
(“Americas Silver” or the “Company”) is pleased to announce that it
has entered into an agreement with Impulsora Minera Santacruz S.A.
de C.V. (“Impulsora”), a wholly-owned subsidiary of Santacruz
Silver Mining Ltd. (“Santacruz”), (the “Option Acquisition
Agreement”) to acquire an option agreement (the “San Felipe Option
Agreement”) between Impulsora and Minera Hochschild Mexico S.A. de
C.V. (“Hochschild”). By acquiring the San Felipe Option Agreement,
the Company will have the right to acquire a 100% interest in the
San Felipe property located in Sonora, Mexico (the “Property”) for
total consideration of $15 million in cash, payable in two staged
payments. All amounts are in U.S. dollars unless otherwise
indicated.
Highlights of the Acquisition
- Adds an additional high quality
silver-zinc development project in a safe, mining-friendly
jurisdiction
- Potential for low capital, highly
profitable silver and zinc production without shareholder
dilution
- Further increases silver and zinc
leverage per share
- Attractive acquisition value of 31
cents per silver equivalent ounce (99 cents/indicated resource
ounce and 46 cents/inferred resource ounce)1 is highly accretive to
overall asset portfolio based on the most recently published NI
43-101 technical report (described below)
- Free cash flow from San Rafael supports
San Felipe advancement
Darren Blasutti, President and Chief Executive Officer of
Americas Silver, stated, “As we did when we acquired Scorpio Mining
and the San Rafael project two years ago, we are taking a
disciplined and highly accretive approach to our external growth
strategy. The San Felipe acquisition provides our shareholders with
an exciting development asset at an attractive valuation, which has
the potential to add material high margin production scale that
further enhances the tremendous value proposition of Americas
Silver. While we remain highly focused on successfully executing
the development of San Rafael on time and on budget, we are
extremely excited to add this project to our pipeline. We believe
it has the potential to drive the next leg of growth for our
Company as we transition to a leading first quartile silver
producer in 2018 and beyond.”
Overview of the San Felipe Project
The San Felipe silver-zinc-lead project is located 130 km
northeast of Hermosillo City, Sonora State in Mexico. A preliminary
economic assessment (the “PEA”) was completed on the Property in
2014 and amended in June 2016, which envisioned an open pit and
underground operation producing low cost silver, zinc and lead
production. The PEA offered attractive returns despite being
modelled at significantly lower zinc and lead prices than current
spot.
Following the successful approach used by Americas Silver when
it acquired San Rafael, the Company will be conducting a detailed
evaluation program over the remainder of the year to re-assess the
San Felipe property and advance the project towards a
pre-feasibility study. The Company’s near-term evaluation program
will be primarily focused on: (i) reviewing and improving the
resource modelling; (ii) conducting geotechnical drilling and
studies; and (iii) advancing the permitting process.
A summary of the current mineral resources for
the Property (as disclosed in the NI 43-101 Technical Report
entitled "2014 Resource Estimate and Preliminary Economic
Assessment, San Felipe Project, Sonora, Mexico” authored by Hans
Smit, Fletcher M. Bourke, Gary Giroux, Greg Blaylock, Deepak
Malhotra, and Mark E. Smith filed by Santacruz on its SEDAR
profile) is presented below:
Summary of Mineral Resources - San
Felipe Project2
Classification Tonnes Ag (g/t)
Zn (%) Pb (%) AgEq (g/t)
AgEq (ozs)3
Within Conceptual Open Pits Indicated 97,000 81.1
4.44 1.26 293.0 913,875 Inferred 858,000 63.5 3.78 1.44 263.5
7,269,283
Below Pits Possible Underground Indicated
1,017,000 75.3 6.54 2.60 435.4 14,234,732 Inferred 2,296,000 64.6
5.21 2.06 346.9 25,606,511
Terms of the Acquisition
As outlined in the San Felipe Option Agreement, as amended on
February 28, 2017, Impulsora was entitled to acquire 100% of the
Property upon making the following cash payments, including
applicable value added taxes (“VAT”):
(i) $2,000,000 on or before March 3, 2017
(the “Initial Payment”)(ii) $8,000,000 on or before December 15,
2017 (the “Final Payment”)
Pursuant to the Option Acquisition Agreement, Impulsora has
assigned all of its rights, obligations and interest in the San
Felipe Option Agreement and other agreements relating to the
Property to Americas Silver in exchange for total cash payments of
$7,000,000, plus applicable VAT, as follows:
(i) $2,000,000, plus applicable VAT, to
Hochschild, satisfying the Initial Payment,(ii) $4,250,025 to JMET,
LLC, a lender to Santacruz, and(iii) $749,975, plus applicable VAT,
to Santacruz.
Upon completion of the Final Payment to Hochschild of $8,000,000
plus applicable VAT on December 15, 2017, 100% of the Property will
have been acquired by the Company, free of any underlying net
smelter return royalties.
Americas Silver has funded the initial $7,000,000 cash payment
with cash on hand. As at December 31, 2016, the Company had a cash
balance of US$24.1 million and on January 30, 2017, the Company
further strengthened its balance sheet by entering into a US$15
million concentrate pre-payment facility with Glencore PLC. With
the operating cash flows expected to be generated at current spot
prices, the Company anticipates having sufficient capital to
complete construction at San Rafael and continue its growth
strategy without dilution to shareholders. The Company will update
the market on the progress of the San Rafael project at the end of
the first quarter.
Medalist Capital Ltd. is acting as financial advisor to Americas
Silver.
About Americas Silver Corporation
Americas Silver is a silver mining company focused on growth in
precious metals from its existing asset base and execution of
targeted accretive acquisitions. It owns and operates the Cosalá
Operations in Sinaloa, Mexico and the Galena Complex in Idaho,
USA.
Daren Dell, Chief Operating Officer and a Qualified Person under
Canadian Securities Administrators guidelines, has approved the
applicable contents of this news release. For further information
please see SEDAR or americassilvercorp.com.
Cautionary Statement on Forward-Looking Information:
This news release contains “forward-looking information” within
the meaning of applicable securities laws. Forward-looking
information includes, but is not limited to, the Company’s
expectations intentions, plans, assumptions and beliefs with
respect to, among other things, the realization of operational and
development plans (including the San Rafael Project, the Cosalá
Operations, the Galena Complex and the Property) as well as the
Company’s financing efforts. Often, but not always, forward-looking
information can be identified by forward-looking words such as
“anticipate”, “believe”, “expect”, “goal”, “plan”, “intend”,
“estimate”, “may”, “assume” and “will” or similar words suggesting
future outcomes, or other expectations, beliefs, plans, objectives,
assumptions, intentions, or statements about future events or
performance. Forward-looking information is based on the opinions
and estimates of the Company as of the date such information is
provided and is subject to known and unknown risks, uncertainties,
and other factors that may cause the actual results, level of
activity, performance, or achievements of the Company to be
materially different from those expressed or implied by such
forward-looking information. This includes the ability to develop
and operate the Property and the Cosalá Operations (including the
San Rafael Project) and Galena properties, risks associated with
the mining industry such as economic factors (including future
commodity prices, currency fluctuations and energy prices), ground
conditions and factors other factors limiting mine access, failure
of plant, equipment, processes and transportation services to
operate as anticipated, environmental risks, government regulation,
actual results of current exploration and production activities,
possible variations in ore grade or recovery rates, permitting
timelines, capital expenditures, reclamation activities, social and
political developments and other risks of the mining industry.
Although the Company has attempted to identify important factors
that could cause actual results to differ materially from those
contained in forward-looking information, there may be other
factors that cause results not to be as anticipated, estimated, or
intended. Readers are cautioned not to place undue reliance on such
information. By its nature, forward-looking information involves
numerous assumptions, inherent risks and uncertainties, both
general and specific that contribute to the possibility that the
predictions, forecasts, and projections of various future events
will not occur. The Company undertakes no obligation to update
publicly or otherwise revise any forward-looking information
whether as a result of new information, future events or other such
factors which affect this information, except as required by
law.
Cautionary Note to U.S. Investors:
The terms "mineral resource", "measured mineral resource",
"indicated mineral resource", "inferred mineral resource" used in
the press release are Canadian mining terms used in accordance with
National Instrument 43-101 - Standards of Disclosure for Mineral
Projects under the guidelines set out in the Canadian Institute of
Mining, Metallurgy and Petroleum Standards. Mineral resources which
are not mineral reserves do not have demonstrated economic
viability.
While the terms "mineral resource", "measured mineral resource,"
"indicated mineral resource", and "inferred mineral resource" are
recognized and required by Canadian regulations, they are not
defined terms under standards in the United States and normally are
not permitted to be used in reports and registration statements
filed with the Securities & Exchange Commission (“SEC”). As
such, information contained in the Company's disclosure concerning
descriptions of mineralization and resources under Canadian
standards may not be comparable to similar information made public
by U.S companies in SEC filings. With respect to "inferred mineral
resource" there is a great amount of uncertainty as to their
existence and a great uncertainty as to their economic and legal
feasibility. It cannot be assumed that all or any part of an
"inferred mineral resource" will ever be upgraded to a higher
category. Investors are cautioned not to assume that any part or
all of mineral deposits in these categories will ever be converted
into reserves.
1 Acquisition value per silver equivalent ounce calculated based
on the $15M total acquisition price divided in each case by the
respective resource ounces: indicated resource ounces (99
cents/ounce); inferred resource ounces (46 cents/ounce); and (31
cents/ounce) for both indicated and inferred resource ounces.2
Mineral resources which are not mineral reserves do not have
demonstrated economic viability.3 Silver equivalent is calculated
using prices of US$20.06/oz, US$0.96/lb. and US$0.92/lb. for
silver, lead and zinc respectively.
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version on businesswire.com: http://www.businesswire.com/news/home/20170302006379/en/
For more information, please contact:Americas Silver
CorporationDarren Blasutti, 416-848-9503President and CEO
Americas Gold and Silver (TSX:USA)
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