Americas Gold and Silver Corporation (TSX: USA) (NYSE American:
USAS) (“Americas” or the “Company”), a growing North American
precious metals producer, today announces a strategic joint venture
agreement (the “Agreement”) with Mr. Eric Sprott to recapitalize
the mining operations at the Galena Complex, located in the Silver
Valley of Northwest Idaho.
- The strategic joint venture – expected to be 60/40
Americas/Sprott respectively – will allow Americas to increase
development, modernize infrastructure, purchase new mining
equipment, and target exploration below current operating areas
with the goal of positioning the Galena Complex to significantly
increase resources, production, and reduce operating costs at the
mine over the next two years.
- Effective October 1, 2019, Mr. Sprott through 2176423 Ontario
Ltd., a corporation which is beneficially owned by him, will
initially commit up to US$20 million to fund capital improvements
and operations for the first year to earn a 40 percent interest in
the Company’s Galena Complex. Americas will invest an additional
US$5 million to fund further capital improvements in 2020.
- After the first year of operations under the Agreement, the
parties will revert to their percentage ownership interests to fund
capital projects and operations as required in proportion to those
interests.
- Oversight of the joint venture will consist of 2 nominees from
Americas and 1 nominee by Mr. Sprott. Americas will continue to
manage the day-to-day operations so long as it retains an interest
in the joint venture.
“We are thrilled to partner with Eric Sprott on this joint
venture. He is already the single largest shareholder in Americas;
with this new venture, we are further solidifying our relationship
with him”, said Darren Blasutti, President and CEO of Americas Gold
and Silver. “We look forward to putting his significant investment
into developing the Galena Complex to benefit all our stakeholders
in the coming months and transforming the Galena Complex into a
leading US-based, profitable silver producer.”
Due to low silver prices and limited capital available from the
capital markets for silver operational improvements since 2012,
Americas has spent minimal funds at the Galena Complex to replace
worn equipment, update aging infrastructure, stope development, and
exploration. Americas is currently allocating all its available
capital to re-start the Relief Canyon mine in Nevada, which is
scheduled to begin producing gold in late Q4, 2019. The Relief
Canyon mine is targeted to increase the Company’s precious metal
production by approximately 500% by 2021. In 2017 and 2018, the
Company focused available capital on developing the San Rafael mine
in Mexico which this year became a significant free-cash flow
generating asset.
The Galena Complex possesses significant operational optionality
and leverage to silver prices. The mine has between 1,250 and 1,500
tons of daily milling capacity though it is currently processing
only 500 tons per day, five days a week. It produces between 0.8 M
to 1.0 M silver ounces annually at high costs as a result of lower
throughput, reduced operational flexibility and old equipment. The
current proven and probable silver reserve includes 12.4 million
ounces, a further measured and indicated silver resource of 27.4
million ounces and an inferred silver resource of approximately
39.0 million ounces (exclusive of lead and copper resources).
Though this operational base is a strong starting point for
comparable silver mines, a capital redevelopment of the asset is
required to best exploit the existing resources, improve
operational performance, and capitalize on expected higher silver
prices. Further, Americas and Mr. Sprott believe there are
substantially more silver resources to be discovered at better
grades along extensions of existing veins and at depth.
Americas believes that the significant investment and joint
venture announced today with Mr. Sprott will allow the parties to
develop the Galena Complex into a long-term, profitable mine,
including to take full advantage of the recent move in silver
price. The Company needed an outside partner who not only shared
the same vision for the current upside and leverage embedded at the
Galena Complex but was willing to commit capital to systematically
explore for deeper level, high-grade targets that may transform the
mine into an important silver producer in the medium to long-term.
Further, with the only operating mine in the Silver Valley, the
joint venture will be well-positioned to take advantage of any
consolidation opportunities which may evolve in the District.
Other material provisions of the Agreement include (i) standard
dilution if a party does not contribute its proportionate share of
costs; (ii) penalty dilution if a party defaults in contributing
its share of costs; (iii) a party’s interest in the joint venture
is converted to a 5% net proceeds interest if that party’s
percentage interest falls below 10%; and (iv) each party has a
pre-emptive right to acquire the other party’s interest should that
party desire to sell its interest in the joint venture.
Medalist Capital Ltd acted as financial advisor to both parties
with respect to the transaction.
For further technical information on the Galena Complex please
see the applicable NI 43‐101 Technical Report available at
www.sedar.com and the Company’s website at
www.americas-gold.com.
About Americas Gold and Silver Corporation Americas Gold
and Silver is a high-growth, low-cost, precious metals mining
company with multiple assets in North America. The Company expects
to begin producing gold in the fourth quarter of 2019 at its fully
funded Relief Canyon Project in Nevada, USA, which is currently in
construction. It owns and operates the Cosalá Operations in
Sinaloa, Mexico and the Galena Complex in Idaho, USA. The Company
also holds an option on the San Felipe development project in
Sonora, Mexico. For further information, please see SEDAR or
www.americas-gold.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, Americas’ expectations,
intentions, plans, assumptions and beliefs with respect to, among
other things, the Company’s financing efforts and the expected
results from the Agreement and the joint venture; future
development plans at the Galena Complex; exploration, production
and cost performance at the Cosalá Operations and the Galena
Complex; construction, production, development plans and
performance expectations at the Relief Canyon Mine, including the
anticipated timing of production. Often, but not always,
forward-looking information can be identified by forward-looking
words such as “anticipate”, “believe”, “expect”, “goal”, “plan”,
“intend”, “potential’, “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 America’s 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
Americas to be materially different from those expressed or implied
by such forward-looking information. With respect to the business
of Americas, these risks and uncertainties include interpretations
or reinterpretations of geologic information; unfavorable
exploration results; inability to obtain permits required for
future exploration, development or production; general economic
conditions and conditions affecting the mining industry; the
uncertainty of regulatory requirements and approvals; fluctuating
mineral and commodity prices; the ability to obtain necessary
future financing on acceptable terms or at all; the ability to
develop, complete construction and operate the Relief Canyon Mine;
the ability of the joint venture to further fund, improve and
operate the Galena Complex, and risks associated with the mining
industry such as economic factors (including future commodity
prices, currency fluctuations and energy prices), ground conditions
and 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 and construction expenditures, reclamation activities,
labor relations, 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. Additional
information regarding the factors that may cause actual results to
differ materially from this forward‐looking information is
available in America’s filings with the Canadian Securities
Administrators on SEDAR and with the SEC. Americas does not
undertake any 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. Americas does not give any assurance (1)
that Americas will achieve its expectations, or (2) concerning the
result or timing thereof. All subsequent written and oral
forward‐looking information concerning Americas are expressly
qualified in their entirety by the cautionary statements above.
Cautionary Note to U.S. Investors: The terms “proven and
probable silver reserve”, “silver resource”, “measured silver
resource”, “indicated silver resource”, and “inferred silver
resource” used in the press release are mining terms used in
accordance with Canadian 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”).
Moreover, the definitions of proven and probable reserves used in
NI 43-101 differ from the definitions in the United States
Securities and Exchange Commission's Industry Guide 7. As such,
information contained in the Company's disclosure concerning
descriptions of mineralization, reserves 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 the mineral deposits in these categories will ever be
converted into reserves.
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version on businesswire.com: https://www.businesswire.com/news/home/20190909005911/en/
Darren Blasutti President and CEO Americas Gold and Silver
Corporation 416‐848‐9503
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