Americas Gold raises $39.4 million in bought deal financing

Americas Gold and Silver Corp. [USA-TSX; USAS-NYSE American] said Friday September 4 that it has raised $39.4 million from an upsized bought deal financing involving the sale of 10.2 million common shares at $3.86 per share.

Net proceeds will be used for exploration and development and/or improvement of its mine properties, including those related to bringing its Relief Canyon mine into production. The amount raised, originally targeted at $25 million, included the partial exercise of an over-allotment option by the underwriters.

The Relief Canyon Mine is at the southern edge of the Pershing Gold and Silver trend, about 95 miles northeast of Reno, Nevada. The project consists of an open pit mine and heap leach processing facility.

“This land package provides the company with the opportunity to expand the Relief Canyon deposit and to explore and make new discoveries on nearby lands,” the company said.

The company said commercial production at Relief Canyon has been delayed until Q4 due “various start-up challenges.

Americas said its precious metals production is expected to significantly increase over the next two years as production ramps up at Relief Canyon, coupled with an anticipated increase in silver production from the Cosala Operations in Sinaloa, Mexico. The company recently said an illegal blockade at the Cosala Operations has been resolved and the operation is expected to restart before the end of the third quarter.

Meanwhile, Americas Gold and Silver is proceeding with a recapitalization of the 60%-owned Galena Complex in the Silver Valley of Northwest Idaho. The company is working to recapitalize the mine under a joint venture agreement with Canadian financier Eric Sprott.

The joint venture is allowing 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 over the next two years.

Sprott, through a private company, is committing US$20 million to fund these improvements and will earn a 40% stake in the project. Galena has previously produced up to 1 million ounces of silver annually, but at a high cost.