Endeavour Silver Corp. [EDR-TSX, EXK-NYSE) said Friday December 18 that it has agreed to sell its El Cubo Mine in Mexico and related assets to VanGold Mining Corp. [VGLD-TSXV] for US$15 million in cash and share payments plus additional contingent payments.
El Cubo is a 480-year-old underground gold-silver mining complex located in El Cubo village, approximately 10 km east of Guanajuato city.
The complex has historically produced roughly 2.0 million ounces of gold and 80 million ounces of silver but has been closed since November 2019.
VanGold plans to use El Cubo’s 1,500-tonne/day mill to process stockpiled material that is currently available at its El Pinguico mine.
Before trading in VanGold was halted on Friday morning, the shares were priced at 27.5 cents and trade in a 52-week range of 34 cents and $0.03.
“We are pleased to enter into this transaction to sell our El Cubo assets to VanGold. They are an ideal fit, given the proximity of the Pinguico property to the El Cubo plant,” said Endeavour CEO Brad Cooke. “We will become VanGold’s largest shareholder and look forward to supporting the VanGold team as they advance the Pinguico and El Cubo assets through exploration and development to production.”
Under the agreement, VanGold will pay US$15 million to Endeavour for the El Cubo assets, comprised of a US$500,000 non-refundable down payment, US$7.0 million cash on closing on or before March 17, 2021.
Endeavour will also receive US$5.0 million in VanGold common shares on closing, priced at 30 cents per share for a total of 21.3 million VanGold shares or 16.1% of the company’s share capital. In addition, Endeavour will receive a US$2.5 million unsecured promissory note due and payable within 12 months of closing.
VanGold has also agreed to pay Endeavour up to an additional US$30 million in contingent payments based on the following events: US$1.0 million upon VanGold producing 3.0 million silver equivalent ounces from the El Cubo mill; US$1.0 million if the price of gold closes at or above US$2,000/oz for 20 consecutive months within 20 consecutive days within two years after closing; and US$1.0 million if the price of gold closes at or above US$2,200/oz for 20 consecutive months within 20 consecutive days within three years after closing.