The sole investor in the offering is Canadian billionaire and businessman Eric Sprott, who is buying the shares through an Ontario numbered company that is controlled by him. The investment will result in Sprott holding approximately 2.3% of First Majestic’s issued and outstanding shares.
“We believe there has been a lack of appreciation for First Majestic’s equity in 2020, and we are happy to align ourselves with [First Majestic CEO] Keith [Neumeyer],” said Sprott in a press release that was issued just before the close of trading on September 10, 2020.
After trading in the shares resumed following the Sept 10 announcement, First Majestic shares eased 0.96% or 15 cents to $15.41 on volume of almost 1.1 million.
First Majestic is a Mexico-focused mining company. It owns and operates the San Dimas silver-gold mine, the Santa Elena silver-gold mine and the Le Encantada silver mine. Production from these mines is expected to be in the region of 11.0-11.7 million silver ounces or 21.4 million to 22.9 million silver equivalent ounces in 2020.
Under a streaming agreement, Wheaton Precious Metals Corp. [WPM-TSX, NYSE] is entitled to receive 25% of the gold equivalent production from San Dimas.
“We are very pleased to welcome Mr. Sprott as a significant shareholder of First Majestic,” said Neumeyer. “As a fellow silver bull, Eric has been recognized as one of the most influential leaders within the silver investment community, and this deal represents his largest treasury investment in a silver producer, let alone the entire silver space.”
Proceeds of the offering, together with cash resources, will be used to develop and/or improve the company’s existing mines and to add to working capital.
The shares were issued as partial consideration for the purchase by GR Silver of a 100% interest in a First Majestic subsidiary which owns the Plomosas Project in Sinaloa, Mexico.