First Majestic’s takes 19.9% GR Silver stake

The Del Toro silver mine in Mexico. Source: First Majestic Silver Corp.

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First Majestic Silver Corp. [FR-TSX; AG-NYSE; FMV-FSE] has acquired a 19.9% stake in GR Silver Mining Ltd. [GRSL-TSXV; GLYXF-OTCQB; GPE-FSE] by picking up 17.1 million shares in the company.

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. First Majestic said it has no present intention of acquiring additional securities in GR Silver.

The Plomosas Project is located within 5 km of GR Silver’s San Marcial Project in the Rosario Mining District of Sinaloa, near the historic mining town of La Rastra. Quartz-sulphide silver-gold-lead-zinc mineralization was discovered in the vicinity of the La Rastra village in the 16th century.

Limited mining activity was conducted intermittently from 1950 to 1989 when a 600 ton-per-day underground mining operation began following the development of a flotation process concentrating lead, zinc, silver and gold ores.

Aside from the underground workings, Plomosas Project also comes with four targets at drilling/resource stage, 16 exploration targets, plus 30 km of under-explored mineralized veins/structures, and an extensive drill and exploration database, including in excess of 500 recent and historical drill holes.

Plomosas consists of 8,515 hectares of mining concessions, which are in good standing and valid up to 2058. It includes key facilities and infrastructure such as the Pomosas underground mine with 8 km of underground development, a 60-km fully operational 33 KV power line, fully operational offices, shops and a 120-person camp.

Previous operations spent US$18 million on the project to fund exploration between 2007 and 2019.

GR Silver was unchanged at 17 cents on Friday, and trades in a 52-week range of 10 cents and 27 cents.

First Majestic eased 7.8% or 79 cents to $9.39 on volume of 624,997. The shares are trading in a 52-week range of $5.31 and $16.50.

“The signing of the definitive share purchase agreement, and the ultimate acquisition of the Plomosas Project, together with associated infrastructure and exploration database, will allow the company to advance the hunt for additional high-grade silver and gold resources in 2020,” said GR Silver President and CEO Mario Fonseca.

First Majestic is a Mexico-focused mining company. It owns and operates six producing silver mines. They include the Parrilla, San Martin, La Encantada, Del Toro and Santa Elena.

Its asset portfolio also includes the San Dimas Mine following the acquisition of the site’s former owner Primero Mining Corp. in May 2018 for $187 million in common shares of First Majestic. Under a new streaming agreement, Wheaton Precious Metals Corp. [WPM-TSX, NYSE] is entitled to receive 25% of the gold equivalent production from San Dimas.

First Majestic achieved total production of 25.6 million silver equivalent ounces last year, a 15% increase over 2018, and reaching the top end of the company’s 2019 guidance range of 24.4 million to 26.0 million ounces.

The company’s silver production reached 13.2 million ounces, a 13% increase over 2018. That number was in line with the company’s guidance range of 12.8 to 13.5 million ounces.

Revenue of US$363.9 million in 2019 was a record, and marked a 21% increase from 2018.

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