Golden Tag shares resume trading

Golden Tag Resources Ltd. [GOG-TSXV, GTAGF-OTCQB] shares are scheduled to resume trading today.

Trading was set resume after the company released an update on April 14, 2023, in relation to its proposed acquisition of the La Parrilla silver mine complex in Durango, Mexico from First Majestic Silver Corp. [FR-TSX, AG-NYSE, FMV-Frankfurt] for US$33.5 million. The deal was announced back in December, 2023.

In its update, Golden Tag said the transaction will be classified as a “reviewable transaction” as defined under Policy 5.3 of TSX Venture Exchange’s Corporate Finance Manual.

As a result, the company will not issue more than 45 million common shares in the capital of Golden Tag in satisfaction of the first deferred payment as outlined in the asset purchase agreement.

It will also file an application under Policy 4.3 of the TSX Venture Exchange’s Corporate Finance Manual prior to the issuance of any Golden Tag shares in satisfaction of the second deferred payment.

However, TSX Venture Exchange said the planned resumption of trading does not constitute acceptance of the company’s reviewable transaction, and should not be construed as an assurance of the merits of the transaction or the likelihood of completion.

Completion of the transaction is subject to a number of conditions, including:

• Approval by Golden Tag shareholders of the creation of a new control person as a result of the transaction as defined by the TSX Venture Exchange.
• The completion of a private placement for minimum gross proceeds of $9 million (inclusive of the subscription of First Majestic in the amount of $2.7 million.
• The receipt of all necessary consents, approvals and authorizations for the transaction (including TSXV and the Mexican Antitrust Commission).

In December, 2022, Golden Tag described the acquisition of La Parrilla as a debt-free transaction with an upfront payment of US$20 million in equity and deferred payments of US$13.5 million, bringing the total acquisition price to US$33.5 million.

Under the deal, First Majestic was set to become Golden Tag’s largest shareholder by acquiring 143.7 million common shares at 19 cents per share.

The property was acquired by First Majestic in 2004 and became its first silver mine in 2005. Under First Majestic’s ownership, the mill produced 34.3 million ounces of silver equivalent (AgEq) with average annual production of approximately 3.1 million ounces of AgEq.

When placed on care and maintenance in September, 2019, La Parrilla was a fully-permitted mine complex, consisting of five underground high-grade silver mines and an open pit.

“Our short-term objective is to commence exploration within and near-mine workings in order to expand the resource base, to support our ultimate goal and vision of placing the asset back into production,’’ said Golden Tag President and CEO Greg McKenzie. “This is a transformative acquisition for Golden Tag and we strongly believe in the upside resource growth potential of this long-life prolific asset,’’ said Golden Tag President and CEO Greg McKenzie.