Guanajuato Silver Company Ltd. [GSVR-TSXV] has announced details of a $8 million bought deal private placement of units with proceeds earmarked for working capital and general corporate purposes.
Guanajuato Chairman and CEO James Anderson said the aim is to strengthen the company’s balance sheet at a time when the challenging market environment has created what he believes are favourable conditions for the procurement of additional opportunities within Mexico’s mining community.
The company said it has struck a deal with Cantor Fitzgerald Canada Corp, the sole underwriter, that will purchase 22.25 million units priced at 36 cents each on a bought deal basis.
Each unit will consist of one common share and one common share purchase warrant, each of which entitles the holder to acquire one common share for 18 months from the date of closing at 55 cents each.
The underwriter will be granted a green shoe option to purchase up to an additional 3.33 million units at the offering price, potentially generating an additional $1.2 million. That option remains open for 48 hours prior to closing, which is expected to occur around August 10, 2023.
Guanajuato shares were active on the news, easing 14.6% or $0.06 to 35 cents on volume of 880,220. The shares are currently trading in a 52-week range of 65 cents and 29 cents.
Guanajuato is a precious metals producer engaged in reactivating past producing silver and gold mines in central Mexico. The company produces silver and gold concentrates from the El Cubo Mine, Valancia Mines Complex and San Ignacio mine. All three are located in the state of Guanajuato, which has an established 480-year mining history.
Additionally, the company produces silver, gold, lead and zinc concentrates from the Topia mine in northwestern Durango. The portfolio includes four operating mines and three processing facilities.
In the second quarter of 2023, the company reported record production of 941,338 silver equivalent ounces (AgEq) derived from 477,650 ounces of silver and 4,719 ounces of gold, 875,802 pounds of lead and 897,258 pounds of zinc.
El Cubo is an underground gold-silver mining complex which is located in El Cubo village, approximately 10 kilometres east of Guanajuato city. The complex has historically produced roughly 2.0 million ounces of gold and 80 million ounces of silver.
The company recently released an updated preliminary economic assessment for the El Cubo Mines Complex. “This updated PEA envisions a six-year mine life; however El Cubo has already demonstrated a production history that has extended well over 100 years,’’ Anderson said.
A new gravity circuit at El Cubo was completed during the fourth quarter of 2022 with the objective of recovering gold and silver from the Mastrantos IV historical tailings pond.