Santacruz Silver Mining Ltd. [SCZ-TSXV; SZSMF-OTC] said Thursday March 18 that it has increased the size of a previously announced non-brokered private placement to $14.1 million, with the lead order coming from Palisades Goldcorp Ltd.
The company said the private placement will now consists of up to 47 million units at a purchase price of 30 cents per unit for gross proceeds of $14.1 million. That marks an increase from the earlier $12 million target. Each unit will consist of one common share of the company and one common share purchase warrant, entitling the holder to acquire one common share of the company for 45 cents each for a period of 36 months following the issue date.
Santacruz is a Mexico-focused silver company that currently owns and operates the Rosario Mine in Charcas, San Luis Potosi. It also owns 100% of Carrizal Mining, which holds a 20% working interest in the company’s Veta Grande Project and previously held the right to operate the Zimapan Mine until June 30, 2021, under a mining lease agreement which was recently replaced after Santacruz struck a deal to acquire the Zamapan property and related assets which are located in Zimapan, Hidalgo State, Mexico.
The company said it is buying the asset from a subsidiary of Industrias Penoles, S.A.B de C.V. for US$20 million (plus applicable value added tax of US$3.2 million).
Proceeds from the private placement are expected to be used by the company to complement the acquisition of the Zimapan Mine assets, to accelerate exploration activities at the Horizonte (Lomo del Toro) area and for general working capital purposes.
All securities issued will be subject to a four-month hold period. The private placement is expected to close in one or more tranches by March 26, 2021.
Assets being purchased under the Zimapan agreement include a processing facility with a capacity of 75,000 tonnes per month and zinc, lead and copper circuits, a surface and underground infrastructure including electrical and other necessary infrastructure required for day-to-day operations and 34 mining concessions covering an area of 5,139 hectares, including the highly prospective 337-hectare Santa Gorgonia 1 concession.
“The completion of this transaction and concurrent financing will be transformational for Santacruz and will mark the company as an emerging mid-tier silver producer,” said Santacruz CEO Carlos Silva. “Our goals following completion of the acquisition include continuing to implement operational efficiencies, achieve quarterly production of approximately 200,000 tonnes by the third quarter of 2021 and further explore opportunities for growth on the property,” he said.
Santacruz produced a record 3.7 million silver equivalent ounces in 2020, an increase of 30% from 2.8 million ounces in 2019. Production in 2020 included 1.16 million ounces of silver, 11,056 tonnes of zinc, 3,948 tonnes of lead and 1,544 tonnes of copper.
Santacruz shares fell on the news, dropping 7.3% or $0.03 to 38 cents on volume of 396,490. The shares are currently trading in a 52-week range of 58 cents and $0.07.
Upon listing, Palisades said it will be the only publicly-traded company in Canada that provides retail and institutional investors with highly levered exposure to junior resource equities.