Sierra Madre Gold and Silver Ltd. [SM-TSXV, SMDRF-OTCQB] has amended the terms of a previously announced brokered private placement.
The company said it now anticipates that the offering will now consist of 9.4 million subscription receipts at 65 cents each and six million common shares at 65 cents per share. Gross proceeds are expected to be just over $10 million.
The offering is being conducted in conjunction with the company’s proposed acquisition of all the issued and outstanding shares La Guitarra compania Minera SA de CV, an indirect unit of First Majestic Silver Corp. [FR-TSX, AG-NYSE, FMV-Frankfurt] that holds a 100% interest in the La Guitarra property.
La Guitarra is a high-grade, past producing underground mine with an on-site process facility that operated until August,2018. The project is currently on care and maintenance, and available for a prompt restart. The property is located in the Temascaltepec mining district, in the southeast end of the Mexican silver belt, 130 kilometres southeast of Mexico City.
It is anticipated that the offering will close in two tranches. The private placement of the subscription receipts shall close in the first tranche. The private placement of common shares will close in the second tranche, subject to and shortly after closing of the proposed acquisition.
Sierra Madre shares were unchanged at 74 cents and currently trade in a 52-week range of 75 cents and 39 cents.
The company said it has granted the agents an option to sell an additional 2.3 million subscription receipts at the issue price, potentially raising additional proceeds of up to $1.5 million. The option is exercisable in whole or in part at any time up to 48 hours prior to the closing date of the subscription receipt tranche, likely on August 31, 2022.
The company will use the net proceeds of the offering for development of the La Guitarra property, advancement of engineering studies and general working capital purposes.
Sierra Madre Gold and Silver is a mineral exploration company with a focus on the exploration and development of the Tepic and La Tigra properties in in the State of Nayarit, Mexico. Sierra previously said its key objective is to advance exploration at the Tepic and La Tigra properties to determine whether they contain commercially exploitable deposits of precious or base metals.
The La Tigra project consists of seven mining concessions covering 357 hectares, including historical high-grade mines in the Districto Minero Del Tigre.
According to Mexican government documents, gold and silver was mined by local gold panners prior to 1900. The property contains a mine that was exploited by an incline shaft on two levels. Production ceased during the Mexican Revolution of 1910 to 1920. However, 13,110 tonnes of material, grading 10 g/t gold and 358 g/t was processed after 1927.