Sierra Madre in offtake deal with Swiss gold trader
Sierra Madre Gold and Silver Ltd. [SM-TSXV, SMDRF-OTCQB] has signed a binding off-take agreement with Swiss-based gold minerals trader MRI Trading AG for 100% of the concentrate sales from the Guitarra silver-gold mine in Mexico for a 24-month term.
La Guitarra is a high-grade, past producing underground mine with an on-site 500-tonne-per-day 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.
Sierra Madre was in the news last year when it closed the second tranche of a private placement financing that raised $10.3 million. The offering was conducted in conjunction with the company’s acquisition of all the issued and outstanding shares La Guitarra compania Minera SA de CV, an indirect unit of First Majestic Silver Corp. [AG-TSX, AG-NYSE, FMV-Frankfurt] that held a 100% interest in the La Guitarra property.
In consideration for the acquisition, Sierra Madre issued 69 million common shares priced at 65 cents per share. A net smelter return royalty was also granted on closing.
“MRI had previously received the concentrate from the time that the mine was last in production in 2018 and understands the high quality of the material,’’ said Sierra Madre President and CEO Alex Langer. “We are very pleased with the terms of this agreement and the 24-month length is in line with the recently executed US$5.0 million loan facility with First Majestic Silver,’’ he said. “This offtake agreement is a key finishing step needed for possible restart of La Guitarra.’’
Langer previously said the US$5.0 million loan would allow the company to complete all necessary steps for the possible restart of the La Guitarra mine.
Sierra Madre shares were unchanged Monday at 48 cents and trade in a 52-week range of trade in a 52-week range of 54 cents and 25 cents.
Sierra Madre Gold and Silver is a mineral exploration company with a focus on evaluating the potential of restarting the Guitarra mine and 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.
MRI is a leader in trading metals and minerals, petroleum products, bulk and freight. The company specializes in non-ferrous ores, concentrates, refined and precious metals and their related byproducts for a global smelting and processing customer base.