SSR Mining Inc. [SSRM-TSX, NASDAQ] is acquiring a 9.9% stake in SilverCrest Metals Inc. [SIL-TSXV, SVCMF-OTCQX] by purchasing 8.2 million common shares of the company via a private placement.
The total consideration is $30.7 million or $3.73, marking a 19% premium on the closing price of SilverCrest shares on November 28, 2019.
On Friday November 30, SilverCrest shares were up 0.92% or $0.03 to $3.29. That’s up from around $2.90 on November 26, 2018.
The announcement comes after SilverCrest recently updated its mineral resource estimate for the Las Chispas property in Sonora, Mexico.
The company is now looking ahead to a further resource update and a preliminary economic assessment (PEA) due in the first quarter of 2019. In keeping with that plan, the company plans to continue exploration drilling with six to eight core drills running up to the first quarter of 2019.
According to a September 2018, resource update, Inferred resources at Las Chispas are estimated at 4.3 million tonnes, grading 3.68 g/t gold and 347 g/t silver, or 623 g/t silver equivalent. The inferred resource estimate includes 511,800 ounces of gold and 48.3 million ounces of silver, or 86.7 million ounces of silver equivalent, using a 150 g/t silver equivalent cut-off grade and minimum true vein width of approximately 1.5 metres.
The Las Chispas property is located approximately 180 km northeast of Hermosillo. It consists of 28 concessions totalling 1,400 hectares.
Between 1880 and 1930, several mines on the property are thought to have yielded approximately 100 million ounces of silver and 200,000 ounces of gold.
The investment by SSR Mining means SilverCrest expects to be fully funded to complete a resource update and preliminary economic assessment (PEA) in the first quarter of 2019, as well as the construction of an exploration decline into the high-grade Area 51 Zone of the Babicanora Vein.
With the backing of SSR, SilverCrest can also proceed with an infill and expansion drilling program to upgrade the resource. Assuming a positive PEA, SilverCrest can also look to a preliminary feasibility study before the end of 2019.
The private placement transaction is expected to close by December 7, 2018.
Under the agreement, shares issued to SSR will have a statutory four-month holding period post close.
Additional provisions of the deal as long as SSR holds 5% or more of the outstanding shares of SilverCrest include a standstill limiting SSR to acquiring up to a maximum of 9.9% of the common shares. It also retains participation rights to maintain its share ownership and the right of first refusal on any proposed royalty, stream, or offtake agreement.
As well, SSR will hold certain information rights to Las Chispas technical and scientific data.
SSR Mining has a 100% interest in the San Luis Project in the Ancash Department of central Peru. It is centred on a high-grade, gold-silver vein, the Ayelen vein, which was discovered in 2005.
Project highlights include a proven and probable mineral reserve of 7.2 million ounces of silver at an average grade of 447.2 g/t and 0.29 million ounces of gold a grade of 18.6 g/t as at December 32, 2016.
In a presentation to investors, SSR describes San Luis as a unique high-grade gold reserve with exploration upside. A June 2010 feasibility study said the project could support average annual production of 1.9 million ounces of silver and 78,000 ounces of gold.