Jerritt Canyon Gold Mine Acquired by First Majestic Silver (FR.TO)

First Majestic Silver, based in Canada, has signed an agreement with Sprott Mining to acquire the Jerritt Canyon Gold Mine in Nevada. This significant acquisition will First Majestic solidify its position as a premier silver and gold producer in North America. 

The Mine

Jerritt comprises a large, underexplored land package that will give the company the opportunity to expand exploration and focus on discoveries. The 30,821-hectare property has one permitted gold processing plant with a capacity of 4500 tonnes per day (tpd). That processing plant is only operating at an average rate of approximately 2200 tpd due to the limited ore production from the two current underground mines. 

The mine is already a proven producer, with 112,749 ounces of gold at a cash cost of $1289/oz produced in 2020. The company’s plan to “enhance both the cost and production profile” will allow them to maximize the potential of this large project, and expand it to other sites in the future with more exploration. 

The Plan

First Majestic’s plans include increasing production capacity to maximize the processing output and make this project a profitable one for their bottom line. According to a press release: “First Majestic has identified several opportunities to enhance both the cost and production profile of Jerritt Canyon as well as near-term brownfield potential between the SSX and Smith mines and long-term property-wide exploration potential.” 

The Deal

The deal has First Majestic purchase issued and outstanding common shares of Jerritt Canyon Canada from Sprott Mining. In turn, Sprott will receive $470 million in shares of First Majestic as well as five million First Majestic share purchase warrants.

Keith Neumeyer, CEO of First Majestic had this to say about the deal: “The acquisition of Jerritt Canyon is a highly compelling transaction that further enhances First Majestic’s operating platform, adding a producing asset in a world-class jurisdiction. While we remain focused on maintaining our peer-leading exposure to silver, Jerritt Canyon is a unique opportunity to create value for First Majestic’s shareholders and provides a new geographic operating platform while preserving our pristine balance sheet.”

First Majestic Takes First

The company has had a string of success so far this year, also winning the 2021 Socially Responsible Business Distinction Award for all three of its mines in Mexico. The award was given in a year and an era when socially and environmentally responsible mining companies are being prioritized in some of the largest institutional portfolios. 

Considering the company’s track record with positive environmental, social, and governmental principles at the forefront of its operations, Jerritt Canyon is sure to join their portfolio of award-winning mines. While investors have rewarded First Majestic in the past for their commitment to growth while balancing social responsibility, making this significant new acquisition is likely to get the capital inflows running once again. 

It is difficult to know how much, but the stock is poised for a run on the recognition of this deal and the potential it brings. 

 

The above references an opinion and is for information purposes only. It is not intended to be investment advice. Seek a licensed professional for investment advice. The author is not an insider or shareholder of any of the companies mentioned above. 

By Matthew Evanoff

I cover the mining industry and the best mining stocks around the world. I write about industry news, individual companies, projects, management, and profiles on industry leaders.

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