First Majestic Silver buys Jerritt Canyon

This is a major development for Anova. Keith Neumeyer is a serious dealmaker who consolidates assets and is a specialist at unlocking value in old camps. I think that First Majestic will have its eyes on Anova, and soon.

Its a strong buy from here.



https://www.stockwatch.com/News/Item/Z-C!FR-3046902/C/FR
Mr. Keith Neumeyer reports

FIRST MAJESTIC ANNOUNCES ACQUISITION OF JERRITT CANYON MINE IN NEVADA, USA

First Majestic Silver Corp. has entered into a definitive agreement whereby First Majestic will acquire all of the issued and outstanding common shares of Jerritt Canyon Canada Ltd. from Sprott Mining for $470-million in shares of First Majestic plus five million First Majestic share purchase warrants. Concurrent with the acquisition, Eric Sprott, president of Sprott Mining, will complete a $30-million private placement investment in First Majestic.

Jerritt Canyon owns and operates the Jerritt Canyon gold mine located in Elko county, Nevada. Jerritt Canyon was discovered in 1972 and has been in production since 1981, having produced over 9.5 million ounces of gold over its 40-year production history. The mine currently operates as an underground mine and has one of three permitted gold processing plants in Nevada that uses roasting in its treatment of ore. This processing plant has a capacity of 4,500 tonnes per day (tpd) and is currently operating at an average rate of approximately 2,200 tpd due to limited ore production from two underground mines. The property consists of a large, underexplored land package consisting of 30,821 hectares (119 square miles). In 2020, Jerritt Canyon produced 112,749 ounces of gold at a cash cost of $1,289 (U.S.) per ounce. 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.

Together with First Majestic's existing three operating silver mines in Mexico, the combined company will be a premier North American silver and gold producer with expected pro forma annualized attributable production of 30 million to 33 million silver equivalent ounces based on historical production rates. With a strong balance sheet and liquidity profile and a diversified portfolio of three producing silver mines in Mexico, and one gold mine in Nevada, the combined company is expected to continue generating strong free cash flow and industry-leading exposure to silver and gold prices.

Benefits to First Majestic shareholders

• Diversification into Nevada, a world-class, mining-friendly jurisdiction;
• Continues record of accretive production and cash flow growth;
• Maintains peer-leading silver exposure;
• Significant upside potential through capital investment and applying First Majestic's technical innovation;
• Accretive on all key metrics including net asset value, cash flow, production and resources to First Majestic;
• Preserves very strong balance sheet;
• Continued strong endorsement from Eric Sprott.

Keith Neumeyer, chief executive officer of First Majestic, said: "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. Nevada is ranked as one of the most attractive jurisdictions, if not the most attractive, for mining operations and we are delighted to add another cornerstone asset to our portfolio. 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. We look forward to working with the operating team at Jerritt Canyon and are excited about the opportunities we have identified to enhance operations to unlock value. We also welcome the increased endorsement from Eric Sprott, who will continue to be a significant shareholder in First Majestic going forward, and thank him for his continued support of the company."

Mr. Sprott stated: "This deal is a win-win for both parties and we look forward to having continued exposure to Jerritt Canyon's bright future through our increased ownership in First Majestic. We have a long-standing respect and high regard for Keith Neumeyer and his leadership in the silver industry, an industry with which we have had an increasing involvement over the past two years. We also see this as a big step forward for Jerritt Canyon, where it can flourish under the larger umbrella of First Majestic. I would like to take this opportunity to sincerely thank all the employees and management at Jerritt Canyon for their tireless efforts in the successful turnaround of the operation since Sprott Mining's acquisition in 2015 and wish them well in their future with First Majestic."

Transaction summary

Under the terms of the share purchase agreement, Sprott Mining will receive 26,719,727 common shares of First Majestic. This represents $470-million in share consideration based on the 20-day trading volume-weighted average price of $17.59 per First Majestic share on the New York Stock Exchange for the period ended on March 11, 2021. In addition, Sprott Mining will receive five million common share purchase warrants at an exercise price of $20 per share for a term of three years. Concurrently, Mr. Sprott will make a $30-million private placement in First Majestic at a price of $17.59 per share for a total of 1,705,514 common shares. Upon completion of the acquisition and private placement, Mr. Sprott, through himself or affiliated controlled companies, will own 32,925,241 shares, including current shareholdings, representing approximately 13.1 per cent of the issued and outstanding common shares of First Majestic.

The acquisition will be effected by way of purchasing 100 per cent of the issued and outstanding shares of Jerritt Canyon Gold Ltd. The acquisition includes the assumption of certain liabilities and a customary working capital adjustment and is subject to applicable regulatory approvals, including the approval of the Toronto Stock Exchange and New York Stock Exchange, and the satisfaction of certain other closing conditions customary in transactions of this nature.

The acquisition is expected to close by April 30, 2021, subject to meeting all applicable closing conditions.

Advisers

TD Securities Inc. acted as exclusive financial adviser and DuMoulin Black LLP and Parsons Behle & Latimer LLP acted as legal counsel to First Majestic.

Irwin Lowy LLP and Dorsey & Whitney LLP acted as Sprott Mining's legal advisers.

Conference call

First Majestic will be holding a conference call and webcast on Monday, March 15, 2021, at 8 a.m. PDT (11 a.m. EDT).

To participate in the conference call, please dial the following:

• Toll-free Canada and United States: 1-800-319-4610;
• Outside of Canada and United States: 1-604-638-5430;
• Toll-free Germany: 0800-180-1954;
• Toll-free United Kingdom: 0808-101-2791.

Participants should dial in 10 minutes prior to the conference.

Click on webcast on the First Majestic homepage as a simultaneous audio webcast of the conference call.

The conference call will be recorded and you can listen to an archive of the conference by calling:

• Toll-free Canada and U.S.: 1-800-319-6413;
• Outside of Canada and U.S.: 1-604-638-9010;
• Access code: 6413 followed by the pound sign.

An archived webcast of the conference call will also be available at the company's website.

Ramon Mendoza Reyes, vice-president of technical services for First Majestic, is a qualified person as such term is defined under National Instrument 43-101 and has reviewed and approved the technical information disclosed in this news release.

About the company

First Majestic is a publicly traded mining company focused on silver production in Mexico and is aggressively pursuing the development of its existing mineral property assets. The company presently owns and operates the San Dimas silver/gold mine, the Santa Elena silver/gold mine and the La Encantada silver mine. Production from these mines is projected to be between 12.5 million to 13.9 million silver ounces or 20.6 million to 22.9 million silver equivalent ounces in 2021.

We seek Safe Harbor.

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