Mexico mining asset acquisitions top US$300mn

Mining companies are targeting production growth through asset acquisitions in Mexico, with projects changing hands in deals totaling US$323mn over six months.

At least seven asset acquisitions have been announced or closed in the country since end-March, mainly involving gold and silver projects but also copper and zinc properties (deals worth less than US$5mn are excluded).

For buyers, the projects offer potential growth, and for some, the chance to transition from exploration to producer status in a strong metals price environment, delivering cash flows to pave the way for further increases in output.

For the sellers, the deals were driven by the aim of shedding non-core assets and suspend mines, or exiting Mexico to focus on opportunities in other jurisdictions.

The deals are a sign of Mexico’s enduring appeal to mining investors, despite concerns over some policies of left-wing President Andrés Manuel López Obrador (AMLO).

The AMLO administration has imposed a moratorium on new mineral concessions and taken a tougher approach to permitting, as well as nationalizing lithium.

Mexico’s geological potential – and the fact licenses can still be obtained far quicker than in many other jurisdictions – remain among its main attractions.

“There’s nowhere else in the world that I know that gives this scale of opportunity when it comes to silver and gold, with the relatively straightforward approach to permitting,” Michael Konnert, CEO at explorer Vizsla Silver, which has the Panuco asset in Mexico, told BNamericas in June.

TOP ASSET ACQUISITIONS

1. Mercedes mine. Deal value: US$125mn

Main metal: Gold

Bear Creek Mining closed its acquisition of the Mercedes gold mine from Equinox Gold in April, in a deal which established the company as a producer.

Mercedes is also expected to generate cash flows to help advance the firm’s US$579mn Corani silver project in Peru.

“The [Mercedes] mine had produced 70,000-90,000oz/y in the past. We would like to get it back to that level,” CEO Tony Hawkshaw told BNamericas in May.

Bear Creek engaged Unison Mining Consulting and Renoir Management to design and implement a 32-week performance improvement program at Mercedes earlier in September.

2. Pitarrilla: US$70mn

Main metal: Silver

Endeavour Silver acquired Pitarrilla – one of the world’s largest undeveloped silver deposits – from SSR Mining in July.

“The addition of the Pitarrilla project elevates our portfolio as a leading mid-tier silver producer with high quality silver exposure and significant growth,” Endeavour CEO Dan Dickson said in a release.

The first goal is to verify all historical data to prepare a current mineral resource estimate and begin exploration of high-priority targets, he added.

3. Esperanza: US$60mn

Main metal: Gold

Zacatecas Silver’s US$60mn acquisition of the Esperanza gold project from Alamos Gold ran into controversy shortly after the deal closed in April, after environment ministry Semarnat said it would not approve permitting for it – or for any open pit projects.

But Zacatecas CEO Bryan Slusarchuk defended the Morelos state project, saying it will be developed in an environmentally and socially responsible way.

The CEO told BNamericas in May that he plans to push forward with the project despite Semarnat’s statement, targeting submission of an environmental impact assessment (EIA) by end-2022.

“Ultimately, the environmental impact of the project will be determined through the EIA procedure established by Mexican mining law,” he added.

4. La Guitarra: US$35mn

Main metal: Silver

Sierra Madre Gold and Silver signed an agreement to purchase the La Guitarra mine from First Majestic Silver in May.

The acquisition – which has yet to close – will be a first step toward delivering on Sierra Madre’s growth ambitions.

La Guitarra was suspended by First Majestic in 2018.

“The underground mine and 500t/d mill will advance Sierra Madre toward its goal of [becoming] a mid-tier precious metals company,” CEO Alex Langer said in a release.

The asset holds historical measured and indicated resources containing about 7.45Moz silver equivalent, and about 10Moz in the inferred category.

5. Great Panther Mining Mexican assets: US$14.7mn

Main metal: Silver

Guanajuato Silver closed its acquisition of Great Panther Mining’s Mexican assets in August, which will provide a swift boost to production for the company.

Guanajuato, which transitioned to producer status through the acquisition of Endeavour Silver’s El Cubo silver mine last year, expects the Great Panther deal to provide an increase to 3.4Moz/y silver equivalent production from around 1.8Moz/y once El Cubo is fully ramped up, and potentially up to 6Moz/y, CEO James Anderson told BNamericas in July.

The aim is to quickly restart operations at the suspended San Ignacio and Valenciana mines, with ore transported to El Cubo for processing, and deliver operational improvements at the Topia silver-lead-zinc mine in Durango state.

“With mining operations well underway at both Topia and San Ignacio, the integration of our newly acquired mines from Great Panther is considerably ahead of schedule,” CEO James Anderson said in a September release.

6. Azure Minerals Mexican assets: US$13.5mn

Main metals: Gold, silver, zinc

US-based Bendito Resources acquired a diversified project portfolio in its purchase of Azure Minerals’ Mexican assets, in a deal worth Aus$20mn (US$13.5mn) which closed in July.

Bendito’s immediate plans are to begin drilling on the Alacrán gold-silver-copper and Oposura (pictured) zinc-lead-silver projects with the aim of delivering resource estimates early next year, according to an August presentation.

7. El Compas: US$5mn

Main metal: Gold

Endeavour Silver announced a deal on Monday to sell its suspended El Compas gold mine to Mexican mining company Grupo ROSGO for payments totaling US$5mn over five years.

Under the deal, ROSGO will acquire a 100% interest in Endeavour’s Minera Oro Silver de México subsidiary, which holds a lease on the La Plata processing plant in Zacatecas state as well as El Compas.

The sale will allow Endeavour to focus on its Terronera and Pitarrilla projects, CEO Dan Dickson said in a release.