Eric Sprott, First Majestic back Silver Dollar Resources

First Majestic’s La Encantada silver mine in Mexico. (Image: First Majestic Silver Corp.)

Canadian newcomer Silver Dollar Resources (CSE: SLV) said that Eric Sprott and First Majestic Silver (NYSE: AG) (TSX: FR) have agreed to participate in its C$10.5 million (about $8m) non-brokered private placement.

Precious metals enthusiast Eric Sprott has agreed to invest about C$6.5 million ($5m), which would increase the billionaire’s stake in Silver Dollar to 19.9%.

First Majestic would subscribe for C$700,000 worth of the shares on offer, resulting in a holding of about 16.4%.

The placement was priced at C$1.40 per share.

Silver Dollar said net proceeds of the financing will be used to fund the exploration and development work on its projects in Red Lake, Ontario, Canada and Durango, Mexico, and for general working capital purposes.

The Vancouver-based junior, which listed on the Canadian Securities Exchange in May, signed an agreement in August to acquire First Majestic’s La Joya silver project in Mexico.

Silver Dollar’s shares closed up 1.65% to C$1.85 on Wednesday and were up 2.7% on Thursday morning to C$1.90, valuing it at about C$51.20 million ($39 million).