First Majestic Silver to sell Mexico assets to Apollo
First Majestic Silver (NYSE:AG) (TSX:FR) has inked a deal with Apollo Gold (TSX-V: APGO) that would see the precious metals producer sell its Jalisco Group of properties in Mexico to the gold junior.
As part of the agreement, Apollo has the option to pay First Majestic C$750,000 and issue shares to the senior silver producer in tranches over a period of three years.
Apollo has also committed to exploration expenditure of at least C$1.25 million ($920K) on the Jalisco gold-silver prospective claims.
While the letter of intent is non-binding, Apollo and First Majestic expect to enter into definitive agreement within three months.
The six properties, totaling 52.4 sq. km, (32 miles) include a total of 15 highly prospective claims. First Majestic has a 100% ownership in 13 of them, and hold a 45% stake in two of them.
Apollo said the potential seller had identified a number of drill-ready targets at the Etzatlan claims that form one of the properties, having mapped and sampled known epithermal veins there in 2008.
The news comes only days after the company signed a separate letter of intent with Silver Dollar Resources (CSE: SLV) giving it the option to earn an initial 80% interest in La Joya property.
Last month, the Vancouver-based major initiated an arbitration process against Mexico under the North American Free Trade Agreement (NAFTA). Silver Majestic argues the tax authority has “exhibited a total disregard for the applicable provisions of three separate double taxation treaties.”
It also said the agency had “unlawfully opted to ignore” an advanced pricing agreement, governing the tax on silver sales between 2010-2014 by the miner’s subsidiary, Primero Empresa Minera.
First Majestic’s three producing mines and several projects are all located in Mexico, the world’s top silver producer.