Mexican mineral exploration company Magna Gold has completed the earlier announced acquisition of the San Francisco mine in Sonora, Mexico.
The company had entered into a definitive share purchase agreement with Timmins GoldCorp Mexico, a subsidiary of Alio Gold on 5 March this year.
Under the agreement, Magna Gold has issued 9,740,000 common shares in the capital of the company, representing approximately 17.48% of the current issued and outstanding Magna common shares on a non-diluted basis.
The consideration also includes payment of $5m within next twelve months. If Magna fails to make cash payment, it has part a 1% net smelter return royalty in respect of the San Francisco Mine.
Magna president and CEO Arturo Bonillas said: “With a stronger balance sheet and operating team, we look forward to getting back to the mine to start implementing our plans to re-establish a profitable mining operation.
“We see several prospects to enhance shareholder value and through a focused operating approach, we believe our team can begin surfacing this value in the near-term. This mine will give us the critical scale to continue building our gold business in Mexico and we look forward to advancing our Company to the benefit of all stakeholders.”
San Francisco Mine commenced commercial production in 2010
Since the start of commercial production in 2010, the San Francisco Mine has produced over 100,000 oz of gold per year on average.
This year, the mine entered a period of residual leaching and Alio expects to recover between 12,500 oz and 15,000 oz of gold.
