ELKO – First Majestic Silver Corp. announced plans March 12 to acquire Jerritt Canyon Canada LLC from and Sprott Mining Inc. for $470 million in shares plus 5 million First Majestic share purchase warrants. Eric Sprott, president of Sprott Mining, will complete a $30 million private placement investment in First Majestic.
“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,” the company stated in a release.
Jerritt Canyon owns the Jerritt Canyon Gold Mine in Elko County. The complex is made up of a processing plant and four gold mines, two of which are active. 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. In 2020, Jerritt Canyon produced 112,749 ounces of gold.
Kevin Small, vice president and general manager of Jerritt Canyon Gold, said that First Majestic’s acquisition of Jerritt Canyon “will be a great boost for Jerritt Canyon and its employees. It’s definitely very positive.”
He said that First Majestic has a “great technical and operations team,” and the company’s vision is in line with his vision for Jerritt Canyon. “They are buying Jerritt Canyon to grow the business to 200,000 ounces.”
Small said since Sprott Mining took Jerritt Canyon Mine five years ago, there has been a “complete turnaround” at the mine, and there is a “great team at Jerritt” that will benefit from the acquisition.
Jerritt Canyon has roughly 300 employees, not counting those working for contract miner Small Mine Development. SMD operates the underground Lee Smith and SSX gold mines at Jerritt Canyon.
“We have enjoyed working with Jerritt Canyon Gold and hope the relationship continues with First Majestic Silver,” said SMD General Manager Keith Jones on Friday.
Small said there is a meeting planned next week with SMD, and there are no plans to change the contract with SMD.
“The relationship will continue,” he said.
First Majestic also plans major exploration efforts at Jerritt Canyon, Small said.
First Majestic operates three silver mines in Mexico, and the acquisition of Jerritt Canyon would diversify the company’s portfolio into gold production.
“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,” said Keith Neumeyer, First Majestic CEO. “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 … . 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.”
Eric Sprott, president of Sprott Mining, will continue to be a significant shareholder in First Majestic. Through the deal, Sprott or his affiliated companies is expected to own about 13 percent of the issued and outstanding common shares of First Majestic.
“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 also see this as a big step forward for Jerritt Canyon where it can flourish under the larger umbrella of First Majestic,” Sprott said.” 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.”
The acquisition is expected to close by April 30, subject to meeting closing conditions.
This article has been updated with comments from Jerritt Canyon and Small Mine Development managers.
Adella Harding contributed to the reporting for this article.