Coeur Mining, Inc. announced that its subsidiary, Coeur Mexicana, S.A. de C.V., has signed a purchase agreement with a subsidiary of Fresnillo plc to acquire mining concessions adjacent to the Palmarejo gold-silver complex located in the state of Chihuahua, Mexico. Total consideration includes a cash payment of approximately $25 million ($10 million due at closing, which is expected to occur sometime in 2024) and a future royalty on certain ounces discovered on the purchased concessions.
Together, the concessions comprise nearly 7,000 acres and include claims adjacent to two primary zones within Palmarejo’s existing footprint as shown in yellow on the map below. The first set of concessions cover the southeast extensions of the Independencia and Nacion deposits where mining currently takes place. The second set of concessions, located to the northeast, surrounds multiple targets containing mineralization and historic resources that were added through the 2015 acquisition of Paramount Gold and Silver. Intensive field work including mapping and sampling across the entire Eastern land package, which was ramped up over the past twelve months and has shown very encouraging results, is expected to accelerate further following closing to test the most advanced targets along these two main trends.
“This transaction fills in two key strategic gaps in the large land package East of the Palmarejo mine which unlocks significant potential in areas unencumbered by the existing Franco-Nevada gold stream. Once complete, our land holdings outside the gold stream-encumbered areas will increase by nearly 20% and the overall Palmarejo complex will consist of a single nearly contiguous district spanning over 70,000 acres of highly prospective and underexplored ground in the heart of the prolific Sierra Madre Occidental,” said Mitch Krebs, president and CEO, Coeur. “In the near-term, we intend to pursue the southeast extensions of existing deposits that trend onto the claims, which provides opportunities to add to Palmarejo’s mine life and leverage existing infrastructure. Another near-term post-closing priority will be to integrate, update and potentially add to historic resources in the northeast area of the previously fragmented land package, which represents an opportunity to further boost Palmarejo’s overall mineral resources to the East.”
The terms of the transaction include an up-front cash payment to Fresnillo of $10 million payable upon closing, an additional $10 million payable 12 months after closing, and an additional $5 million payable 24 months after closing. The concessions will be subject to a royalty payment of $25/oz for each new gold-equivalent (AuEq) oz of resource discovered between 450,000 and 2 million AuEq oz. Closing is subject to applicable regulatory approvals in Mexico.