First Majestic Silver Corp. has entered an agreement to sell its past-producing La Parrilla silver mine located in the state of Durango, Mexico to Golden Tag Resources Ltd. for total consideration of up to $33.5 million.

On closing, First Majestic will receive 40% of Golden Tag’s shares at C$0.19 per share having an aggregate value of $20 million. First Majestic will receive up to $13.5 million in the form of three milestone payments in either cash or shares in Golden Tag.

“Over the past two years we have evaluated several opportunities for growth in the silver space and La Parrilla is a great opportunity,” Greg McKenzie, president and CEO, Golden Tag Resources said. “The mine complex is fully permitted, located only 45 minutes on paved roads from Durango and, only a few hours from our existing San Diego project. Our short-term objective is to commence exploration within and near mine workings in order to expand the resource base, to support our ultimate goal and vision of placing the asset back into production.”

La Parrilla produced 34.3 million silver equivalent ounces that include: silver, gold, lead, and zinc and it was placed under care and maintenance by First Majestic in September 2019. It’s comprised of mining concessions that total 69,478 hectares. The property has known mineralization throughout, with a complex of five underground mines surrounding the mill including Los Rosarios, La Rosa, San Jose, Quebradillas and San Marcos. The mines feed a 2,000 metric ton per day (mt/d) mill that operates parallel 1,000 mt/d flotation and 1,000 mt/d cyanidation circuits.