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TORONTO, Dec. 07, 2022 (GLOBE NEWSWIRE) -- Golden Tag Resources Ltd. (“Golden Tag” or the "Company") (TSX.V: GOG) (OTCQB: GTAGF) is pleased to announce that the Company has entered into a definitive Asset Purchase Agreement dated December 7, 2022 (the "Purchase Agreement" or “APA”) with First Majestic Silver Corp (“First Majestic” or “FMS”) to acquire a 100% interest in the 69,478 hectares La Parrilla Silver Mine Complex (“La Parrilla”) in the locality of San Jose de la Parrilla, Durango, Mexico (the “Transaction”).
Highlights:
Greg McKenzie, President & CEO commented “We are honoured to partner with First Majestic in the acquisition of La Parrilla, their first producing silver mine, which has produced 34.3 million oz of Ag.Eq under their ownership. Over the past two years we have evaluated several opportunities for growth in the silver space and La Parrilla is a great opportunity. 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.
This is a transformative acquisition for Golden Tag and we strongly believe in the upside resource growth potential of this long-life prolific asset. 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 & vision of placing the asset back into production.
We would like to thank our key shareholders for their support on this transaction and look forward to working with First Majestic to complete the acquisition.”
Figure 1 – Clockwise from top-left 1. Rosarios Portal; 2. Ag-Pb-Zn vein mineralization, Quebradillas Cuerpo 460 (1700 elevation); 3. Quebradillas Open Pit
Overview of the La Parrilla Complex
The property is located in Durango State, Mexico, approximately 76 kilometres southeast of the capital city of Durango and is comprised of 41 contiguous mining concessions, in good standing, covering 69,478 hectares. The property was acquired by First Majestic in 2004 and became their first silver mine in 2005. When placed on care and maintenance in September 2019, the complex hosted five underground mines surrounding the mill including Rosarios, La Rosa, San Jose, Quebradillas and San Marcos, as well as the Quebradillas open pit (See Figure 1). From 2010-2019 La Parrilla produced approximately 29.6 million oz Ag.Eq as outlined in Table 1 below.
Table 1 – Historical Production at La Parrilla from 2010 - 20191
Production | 2010 | 2011 | 2012 | 2013 | 2014 | 2015 | 2016 | 2017 | 2018 | 2019* | |||||||||||
Ore processed/ tonnes milled | 303,869 | 362,947 | 679,788 | 788,335 | 711,915 | 667,702 | 610,509 | 543,985 | 491,637 | 167,535 | |||||||||||
Average silver grade (g/t) | 209 | 200 | 170 | 162 | 158 | 145 | 140 | 130 | 108 | 139 | |||||||||||
Recovery (%) | 76 | % | 77 | % | 78 | % | 76 | % | 79 | % | 78 | % | 81 | % | 76 | % | 76 | % | 75 | % | |
Total silver ounces produced | 1,548,832 | 1,793,728 | 2,876,810 | 3,115,997 | 2,876,452 | 2,434,095 | 2,220,874 | 1,730,383 | 1,340,385 | 557,603 | |||||||||||
Gold ounces produced | 413 | 344 | 923 | 1,051 | 982 | 1,161 | 1,009 | 1,014 | 963 | 0 | |||||||||||
Pounds of lead produced | 4,280,167 | 7,888,943 | 13,240,889 | 18,503,451 | 21,259,559 | 10,441,510 | 10,648,161 | 6,544,745 | 6,550,602 | 4,659,549 | |||||||||||
Pounds of zinc produced | 363,288 | 178,767 | 4,952,899 | 6,723,878 | 12,619,352 | 17,524,223 | 10,577,434 | 3,944,232 | 5,695,657 | 3,691,100 | |||||||||||
Total production - ounces silver equivalent | 1,813,788 | 2,057,172 | 3,487,392 | 4,219,374 | 4,673,186 | 4,036,398 | 3,388,434 | 2,517,199 | 2,323,056 | 1,120,490 | |||||||||||
Underground development (m) | 7,545 | 13,242 | 20,606 | 12,004 | 8,981 | 7,371 | 9,416 | 12,313 | 11,443 | 6,660 | |||||||||||
Diamond drilling (m) | 1,581 | 14,447 | 26,204 | 10,974 | 5,789 | 9,750 | 15,326 | 28,839 | 30,713 | 24,440 | |||||||||||
*Care and maintenance procedures began in September 2019 | |||||||||||||||||||||
The metallurgical processing plant at La Parrilla (see Figure 2) consists of parallel 1,000 tpd flotation and 1,000 tpd cyanidation leach circuits to treat both oxide and sulfide ores, for a total capacity of 2,000 tpd, using a conventional flowsheet. Both ore types are polymetallic containing silver as their principal economic component as well as significant amounts of lead and zinc, and minor amounts of gold. Oxide ore is processed by cyanide leaching to produce doré bars while sulphide ore is processed by differential flotation to produce a silver-rich lead concentrate and a zinc concentrate.
Figure 2 – View of the La Parrilla Mill Complex
During 2018, the last year of open pit operations, metallurgical recoveries in the cyanidation circuit were 74% for silver and 81% for gold, and metallurgical recoveries in the flotation circuit were 76% for silver, 73% for lead and 55% for zinc. Tailings from both circuits are filtered separately before being dry‐stacked in the tailings storage facility, which currently holds approximately 6.5 million tonnes of capacity, sufficient for nine years of operations at a throughput rate of 2,000 tpd.
Table 2 – La Parrilla Historic Mineral Resources5, 6
Category / Area | Mineral Type | Tonnage | Grades | Metal Content | ||||||||
kt | Ag (g/t) | Au (g/t) | Pb (%) | Zn (%) | Ag-Eq (g/t) | Ag (k Oz) | Au (k Oz) | Pb (M lb) | Zn (M lb) | Ag-Eq (k Oz) | ||
Measured Quebradillas (UG) | Sulphides | 15 | 193 | - | 1.27 | 1.27 | 250 | 90 | - | 0.4 | 0.4 | 120 |
Total Measured (UG) | Sulphides | 15 | 193 | - | 1.27 | 1.27 | 250 | 90 | - | 0.4 | 0.4 | 120 |
Indicated Rosarios (UG) | Sulphides | 519 | 179 | 0.08 | 1.71 | 1.33 | 257 | 2,980 | 1.4 | 19.6 | 15.2 | 4,290 |
Indicated Quebradillas (UG) | Sulphides | 321 | 177 | 0.08 | 2.59 | 2.70 | 303 | 1,820 | 0.8 | 18.3 | 19.0 | 3,120 |
Indicated San Marcos (UG) | Sulphides | 188 | 260 | 0.04 | 0.57 | 0.56 | 289 | 1,570 | 0.2 | 2.4 | 2.3 | 1,750 |
Total Indicated (UG) | Sulphides | 1,028 | 193 | 0.07 | 1.78 | 1.62 | 277 | 6,370 | 2.4 | 40.3 | 36.6 | 9,160 |
Indicated Rosarios (UG) | Oxides | 23 | 300 | 0.04 | - | - | 304 | 220 | - | - | - | 220 |
Indicated San Marcos (UG) | Oxides | 53 | 256 | 0.12 | - | - | 266 | 440 | 0.2 | - | - | 450 |
Total Indicated (UG) | Oxides | 76 | 270 | 0.09 | - | - | 278 | 660 | 0.2 | - | - | 670 |
Total Indicated (UG) | Oxides + Sulphides | 1,104 | 182 | 0.07 | 1.67 | 1.52 | 261 | 7,030 | 2.6 | 40.3 | 36.6 | 9,830 |
Total Measured & Indicated (UG) | Oxides + Sulphides | 1,119 | 198 | 0.07 | 1.65 | 1.50 | 277 | 7,120 | 2.6 | 40.7 | 37.0 | 9,950 |
Category / Area | Mineral Type | Tonnage | Grades | Metal Content | ||||||||
Inferred | kt | Ag (g/t) | Au (g/t) | Pb (%) | Zn (%) | Ag-Eq (g/t) | Ag (k Oz) | Au (k Oz) | Pb (M lb) | Zn (M lb) | Ag-Eq (k Oz) | |
Inferred Rosarios (UG) | Sulphides | 265 | 154 | 0.16 | 1.85 | 1.48 | 245 | 1,310 | 1.4 | 10.8 | 8.6 | 2,090 |
Inferred Quebradillas (UG) | Sulphides | 578 | 214 | 0.08 | 1.85 | 2.65 | 319 | 3,970 | 1.6 | 23.6 | 33.8 | 5,920 |
Inferred San Marcos (UG) | Sulphides | 185 | 304 | 0.03 | 0.25 | 0.22 | 317 | 1,810 | 0.2 | 1.0 | 0.9 | 1,890 |
Total Inferred (UG) | Sulphides | 1,028 | 215 | 0.09 | 1.56 | 1.91 | 299 | 7,090 | 3.2 | 35.4 | 43.3 | 9,900 |
Inferred Rosarios (UG) | Oxides | 280 | 198 | 0.08 | - | - | 205 | 1,780 | 0.7 | - | - | 1,840 |
Inferred Quebradillas (UG) | Oxides | 43 | 196 | 0.14 | - | - | 208 | 270 | 0.2 | - | - | 290 |
Inferred San Marcos (UG) | Oxides | 70 | 211 | 0.04 | - | - | 214 | 480 | 0.1 | - | - | 480 |
Total Inferred (UG) | Oxides | 393 | 200 | 0.08 | - | - | 207 | 2,530 | 1.0 | - | - | 2,610 |
Total Inferred (UG) | Oxides + Sulphides | 1,421 | 211 | 0.09 | 1.13 | 1.38 | 274 | 9,620 | 4.2 | 35.4 | 43.3 | 12,510 |
Cautionary Statement: Mineral Resources that are not Mineral Reserves do not have demonstrated economic viability. The resource estimate stated in Table 2 is as reported by First Majestic with an effective date of December 31, 2020. Golden Tag is not treating these estimates as current Mineral Resources because a Qualified Person on behalf of Golden Tag has not performed sufficient work5 to classify these estimates as current resources5, 6.
Notes for Historic Mineral Resources Estimates:
5. These figures are historic in nature, have not been verified by Golden Tag and while relevant as the most recent mineral resource estimates for La Parrilla, should not be relied upon. A thorough review by Golden Tag’s "Qualified Person" of all historic data, along with additional exploration and validation work to confirm results and estimation parameters, would be required in order to produce a current mineral resource estimate for the La Parrilla Mine Complex. No more recent estimates or data are available to Golden Tag.
6. First Majestic reported that its La Parrilla mineral resource estimates were:
Please refer to the FMS Annual Information Form for The Year Ended December 31, 2021 dated March 31, 2022 available on at www.SEDAR.com.
Transaction Summary
The Company will acquire 100% of the assets of the La Parrilla Silver Mine Complex from First Majestic and the remaining employees associated directly with the Complex. In consideration, Golden Tag will pay to First Majestic the following:
Both II and III are payable in cash or common shares, at the election of Golden Tag.
Closing of the Transaction is expected to occur in H1 2023, and is subject to certain conditions including, but not limited to: (i) the approval of Golden Tag shareholders as a result of the Transaction creating a new control person; (ii) the completion by the Company of a Private Placement for minimum gross proceeds of C$9,000,000, as described below; (iii) the receipt of all necessary consents, approvals and authorizations (including the TSX Venture Exchange (the “TSXV”) and the Mexican Antitrust Commission) for the Transaction; and (iv) other conditions which are customary for a transaction of this type.
The Company has engaged SRK Consulting (Canada) Inc. to prepare an independent National Instrument 43-101 resource report on La Parrilla.
There are no finder’s fee payable in connection with the Transaction; First Majestic and the Company are arm’s length parties from each other and the Transaction is an Arm’s Length Transaction (as such term is defined under the corporate finance manual of the TSXV).
Financing for the Acquisition
Concurrent with or prior to the closing of the Transaction, Golden Tag will complete a private placement to raise gross aggregate proceeds of C$9 million (the "Private Placement"), inclusive of US$2.7M subscribed for by First Majestic. Further details regarding the Private Placement will be announced once final terms of the Private Placement have been determined.
Change of Name
On the closing of the Transaction, subject to regulatory approval, the Company will undertake a rebranding initiative. Further details will follow.
Financial Advisors and Legal Counsel
Golden Tag is represented by McMillan LLP as legal counsel. First Majestic is being advised by National Bank as financial advisor and Bennett Jones LLP as legal counsel.
Qualified Person
The scientific and technical information in this document has been reviewed and approved by Bruce Robbins, P.Geo., a Qualified Person as defined by National Instrument 43-101.
About Golden Tag Resources
Golden Tag Resources Ltd. is a Toronto based mineral resource exploration company. The Company holds a 100% interest, subject to a 2% NSR, in the San Diego Project, in Durango, Mexico. The San Diego property is among the largest undeveloped silver assets in Mexico and is located within the prolific Velardeña Mining District. Velardeña hosts several mines having produced silver, zinc, lead and gold for over 100 years. For more information regarding the San Diego property please visit our website at www.goldentag.ca.
For additional information, please contact:
Greg McKenzie, President & CEO
Ph: 416-504-2024
greg.mckenzie@goldentag.ca
Cautionary Statement:
Neither the TSXV nor its Regulation Services Provider (as that term is defined in the policies of the TSXV) accepts responsibility for the adequacy or accuracy of this news release. Certain statements in this news release are forward-looking and involve a number of risks and uncertainties. Such forward-looking statements are within the meaning of the phrase ‘forward-looking information’ in the Canadian Securities Administrators’ National Instrument 51-102 – Continuous Disclosure Obligations. Forward-looking statements are not comprised of historical facts. Forward-looking statements include estimates and statements that describe the Company’s future plans, objectives or goals, including words to the effect that the Company or management expects a stated condition or result to occur. Forward-looking statements may be identified by such terms as “believes”, “anticipates”, “expects”, “estimates”, “may”, “could”, “would”, “will”, or “plan”. Since forward-looking statements are based on assumptions and address future events and conditions, by their very nature they involve inherent risks and uncertainties. Although these statements are based on information currently available to the Company, the Company provides no assurance that actual results will meet management’s expectations. Risks, uncertainties and other factors involved with forward-looking information could cause actual events, results, performance, prospects and opportunities to differ materially from those expressed or implied by such forward-looking information. Forward-looking information in this news release includes, but is not limited to, the completion of the acquisition of the La Parrilla Mine Complex on the terms set out in the definitive Asset Purchase Agreement, the completion of the Private Placement on terms anticipated by the Company (or at all), First Majestic’s distribution of the Excess Shares, the Company’s plans to prepare a technical report on La Parrilla, to initiate a rebranding process & change the name of the Company, the ability to obtain requisite corporate and regulatory approvals, including but not limited to the approval from the TSXV for the Transaction and the Private Placement, obtain applicable and customary approvals from the Mexican government, the Company's plans and expectations for La Parrilla, the ability of the Company, upon closing of the Transaction, to incorporate La Parrilla into the business of the Company, and the ability to eventually place the asset back into production.
In making the forward-looking statements included in this news release, the Company has applied several material assumptions, including that the Company´s financial condition and development plans do not change because of unforeseen events, that future metal prices and the demand and market outlook for metals will remain stable or improve, management’s ability to execute its business strategy, the receipt of all necessary approvals, the Company’s and First Majestic’s satisfaction of all closing conditions with respect to APA, the closing of the Private Placement, and no unexpected or adverse regulatory changes with respect to La Parrilla. Forward-looking statements and information are subject to various known and unknown risks and uncertainties, many of which are beyond the ability of the Company to control or predict, that may cause the Company´s actual results, performance or achievements to be materially different from those expressed or implied thereby, and are developed based on assumptions about such risks, uncertainties and other factors set out herein, including, but not limited to, the risk that the Company is not able to complete the acquisition of La Parrilla on the terms set out in the definitive Asset Purchase Agreement (or at all), the risk that the Company is unable to complete the Private Placement on the terms anticipated by the Company (or at all), the risk that the Company is unable to obtain requisite corporate and regulatory approvals, including but not limited to the approval of the TSXV, the Mexican government, and shareholder approval, the risk that the Company will be unable to incorporate La Parrilla into the business of the Company, the risk that the Company is unable to achieve its goal of placing La Parrilla back into production, the risk that the assumptions referred to above prove not to be valid or reliable, market conditions and volatility and global economic conditions including increased volitivity and potentially negative capital raising conditions resulting from the continued or escalation of the COVID-19 pandemic, risk of delay and/or cessation in planned work or changes in the Company´s financial condition and development plans; risks associated with the interpretation of data (including in respect of third party mineralized material) regarding the geology, grade and continuity of mineral deposits, the uncertainty of the geology, grade and continuity of mineral deposits and the risk of unexpected variations in mineral resources, grade and/or recovery rates; risks related to gold, silver and other commodity price fluctuations; employee relations; relationships with and claims by local communities and indigenous populations; availability and increasing costs associated with mining inputs and labour, the speculative nature of mineral exploration and development, including the risks of obtaining necessary licenses and permits and the presence of laws and regulations that may impose restrictions on mining; risks relating to environmental regulation and liability; the possibility that results will not be consistent with the Company´s expectations.
Such forward-looking information represents management´s best judgment based on information currently available. No forward-looking statement can be guaranteed, and actual future results may vary materially. Accordingly, readers are advised not to place undue reliance on forward-looking statements or information.
TSX Venture Exchange Inc. has in no way passed upon the merits of the Transaction and has neither approved nor disapproved the contents of this press release.
1 Per historic operating data filed by FMS on an annual basis at www.SEDAR.com
2 Average annual production calculated from 2010 – 2018, the last year of full-scale commercial operations
3 Approximately 6.5 million tonnes of tailings capacity at full run rate of 2,000 tpd
4 Subject to certain maintenance and rehabilitation expenditures that have yet to be determined in size and scope
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