Premier Gold Mines (TSX:PG) announced this week that it entered into an agreement with Americas Silver Corporation to acquire an option to purchase a 100% interest in the San Felipe property in Mexico.
To move forward with the deal, Premier has to pay $7 million on closing and make additional payments of $1.9 million upon the making of a positive construction decision and then upon achieving commercial production.
San Felipe, whose underlying owner is Britain's Hochschild plc, is located 55 kilometres from Premier's Mercedes mine in the northwestern state of Sonora.
In a press release, the Thunder Bay-based miner said that the property consists of a series of claim groups that comprise 16,265 hectares with several polymetallic zones that host a high-grade historic mineral resource and has potential for future discoveries.
San Felipe hosts several existing deposits open for expansionSan Felipe is partially developed with an existing ramp, several mining-related facilities on-site and 69,000 metres of drilling already performed in different areas.
"San Felipe represents a strategic asset, adding resources and providing a near-term development opportunity in close proximity to an existing operation," Ewan Downie, president and CEO of Premier Gold, said in the media statement. "We will assess options to bring San Felipe to production to complement existing production in Mexico."
According to Downie, the firm plans to evaluate potential development options which may include adding a parallel floatation circuit at Mercedes to increase annual output in the near-term; building a stand-alone mill at San Felipe; and bringing San Felipe into development at the end of the Mercedes mine-life and processing mineralized material at the existing complex.