First Majestic Silver (TSX:AG,NYSE:AG) has agreed to sell its Del Toro Silver Mine in Mexico to Sierra Madre Gold and Silver (TSXV:SM,OTC:SMDRF) in a transaction valued at up to US$60 million.
The Vancouver-based miner said it entered into a definitive agreement on December 17 to divest the 100 percent-owned, past-producing Del Toro mine, located in the halchihuites, Zacatecas region of Mexico.
Under the terms of the agreement, First Majestic will receive US$30 million at closing, consisting of US$20 million in cash and US$10 million in Sierra Madre common shares.
The shares will be issued at a price of C$1.30 each, matching the price of Sierra Madre’s concurrent subscription receipt financing tied to the transaction.
An additional US$30 million may be paid over time if certain development and production benchmarks are met. Within 18 months of closing, Sierra Madre is required to pay US$10 million in either cash or shares, at its election, based on the prevailing market price at the time of issuance and subject to a cap on the number of shares issued.
Further payments of US$10 million each are tied to the delineation of at least 100 million silver-equivalent ounces in mineral resources within 48 months, including the achievement of sustained commercial production of at least 4,000 tonnes per day within 60 months of closing.
All shares issued to First Majestic will be subject to statutory hold periods and additional resale restrictions under the agreement.
The transaction is conditional on Sierra Madre completing a concurrent private placement financing of at least USD$29 million in gross proceeds.
The company has announced plans to raise up to C$50 million through the issuance of subscription receipts, with the financing expected to close in January 2026.
Completion of the sale is also subject to customary regulatory and shareholder approvals. Sierra Madre expects to seek shareholder approval for the acquisition by the end of April 2026.
Del Toro is a former silver, gold, and lead producer that was placed on care and maintenance by First Majestic in January 2020.
The sale follows a prior transaction between the two companies, after Sierra Madre acquired the La Guitarra Silver Mine from First Majestic in 2022 and brought it back into commercial production in January 2025.
Securities Disclosure: I, Giann Liguid, hold no direct investment interest in any company mentioned in this article.