GR Silver Mining Ltd (CVE: GRSL (OTCQB:GLYXF) has completed its acquisition of the past-producing Plomosas silver project in Mexico, giving it a commanding position and potential to expand in the exciting Rosario mining district.
The vendor is major silver producer First Majestic Silver Corp (NYSE:AG) (TSE:FR), which becomes the group's largest strategic shareholder with a 19.9% holding.
The Plomosas project, along with GR's San Marcial project - 5 kilometres away - gives the firm control of 9,764 hectares and most of the silver-gold-lead-zinc mineralized zones in the eastern section of Rosario district as well as the chance to cut costs and blend future development.
GR Silver paid C$100,000 and granted a subsidiary of First Majestic a 2% net smelter return (NSR) royalty on Plomosas with half of the NSR being subject to a buy-back option for US$1 million.
The group also issued more than 17 million of its shares to First Majestic.
"This represents significant value for GR Silver Mining Ltd shareholders by adding, at a low acquisition cost, a high-grade silver-gold resource/development stage asset to our portfolio and by adding First Majestic Inc., one of the largest silver producers in Mexico, as the largest strategic shareholder," Marcio Fonseca, GR Silver's CEO noted in a statement.
"The Plomosas project together with the San Marcial project and the knowledge gained during the last two years expanding the resources (at the nearby San Marcial Project), provide key elements to successfully expand silver and gold resources."
He added: "GR Silver's portfolio is located in a favorable geological setting akin to other multi-million-ounce mining districts along the western border of the Sierra Madre Occidental in Mexico.
"The magnitude of this acquisition provides GR Silver the opportunity to define and expand ounces in the current resources and opens up potential for new high-grade silver and gold discoveries, positioning the company for future growth in Mexico."
Drilling or resource stage
The Plomosas project includes six areas that are at the drilling/resource stage with a total of 563 recent and historical drill holes and a series of high-grade silver and gold intersections. There are 16 exploration targets and over 30,000 metres (m) of under-explored veins and structures with around US$18 million spent on exploration until 2019.
There is also key surface, underground facilities and infrastructure, including an underground mine, a fully operational 60 km 33 KV power line, fully equipped offices and shops and a 120 person camp.
The Plomosas mine operated from 1986 to 2000, processing 2.5 million tons in a crushing-milling flotation circuit.
During the 14 years of operation, lead and zinc concentrates were the main products, with reported high-grade silver and gold credits.
The historical reports indicate annual grades for each commodity ranging from 338 grammes per ton (g/t) to 79 g/t of silver and 1.74g/t to 0.76 g/t gold. There was also zinc (2.66% to 1.85%) and lead (3.37% to 1.19%).
Drilling data also indicates high-grade silver and gold mineralization, particularly those on the unmined hanging wall and footwall zones around the polymetallic (zinc and lead) zones. The firm is now also analyzing drilling data and delineating new mineralized zones outside the historically mined area.
GR Silver Mining's other projects lie in the same vicinity of Plomosas and San Marcial in the Rosario mining district.
Shares slipped 2.94% to $0.16 each.
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