NYSE- and TSX-listed First Majestic Silver has made its first investment outside of Mexico, announcing on Thursday that it would acquire a stream on 50% of payable silver produced from the Springpole gold project, in Ontario.

The company will acquire the silver stream from First Mining Gold for $22.5-million in cash and shares, which will fund Springpole through the prefeasibility and environmental assessment processes.

In addition, First Majestic will make ongoing cash payments of 33% of the silver spot price an ounce – up to $7.50/oz – for all payable silver delivered by Springpole. First Mining also granted First Majestic 30-million warrants, each of which will entitle the company to purchase a common share of First Mining at C$$0.40 over a period of five years.

“This agreement is the result of a year-long process to explore non-dilutive financing alternatives with a number of different parties. This silver stream sale leverages Springpole’s potential by-product revenue, strengthens our balance sheet, and provides a less dilutive source of funding to support our continued advancement of one of the largest undeveloped openpit gold deposits in North America,” said First Mining CEO Dan Wilton.

According to the 2019 preliminary economic assessment (PEA), the average silver production from Springpole in years two through nine of the mine plan is expected to be 2.4-million ounces a year.  A total of 22-million ounces of silver are expected to be recovered over the life of the project - of which 50% would be purchased by First Majestic. The project will deliver 410 000 oz/y of gold.

The Springole project contains National Instrument 43-101-compliant resources of 24.19-million ounces of silver in the indicated category and 1.12-million ounces of silver in the inferred category, plus 4.67-million ounces of gold in the indicated category and 0.23-million ounces of gold in the inferred category.

It also offers substantial exploration upside over its large land holdings of 41 913 ha, which are fully encompassed under the silver streaming agreement.

"This new silver stream gives First Majestic significant upside potential to higher silver prices while minimising risks and costs," said First Majestic president and CEO Keith Neumeyer.

"With approximately 22-million ounces of silver expected to be produced over the life of the project, and additional exploration upside, Springpole has both the scale and location to make this an ideal investment for our long-term portfolio. In addition, this silver stream marks our first investment outside of Mexico in the company’s 18-year history,” he added.