Consolidated Zinc has signed an agreement to divest its Plomosas zinc-lead-silver mine in Mexico to Impact Silver in a cash-stock deal worth $6m.

Under the binding conditional share sale agreement, Impact Silver will acquire Consolidated Zinc’s Mexican subsidiary Minera Latin America Zinc (MLAZ), which owns a 100% interest in the Plomosas mine.

This mine is located in Chihuahua, northern Mexico. 

In exchange, Impact Silver will make an initial $3m cash payment and issue shares worth up to $3m.

Consolidated Zinc will also receive 12% of the net profits, in cash, generated from the project.

Upon completion of the proposed deal, Consolidated Zinc is expected to own 6% of the issued capital in Impact Silver.

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Consolidated Zinc executive chairman Brad Marwood said: “The proposed transaction presents a good outcome for shareholders as we will realise sufficient cash from the sale of the Plomosas Project to fund the planned exploration in Western Australia, as well as retaining exposure to the potential upside of the Plomosas Project through the shareholding in Impact Silver and the 12% net profit interest.

“With an enlarged cash balance following completion of the proposed transaction, the company will be able to focus its resources on its Pilbara and Gascoyne Projects, with an aim for exploring lithium and rare earth metals in the region.”

Between 1945 and 1974, the Plomosas project extracted more than two million tonnes of ore grading 22% Zn+Pb and over 80g/t Ag.

Consolidated Zinc commenced zinc production at Plomosas in 2018. The project covers more than 3,000ha in Chihuahua.