Canada-based First Majestic Silver has signed an agreement to acquire the Jerritt Canyon Gold Mine located in Nevada in the US from Sprott Mining.

First Majestic Silver will purchase issued and outstanding common shares of Jerritt Canyon Canada from Sprott Mining.

The deal consideration includes $470m in shares of First Majestic as well as five million First Majestic share purchase warrants.

Jerritt Canyon owns and operates the Jerritt Canyon Gold Mine, which commenced production since 1981.

The Jerritt Canyon underground gold mine has one permitted gold processing plant, which has a capacity of 4,500 tonnes per day (tpd).

Currently, the processing plant is operating at an average rate of approximately 2,200tpd due to limited ore production from two underground mines.

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The property comprises a large, underexplored land package consisting of 30,821ha.

First Majestic expects the acquisition, together with its three operating silver mines in Mexico, to solidify its position as a premier silver and gold producer in North America.

In a press statement, First Majestic said: “First Majestic has identified several opportunities to enhance both the cost and production profile of Jerritt Canyon as well as near-term brownfield potential between the SSX and Smith mines and long-term property wide exploration potential. “

First Majestic CEO Keith Neumeyer said: “The acquisition of Jerritt Canyon is a highly compelling transaction that further enhances First Majestic’s operating platform, adding a producing asset in a world-class jurisdiction.

“While we remain focused on maintaining our peer-leading exposure to silver, Jerritt Canyon is a unique opportunity to create value for First Majestic’s shareholders and provides a new geographic operating platform while preserving our pristine balance sheet.”

Sprott Mining president Eric Sprott said: “This deal is a win-win for both parties and we look forward to having continued exposure to Jerritt Canyon’s bright future through our increased ownership in First Majestic.”

Additionally, Sprott will complete a private placement investment of $30m in First Majestic.

Subject to meeting all applicable closing conditions, the transaction is slated to complete by 30 April 2021.