Santacruz Silver Mining has announced that its fully owned subsidiary Impulsora Minera Santacruz has entered an agreement to sell 100% interest in the San Felipe Project located in Sonora, Mexico.
The purchaser is Hermosillo Group, based in Hermosillo, Mexico.
The transaction was finalised for a cash consideration of $15m with value added tax of $2.4m.
Santacruz expects to close the deal by 19 December, subject to customary closing conditions and approval from the TSX Venture Exchange.
Under the agreement, the Hermosillo Group will pay the consideration in three tranches with the first instalment of $3m to be paid by 9 December.
Santacruz subsidiary will use $10m from the proceeds to pay Minera Hochschild Mexico, the property vendor.
The subsidiary will also issue 1.3 million Santacruz common shares to Minera, which will complete the full payment of San Felipe Project free of all encumbrances and the El Gachi Property.
Santacruz Silver Mining president and CEO Arturo Prestamo said: “Our divestment of the San Felipe Project is the result of an internal analysis that identified the property as being a non-core asset at this time in light of the opportunity that exists at the company's recently established operating base in Zacatecas, Mexico.
“This strategic decision will allow the company to further de-lever its balance sheet and accelerate our growth at the Veta Grande Project located in one of Mexico's most recognised silver districts.
“The company's focus in 2017 will be to further optimise the operations at our two producing mines with the goal of increasing production levels and reducing costs.”
After the completion of this transaction, Santa Cruz Mining will have $5m in cash with complete ownership of El Gachi Property.
It intends to pay $2m to JMET and reduce its debt. The remaining balance will be used by Santacruz for general working capital purposes.
Canadian-based Santacruz focuses on different silver projects located in Mexico where it owns two producing and four exploration properties.