Vancouver, B.C. – Santacruz Silver Mining Ltd. (TSX-V:SCZ) (“the Company” or “Santacruz”) is pleased to announce that it has completed the acquisition of a portfolio of producing assets located in Bolivia (the "Transaction") pursuant to a previously disclosed share purchase agreement dated October 11, 2021 (the “SPA”), as amended pursuant to an amendment agreement dated March 18, 2022 between the Company and certain subsidiaries of Glencore plc (together, “Glencore”).
Arturo Prestamo Elizondo, Executive Chairman of Santacruz, stated: “The Transaction elevates the Company into a multi asset producer and is accretive with the future cash flows of the mines financing the acquisition. We have been working closely with Glencore and the Bolivian government to ensure a smooth transition while the mines have generated sufficient cash flow to decrease the initial US$20 million upfront consideration down to US$12,011,148, which will be paid by Santacruz to Glencore within 30 days of closing and will be paid from working capital. We look forward to elevating Santacruz into a leading mid-tier silver producer while generating value for all stakeholders.”
Carlos Silva, CEO of Santacruz, stated: “This is a significant acquisition for Santacruz that creates a leading mid-tier silver producer in the Americas. We are very pleased to team up with a great group of professionals in Bolivia, where Glencore has performed extraordinary work while achieving very high standards in terms of responsible mining practices and their commitment to responsible business and community relations. We will ensure that this excellent legacy continues in the coming years.”
Key Transaction Highlights
Creation of a significant Latin-American focused silver producer following acquisition of a robust portfolio of producing, exploration and mining infrastructure assets;
Initial upfront consideration of US$20 million, as adjusted pursuant to the purchase price adjustments under the SPA (the “Closing Cash Payment”), was determined to be US$12,011,148 and will be paid by Santacruz to Glencore within 30 days of closing and will be paid from working capital;
Glencore agreed to provide the San Lucas business with a working capital facility in an amount up to US$10 million; and
For the 12 months ended December 31, 2021 the Assets (as defined below) produced approximately 10.0 million silver equivalent ounces (on 100 percent basis)(1).
As previously disclosed in the Company’s press releases dated October 13, 2021 and November 15, 2021, the transaction involved the acquisition of, among other things, a 100% interest in the Sinchi Wayra business which includes the producing Caballo Blanco mining complex ("Caballo Blanco"), the Soracaya exploration project located in Bolivia and the San Lucas ore sourcing and trading business, a 45% interest in the producing Bolivar and Porco mining operations held through an unincorporated joint venture with Corporación Minera de Bolivia, a Bolivian state-owned entity and certain related properties and assets (together, the "Assets").
The Company expects to cover the Closing Cash Payment using the Company’s own cash flow. As a result, the Company is no longer required to complete a financing to fund such upfront consideration.
In addition to the Closing Cash Payment, an additional US$90 million that is secured against the Assets is payable to Glencore in equal installments over four years from the closing of the Transaction, subject to certain conditions and adjustments (the “Deferred Consideration”). Glencore also retains: (a) a 1.5% net smelter returns royalty on all assets other than the San Lucas business; (b) a 14% gross profit royalty on the San Lucas business. Glencore has the right to acquire 100% of the offtake from the Assets in accordance with offtake agreements entered into in connection with closing.
The Company has prepared technical reports in accordance with National Instrument 43-101 – Standards of Disclosure for Mineral Projects in respect of the Porco, Bolivar and Caballo Blanco mineral projects (the “Technical Reports”) acquired from Glencore. The Technical Reports are now available on the Company’s SEDAR profile. See the Company’s news release dated October 13, 2021 for a description of the Porco, Bolivar and Caballo Blanco projects.
Further to the Company’s news release dated October 12, 2021, the Company has paid US$320,000 and issued 3,077,317 common shares at a price of $0.41 per share to Big Buck Capital (“BBC”) to settle US$1,000,000 in services provided pursuant to the terms of a consulting services agreement with BBC. The sole principal of BBC is Felipe Molina Bernal.
About Santacruz Silver Mining Ltd.
Santacruz is a Mexican focused silver company with one producing silver project, the Zimapan Mine and two exploration properties, the La Pechuga property and Santa Gorgonia prospect. The Company is managed by a technical team of professionals with proven track records in developing, operating and discovering silver mines in Mexico. Our corporate objective is to become a mid-tier silver producer.
‘signed’
Arturo Préstamo Elizondo,
Executive Chairman |
