Bear Creek Mining acquires Mercedes gold-silver mine

Bear Creek Mining Corporation has completed its 100% acquisition of the Mercedes gold-silver Mine in Sonora, Mexico, from Equinox Gold Corp.

As announced on December 17, 2021, the deal comprises a US$75mn cash payment and deferred cash payment of US$25mn due by June, a 2% net smelter return on Mercedes production and 24.73mn shares of Bear Creek Mining.

The cash payment was funded with US$15mn from the company’s treasury and $60mn pursuant to a financing arrangement with Sandstorm Gold.

Sandstorm advanced US$37.5mn and in exchange Bear Creek agreed to sell to Sandstorm 600oz of refined gold per month for 42 months (a total of 25,200oz) at a price equal to 7.5% of the spot gold price at the time of delivery.

Thereafter it will sell to Sandstorm 4.4% of gold produced by Mercedes at a price equal to 25% of the spot price at the time of delivery. Sandstorm was also granted a right of first refusal on any royalties, streams or similar transactions with respect to production from Mercedes.

Total measured and indicated mineral resources at Mercedes, inclusive of Mineral Reserves, amount to approximately 3.8mn tonnes grading 4.73 grams per tonne gold and 42.4 gpt silver, containing approximately 575,000oz of gold and 5.1mn oz of silver.

The Inferred Mineral Resources total 0.9mn tonnes grading 4.50gpt Au and 41.0 gpt Ag, containing approximately 128,000oz of gold and 1.2mn oz of silver. The Mineral Resources and Mineral Reserves have been estimated using a gold price of $1,350 per ounce.

Anthony Hawkshaw, President and CEO, said it has acquired a producing gold-silver mine with a strong operating team, underlying assets with a replacement cost exceeding its purchase price, and exploration potential.

Christian Milau, CEO of Equinox Gold, said as a significant shareholder of Bear Creek Mining, it looks forward to participating in the success of Mercedes and future development of Bear Creek Mining’s Corani silver-lead-zinc deposit, one of the largest, fully-permitted silver deposits in the world.

Equinox Gold recently poured first gold from the resin and elution circuit at its new Santa Luz Mine in Brazil. Commissioning started in February and the mine is expected to ramp up to commercial production over the next few months.

When operating at capacity, Santa Luz is expected to produce approximately 100,000oz of gold annually. During 2022, with a partial year of production, Santa Luz is expected to produce 70,000-90,000oz. The mine has expansion potential from underground development opportunities and several exploration targets within the greenstone belt that extends between Santa Luz and Fazenda Mine.