First Majestic Offloads San Martin Mine in US$90 Million Deal
First Majestic Silver (TSX:AG,NYSE:AG) has agreed to sell its past-producing San Martin silver mine in Mexico for US$90 million in cash, furthering the company’s push to monetize non-core assets held on care and maintenance.
The perimeter of the sale includes the Jalisco group of properties, covering 5,245 hectares of mining concessions located 250 kilometers north of Guadalajara.
First Majestic suspended active mining operations at the San Martin silver mine and placed the facility under care and maintenance in July 2019 due to security concerns and declining operational efficiencies.
The buyer is Flextronics Supply and Service, a private Mexican company that operates under Meridian Capital, an investment firm managing mining and energy developments across Mexico, Venezuela and Uruguay.
Under a staggered payment structure, Flextronics will pay US$2.5 million at closing, US$2.5 million within 180 days, five annual US$10 million installments, and a final US$35 million payment on August 31, 2032.
Closing is targeted for the fourth quarter of 2026, pending Mexican antitrust clearance.
The transaction will also transfer all issued and outstanding shares of Minera El Pilon, S.A. de C.V., the subsidiary controlling the San Martin mine.
The San Martin deal mirrors the financial architecture used in the company’s recent Del Toro exit, where First Majestic traded legacy holding costs for guaranteed near-term liquidity and deferred payouts.
The Del Toro silver mine, also located in Mexico, was placed on care and maintenance by First Majestic in January 2020.
At the June 22 closing of the Del Toro sale, First Majestic received US$30 million upfront, split between US$20 million in cash and US$10 million in Sierra Madre Gold and Silver (TSXV:SM,OTCQX:SMDRF) common shares priced at C$1.30 each. The remaining US$30 million in potential consideration is bound to three specific development milestones that would each trigger a US$10 million payment.
Combined, the two transactions eliminate significant care and maintenance liabilities from First Majestic’s balance sheet, while potentially securing as much as US$150 million in total value.
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Securities Disclosure: I, Giann Liguid, hold no direct investment interest in any company mentioned in this article.
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