PRECIOUS METALS

VanGold buys El Cubo for US$15M to pair with El Pinguico

VanGold Mining has signed an agreement to acquire the El Cubo mine in Guanajuato, Mexico, from Endeavour Silver for US$15 million in cash and shares.

Endeavour Silver's El Cubo mine in Guanajuato, Mexico

Endeavour Silver's El Cubo mine in Guanajuato, Mexico

The payment includes $7.5 million in cash, $5 million in VanGold stock and $2.5 million via an unsecured promissory note due and payable within 12 months from closing. VanGold also agreed to pay up to an additional $3 million in contingent payments based on the following events based on potential future producing and future increases in the gold price.

"This will be transformational. In six to eight months from now you won't recognise VanGold as it is today," VanGold Mining chair and CEO James Anderson told Mining Journal.

Anderson said the deal came about after the company looked for a nearby mill to process a 1,000-tonne bulk sample of stockpiled ore from the former mine, which was eventually processed at Endeavour's Bolanitos mill.

"We started talking with Endeavour and asked if we could use El Cubo to process stockpile that progressed into the idea of us purchasing it," said Anderson.

The 1,500 tonnes per day El Cubo mill is 8km by road from VanGold's El Pinguico silver-gold project and also includes two operating underground silver-gold mines and a flotation plant. Endeavour suspended operations there at the end of November 2019. The operation produced 4.6 million silver equivalent ounces in 2018.

VanGold intends to re-start the mill at about 750tpd using mineralised material from its surface and underground stockpiles at its El Pinguico project as a significant portion of its estimated throughput for the first 36 months of operation.

To finance the transaction, VanGold signed an indicative term sheet with a Swiss based metals trading firm to provide $7.5 million in the form of a gold and silver loan with a 16-month term secured against VanGold's assets and repayable by delivering fixed monthly ounces of gold and silver produced through the El Cubo mill at a discount to the prevailing spot price.

VanGold estimates the amount of gold and silver required to repay this loan facility will represent about 33% of the projected gold and silver to be recovered by VanGold from operations at the El Cubo mill during the 12-month repayment period of the loan.

"We are pleased to enter into this transaction to sell our El Cubo assets to VanGold. They are an ideal fit given the proximity of the Pinguico property to the El Cubo plant. We will become VanGold's largest shareholder and look forward to supporting the VanGold team as they advance the Pinguico and El Cubo assets through exploration and development to production," said Endeavour Silver CEO Bradford Cooke.

El Pinguico is an historic silver-gold where production stopped in 1913 due to the Mexican Revolution.

Shares in VanGold Mining are trading at C28c, valuing the company at $29 million.

 

A growing series of reports, each focused on a key discussion point for the farming sector, brought to you by the Kondinin team.

A growing series of reports, each focused on a key discussion point for the farming sector, brought to you by the Kondinin team.

editions

Mining Journal Intelligence Investor Sentiment Report 2024

Survey revealing the plans, priorities, and preferences of 120+ mining investors and their expectations for the sector in 2024.

editions

Mining Journal Intelligence Mining Equities Report 2023

Access an exclusive, inside look on the quarterly mining IPOs and secondary raisings data and mining equities performance tables with an annual Stock Exchange Comparisons supplement.

editions

Mining Journal Intelligence World Risk Report 2023 (feat. MineHutte ratings)

A detailed analysis of mining investment risks across 121 jurisdictions globally, built on 11 ‘hard risk’ metrics and an industrywide survey.

editions

Mining Journal Intelligence Global Leadership Report 2023: Social licence

Gain insights into social licence trends and best practices from interviews with 20+ top mining company executives and an industrywide survey.