Following this sale, Fortuna Mining will no longer have interest in the mine, apart from a net smelter return (NSR) royalty. Credit: Katarzyna Wojtkiewicz/Shutterstock.

Canadian precious metals miner Fortuna Mining has announced the sale of its 100% interest in Compañia Minera Cuzcatlan to Minas del Balsas in a deal worth up to $17m (C$24.47m).

The companies entered a binding letter of agreement in this regard.

The transaction involves the sale of the San Jose Mine in the state of Oaxaca, Mexico which is fully owned by Cuzcatlan.

After this divestment, Fortuna Mining will no longer have any interest in the non-core San Jose Mine, apart from an NSR royalty.

The San Jose Mine is set to begin a progressive closure process in early 2025.

Under the agreement, Minas del Balsas will purchase all the issued and outstanding shares of Cuzcatlan that are held by Fortuna’s subsidiaries.

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The deal consideration will be paid in instalments including $2m at closing, another $2m one year after the closing and an additional $2m two years after closing.

Additionally, Fortuna Mining will have the right to receive up to nearly $11m upon the fulfilment of certain conditions.

Fortuna Mining president and CEO Jorge A Ganoza said: “Fortuna successfully built, expanded and operated the underground San Jose mine for 13 years, developing it into one of the 12 largest primary silver producers in the world for several years. 

“Today, San Jose is no longer a core asset in our portfolio, and we believe Minera del Balsas is well suited to continue extracting value, benefitting both employees and local stakeholders.”

“This transaction allows us to focus management’s efforts on higher-value opportunities within our portfolio.”

Fortuna Mining will also receive a 1% NSR royalty on production from the San Jose Mine concessions for a five-year term, starting from the commencement of production.

The completion of this deal is anticipated in the first quarter of 2025, contingent upon the satisfaction of standard closing conditions.

INFOR Financial offered financial advice to Fortuna Mining for this deal.