Great Panther Mining has agreed to divest 100% of its Mexican subsidiary Minera Mexicana El Rosario (MMR) to Guanajuato Silver Company (GSilver).

MMR owns the Guanajuato Mine Complex (GMC), the Topia mine and production facility, and the El Horcón and Santa Rosa projects in Mexico.

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Combined Mexican assets of MMR include three mines; 25,000ha of mineral claims; two floatation processing facilities; and substantial historical measured, indicated, and inferred resources.

GSilver will pay $14m upfront for the deal along with an additional amount of up to $2m.

According to the agreed terms, GSilver will make an $8m cash payment upon closing of the transaction and issue a total of 25,787,200 GSilver common shares valued at around $6.7m, based on current trading prices.

The acquisition marks a step ahead for GSilver in becoming a gold company with a focus on maximising the Tucano gold mine’s potential while pursuing further growth in Brazil.

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Great Panther Mining chair and interim CEO Alan Hair said: “This is a strategic transaction that places the GMC and Topia mines in the hands of an operator who is well positioned to unlock additional value from the assets and maintain a strong commitment to employees and local stakeholders.

“Furthermore, GSilver’s processing and tailings facilities in the district provide the platform for a near-term re-start of operations at the GMC.”

With the sale, Great Panther Mining intends to focus on maximising the full potential of the Tucano Gold Mine in Brazil.

Hair added: “We expect Tucano to return to steady-state production in the second half of the year and intend to continue investing into unlocking value both from the underground, as well as the regional potential of the district.”

The transaction, which awaits all requisite third-party and regulatory approvals, is due to be closed in Q3 2022.

GSilver chairman and CEO James Anderson said: “The MMR acquisition further demonstrates our commitment to consolidating the Guanajuato mining district, which has an established 480-year mining history of precious metals production.”