Apollo Silver has signed an earn-in and option agreement to potentially acquire the Cinco de Mayo Project in Chihuahua, Mexico.

The agreement with MAG Silver and its subsidiary Minera Pozo Seco grants Apollo Silver an option to acquire all outstanding shares of MAG’s wholly owned subsidiary 0890887 B.C. (NumberCo).

NumberCo is the indirect controlling shareholder of MPS, which is the beneficial owner of the mineral concessions comprising the Cinco de Mayo Project.

Apollo Silver will control exploration and development activities on the project for a five-year term.

To exercise the option, Apollo Silver is required to complete at least 20,000m of exploratory drilling and obtain necessary licensing for mining activities.

Upon successful exercise, Apollo Silver will issue shares to MAG, representing 19.9% ownership. The issued shares will be subject to a four-month statutory hold.

During the option term, Apollo Silver will manage all project-related expenses. Post-exercise, MAG will have rights to participate in equity interests to maintain its ownership percentage.

Cinco de Mayo spans around 25,000 hectares and is located 190km north-west of Chihuahua City.

The project is known for its carbonate replacement-type deposits and hosts the Upper Manto Pb-Zn-Ag (Au) and Pozo Seco Mo-Au deposits, which are 4km apart and feature distinct mineralisation.

Apollo Silver chairman and interim CEO Andrew Bowering said: “This is an exciting time for Apollo Silver as the addition of Cinco de Mayo marks the beginning of our transformation as a company. We have successfully mitigated single asset risk by now boasting a portfolio of two exciting projects in two pro-mining jurisdictions.

“Much of our group has considerable experience in Mexico and we are excited to begin the work to unlock value at Cinco de Mayo for all our stakeholders.”