Heliostar Metals has signed an agreement to acquire a portfolio of gold mining assets in Mexico from Florida Canyon Gold Inc. (FCGI) for $5m (C$6.84m).
Recently, these asses were spun out of Argonaut Gold.
Under the agreed terms, Heliostar will take over FCGI subsidiaries holding 100% interests in these assets, which include the La Colorada Mine in Sonora that is currently producing gold through residual leaching while on care and maintenance.
Additionally, the San Agustin Mine, an open-pit heap leach gold mine in Durango, and the closed El Castillo mine are part of the transaction.
The acquisition also encompasses the Cerro del Gallo Project in Guanajuato and the San Antonio Project in Baja California Sur, both advanced gold development projects.
This deal is due for completion in October 2024, subject to regulatory approvals and other customary closing conditions.
Furthermore, the transaction cancels up to $20m in contingent payments associated with Heliostar's purchase of the Ana Paula Project and up to $150m in conditional option payments, including a 2% net smelter returns royalty on the San Antonio Project.
This sale is in line with FCGI's strategic review aimed at leveraging its asset portfolio and managing risk.
Trinity Advisors Corporation and TSCG Capital were Heliostar's financial advisors for the transaction, while Forooghian + Company Law Corporation offered legal advice.
For FCGI, Scotiabank and Bennett Jones served as financial advisor and legal advisor, respectively.
Heliostar CEO Charles Funk said: “This acquisition is transformative for Heliostar. The company transitions from single-asset developer to a multi-asset producer. The addition of the two producing gold mines provides cash flow to bring new production online. In addition, this transaction eliminates up to $20 million in contingent payments on the Ana Paula project, freeing that capital for its development, which remains the company's focus.”
In May this year, Heliostar announced a letter of intent for a $20m senior secured debt facility to support Ana Paula’s development.
