2016 is only a month and a half in, but Kootenay Silver (TSXV:KTN) has already gotten a lot done.
Midway through January, the Mexico-focused company announced plans to acquire Northair Silver (TSXV:INM), and in doing so become “a leading Mexican silver exploration and development company and consolidator.” This Tuesday, it built on that base by entering into two agreements with major silver miner Pan American Silver (TSX:PAA,NASDAQ:PAAS).
Under the first agreement, Kootenay subsidiary Minera JM will give Pan American subsidiary Compania Minera Dolores the option to earn a 75-percent stake in the Promontorio and La Negra deposits, which are collectively known as the Promontorio Mineral Belt properties. To gain that interest, Dolores will:
- Pay Minera JM US$8,050,000 in cash over a four-year earn-in period.
- Spend US$8,000,000 on exploration and development on the Promontorio Mineral Belt properties, also during that four-year period.
The second agreement will see Pan American invest C$2,000,000 in Kootenay by subscribing for 9,090,909 Kootenay shares priced at C$0.22 each. All in all, Pan American will invest about C$24 million in Kootenay; furthermore, once the agreements close, Minera JM will gain the option to acquire up to two of Dolores’ Mexican properties in exchange for a 2.5-percent net smelter return royalty.
Get Our Expert Guide to Silver Investing FREE!
Download this FREE Special Report, When Will Silver Go Up: Is the Highest Price of Silver Still to Come?
Kootenay President and CEO James McDonald is pleased with the deal and sees it as a major vote of confidence from Pan American. “