- Alio Gold (TSX:ALO) has announced the sale of its San Francisco Mine in Sonora, Mexico
- The company has agreed to sell its subsidiary, Molimentales del Noroeste S.A. de C.V., which owns the mine
- Magna Gold (TSXV:MGR) will issue 9,740,000 shares to Alio for the purchase, and C$5 million cash within 12 months of the closing date
- The sale will allow Alio to focus greater efforts on its cornerstone Florida Canyon Mine in Nevada, USA
- Shares in Alio Gold (ALO) have remained steady at $0.90, with a market cap of $77.39 million
Alio Gold (TSX:ALO) has announced the sale of its San Francisco Mine in Sonora, Mexico.
Magna Gold (TSX:MGR) is set to acquire the project, in a deal likely to close by the end of March.
Located roughly 120 kilometres from the Mexico-US border, the mine ceased operations in early 2019. Since then, Alio has been processing purely stockpiled materials.
In order to facilitate the sale, Alio will sell its wholly owned subsidiary, Molimentales del Noroeste S.A. de C.V., which owns the mine.
Alio Gold President and CEO, Mark Backens, believes the transaction is beneficial for both companies.
“The sale of San Francisco is a win-win for Alio Gold and Magna,” he said.
Backens added that Magna has “a lengthy history and extensive knowledge of the mine,” and that “employees, contractors, suppliers and local communities” will also benefit.
Per the agreement, Magna will issue 9,740,000 of its shares to Alio, representing approximately 19.9 per cent of the company.
Magna will also pay C$5 million in cash within 12 months of the transaction closing date.
“The transaction transfers all current assets and liabilities associated with the property, and allows Alio Gold to focus time and resources on more value-enhancing opportunities at the Florida Canyon Mine, our core asset,” concluded Backens.
Located near Winnemucca, Nevada, the wholly owned Florida Canyon Mine was acquired in May 2018.
According to a ‘2020 Guidance’ announcement released in early December last year, the property is currently undergoing significant work.
Construction of a second heap-leach pad is underway, with initial ore loading expected soon. As of December 3, Alio had spent approximately $15 million on the work, with $7 million remaining to finish the development this year.
The company is also examining additional potential deposits in the area surrounding the mine.
Shares in Alio Gold (ALO) have remained steady at $0.90, with a market cap of $77.39 million at 11:41am EST.