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Northwest open-pit mine builder pockets US $22.5-million in streaming deal

First Mining Gold signs deal with First Majestic Silver for half of Springpole's silver production
Northern Ontario Business Staff
First Mining Gold Springpole project (Ausenco photo)
First Mining Gold's Springpole Project (Ausenco photo)

The developers of the Springpole gold mine project in northwestern Ontario have signed a US$22.5-million silver streaming deal with a major Mexican mining interest.

First Mining Gold has an agreement with First Majestic Silver to purchase 50 per cent of the silver produced from Springpole for the 12-year life of the proposed open-pit gold and silver mine. 

The project, 110 kilometres northeast of Red Lake, is now in the technical study and permitting stage.

First Mining is earmarking the money to fund a prefeasibility study for Springpole, all the environmental assessment work, community consultation, and for general administrative purposes through to 2023.

For Vancouver-based First Majestic, this is the first investment on home soil. The company operates three silver and gold mines in Mexico.

A preliminary economic assessment released last year pegged average silver production between the second and ninth year of the mine plan as 2.4 million ounces a year. A total of 22 million ounces of silver is expected to be recovered over the life of the project, of which half would be purchased by First Majestic.

Springpole is located on a 41,913-hectare property and is promoted by First Mining as one of the largest undeveloped open pit gold projects in North America.”

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The deposit contains 24.19 million ounces of indicated silver, 1.12 million ounces of silver in the inferred category, plus 4.67 million ounces of indicated gold and 0.23 million ounces of inferred gold. A pre-feasibility study is due out early next year.

“This agreement is the result of a year-long process to explore non-dilutive financing alternatives with a number of different parties," said Dan Wilton, CEO of First Mining Gold in a June 11 news release.

"This silver stream sale leverages Springpole’s potential by-product revenue, strengthens our balance sheet, and provides a less dilutive source of funding to support our continued advancement of one of the largest undeveloped open-pit gold deposits in North America.”

First Majestic will join First Mining on a technical team to advise on metallurgical testing, processing plans, and other related work.

"This new silver stream gives First Majestic significant upside potential to higher silver prices while minimizing risks and costs," stated First Majestic president-CEO Keith Neumeyer.

"With approximately 22 million ounces of silver expected to be produced over the life of the project, and additional exploration upside, Springpole has both the scale and location to make this an ideal investment for our long-term portfolio. In addition, this silver stream marks our first investment outside of Mexico in the company’s 18-year history.”