PERTH (miningweekly.com) – ASX-listed Consolidated Zinc has struck a $6-million deal to sell its Plomosas zinc project, in Mexico, to TSX-V- and FSE-listed Impact Silver Corp.

The two companies have signed a binding conditional share sale agreement for the sale of the project for the purchase price of $6-million, consisting of an initial $3-million cash payment and up to $3-million Impact Silver shares.

Consolidated Zinc will also receive 12% of the net profits generated from the Plomosas project, in cash.

“The proposed transaction presents a good outcome for shareholders as we will realise sufficient cash from the sale of the Plomosas project to fund the planned exploration in Western Australia, as well as retaining exposure to the potential upside of the Plomosas project through the shareholding in Impact Silver and the 12% net profit interest,” said Consolidated Zinc executive chairperson Brad Marwood.

“Impact Silver hold various mining projects in Mexico and will bring their experience in running similar operations to the Plomosas project. Retaining exposure in the Plomosas project and gaining exposure to the other projects held by Impact Silver should be both exciting and rewarding for our shareholders.

“With an enlarged cash balance following completion of the proposed transaction, the company will be able to focus its resources on its Pilbara and Gascoyne projects, with an aim for exploring for lithium and rare earth metals in the region.”

The Plomosas mine and mill are fully permitted, have an offtake smelter contract and have been in production by Consolidated Zinc since September 2018 except for some temporary short suspensions during Christmas. In 2021 Consolidated Zinc processed 31 695 t producing 2 442 t of zinc concentrate and 599 t of lead concentrate. 

Impact CEO and chairperson Frederick Davidson said the company was pleased to acquire a second mining district after evaluating hundreds of projects over the years in an effort to grow Impact.

“Currently Plomosas is a relatively small mining operation on a large mineral system. Our goal is to upgrade and expand operations to optimize production from the large mineral system. Our Mexican technical team is exceptionally skilled in building and efficiently operating mines like this and we will bring our 17 years of underground operating experience at the Royal Mines of Zacualpan to hone and grow the Plomosas operations.

“The technical and management overlap with similarity of asset and operations provides great synergy for the transaction and represents near-term growth of our production levels and value to shareholders.”

The transaction is subject to a number of conditions, including shareholder and regulatory approval, with Consolidated Zinc shareholders expected to meet in March.