Dual-listed First Majestic Silver on Friday announced that it would buy the Jerritt Canyon gold mine, in Elko, Nevada, from Sprott Mining for $470-million in shares and five-million share purchase warrants.

Concurrent with the acquisition, Sprott Mining president Eric Sprott would complete a $30-million private placement investment in First Majestic.

“Nevada is ranked as one of the most attractive jurisdictions, if not the most attractive, for mining operations and we are delighted to add another cornerstone asset to our portfolio.

“While we remain focused on maintaining our peer-leading exposure to silver, Jerritt Canyon is a unique opportunity to create value for First Majestic's shareholders and provides a new geographic operating platform while preserving our pristine balance sheet,” said CEO Keith Neumeyer.

Jerritt Canyon, which was discovered in 1972, has been in production since 1981 having produced more than 9.5-million ounces of gold over its 40-year production history.

The mine currently operates as an underground mine and has one of three permitted gold processing plants in Nevada that uses roasting in its treatment of ore. This processing plant has a capacity of 4 500 t/d and is currently operating at an average rate of about 2 200 t/d, owing to limited ore production from two underground mines.

The property also consists of a large, underexplored land package consisting of 30 821 ha.

First Majestic said it had identified several opportunities to enhance both the cost and production profile of Jerritt Canyon as well as near-term brownfield potential between the SSX and Smith mines and long-term property-wide exploration potential.  

Together with First Majestic's existing three operating silver mines in Mexico, the combined company would have attributable production of 30-million to 33-million silver equivalent ounces.

Sprott said that the deal was a win-win for both parties.

“We have a long-standing respect and high regard for Keith Neumeyer and his leadership in the silver industry, an industry with which we have had an increasing involvement over the past two years. We also see this as a big step forward for Jerritt Canyon where it can flourish under the larger umbrella of First Majestic.”