In addition, shareholders of Amarillo will receive shares in a newly formed company, Lavras Gold Corp., which will hold a stake in the Lavras do Sul project, C$10 million of cash, and a 2% net smelter revenue royalty on certain exploration properties owned by Amarillo and located outside the current Posse resource and mine plan at Amarillo’s Mara Rosa property. The net acquisition cost to Hochschild, including the cash offer, cash provided to Lavras Gold Corp. and Amarillo’s net cash as at September 30, is estimated to be C$135 million.

The transaction is subject to Hochschild shareholder approval as well as the approvals of Amarillo shareholders, the Canadian court, regulatory authorities and the satisfaction of certain other customary conditions. Completion is expected to occur in the first quarter of 2022. “The acquisition of Amarillo enhances the company’s project pipeline and is the result of a long-term company review process of a wide range of growth opportunities,” CEO Ignacio Bustamante said. “Posse is an attractive low-cost project with relatively near-term production and strong exploration upside potential.”

Construction of certain infrastructure at Posse is under way, with the project having received the license to install from state regulators in February and approval for the power line in October.