An aerial photo shows the Cerro Los Gatos mine and mill, located in Chihuahua, Mexico.
(Photo: Gatos Silver)

The acquisition would enhance First Majestic’s operating platform by adding a high-quality, long-life, unencumbered, free cash flow generating asset in a mining- friendly district in Mexico, explained Keith Neumeyer, president and CEO, First Majestic. “Mexico is a country that First Majestic has operated in for more than 20 years, and we are extremely excited to deploy our operating expertise within these mining districts to deliver operational synergies and exploration success,” he said. “We look forward to working with the operating team at Cerro Los Gatos and with our new joint venture partner Dowa Metals & Mining Co., Ltd.”

Dowa holds the other 30% of the LGJV. Zinc concentrate from the Los Gatos mine is shipped to Akita Zinc, Dowa’s zinc smelter located in Akita, Japan. A de-bottlenecking program combined with higher grades has improved recovery for the Los Gatos mill in 2024. For Q2 2024, the company reported 3.88 million ounces (oz) of silver, 18% higher than Q2 2023. Zinc production increased 29% to a record quarterly production of 19.1 million lb. Lead production and gold production increased by 24% and 14%, respectively. The company said the processing plant, which averaged a little more than 3,000 metric tons per day (mt/d) in Q4 2023, is now running reliably above 3,500 mt/d with no reduction in metallurgical recoveries.

The company also said the Cerro Los Gatos team has also been focused on first consistently maintaining and then gradually increasing daily mine production rates by implementing various optimization and improvement projects. A rebuild program for the underground mobile equipment fleet has already contributed to improved mine performance. Gatos Silver previously said it expected both silver equivalent and silver production to be in the top half of its previously announced guidance of 13.5 to 15 million oz and 8.4 to 9.2 million oz respectively for 2024. The transaction is expected to close in early 2025, subject to the satisfaction of customary closing conditions, including approvals of the shareholders of First Majestic and Gatos Silver, and clearance under Mexican anti-trust laws. It has been unanimously approved by the board of directors of each of First Majestic and Gatos Silver.