States News Wire Services Golden Tag to Acquire LA Parrilla Silver MINE Complex from First Majestic Silver
NEWS RELEASE
NOT FOR DISSEMINATION IN THE UNITED STATES OR FOR DISTRIBUTION TO UNITED
STATES NEWS WIRE SERVICES
GOLDEN TAG TO ACQUIRE LA PARRILLA SILVER MINE COMPLEX FROM FIRST
MAJESTIC SILVER
Toronto, Ontario , December 7, 202 2: Golden Tag Resources Ltd. (“ Golden Tag ” or the
"Company") (TSX.V: GOG) (OTCQB: GTAGF) is pleased to announce that the Company has
entered into a definitive Asset Purchase Agreement dated December 7, 2022 (the "Purchase
Agreement" or “APA”) with First Majestic Silver Corp (“ First Majestic” or “FMS”) to acquire a
100% interest in the 69,478 hectares La Parrilla Silver Mine Complex (“La Parrilla”) in the locality
of San Jose de la Parrilla, Durango, Mexico (the “Transaction”).
Highlights:
• La Parrilla is a fully permitted former producing mine complex consisting of five underground
high-grade silver mines, and an open pit
• Demonstrated history of replacing resources – operated continuously from 2004 until
September 2019 when it was placed on care and maintenance due to low silver prices
• Under FMS ownership the mill produced 34.3 million (“M”) ounces1 of (“oz”) silver equivalent
(“Ag.Eq”), with average annual production of approximately 3.1 M oz of Ag.Eq1, 2
• Excellent infrastructure inclusive of a 2,000 tonne per day (“tpd”) processing facility (1,000
tpd flotation and 1,000 tpd cyanidation circuits), dry stack filter plant with approximately 9
years3 of tailings capacity available , numerous buildings including a dor é refinery, and a
partial underground mining fleet4
• New labour and Ejido agreements in place
• Historical Measured and Indicated Mineral Resources of approximately 9.95 M oz Ag.Eq
and Inferred Mineral Resources of approximately 12.51 M oz Ag.Eq5, 6 (see Table 2)
• Located only 45 minutes from Durango City, paved highway to site
• Large underexplored land package totaling 69,478 ha
• Debt-free transaction with upfront consideration of US$ 20M in equity, and deferred
payments totaling US$13.5M for a total acquisition price of US$33.5M
• Requirement to raise a minimum of CAD$9M in equity concurrent with the acquisition, with
participation of US$2.7M from First Majestic
• Support received from key existing shareholders representing 54 million shares
• First Majestic to become strategic and largest shareholder of Golden Tag , inclusive of
standard support agreements in place until May 2024
Greg McKenzie, President & CEO commented “We are honoured to partner with First Majestic in
the acquisition of La Parrilla, their first producing silver mine, which has produced 34.3 million oz
1 Per historic operating data filed by FMS on an annual basis at www.SEDAR.com
2 Average annual production calculated from 2010 – 2018, the last year of full-scale commercial operations
3 Approximately 6.5 million tonnes of tailings capacity at full run rate of 2,000 tpd
4 Subject to certain maintenance and rehabilitation expenditures that have yet to be determined in size and
scope
of Ag.Eq under their ownership. Over the past two years we have evaluated several opportunities
for growth in the silver space and La Parrilla is a great opportunity. The mine complex is fully
permitted, located only 45 minutes on paved roads from Durango and, only a few hours from our
existing San Diego project.
This is a transformative acquisition for Golden Tag and we strongly believe in the upside resource
growth potential of this long-life prolific asset. Our short-term objective is to commence exploration
within and near mine workings in order to expand the resource base, to support our ultimate goal
& vision of placing the asset back into production.
We would like to thank our key shareholders for their support on this transaction and look forward
to working with First Majestic to complete the acquisition.”
Figure 1 – Clockwise from top -left 1. Rosari os Portal ; 2. Ag-Pb-Zn vein mineralization,
Quebradillas Cuerpo 460 (1700 elevation); 3. Quebradillas Open Pit
Overview of the La Parrilla Complex
The property is located in Durango State, Mexico, approximately 76 kilometres southeast of the
capital city of Durango and is comprised of 41 contiguous mining concessions, in good standing,
covering 69,478 hectares. The property was acquired by First Majestic in 2004 and became their
first silver mine in 2005. When placed on care and maintenance in September 2019, the complex
hosted five underground mines surrounding the mill including Rosarios, La Rosa, San Jose,
Quebradillas and San Marcos, as well as the Quebradillas open pit (See Figure 1). From 2010-
2019 La Parrilla produced approximately 29.6 million oz Ag.Eq as outlined in Table 1 below.
Table 1 – Historical Production at La Parrilla from 2010 - 20191
The metallurgical processing plant at La Parrilla (see Figure 2) consists of parallel 1,000 tpd
flotation and 1,000 tpd cyanidation leach circuits to treat both oxide and sulfide ores, for a total
capacity of 2,000 tpd, using a conventional flowsheet. Both ore types are polymetallic containing
silver as their principal economic component as well as significant amounts of lead and zinc, and
minor amounts of gold. Oxide ore is processed by cyanide leaching to produce doré bars while
sulphide ore is processed by differential flotation to produce a silver -rich lead concentrate and a
zinc concentrate.
Figure 2 – View of the La Parrilla Mill Complex
During 2018, the last year of open pit operations, metallurgical recoveries in the cyanidation circuit
were 74% for silver and 81% for gold, and metallurgical recoveries in the flotation circuit were
76% for silver, 73% for lead and 55% for zinc. Tailings from both circuits are filtered separately
before being dry ‐stacked in the tailings storage facility , which currently holds approximately 6.5
million tonnes of capacity, sufficient for nine years of operations at a throughput rate of 2,000 tpd.
Production 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019*
Ore processed/ tonnes milled 303,869 362,947 679,788 788,335 711,915 667,702 610,509 543,985 491,637 167,535
Average silver grade (g/t) 209 200 170 162 158 145 140 130 108 139
Recovery (%) 76% 77% 78% 76% 79% 78% 81% 76% 76% 75%
Total silver ounces produced 1,548,832 1,793,728 2,876,810 3,115,997 2,876,452 2,434,095 2,220,874 1,730,383 1,340,385 557,603
Gold ounces produced 413 344 923 1,051 982 1,161 1,009 1,014 963 0
Pounds of lead produced 4,280,167 7,888,943 13,240,889 18,503,451 21,259,559 10,441,510 10,648,161 6,544,745 6,550,602 4,659,549
Pounds of zinc produced 363,288 178,767 4,952,899 6,723,878 12,619,352 17,524,223 10,577,434 3,944,232 5,695,657 3,691,100
Total production - ounces silver equivalent 1,813,788 2,057,172 3,487,392 4,219,374 4,673,186 4,036,398 3,388,434 2,517,199 2,323,056 1,120,490
Underground development (m) 7,545 13,242 20,606 12,004 8,981 7,371 9,416 12,313 11,443 6,660
Diamond drilling (m) 1,581 14,447 26,204 10,974 5,789 9,750 15,326 28,839 30,713 24,440
*Care and maintenance procedures began in September 2019
Table 2 – La Parrilla Historic Mineral Resources5, 6
Cautionary Statement : Mineral Resources that are not Mineral Reserves do not have
demonstrated economic viability. The resource estimate stated in Table 2 is as reported by First
Majestic with an effective date of December 31, 2020. Golden Tag is not treating these estimates
as current Mineral Resources because a Qualified Person on behalf of Golden Tag has not
performed sufficient work5 to classify these estimates as current resources5, 6.
Notes for Historic Mineral Resources Estimates:
5. These figures are historic in nature, have not been verified by Golden Tag and while
relevant as the most recent mineral resource estimates for La Parrilla, should not be relied
upon. A thorough review by Golden Tag’s "Qualified Person" of all historic data, along with
additional exploration and validation work to confirm results and estimation parameters,
would be required in order to produce a current mineral resource estimate for the La
Parrilla Mine Complex. No more recent estimates or data are available to Golden Tag.
6. First Majestic reported that its La Parrilla mineral resource estimates were:
a. classified in accordance with the 2014 Canadian Institute of Mining, Metallurgy and
Petroleum (CIM) Definition Standards on Mineral Resources and Mineral Reserves
b. The Historic Mineral Resource estimates were updated to December 31, 2020 and
were compliant with NI 43 -101 at that time . The estimates were prepared by FMS
Internal QP’s, who have appropriate relevant qualifications, and experience in geology
and resou rce estimation, The information provided was compiled by David Rowe,
CPG and reviewed by Ramon Mendoza Reyes, P.Eng., both Internal QP’s for FMS.
c. Sample data was collected through a cut-off date of December 31, 2020
d. cut-off grades and cut -off values used to report Historic Mineral Resources are
different for all FMS mines. The cut-off grades, values and economic parameters are
listed in the applicable section describing each mine section of the FMS AIF
Category / Area Mineral Type Tonnage
kt Ag (g/t) Au (g/t) Pb (%) Zn (%) Ag-Eq (g/t) Ag (k Oz) Au (k Oz) Pb (M lb) Zn (M lb) Ag-Eq (k Oz)
Measured Quebradillas (UG) Sulphides 15 193 - 1.27 1.27 250 90 - 0.4 0.4 120
Total Measured (UG) Sulphides 15 193 - 1.27 1.27 250 90 - 0.4 0.4 120
Indicated Rosarios (UG) Sulphides 519 179 0.08 1.71 1.33 257 2,980 1.4 19.6 15.2 4,290
Indicated Quebradillas (UG) Sulphides 321 177 0.08 2.59 2.70 303 1,820 0.8 18.3 19.0 3,120
Indicated San Marcos (UG) Sulphides 188 260 0.04 0.57 0.56 289 1,570 0.2 2.4 2.3 1,750
Total Indicated (UG) Sulphides 1,028 193 0.07 1.78 1.62 277 6,370 2.4 40.3 36.6 9,160
Indicated Rosarios (UG) Oxides 23 300 0.04 - - 304 220 - - - 220
Indicated San Marcos (UG) Oxides 53 256 0.12 - - 266 440 0.2 - - 450
Total Indicated (UG) Oxides 76 270 0.09 - - 278 660 0.2 - - 670
Total Indicated (UG) Oxides + Sulphides 1,104 182 0.07 1.67 1.52 261 7,030 2.6 40.3 36.6 9,830
Total Measured & Indicated (UG)Oxides + Sulphides 1,119 198 0.07 1.65 1.50 277 7,120 2.6 40.7 37.0 9,950
Category / Area Mineral Type Tonnage
Inferred kt Ag (g/t) Au (g/t) Pb (%) Zn (%) Ag-Eq (g/t) Ag (k Oz) Au (k Oz) Pb (M lb) Zn (M lb) Ag-Eq (k Oz)
Inferred Rosarios (UG) Sulphides 265 154 0.16 1.85 1.48 245 1,310 1.4 10.8 8.6 2,090
Inferred Quebradillas (UG) Sulphides 578 214 0.08 1.85 2.65 319 3,970 1.6 23.6 33.8 5,920
Inferred San Marcos (UG) Sulphides 185 304 0.03 0.25 0.22 317 1,810 0.2 1.0 0.9 1,890
Total Inferred (UG) Sulphides 1,028 215 0.09 1.56 1.91 299 7,090 3.2 35.4 43.3 9,900
Inferred Rosarios (UG) Oxides 280 198 0.08 - - 205 1,780 0.7 - - 1,840
Inferred Quebradillas (UG) Oxides 43 196 0.14 - - 208 270 0.2 - - 290
Inferred San Marcos (UG) Oxides 70 211 0.04 - - 214 480 0.1 - - 480
Total Inferred (UG) Oxides 393 200 0.08 - - 207 2,530 1.0 - - 2,610
Total Inferred (UG) Oxides + Sulphides 1,421 211 0.09 1.13 1.38 274 9,620 4.2 35.4 43.3 12,510
Grades Metal Content
Grades Metal Content
e. Metal prices considered for Historic Mineral Resource s estimates on December 31,
2020 were $22.50/oz Ag, $1,850/oz Au, $0.90/lb Pb and $1.05/lb Zn
f. Silver-equivalent grade is estimated considering: metal price assumptions,
metallurgical recovery for the corresponding mineral type/mineral process and the
metal payable of the corresponding contract of each mine
g. Tonnage is expressed in thousands of tonnes, metal content is expressed in
thousands of ounces. The totals may not add up due to rounding
Please refer to the FMS Annual Information Form for The Year Ended December 31, 2021
dated March 31, 2022 available on at www.SEDAR.com.
Transaction Summary
The Company will acquire 100% of the assets of the La Parrilla Silver Mine Complex from First
Majestic and the remaining employees associated directly with the Complex. In consideration,
Golden Tag will pay to First Majestic the following:
• 143,673,684 common shares of Golden Tag (“Consideration Shares”), or US$20M at a
deemed price of C$0.19 per Golden Tag share;
• Deferred payments totaling US$13.5M, comprised of the following:
I. US$2.7M on the earlier of 18 months post-closing, or upon receipt of certain
approvals from the Mexican government;
II. US$5.75M when either (a) 5 million ounces of Ag .Eq reserves are declared from
the La Parrilla claims, or (b) 22 million ounces of Ag.Eq of measured and indicated
resources are declared, from the La Parrilla claims;
III. US$5.05M when a new zone is discovered on the La Parrilla claims inclusive of a
NI 43-101 resource of 12.5 million ounces of Ag.Eq;
Both II and III are payable in cash or common shares, at the election of Golden Tag.
• FMS may distribute shares held in excess of a 19.9% issued and outstanding Golden Tag
holding (on a non-diluted basis) pro-rata to its shareholders (“Excess Shares”).
• After closing, FMS will have a participation right to maintain its pro-rata interest in Golden
Tag (to a maximum of 19.9%) in any future Golden Tag share issu ances, subject to
customary exceptions.
• The Consideration Shares held by FMS will be subject to the following contractual resale
restrictions, in addition to any securities laws resale restrictions:
I. 25% subject to a 6-month resale restriction;
II. 25% subject to a 12-month resale restriction;
III. 25% subject to a 18-month resale restriction;
IV. 25% subject to a 24-month resale restriction.
• The resale restrictions above will not apply to the Excess Shares and will be subject to
customary carve-outs in the event of a takeover bid or merger or acquisition transaction
involving the common shares of Golden Tag.
• Shareholders, along with certain directors and officers of Golden Tag holding a total of
54M shares (representing approximately 25% of the Golden Tag’s issued and outstanding
shares), have entered into voting and support agreements with Golden Tag pursuant to
which they have agreed, among other things, to support the Transaction (which creates a
new control person of Golden Tag) and to vote their Golden Tag shares in favour of the
Transaction.
• FMS has also entered into a standard and customary voting support agreement with
Golden Tag for a period that is the longer of (i) May 24, 2024 , or (ii) First Majestic’s
ownership percentage of Golden Tag is greater than or equal to 19.9%.
Closing of the Transaction is expected to occur in H1 2023, and is subject to certain conditions
including, but not limited to: (i) the approval of Golden Tag shareholders as a result of the
Transaction creating a new control person ; (ii) the completion by the Company of a Private
Placement for minimum gross proc eeds of C$9,000,000, as described below; (iii) the receipt of
all necessary consents, approvals and authorizations (including the TSX Venture Exchange (the
“TSXV”) and the Mexican Antitrust Commission ) for the Transaction; and (iv) other conditions
which are customary for a transaction of this type.
The Company has engaged SRK Consulting (Canada) Inc. to prepare an independent National
Instrument 43-101 resource report on La Parrilla.
There are no finder’s fee payable in connection with the Transaction; First Majestic and the
Company are arm’s length parties from each other and the Transaction is an Arm’s Length
Transaction (as such term is defined under the corporate finance manual of the TSXV).
Financing for the Acquisition
Concurrent with or prior to the closing of the Transaction, Golden Tag will complete a private
placement to raise gross aggregate proceeds of C$9 million (the "Private Placement"), inclusive
of US$2.7M subscribed for by First Majestic. Further details regarding the Private Placement will
be announced once final terms of the Private Placement have been determined.
Change of Name
On the closing of the Transaction, subject to regulatory approval, the Company will undertake a
rebranding initiative. Further details will follow.
Financial Advisors and Legal Counsel
Golden Tag is represented by McMillan LLP as legal counsel. First Majestic is being advised by
National Bank as financial advisor and Bennett Jones LLP as legal counsel.
Qualified Person
The scientific and technical information in this document has been reviewed and approved by
Bruce Robbins, P.Geo., a Qualified Person as defined by National Instrument 43-101.
About Golden Tag Resources
Golden Tag Resources Ltd. is a Toronto based mineral resource exploration company. The
Company holds a 100% interest, subject to a 2% NSR, in the San Diego Project, in Durango,
Mexico. The San Diego property is among the largest undeveloped silver assets in Mexico and is
located within the prolific Velardeña Mining District. Velardeña hosts several mines having
produced silver, zinc, lead and gold for over 100 years. For more information regarding the San
Diego property please visit our website at www.goldentag.ca.
For additional information, please contact:
Greg McKenzie, President & CEO
Ph: 416-504-2024
Cautionary Statement:
Neither the TSXV nor its Regulation Services Provider (as that term is defined in the policies of
the TSXV) accepts responsibility for the adequacy or accuracy of this news release. Certain
statements in this news release are forward -looking and involve a number of risks and
uncertainties. Such forward -looking statements are within the meaning of the phrase ‘forward -
looking information’ in the Canadian Securities Administrators’ National Instrument 51 -102 –
Continuous Disclosure Obligations. Forward -looking statements are not comprised of historical
facts. Forward-looking statements include estimates and statements that describe the Company’s
future plans, objectives or goals, including words to the effect that the Company or management
expects a stated cond ition or result to occur. Forward -looking statements may be identified by
such terms as “believes”, “anticipates”, “expects”, “estimates”, “may”, “could”, “would”, “will”, or
“plan”. Since forward -looking statements are based on assumptions and address fut ure events
and conditions, by their very nature they involve inherent risks and uncertainties. Although these
statements are based on information currently available to the Company, the Company provides
no assurance that actual results will meet management ’s expectations. Risks, uncertainties and
other factors involved with forward -looking information could cause actual events, results,
performance, prospects and opportunities to differ materially from those expressed or implied by
such forward-looking information. Forward-looking information in this news release includes, but
is not limited to, the completion of the acquisition of the La Parrilla Mine Complex on the terms
set out in the definitive Asset Purchase Agreement, the completion of the Private Plac ement on
terms anticipated by the Company (or at all), First Majestic’s distribution of the Excess Shares,
the Company’s plans to prepare a technical report on La Parrilla, to initiate a rebranding process
& change the name of the Company, the ability to o btain requisite corporate and regulatory
approvals, including but not limited to the approval from the TSXV for the Transaction and the
Private Placement, obtain applicable and customary approvals from the Mexican government, the
Company's plans and expectations for La Parrilla, the ability of the Company, upon closing of the
Transaction, to incorporate La Parrilla into the business of the Company, and the ability to
eventually place the asset back into production.
In making the forward-looking statements included in this news release, the Company has applied
several material assumptions, including that the Company´s financial condition and development
plans do not change because of unforeseen events, that future metal prices and the demand and
market outlook for metals will remain stable or improve , management’s ability to execute its
business strategy, the receipt of all necessary approvals, the Company’s and First Majestic’s
satisfaction of all closing conditions with respect to APA, the closing of the Private Placement,
and no unexpected or adverse regulatory changes with respect to La Parrilla . Forward-looking
statements and information are subject to various known and unknown risks and uncertainties,
many of which are beyond the ability of the Company to control or predict, that may cause the
Company´s actual results, performance or achievements to be materially different from those
expressed or implied thereby, and are developed based on assumptions about such risks,
uncertainties and other factors set out herein, including, but not limited to, the risk that the
Company is not able to complete the acquisition of La Parrilla on the terms set out in the definitive
Asset Purchase Agreement (or at all), the risk that the Company is unable to complete the Private
Placement on the terms anticipated by the Company (or at all), the risk that the Company is
unable to obtain requisite corporate and regulatory approvals, including but not limited to the
approval of the TSXV , the Mexican g overnment, and shareholder approval, the risk that the
Company will be unable to incorporate La Parrilla into the business of the Company, the risk that
the Company is unable to achieve its goal of placing La Parrilla back into production, the risk that
the assumptions referred to above prove not to be valid or reliable, market conditions and volatility
and global economic conditions including increased volitivity and potentially negative capital
raising conditions resulting from the continued or escalation of the COVID-19 pandemic, risk of
delay and/or cessation in planned work or changes in the Company´s financial condition and
development plans; risks associated with the interpretation of data (including in respect of third
party mineralized material) reg arding the geology, grade and continuity of mineral deposits, the
uncertainty of the geology, grade and continuity of mineral deposits and the risk of unexpected
variations in mineral resources, grade and/or recovery rates; risks related to gold, silver and other
commodity price fluctuations; employee relations; relationships with and claims by local
communities and indigenous populations; availability and increasing costs associated with mining
inputs and labour, the speculative nature of mineral explorati on and development, including the
risks of obtaining necessary licenses and permits and the presence of laws and regulations that
may impose restrictions on mining; risks relating to environmental regulation and liability; the
possibility that results will not be consistent with the Company´s expectations.
Such forward-looking information represents management´s best judgment based on information
currently available. No forward -looking statement can be guaranteed, and actual future results
may vary materially. Accordingly, readers are advised not to place undue reliance on forward -
looking statements or information.
TSX Venture Exchange Inc. has in no way passed upon the merits of the Transaction and has
neither approved nor disapproved the contents of this press release.