Minera Alamos Inc. [MAI-TSXV; MAIFF-OTC] said Friday August 30 that it has taken a 16.1% stake in Prime Mining Corp. [PRYM-TSXV] by acquiring 9.45 million common shares of the company at 30 cents per share.
The purchase comes after Prime (formerly ePower Metals Inc. [EPWR-TSXV Halted] acquired the rights to earn a 100% stake in the Los Reyes Gold Project (formerly known as Guadalupe de los Reyes) in Sinaloa State, Mexico.
The 15,575-hectare Los Reyes Project is located 200 km by road from the coastal city of Mazatlan. It contains an indicated resource of 380,000 ounces of gold and 6.3 million ounces of silver. On top of that, is an inferred resource of 155,200 ounces of gold and 3.63 million ounces of silver.
Prime said the rights were acquired under a June 25, 2019 agreement with Minera Alamos Inc., Vista Gold Corp. [VGZ-TSX, NYSE American], and the underlying Los Reyes and Mexican subsidiaries of Minera Alamos and Prime.
In connection with the completion of the transaction, ePower Metals changed its name to Prime Mining and consolidated its common shares on a two for one basis. Prime said it now intends to focus its resources and capital on the immediate development of Los Reyes.
“Needless to say, our entire team is ready and anxious to begin the next stage of Prime’s development,” said Prime CEO Andrew Bowering.
To acquire Minera Alamos’s interest in Los Reyes, Prime has completed a cash payment of US$1.5 million to Minera Alamos to reimburse it for the cost of an option payment made to Vista Gold back in April, 2019, and will assume Minera Alamos’s remaining option payments of US$3 million.
That includes US$1.5 million due on October 27, 2019, and US$1.5 million due on the earlier of October 27, 2021 or a production decision.
In connection with the deal, Prime has also issued 9.45 million post-consolidation common shares to Minera Alamos and 3.35 million common share purchase warrants entitling Minera Alamos to acquire more post-consolidation common shares at 50 cents a share for a period of 24 months.
In keeping with the agreement, Minera Alamos holds the right to appoint one director to the board of Prime for as long as it holds at least 5% of the company’s outstanding common shares and to participate in future financings and transactions completed by the company in order to maintain its pro rata equity stake in Prime.
Minera Alamos’s initial board nominee under the governance agreement is Bruce Durham. Already a director of Minera Alamos, Durham is currently President and CEO of Nevada Zinc Corp. He was also an integral member and leader of various exploration teams that were credited with the discovery of several significant deposits, including the David Bell and Golden Giant gold mines at Hemlo, Ontario, as well as the Redstone Nickel and Bell Creek gold mines in Timmins, Ontario.
On Friday, Minera Alamos shares rose 9% or $0.015 to 18 cents on a volume of 608,566 shares traded. The shares are currently trading in a 52-week range of $0.085 and 18.5 cents.