Bear Creek Mining (TSXV:BCM), based in Canada, has completed the purchase of a 100 percent stake in the Mercedes gold-silver mine in Mexico from Equinox Gold (TSX:EQX) of Toronto, Canada. The Mercedes mine is located in the northern, mineral and metal-rich state of Sonora. The mine consists of 43 mineral concessions spread across an area of 69,285 hectares. Equinox Gold gained ownership and control of the mine in 2021 when it acquired Premier Gold Mines.
Bear Creek Mining will pay $75 million as part of the agreement, which was signed in December 2021. On closing of the deal, Bear Creek Mining will pay a 2% net smelter return on production from the Mercedes mine. Equinox Gold has shifted its focus to larger production and development assets, and as such sees the sale as part of this strategy.
Bear Creek Mining president and CEO Anthony Hawkshaw commented in a press release: “We are extremely pleased to have acquired a producing gold-silver mine with a strong operating team, underlying assets with a replacement cost exceeding our purchase price and what we believe to be exciting “blue sky” exploration potential.”
Equinox Gold CEO Christian Milau also commented: “As a significant shareholder of Bear Creek Mining, we look forward to participating in the success of Mercedes and future development of Bear Creek Mining’s Corani silver-lead-zinc deposit, one of the largest, fully-permitted silver deposits in the world.”
Mexico is seen as a favourable jurisdiction for mining, with a long history of both large and small-scale mining operations. The country is the world’s largest producer of silver and gold and is also a major producer of copper, zinc, lead and other minerals.
However, recent events resulted in the Mexican government’s nationalization of lithium, meaning that companies can no longer mine the metal without a government concession, and production will be owned exclusively by the state.
This has led to some uncertainty in the Mexican mining industry, with a number of companies put off by the new rules. It also throws into question the future of lithium mining in the country and whether the government might aim to nationalize other resources as it has oil at the beginning of the prior century. Nevertheless, the country still presents a number of opportunities for miners, especially given its rich mineral resources.
Gold mining in particular has a long history in Mexico, with some of the first mines dating back to the 16th century. The country is thought to have the world’s second-largest gold reserves, after Russia. In 2019, Mexican gold production reached a record high.
The vast majority of Mexico’s gold is produced by large-scale mines, with just a small number of artisanal and small-scale miners operating in the country. Many of Mexico’s gold mines are located in the northwestern state of Sonora, which is also home to the Mercedes mine.
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