James Bay Minerals to Acquire and Re-Develop Historical High-Grade Shafter Silver Project
James Bay Minerals (ASX: JBY) has signed a binding agreement with Canada’s Aurcana Silver Corporation to acquire the advanced, high-grade, and undeveloped Shafter silver project in Texas.
The project is located close to the border of Mexico as a northern extension of the prolific eastern Sierra Madre Belt, and comes with an estimated $150 million in established mine and processing infrastructure including 160 kilometres of underground drifts, declines, adits, and stopes, along with four production shafts.
Shafter has a foreign mineral resource estimate of 1.88 million tonnes grading 289 grams per tonne silver for 17.57 million ounces and largely excludes mineralisation of the historical Presidio mine, which produced 2.3Mt of ore from 1883 to 1942 for 35.15Moz silver averaging 521g/t, plus 134,557oz silver produced in 2013.
Significant Silver Player
Executive chair Matthew Hayes said the landmark acquisition would transform the company into a significant new silver player in North America and complement its high-grade Independence gold project in Nevada.
“Taking ownership of two advanced silver-gold projects in Tier-1 jurisdictions places our company at the heart of the US silver and critical minerals renaissance,” he said.
James Bay will rebrand to Black Bear Minerals (ASX: BKB) when it completes the acquisition, at which point ex-Alcoa executive Dennis Lindgren will take up the role of chief executive officer.
Mr Lindgren will be responsible for leading the company’s next stage of growth, capitalising on the US macro-economic outlook for precious metals and increasing its alignment with the government’s focus on securing home-grown sources of critical minerals.
The company expects his appointment will position it to leverage potential federal and state support for domestic silver production.
Sierra Madre Belt Extension
The Shafter project sits within a basin carbonate sequence stretching 1,600km from northern Mexico through southwest Texas along an extension of the eastern Sierra Madre Belt—home to the world’s fifth largest silver mine at Penasquito (owned by Newmont Corporation, ASX: NEM).
Aurcana acquired Shafter in 2008 and completed modern drilling and resource classification work prior to constructing new facilities including an administrative building, a mill process unit, and a warehouse complex with a Merrill-Crowe recovery plant and refinery.
Recent work by Aurcana and Gold Fields Australia focused on mineralisation along strike to the north-east of the Presidio mine and defined a 1.8km zone termed the ‘Shafter Extension’.
James Bay’s review of historical exploration data confirmed significant exploration upside exists outside of the mineralised footprint of the Shafter Extension and Presidio mine area, and the company plans to conduct staged exploration across the north-east extensions of the Shafter mineralisation and the south-west extensions to the Presidio mine, along with shallow drilling to determine open pit potential at a lower grade cut-off.
Mr Hayes said the ability to bring Shafter back into production would be contingent on the outcome of exploration activities and prevailing market dynamics.
$30m Capital Raising
James Bay Minerals has received firm commitments from sophisticated and professional investors for a $30m capital raising to fund the Shafter acquisition, which will take place over three tranches totalling US$18m.
US$9.5m of the consideration will be an upfront cash payment, with the balance payable in two equal instalments over the following 24 months.
The company will also return the vendor a 2% net smelter royalty on all metal sales.
A two-tranche placement will see the company issue 46.15 million shares priced at $0.65 each—a 15.6% discount to the last traded price of $0.77 on 29 September, and a 6.1% discount to the 15-day volume weighted average price of $0.692.