Tarachi Gold Corp. (CSE: TRG) (OTCQB: TRGGF) (Frankfurt: 4RZ) entered into a sales agreement with the Mexican firm Compañia Minera de Atocha S.A. to sell Tarachi’s mining project in the state of Durango, Mexico.
The Vancouver-based company announced the sales agreement on Thursday which will transfer ownership of Tarachi’s subsidiary TGMEX Silver S.A. de C.V. to Compañia Minera de Atocha.
Under the agreement, Atocha will make a cash payment to Tarachi in the amount of US$4.0 million in addition to:
- US$500,000 when 50 per cent of the tailings located on the Magistral Project have been mined, sold and/or processed or after the first complete calendar year of operation at the Magistral Project.
- US$500,000 when 100 per cent of the Magistral Tailings have been mined, sold and/or processed or after the second complete calendar year of operation at the Magistral Project.
The company will also pay an amount of value-added tax currently owing to TGMEX as that tax benefit is realized by Atocha during operations and product sales from the Magistral Project or other Atocha-controlled assets if Atocha merges TGMEX with Atocha or another entity they control, estimated to total approximately US$650,000.
Atocha will pay a total of approximately US$5.7 million in cash. Tarachi and Atocha expect to sign a definitive agreement within 60 days.
Tarachi anticipates the IVA tax benefit will be realized by Atocha and paid to Tarachi within the first year of commercial operations at the Magistral Project.
Atocha has agreed to advance US$1.0 million which will be held in escrow and act as a deposit against the initial payment.
Map via Tarachi Gold.
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“This transaction represents an opportunity for Tarachi to convert our interest in the Magistral Project to hard dollars at a strong valuation,” said Cameron Tymstra, Tarachi President and CEO.
According to Tymstra, it has been a challenging year for the junior gold sector and difficult to raise money through traditional means for project development, particularly for assets with shorter mine lives such as the Magistral Project.
“We are excited to be moving forward following the close of the Transaction with a strong cash position which will provide us with the flexibility to pursue other gold assets in North America with superior value-creation potential,” Tymstra added.
Tarachi Gold is a Canadian-listed junior gold exploration company focused on exploring and developing projects in Mexico. Tarachi acquired the Magistral Mill and tailings project in Durango, Mexico in 2021.
Magistral includes a 1,000 tpd mill and access to a tailings deposit with Measured and Indicated resources of 1.26 million tonnes at a grade of 1.93g/t Au.
