Published: March 18, 2021 |

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First Majestic Silver (FMSC) will be focusing on expanding mill use, exploration, and mine production at the Jerritt Canyon Mine north of Elko once the company owns the mine, said the company’s president and chief executive officer, Keith Neumeyer.

“We want to get the mill filled,” Neumeyer said in a March 15 conference about First Majestic’s plans to acquire Jerritt Canyon from Sprott Mining in a deal that is expected to close by the end of April. “The mine is in great shape. The mill is in great shape.”

Jerritt Canyon, located 50 miles north of Elko, is a gold mine with two operating underground mines and one of only three processing plants in Nevada that use roaster technology. Steve Holmes, First Majestic’s chief operating officer, said the plant has “real capacity that is not being utilized.”

Holmes said that while First Majestic is working to “gear the mines up” for more production, one of the options will be to look at more use of the mill, including toll milling for other companies.

Neumeyer said the company offers the ability to deal with issues involving the mill, and the “bottleneck is the mine.” The mill is operating at roughly 2,200 metric tons per day, while capacity is 4,500 metric tons per day.

The roaster also has had to deal with air quality concerns over the years. He said that under Sprott the mill has been doing a good job in that area.

Kevin Small, vice president and general manager at Jerritt Canyon, said in an emailed list of points he would be using to talk with employees that “financially, FMSC is prepared to invest substantially in increasing mine output to match with plant capacity in the next few years.”

Neumeyer also said he was “excited about getting into another country,” because all the current assets are in Mexico. First Majestic is based in Vancouver and first announced the deal to acquire Jerritt Canyon on March 12.

“We’ve been looking at assets outside of Mexico for quite a few years,” Neumeyer said, assuring investors and analysts that “we will stay silver central as possible,” although the company’s portfolio will change over time.

He said during the call that while Jerritt Canyon will be 100 percent gold and “reduce our purity a bit, we don’t want to turn into a gold company.”

Neumeyer said Sprott has done an “enormously good job” with Jerritt Canyon in the last five years since taking over operation of the mine, and he said that the mine meets First Majestic’s criteria for the acquisition in Nevada.

Those criteria include whether there can be cost reductions, can mine life be increased through exploration, and “can you actually produce more metal,” Neumeyer said.

He said the company analyzed cost reduction potential “quite deeply and got pretty deep in the weeds on that.”

Jerritt Canyon Gold holds 119 square miles of property, and Neumeyer said much of that has yet to be explored.

First Majestic has 19 years of experience operating silver mines in Mexico, so Jerritt Canyon will be the company’s first 100 percent gold operation, although three operating mines in Mexico also produce gold. The three mines are the San Dimas, the Santa Elena, and the La Encantada.

The three are expected to produce between 20.6 million and 22.9 million silver equivalent ounces this year, and Neumeyer said that the company’s goal of producing 30 million silver equivalent ounces by 2023 will be met “right away” with acquisition of Jerritt Canyon.

Jerritt Canyon produced 112,749 ounces of gold in 2020 at a cash cost of $1,289 per ounce, and that was in a COVID-19 year.

First Majestic is acquiring Jerritt Canyon Canada for $470 million in shares of First Majestic plus five million First Majestic share purchase warrants, and in turn Eric Sprott, president of Sprott Mining, will place a $30 million private investment in First Majestic.

Neumeyer said “as far as we can tell” this will be Eric Sprott’s largest holding, and “we are happy to have him on board.”

Jerritt Canyon has been in operation since 1981 on different owners, including Freeport McMoRan, FMC, Independence Mining Co., and Meridian Gold in the earlier years and later AngloGold and Meridian, Queenstake Resource, a subsidiary of Yukon-Nevada Gold, and later Veris Gold, which filed for bankruptcy in 2014 and later sold to Sprott Mining.

Neumeyer said First Majestic will have a team on site during the closing of the deal.

“First Majestic is a financially strong mid-tier, growing Ag/au (silver and gold) company that has good expertise in underground mining and open pit, plus a history of unique innovation in process metallurgy that can help JCG grow, become more competitive and build a strong future,” said Kevin Small, vice president and general manager at Jerritt Canyon.

Source: Elko Daily Free Press

About First Majestic Silver
First Majestic is a publicly traded mining company focused on silver production in Mexico and is aggressively pursuing the development of its existing mineral property assets. The company presently owns and operates the San Dimas Silver/Gold Mine, the Santa Elena Silver/Gold Mine and the La Encantada Silver Mine. Production from these mines are projected to be between 12.5 to 13.9 million silver ounces or 20.6 to 22.9 million silver equivalent ounces in 2021.

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