Americas Gold and Silver buys out JV partner Sprott at Galena complex in Idaho

Americas Gold and Silver (TSX: USA; NYSE-AM: USAS) has agreed to buy out its 40% joint-venture partner — an affiliate of Canadian mining investor Eric Sprott — in its producing Galena silver-lead-zinc complex in Idaho.

Americas Gold and Silver stock rallied 22% or 9.5¢ on the news to 53¢. The company has a $139.2 million market cap.

In return for the interest, Americas Gold will issue 170 million common shares to Sprott and pay US$10 million cash. It will also issue 10 million shares priced at 40¢ each for a total of $4 million to certain vendors involved in the transaction.

Americas Gold acquired Galena in 2014, and five years later entered a joint venture with the Sprott entity.

The precious metals miner has also arranged a private placement at the same issue price to raise gross proceeds of $40 million, and is in talks for further debt financing to improve its balance sheet as it looks to optimize and expand the Galena complex moving forward.

Following the transactions, existing Americas Gold shareholders will own roughly 53% of the company and Sprott will own 22%. The financing participants will own 19%, while management and directors will own the remaining 6%.

As part of the acquisition, the company will also appoint former Karora Resources executive Paul Andre Huet as chairman and CEO to lead the next phase of its growth.

Enhanced silver leverage

The Galena complex is located in Idaho’s Silver Valley, a district famous for producing silver, lead, zinc and copper from well-known operations such as the Bunker Hill, Sunshine and Lucky Friday mines. The company’s claim holdings cover nearly 90 sq. km. and hosts three active shafts and two process facilities, one of which is producing silver concentrates.

The Galena complex is currently undergoing a recapitalization plan designed to modernize its infrastructure, acquire new mining equipment and develop additional stopes for better operational flexibility.

A consolidated ownership of Galena, says Americas Gold, would provide for a focused vision centred around optimizing and expanding the operation through the use of existing infrastructure. The complex is expected to be a long-term cornerstone asset supported by a robust reserve and resource base, excess mill capacity, and opportunity to grow through future exploration.

Galena represents one of the largest underground silver mines in North America, having produced over 240 million oz. of the precious metal for more than half a century. It reached peak production in the early 2000s, producing more than 5 million oz. of silver per year.

Americas Gold’s other main asset, Cosalá in Mexico, consists of the San Rafael mine, which is currently in full production, and the EC120 deposit, which has an estimated probable reserve of 2.9 million tonnes with a grade of 157 grams silver per tonne containing 14.5 million oz.

The company expects production, operating margins and near-term growth potential at Cosalá to steadily increase.

Silver has rallied nearly 30% this year, and Americas Gold expects the metal to generate roughly 80% of its revenue starting in the second half of 2025.