Scorpio Mining Corp. (TSX: SPM) is a junior Canadian mining company which is primarily exploring and developing the Nuestra Senora project in Mexico. The company’s property mainly holds silver, but also has been found to contain copper, zinc and lead deposits.
The company today announced the proposed acquisition of privately-held Platte River Gold and all of its assets, including four significant mining projects in Mexico. The transaction will involve the issuance of approximately 74.8 million common shares of Scorpio Mining, resulting in Platte River shareholders owning approximately 40% of the outstanding shares of Scorpio Mining after the deal is completed.
This deal is a real positive for Scorpio as it adds a diversified production base from a minimum of two additional quality silver-zinc mines less than 10 kilometers from Scorpio’s central milling facility. This milling facility has excess capacity and will easily be able to process the additional output with little capital outlay.
The proposed transaction fits Scorpio’s strategy of low-cost external growth through consolidation and will potentially increase future cash flows which should help the company’s organic growth. Chairman and CEO of Scorpio Mining, Peter J. Hawley, said, “The acquisition of Platte River’s deposits in the Cosala(Mexico) area supports the company’s mandate to be a growing, low-cost producer.”
And Mr. Hawley added that both management teams “envision a larger, low-cost producer with near-term increased production, organic reserve and resource growth and high-quality assets allowing a long-term, Cosala-based mining company to emerge.”