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    Consolidated Zinc signs binding agreement to sell subsidiary Minera Latin America to Impact Silver

    ASX-listed exploration company Consolidated Zinc (ASX:CZL) has entered into a binding conditional sale agreement with TSX-V-listed company Impact Silver (TSX-V:IPT) to sell its 100% owned subsidiary Minera Latin America, which holds the Plomosas Zinc Project in Mexico.

    The proposed transaction will require Impact Silver to pay Consolidated Zinc US$3 million in cash, and up to US$3 million in common shares based on the lower of the price per common share for the Impact capital raising, or the volume weighted averaged price (VWAP) for the 20 trading days immediately before the execution of the sale agreement.

    The agreement also outlines that Consolidated Zinc will receive a payment of 12% net profit interest (NPI) royalty. Consolidated Zinc expects it will hold about 6% of the issued capital in Impact Silver upon completion of the proposed transaction.

    Retaining exposure in the Plomosas Project and gaining exposure to the other projects held by Impact Silver should be both exciting and rewarding for our shareholders”

    Commenting on the proposed transaction, Consolidated Zinc Executive Chairman Brad Marwood said: “The proposed transaction presents a good outcome for shareholders as we will realise sufficient cash from the sale of the Plomosas Project to fund the planned exploration in Western Australia, as well as retaining exposure to the potential upside of the Plomosas Project through the shareholding in Impact Silver and the 12% net profit interest.

    Impact Silver holds various mining projects in Mexico and will bring their experience in running similar operations to the Plomosas Project. Retaining exposure in the Plomosas Project and gaining exposure to the other projects held by Impact Silver should be both exciting and rewarding for our shareholders.

    With an enlarged cash balance following completion of the proposed transaction, the company will be able to focus its resources on its Pilbara and Gascoyne Projects, with an aim for exploring for lithium and rare earth metals in the region.”

    Consolidated Zinc reports completion of the sale agreement is subject to various conditions being satisfied by 31 March 2023. These conditions include obtaining shareholder approval, both companies entering into an NPI deed, and Impact having cash on-hand to close the sale agreement

    The company says completion of the transaction will occur within 7 days of these conditions being satisfied, or waived if applicable. Once complete, Impact Silver will acquire 100% of Minera Latin America, and in turn the Plomosas project.

    Consolidated Zinc also reports the cash amount payable may be adjusted if the working capital amount on completion of the proposed transaction changes by more than US$50,000 to the agreed target working capital amount as agreed in the sale agreement.

    Escrow will be applied to 75% of the share amount which will be released from escrow in 3 equal tranches of 25% every 6 months over the next 18 months. The company notes 25% of the shares in Impact will be immediately held by the company, subject to a statutory 4 months and 1 day hold period.

    The NPI will be calculated by the revenue generated from Plomosas, less direct operating costs (including mining, processing, and administrative), capital expenditure, and exploration incurred on the project.

    Consolidated Zinc expects the cash consideration of US$3 million will fully fund, and accelerate its exploration activities at the Pilbara, and Gascoyne projects in Western Australia, whilst also retaining a surplus cash balance to actively seek complimentary investments and acquisitions.

    Impact Silver is a Canadian mining and exploration company focused on its wholly-owned Guadalupe Production Centre in the Royal Mines of Zacualpan Silver District, and the Capire Production Centre in the Capire-Mamatla Mineral District in Mexico.

    Consolidated Zinc is an ASX-listed company that owns 100% interests in the Pilbara Lithium, and Wandagee projects which cover 1,400km-square in 5 granted exploration licences in the Pilbara and Gascoyne regions of Western Australia.

    Harry Mulholland
    Harry Mulholland
    Hailing from the Central Coast region of NSW, Harry is a passionate journalist with a background in print, radio and ESG news. When not bashing away on his keyboard, he can be found brewing a coffee or playing with his dog.