Santacruz Amends JMET Agreement, Delays San Felipe Decision

Santacruz Silver Mining Ltd. (TSXV:SCZ) announced that it has amended its US$28.4-million prepaid silver purchase agreement with JMET LLC. The agreement, announced on September 18, 2014, originally called for Santacruz to sell 4,635,000 ounces of silver to JMET through August 2019.

The amendment comes on the back of a reduction in Santacruz’s cash requirements. The company has opted to delay a construction decision on its San Felipe project in light of “volatility in both the precious metals and equities markets,” and thus does not need to sell as much to JMET.

As quoted in the press release:

The amended agreement reduces the contractual quantity of silver to be sold to JMET and, accordingly, the Company has agreed to repay JMET a portion of the original silver prepayment amount. Pursuant to the amended agreement Santacruz will now sell to JMET 2,600,000 ounces of silver at an agreed upon discount to the spot price. The first delivery of silver to JMET is 52,000 ounces in July 2015, and sales of an additional 52,000 ounces shall occur each month through August 2019, at which point the contract will be fulfilled.

Pursuant to the original agreement the Company received an upfront payment of US$28.4 million. With the quantity of silver ounces to be delivered reduced to 2,600,000 ounces, the upfront payment has been commensurately reduced to US$12.4 million. Accordingly, Santacruz repaid JMET US$9.0 million upon execution of the amended agreement and has agreed to repay the balance of US$7.0 million on or before April 1, 2015.

Arturo Prestamo, president of Santacruz, said:

With this amended agreement, we have set up the Company to be in a stronger position during these volatile market conditions. The Company will continue low cost but important and necessary activities on the San Felipe Project, aiming to further de-risk the project and advance all necessary permits and approvals to have them in hand when timing is appropriate to make a construction decision.

Click here to read the full Santacruz Silver Mining Ltd. (TSXV:SCZ) press release.