Consolidated Nevada inks Mexican merger deal

Consolidated Nevada Goldfields (KNV-T) has signed a deal with Mexican miner Grupo Real del Monte that will lead to a six-fold increase in reserves for the American company.

The companies are merging their two operations to create a single North American mining company. Under the agreement, Consolidated Nevada will issue 52.3 million shares of common stock to Grupo Real del Monte. Grupo Acerero del Norte, the Mexican conglomerate that owns Grupo Real, will receive US$5 million through a 12% net profits interest from the Mexican operations.

Grupo Real will also be able to nominate six directors to the expanded board of directors.

Grupo Real’s four mines will augment production from Consolidated Nevada’s two U.S. gold mines, raising minable reserves to 600,000 oz. gold, 47 million oz. silver, 28 million lb. copper and 4 million tonnes of barite.

Grupo Real’s primary asset is the Pachuca silver mine in central Mexico. The mine, which has been in operation for 465 years, has yielded more than 1.3 billion oz. silver. Consolidated Nevada plans to upgrade and streamline the operation, restoring it to its full potential.

Grupo Real also operates the Magistral del Oro, a gold tailings reprocessing operation, the Baztan underground copper mine, and a barite mine in Sonora.

Consolidated Nevada operates the Nixon Fork gold mine near McGrath, Ala., and the Aurora gold mine near Hawthorne, Nev.

Consolidated Nevada has scheduled a special shareholders’ meeting to approve the acquisition. The company has already appointed a Canadian investment bank, Scotia Capital Markets, to act as underwriter for a proposed private placement of up to US$25 million.