Silverco Mining signs LOI to acquire Nuevo Silver

Executive Summary

• Silverco Mining Ltd. has entered into a binding letter of intent to acquire Nuevo Silver Inc. and its 100% interest in the producing La Negra silver mine in Queretaro, Mexico, via a three-cornered amalgamation.
• The transaction is valued at an aggregate of 16,802,316 Silverco common shares, representing approximately 34% of Silverco’s post-transaction outstanding shares, with existing Silverco shareholders retaining approximately 66%.
• The acquisition provides immediate production and cash flow, approximately $8 million in U.S. cash, and adds an established operating team in Mexico, while Silverco assumes approximately $11 million in debt and future milestone/contingent payments.

Key Details

• Transaction Structure: Binding letter dated Jan. 19, 2026, for a three-cornered amalgamation where Nuevo Silver amalgamates with a wholly owned subsidiary of Silverco.
• Consideration: Nuevo Silver shareholders receive an aggregate of 16,802,316 Silverco common shares.
• Ownership Dilution: Post-closing, former Nuevo Silver shareholders will hold ~34% of Silverco; existing Silverco shareholders will hold ~66%.
• Assets Acquired: 100% interest in the La Negra silver mine in Queretaro, Mexico.
• Operational Status: La Negra is currently operating at approximately 55% capacity.
• Financial Impact on Silverco:
  • Immediate production and cash flow. ~ $8 million (U.S.) in cash acquired.
  • Assumption of ~$11 million (U.S.) in debt associated with the La Negra mine.
  • Assumption of $12.5 million (U.S.) in milestone payments due in Q1 2027.
  • Assumption of $5 million (U.S.) in contingent payments potentially due between Q1 2027 and Q1 2028.
• Strategic Goals: CEO Mark Ayranto states the acquisition shifts Silverco from a developer to a cash-flowing producer, with a pathway to increase throughput in 2026 and combine with the Cusi property (expected to return to operation in H2 2026) to become a 10-million-ounce AgEq producer within three years.
• Conditions Precedent: Regulatory approvals (including TSX Venture Exchange conditional approval), completion of Nuevo Silver’s acquisition of La Negra, receipt of a technical report (if required), receipt of a favorable fairness opinion, and Silverco board approval.
• Related Party Transaction: Classified as a related party transaction under Multilateral Instrument 61-101 due to insiders acquiring Nuevo Silver shares; exempt from formal valuation and minority shareholder approval requirements.
• Advisers: Canaccord Genuity Corp. (Financial Adviser to Silverco); DLA Piper (Legal Counsel to Silverco); Cassels Brock & Blackwell LLP (Legal Counsel to Nuevo Silver).
• Qualified Person: Nico Harvey, VP of Project Development, reviewed and approved scientific/technical information.

Notable Quotes

• "The acquisition of Nuevo Silver and the La Negra mine is a transformative milestone that immediately shifts Silverco from a developer into a cash-flowing producer. La Negra is currently operating at approximately 55-per-cent capacity, providing a robust foundation of existing cash flow that we see a clear pathway to build upon by significantly increasing throughput during the remainder of 2026. This accretive acquisition delivers immediate shareholder value and, when combined with our wholly owned Cusi property, which we expect to return to operation in the second half of 2026, accelerates our vision to become a 10-million-ounce AgEq producer within three years." — Mark Ayranto, CEO of Silverco