Benzinga | Sep 25, 2020 07:08AM EDT

First Majestic Silver Corp. Reports 90-Day Process Deadline For Tax Dispute Expired Without Resolution; Mexican Legal Advisors Said Co. Subsidiary, Primero Empresa Minera, Will Be Served With Nullifying Grant

First Majestic Silver Corp. ("First Majestic" or the "Company") announced an update related to the ongoing tax dispute with the Mexican tax authority, the Servicio de Administracion Tributaria ("SAT") in connection with the 2012 Advance Pricing Agreement ("APA") granted to Primero Empresa Minera, S.A. de C.V. ("PEM"), a subsidiary of the Company.

As previously announced on May 13, 2020, the Company served the Government of Mexico with a Notice of Intent to Submit a Claim ("Notice") under the provisions of Chapter 11 of North American Free Trade Agreement ("NAFTA"). The service of this Notice initiated a 90-day process for the Government of Mexico to enter into good faith and amicable negotiations with the Company to resolve the dispute. On August 11, 2020, the 90-day process deadline expired without any resolution of the tax dispute.

The Company has also been informed by its Mexican legal advisors that PEM will be served with a decision made on September 23, 2020 by the Federal Court on Administrative Matters ("Federal Court"), nullifying the APA granted to PEM and directing the tax authority to re-examine the evidence and basis for the issuance of the APA. The Federal Court decision is appealable to the Circuit Courts.

The Company's legal advisors are of the view that the Federal Court's decision was not arrived following regular procedures, was undertaken hastily, and did not provide opportunity for the presentation of evidence from PEM. In addition, the decision is inconsistent with previous legal precedents and violates the Federal Mexican Constitution. The Company continues to assess all of its legal options, both domestic and international including under the North American Free Trade Agreement, and will make additional updates, when necessary, on its legal plan of action.