Pan American Silver has completed its previously announced $1.07bn worth acquisition of US-based mid-tier precious metals company Tahoe Resources.
Image: Pan American Silver acquires Tahoe Resources with a hope to create a major silver mining company. Photo: courtesy of Unit 5/Wikipedia.org.
Through the acquisition of Tahoe Resources, the Canadian mining company hopes to create a major silver mining company.
Last month, the Supreme Court of British Columbia (BC), Canada issued a final order to approve the deal, which was signed in November 2018. Prior to that, shareholders of both the mining companies approved the merger.
Pan American has agreed to pay $275m in cash and issue 55,990,512 of its shares to Tahoe’s shareholders. After closing of this arrangement, existing Pan American and former Tahoe shareholders will own about 73% and 27%, respectively in the enlarged Pan American.
Pan American Silver president and CEO Michael Steinmann said: “The completion of the Arrangement establishes the world’s premier silver mining company with an industry-leading portfolio of assets, a robust growth profile and attractive operating margins.
“We are also now the largest publicly traded silver mining company by free float, offering silver mining investors enhanced scale and liquidity.”
As per the terms of the deal, the stakes in the enlarged company will be further revised after first commercial shipment of concentrate after restart of operations at the Escobal silver mine in Guatemala, which is fully owned by Tahoe Resources.
Following this, shareholders of the US company will get contingent consideration in the form of contingent value rights (CVRs), in exchange for 0.0497 Pan American shares for each Tahoe share, valued at $221m.
After meeting of the payment conditions under the terms of the CVRs, Pan American and Tahoe shareholders will own about 68% and 32%, respectively, of the combined company.
The Escobal silver mine, which was acquired by Tahoe Resources from Goldcorp in June 2010, began operations in 2013. However, since June 2017, mining operations at the underground silver-gold-lead-zinc mine have been temporarily suspended, pending the result of the legal ruling on the mining license.
In addition to the Escobal silver mine, Tahoe Resources owns a diverse portfolio of mines and projects in Canada, Guatemala and Peru. Pan American, on the other hand, is one of the largest primary silver producers in the world with ownership in six mines located in Mexico, Peru, Argentina and Bolivia.
Last week, the company reported that its mineral reserves are estimated to contain nearly 280 million ounces of silver and 1.7 million ounces of gold, as at 31 December, 2018.