Pan American Buys Mexican Mine

Pan American Silver has agreed to pay roughly CAD1.50bn ($1.49bn) to acquire fellow Canadian-listed miner Minefinders, a company that runs the Dolores gold and silver mine in northern Mexico. The deal offers Minefinders’ shareholders three options: taking 0.6235 Pan American shares per Minefinders share, accepting CAD15.60 cash per share, or a combination of 0.55 Pan American shares and CAD1.84 in cash per share. The offer represents a 36% premium to Minefinders’ Jan 20 closing price. The transaction, on a fully diluted basis, gives Minefinders shareholders a 33% stake in Pan American. With the acquisition, Pan American strengthens its position in Latin America by adding the Dolores mine to a collection of projects in Mexico, Argentina, Bolivia and Peru. Rob Doyle, Pan American’s CFO, tells LatinFinance that paying a premium in the thirties for the company is standard. The offer, he notes, amounts to roughly CAD20 to CAD22 per ounce of recoverable metal, taking into account the capex and opex needed for production. CIBC World Markets and Scotia Capital gave Pan American a fairness opinion on the deal. BMO Capital Markets advised Minefinders.