While merger and acquisition (M&A) activity has picked up of late in the gold sector, this morning’s multi-billion dollar deal involved two of the most widely-held silver companies in the precious metals space.
Pan American Silver (PAAS) and Minefinders (MFL.TSX, AMEX: MFN) announced that they entered into a definitive agreement whereby Pan American will acquire Minefinders for C$15.60 per share, or approximately for C$1.5 billion. The offer price represents a 36% premium to last Friday’s closing price for MFL.TSX of C$11.50 per share.
Shares of MFL.TSX surged as much as 27.7% to C$14.86 this morning and remained higher by 25.5% at C$14.43 in mid-day trading. PAAS, on the other hand, fell 7.8% to $22.80 per share.
The companies noted that “Under the terms of the Arrangement Agreement, Minefinders shareholders will be entitled to elect to receive, in exchange for each Minefinders share held, either: (i) 0.55 shares of Pan American and $1.84 in cash; or (ii) 0.6235 shares of Pan American; or (iii) $15.60 in cash, subject to pro-ration under total aggregate cash and share pools of approximately $176 million and approximately 53 million Pan American shares, respectively, on a fully-diluted basis. Assuming full pro-ration, Minefinders shareholders will receive 0.55 shares of Pan American and $1.84 in cash in exchange for each Minefinders share held…Upon completion of the transaction, existing Minefinders shareholders will own approximately 33% of Pan American on a fully-diluted basis.”
If approved by each companies’ shareholders, the deal is expected to close by the end of March 2012 and will create the “leading growth-oriented, geographically-diversified silver producer with combined market capitalization of approximately $4 billion.”
Geoff Burns, President and CEO of Pan American Silver, commented that “Given the location of Minefinders’ assets, we believe this acquisition is logical and consistent with Pan American’s vision to become the largest, low-cost primary producer of silver in the world. Silver production from Minefinders’ Dolores mine has increased almost 200% over the last year and we expect to see further increases into the future.”
In 2011 the two companies combined to produce approximately 26 million ounces of silver, and stated that production is expected to reach 50 million ounces by 2015.
Platinum Group Metals Moves Forward Toward Production
In August, Platinum Group Metals entered into a mandate letter with a consortium of financial institutions – including Barclays Capital and the Standard Bank of South Africa Limited – for a $260 million project finance loan to enhance the development of the Western Bushveld Joint Venture (WBJV) Project 1 Platinum Mine. Full Platinum Group Metals News Release.
- Preparation of detailed banking documents for the senior loan facility with the mandated syndicate of banks is ongoing
- The completion of this documentation, due diligence, hedging establishment and off take negotiations are expected to be completed during Q1 and Q2 of calendar 2012
- Project 1 is advancing towards a 275,000 ounce per year platinum, palladium, rhodium and gold planned production profile
- Full commercial construction is budgeted at $443 million and initial commercial production is scheduled for late 2013
