Two major mining companies have joined forces to create the world’s premier silver mining company.
Pan American Silver Corp and Tahoe Resources have entered into a definitive agreement for Pan American to acquire all of the outstanding shares of Tahoe in a deal worth $1.1bn in a cash consideration.
The combined entity will create a world-class primary solver asset portfolio, diversified across the Americas as well as the worlds largest silver reserve base and silver measured and indicated resource base.
A key highlight of the portfolio will be the restart of the Escobal silver mine in Guatemala. Escobal is an underground silver-gold-lead-zinc mine and is a well built, turn-key operation with minimal capital outlay and development risk. The mine produced 21Moz of Ag at US$8.63/oz Ag AISC during its last four quarters of undisturbed production.
Commenting on the transaction, Michael Steinmann, President and Chief Executive Officer of Pan American Silver, said: "The combination of Pan American and Tahoe will establish the world's premier silver mining company with an industry-leading portfolio of assets, superior growth opportunities and attractive operating margins. This transaction doubles our silver reserves and further improves our cost profile. We will build on that strong foundation, optimizing these high-quality assets to deliver profitable growth and superior returns."
Added Mr. Steinmann: "We are proud of our 25-year track record of operating mines in Latin America in an ethical, collaborative and sustainable way. Our reputation as a responsible operator reflects our ability to build successful partnerships with the communities around our operations, respecting the diversity of local populations and safeguarding the natural environment. We are looking forward to applying this experience at Escobal, and working with the local communities towards concluding the consultation process and gaining their support to enable the restart of the mine."
Kevin McArthur, Executive Chair of Tahoe Resources, said: "This transaction allows our shareholders to participate in the creation of the world's premier silver company with the contribution of the world-class Escobal mine to Pan American's existing asset base. In addition to the upfront premium, we will continue to participate in the upside inherent in a restart of Escobal through the CVRs. Pan American's excellent track record of developing mines and fostering strong, mutually beneficial relationships with local stakeholders gives us confidence that the combined company will be best positioned to maximize value for shareholders."