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Canadian miner Pan American Silver has signed an agreement to acquire all of the outstanding shares of Tahoe Resources for a total consideration of $1.06bn through a plan of arrangement.

The transaction is expected to create a premier silver mining company, with assets located across the Americas.

Tahoe shareholders can choose to receive either $3.4 in cash or 0.2403 Pan American shares for each share held by them. The deal caps total cash consideration at $275m and the total number of shares issued at 56 million.

In addition, Tahoe shareholders will receive an additional conditional payment, valued at $221m, linked to the restart of Tahoe’s Escobal mine in Guatemala.

Pan American Silver president and CEO Michael Steinmann 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.”

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Pan American intends to work towards completing the consultation process with the local communities to enable the restart of the Escobal mine, where operations were suspended last year. Production at the mine during its last four quarters stood at 21Moz of silver.

Furthermore, the transaction offers additional upside through expansion of the La Colorada mine and potential development of the Navidad silver deposit.

Once the transaction is completed, Pan American shareholders will hold around 73% of the company, while Tahoe shareholders will own the remaining 27%.

“This transaction allows our shareholders to participate in the creation of the world’s premier silver company.”

Tahoe Resources executive chairman Kevin McArthur 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.”

Subject to the receipt of regulatory approvals and the satisfaction of other closing conditions, the deal is expected to be completed in the first quarter of next year.

Pan American owns and operates six mines located in Mexico, Peru, Argentina and Bolivia. The company is currently building two new mines in Argentina.