First Majestic is making inroads for its silver expansion mission in Mexico with a confirmation it has inked a definitive merger agreement with Gatos Silver.
Gatos has a 70% interest in the Los Gatos joint venture, which owns the producing Cerro Los Gatos underground silver mine in Chihuahua, Mexico.
The proposed transaction implies a total equity value for Gatos of about US$790 million. Following completion of the transaction, existing Gatos shareholders will own about 38% of First Majestic. Additionally, the deal consolidates three world-class, producing silver mining districts in Mexico under one banner: Cerro Los Gatos, San Dimas and Santa Elena.
The combination will give the company a combined annual production of 30-32 million ounces of silver-equivalent, including 15-16 million ounces of silver.
First majestic president and CEO Keith Neumeyer called the acquisition “a highly compelling and transformative transaction” that will meaningfully enhance its operating platform through the addition of 70% of Cerro Los Gatos.
“Mexico is a country that First Majestic has operated in for over 20 years, and we are extremely excited to deploy our operating expertise within these mining districts to deliver operational synergies and exploration success for our shareholders. We look forward to working with the operating team at Cerro Los Gatos and with our new joint venture partner Dowa Metals & Mining Co.”
Gatos CEO Dale Andres concurred.
“We are pleased to enter into this transaction with First Majestic, as it provides our shareholders an attractive immediate premium and the opportunity to retain exposure to the high quality, long-life Cerro Los Gatos asset, now within a well-established intermediate primary silver producer. This transaction also provides our shareholders with the benefits of First Majestic’s enhanced capital markets presence, liquidity and balance sheet, while combining its local Mexican expertise and history of operations with our history of successful performance.”
Canadian-based First Majestic also owns the La Encantada silver mine in the Coahuila state of Mexico.
Source: firstmagestic.com