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FIRST ACCESS to Nadeem Walayat’s Analysis and Trend Forecasts

Pan American to Acquire Minefinders and its Dolores Mine for $1.5B

Companies / Mergers & Acquisitions Jan 24, 2012 - 04:04 AM GMT

By: G_Joel_Chury

Companies

Pan American Silver Corp. (TSX:PAA) (NASDAQ:PAAS) has indicated it will buy Vancouver-Based metals miner Minefinders Corp. (TSX:MFL) (AMEX:MFN) for nearly $1.5 billion, a move that will boost the combined company portfolio to 8 operating mines, half of which are located in Mexico. Going by 2011 production numbers, the new entity represents 26 million ounces of silver.


Minefinders currently owns and operates the multi-million ounce Dolores gold and silver mine, located in northern Mexico. Through acquiring Minefinders and the Dolores Mine, Pan American aims to boost its production in Mexico and reduce its output costs.

The offer comes in at C$15.60 per share, for a premium of 36% over Minefinders’ clost on Friday. For holders of Minefinders shares, the offer comes with three options:

· 0.55 shares of Pan American and C$1.84 in cash

· 0.6235 shares of Pan American

· $15.60 in cash

If all goes according to plan, Pan American is expected to complete the deal by the end of March 2012. Once the deal is completed, Pan American will stand as a geographically-diversified silver producer operating within Mexico (52%), Peru (21%), Argentina (15%), and Bolivia (12%). With a combined market cap of approximately $4 billion, the new entity should have enhanced capital markets scale and profile, as well as increased strategic flexibility for future transactions.

After the transaction closes, the combined company will have a significant Mineral Reserve base consisting of 350 million ounces of Proven and 3.0 million ounces of Proven and Probable gold Mineral Reserves. As well, there is an additional Measured and Indicated Mineral Resource of 742 million ounces of silver and 2.0 million ounces of gold and Inferred Mineral Resources of 265 million ounces of silver and 1.4 million ounces of gold, as of the end of December 2011.
ac

G. Joel Chury
Editor in Chief
VantageWire.com

Disclaimer: No information in this article should be construed as individualized investment advice. A licensed financial advisor should be consulted prior to making any investment decision. VantageWire makes no guarantee, representation or warranty and accepts no responsibility or liability as to its accuracy or completeness. Expressions of opinion are those of the VantageWire only and are subject to change without notice. VantageWire assumes no warranty, liability or guarantee for the current relevance, correctness or completeness of any information provided within this article and will not be held liable for the consequence of reliance upon any opinion or statement contained herein or any omission. The author of this article does not currently own shares of any of the companies mentioned in this article. Furthermore, VantageWire assumes no liability for any direct or indirect loss or damage or, in particular, for lost profit, which you may incur as a result of the use and existence of the information, provided within this article.

G. Joel Chury

G. Joel Chury is a veteran investment columnist for Resource World Magazine and the Editor in Chief of VantageWire.com. His knowledge of both the mining and oil and gas sectors along with his ability to sift through TSX.V data and press releases makes him one of the best up-and-coming newsletter writers on the web.

With a diverse background that includes investor relations writing and consulting for publicly-held companies and previous field work as a surface land agent for oil and gas companies, Mr. Chury seamlessly translates technical results geared towards engineers and geologists into a more readable language that’s palatable for investors on the go. As well, Mr. Chury is an avowed silver bug, always willing to join the debate on where the precious metals market is heading.


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