Canada’s Latin America focussed Pan American to acquire Minefinders for $1.49 bn

Latin America focussed metal miner Pan American Silver Corp yesterday said that it will acquire Minefinders Corp, for about C$1.5 billion ($1.49 billion) in cash and stock in order to expand in Mexico and become one of the world's largest silver producers.

The friendly deal moves away from Pan American's earlier strategy of acquiring shuttered or distressed mines, and then turning them around.

Vancouver-based Minefinders owns the multi-million ounce Dolores gold and silver mine in northern Mexico, along with a strong portfolio of exploration and development projects in Mexico's Sonora state.

The combined company would have a market capitalisation of about C$4 billion and production expected to be around 26 million ounces of silver in 2011 and grow to more than 50 million ounces by 2015. About half the production will come from mines in Mexico, including Minefinders' fast-growing Dolores project, with the rest coming from Pan American's mines in Peru, Argentina and Bolivia.

Minefinders, which had 2011 revenues of $241-million, produced about 3.6 million ounces of silver last year and about 74,000 ounces of gold. It aims to increase production by 80 per cent by 2015, once its La Bolsa mine gets on stream.

Pan American, also based in Vancouver, owns seven silver mines in Peru, Mexico, Argentina and Bolivia, as well as the Navidad project in Argentina, touted as one of the world's largest undeveloped silver deposits and is expected to produce about 20 million ounces of silver a year for the first five years of its life. It also has a joint venture with Orko Silver Corp. for the La Preciosa silver project in Mexico.