Pan American Silver to buy Minefinders for C$1.5 billion
(Reuters) - Pan American Silver Corp PAA.TO said on Monday it will buy Minefinders Corp Ltd MFL.TO for about C$1.5 billion ($1.48 billion), aiming to more than double production by 2015.
News of the friendly deal sent shares of Pan American skidding 10.5 percent to C$22.39 by early afternoon on the Toronto Stock Exchange as investors reacted adversely to the rich cash and share offer for Minefinders, which owns one producing mine in Mexico.
An expensive takeover of a healthy company with a producing asset is a departure for Pan American, which has made its name buying shuttered or distressed mines, and then reviving them.
Chief Executive Geoff Burns said during a conference call that it has become difficult to find discarded projects that still have valuable resources.
"Those opportunities aren't there, at least not in anywhere that we've looked," he said. "To us, it really has become about looking at assets where we can see additional value."
"My view is that the Minefinder assets qualify," he said, adding that the acquisition is in line with Pan American's goal of becoming the world's largest, low-cost primary producer of silver.
Vancouver-based Minefinders owns the Dolores mine in northern Mexico, along with numerous exploration properties. In 2011, the company produced about 3.6 million ounces of silver and 74,000 ounces of gold.
After the takeover, Pan American will have eight operating mines, with about half its total production coming from projects in Mexico. Mexico is the world's top silver producer.
By the end of 2015, Pan American expects to boost annual production to more than 50 million ounces of silver from the 22.5 million ounces it has forecast for 2011. Continued...