Pan American Silver Corp. has entered into a definitive agreement to acquire Minefinders in a deal valued at approximately $1.5 billion. The transaction would create a geographically-diversified silver producer with combined market capitalization of $4 billion.

The company’s combined 2011 pro forma production would be 26 million oz of silver and it’s expected to reach more than 50 million oz by 2015. The combined company will consist of eight operating mines and an extensive portfolio of development and exploration projects in jurisdictions throughout the Americas where Pan American currently operates. Based on 2011 data, approximately 52% of combined production will be from mines in Mexico, 21% from Peru, 15% from Argentina and 12% from Bolivia.

“Given the location of Minefinders’ assets, we believe this acquisition is logical and consistent with Pan American’s vision to become the largest, low-cost primary producer of silver in the world,” said Geoff Burns, President and CEO of Pan American. “Silver production from Minefinders’ Dolores mine has increased almost 200% over the last year and we expect to see further increases into the future. As a producing, long-life, low-cost mine, Dolores will not only add to Pan American’s production, but will help balance our entire portfolio of producing and development assets.”

The combined company will have a significant reserve base consisting of 350 million oz of silver reserves and 3 million oz of gold reserves with additional resources of 742 million oz of silver and 2 million oz of gold

The proposed transaction is subject to certain customary conditions. The boards of directors of Pan American and Minefinders have each unanimously determined that the proposed transaction is fair and in the best interest of their respective companies and recommend that their respective security holders vote in favour of the proposed transaction. If approved by security holders of Minefinders and shareholders of Pan American, the proposed transaction is expected to be completed by the end of March 2012.