Pan American Silver and Minefinders announced on January 23 an agreement for Pan American to acquire Minefinders by way of a plan of arrangement. The proposed transaction implies a value for Minefinders of about C$1.5 billion in cash and Pan American shares.

Upon completion of the transaction, existing Minefinders shareholders will own approximately 33% of Pan American on a fully diluted basis. Market capitalization of the combined company will be about C$4 billion. The companies expect to complete the transaction by the end of March 2012.

Minefinders operates the Dolores gold and silver mine in the Sierra Madre Occidental Range of northern Mexico, approximately 250 km west of the city of Chihuahua. The mine has a well-defined deposit and an open-pit mine life of 16 years. Proven and probable reserves total 2 million oz of gold and 114.5 million oz of silver.

The combined company will have eight operating mines and an extensive portfolio of development and exploration projects throughout the Americas. Combined silver production of the companies during 2011 totaled about 26 million oz, 52% from Mexico, 21% from Peru, 15% from Argentina, and 12% from Bolivia. The combined company will have 350 million oz of proven and probable silver reserves and 3 million oz of proven and probable gold reserves, with significant additional measured, indicated, and inferred resources.

Geoff Burns, president and CEO of Pan American, said: “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. 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.

“Minefinders also has significant expansion potential and exceptional exploration opportunities at Dolores and a number of other promising early-stage properties.”

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