Tahoe Resources has agreed to acquire Lake Shore Gold in an all-share transaction that values Lake Shore at about $C945 million. Upon completion of the transaction, existing Tahoe and Lake Shore Gold shareholders will own approximately 74% and 26%, respectively, of the pro forma company.
Tahoe is headquartered in Reno, Nevada. The company owns and operates the underground Escobal silver mine in Guatemala and the La Arena and Shahuindo gold mines in Peru. Escobal is one of the world’s largest, highest-grade silver mines.
Lake Shore Gold is a Canadian-based gold producer with operations in the Timmins gold camp of northern Ontario. The company has two mines, Timmins West and Bell Creek. Ore from Timmins West is delivered to the Bell Creek mill for processing.
Lake Shore also has a number of highly prospective projects and exploration targets in and around the Timmins camp. Concurrent with the announcement of its acquisition by Tahoe Resources, Lake Shore announced initial indicated and inferred resources at its 144 Gap deposit totaling 620,900 ounces (oz) of gold at grades of more than 5 grams per metric ton (mt).
Tahoe and Lake Shore between them have 3.4 million oz of measured and indicated gold resources and 6 million oz of inferred gold resources across eight exploration projects in Peru and Canada, with strong near-mine potential to add to these resources.
Combined 2016 production by Tahoe and Lake Shore is forecast at 18 million to 21 million oz of silver at all-in sustaining costs of $10 to $11/oz and 370,000 to 430,000 oz of gold at all-in sustaining costs of $950 to $1,000/oz. All operations generate free cash flow in the current commodity price environment.