www.minefinders.com
Minefinders is a precious metals mining and exploration company. The Company's flagship Dolores Mine in Mexico commenced production of gold and silver in November, 2008 and is expected to produce more than 1.7 million ounces of gold and 64.4 million ounces of silver from heap-leach operations over a 15.5 year mine life. There is potential to increase production from operations by increasing high-grade recoveries with the addition of a mill and by expanding the mine into areas of additional mineralization.
Pan American Silver buys Minefinders for $1.5 bln
Pan American Silver (TSE:PAA)(NASDAQ:PAAS) made a move Monday to increase production in Mexico as it bought Minefinders (TSE:MLF)(AMEX:MFN) for $1.5 billion.
Monday's deal will create one of the largest diversified silver mining companies with a combined market capitalization of approximately $4 billion.
Under the deal, Minefinders investors can opt for 0.55 of a Pan American share plus $1.84 in cash, or 0.6235 of a share, or just $15.60 in cash.
The $15.60 cash offer represents a 36 percent premium to Minefinders' closing share price on January 20. On completion of the offer, existing Minefinders shareholders will own approximately 33 percent of Pan American, on a fully-diluted basis.
The pro forma company will have a cash balance of approximately US$570 million, undrawn credit facilities in the amount of US$150 million, substantial cash flow generating capacity and negligible debt, the two parties said.
Pan American president and CEO, Geoff Burns, 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 percent 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 president and CEO, Mark Bailey, added: "Since drilling the discovery hole on the Dolores deposit in 1996, we have successfully advanced the project through exploration, permitting, and construction into a low-cost gold and silver producer.
"The proposed combination with Pan American represents an exciting next step for our shareholders as they gain exposure to a diverse portfolio of world class producing and development assets along with the substantial resources and expertise that a larger company possesses.
"Moreover, we believe that the addition of the Dolores deposit along with a strong portfolio of exploration and development projects and a dedicated team of employees provides a significant contribution to the future growth and success of Pan American".
The combined company, which will retain the Pan American Silver name, will have a significant mineral reserve base consisting of 350 million ounces of proven and probable silver mineral reserves and 3.0 million ounces of proven and probable gold mineral reserves.
Additional measured and indicated mineral resources amount to 742 million ounces of silver and 2.0 million ounces of gold, with inferred mineral resources of 265 million ounces of silver and 1.4 million ounces of gold, as of the end of December 2010.
The new entity 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 expected silver production in 2011, approximately 52 percent of combined production will be from mines in Mexico, 21 percent from Peru, 15 percent from Argentina and 12 percent from Bolivia.
Pan American is buying Minefinders at a time when silver and gold prices are off last year's record highs - a shrewd move.
Silver rose four percent to $31.68 per ounce on Friday, its highest level in six weeks amid hopes steady demand for the metal in industrial applications will continue.
Silver hit a record $49.79 per ounce in early 2011, but fell alongside other industrial metals amid worries of another global economic slowdown.
Gold, considered a currency and hedge against inflation, is currently trading around $1,660 an ounce, below its record $1,900 an ounce set in September as many investors took profits to compensate for the slump in other investments.
While silver is also valued as a currency, about half of its demand comes from industrial uses, ranging from cars to cellphones, which makes it more volatile as compared to its sister metal.
Minefinders produced about 3.6 million ounces of silver in 2011 and about 74,000 ounces of gold, with annual sales of $241 million, beating its own production forecasts. In 2010, the company had sales of $92.9 million.
The company's flagship Dolores mine is located in the Sierra Madre Occidental Range of northern Mexico. The Dolores mine has a well-defined deposit and an open-pit mine life of 16 years. Measured and indicated reserves at Dolores amount to 2.6 million ounces of gold and 139.5 million ounces of silver.
The company's other mining assets are the La Bolsa and La Virginia projects as well as exploration properties at Planchas de Plata in Sonora, northern Mexico, and the adjacent Real Viejo silver project.
It is targeting production growth of 80 percent by 2015, once its La Bolsa mine starts pumping out metal.
Pan American has seven silver mines in Peru, Mexico, Argentina and Bolivia, as well as the Navidad project in Argentina, one of the largest undeveloped silver deposits in the world. It also has a joint venture with Orko Silver (CVE:OK) in the La Preciosa silver project in Mexico.
