Great Panther Silver (TSE:GPR)(NYSE MKT:GPL) has agreed to buy Cangold Limited (CVE:CLD) in a C$1.7 million all-share deal, which will expand the precious metal producer's asset base in Mexico, and add a new project in Canada's Red Lake district.
Cangold shareholders will get 0.05 shares of Great Panther for each share of Cangold held. Great Panther said the shares to be issued for the deal represent about 3 percent of its current issued and outstanding shares.
Through the acquisition, Great Panther will add an option to acquire more than 6,000 hectares of the Guadalupe de los Reyes gold-silver project in Mexico, expanding on its existing asset base in the country at Guanajuato and Topia.
Cangold also owns the Plomo gold project in Mexico, as well as the Argosy project in the Red Lake mining district of northeastern Ontario, in Canada.
"Guadalupe de los Reyes is a strong fit with Great Panther's current producing mines and projects in Mexico," said chairman Bob Garnett in a statement.
"Our team has proven success in developing producing mines in Mexico, and has the expertise and resources to advance Guadalupe de los Reyes.
"The proposed acquisition will also realize cost synergies in terms of management, administration, and overhead," he added.
Indeed, Great Panther has proven its expertise in building up mines in Mexico, just earlier this week bolstering the mineral resource estimate at its new San Ignacio satellite mine, which forms part of its Guanajuato mine complex. It increased indicated resources by more than 30 percent, and over doubled the inferred resources, reflecting the most recent drill results from San Ignacio.
Ore from San Ignacio, which started operations last year, is trucked 22 km to the company's Cata processing plant at the complex.
"Great Panther is an experienced operator in Mexico with a strong balance sheet, no debt, and has access to capital to advance Guadalupe de los Reyes," said executive chairman of Cangold, Kaare G. Foy.
The deal still requires shareholder and regulatory approvals, and Great Panther still needs to complete satisfactory due diligence on Cangold.
A definitive agreement is expected before April 25, until which time Cangold has agreed to an exclusivity period. Cangold is due to hold a shareholder meeting to approve the arrangement in May.
