The Supreme Court of British Columbia (BC), Canada has issued a final order to approve Canadian mining company Pan American Silver’s $1.07bn worth acquisition of Tahoe Resources.
Canadian court approves Pan American’s acquisition of Tahoe Resources. Photo: courtesy of Unit 5/Wikipedia.
In November 2018, the Canadian firm agreed to acquire the US-based mid-tier precious metals company Tahoe Resources in a move to create a major silver mining company. The merged entity is expected to have a robust financial position and access to capital to advance key growth projects.
Last week, shareholders of both the companies approved the merger.
Tahoe Resources, in a statement, said: “Subject to the satisfaction or waiver of all conditions precedent to the Arrangement, including receipt of approval from the Mexican Federal Economic Competition Commission, the Arrangement is anticipated to be completed on or about February 26, 2019.”
Upon closing of the transaction, existing shareholders of Pan American and Tahoe Resources will own stakes of around 73% and 27% of the enlarged company, respectively.
Under a plan of arrangement signed by the parties, shareholders of the US firm may opt to receive $3.40 in cash or 0.2403 Pan American shares for each share they hold in Tahoe Resources, subject to certain conditions.
Additionally, shareholders of the US company will get contingent consideration in the form of contingent value rights (CVRs), in exchange for 0.0497 Pan American shares for each Tahoe share, valued at $221m. As per the terms, this amount will be payable upon first commercial shipment of concentrate after restart of operations at the Escobal silver mine in Guatemala, which is 100% owned by Tahoe Resources.
Acquired from Goldcorp in June 2010, the Escobal silver mine began operations in 2013. However, since June 2017, mining operations at the underground silver-gold-lead-zinc mine have been suspended temporarily, pending the result of the legal ruling on the mining license.
Tahoe Resources boasts of a diverse portfolio of mines and projects across Canada, Guatemala and Peru.
On the other hand, Pan American is among the largest primary silver producers in the world.
Headquartered in Vancouver, the company owns and operates six mines located in Mexico, Peru, Argentina and Bolivia. In October 2018, Pan American announced a major exploration discovery at its La Colorada mine located in Mexico after an exploration drilling program intersected up to 223m of polymetallic mineralization.