First Majestic Silver (TSX:FR,NYSE:AG) introduced plans on Thursday (September 5) to purchase Gatos Silver (TSX:GATO,NYSE:GATO) in a stock-based transaction valued at about US$970 million.
The brand new entity’s anticipated annual manufacturing is 30 million to 32 million silver equal ounces.
If accepted, the deal will see First Majestic take up Gatos’ belongings, together with its 70 % curiosity within the Los Gatos three way partnership, which operates the Cerro Los Gatos silver mine in Chihuahua, Mexico.
This mine, together with First Majestic’s current operations at San Dimas and Santa Elena, will consolidate First Majestic’s portfolio into three main silver-producing districts in Mexico.
Below the phrases of the settlement, First Majestic will purchase all excellent shares of Gatos, whereas the latter’s shareholders will obtain 2.55 frequent shares of First Majestic for every Gatos share they maintain.
This consideration interprets to a price of US$13.49 per Gatos share primarily based on the closing worth of First Majestic shares on the NYSE on Wednesday (September 4). The transaction represents a 16 % premium primarily based on the closing costs and 20 day volume-weighted common costs of the 2 firms’ shares.
“Mexico is a rustic that First Majestic has operated in for over 20 years, and we’re extraordinarily excited to deploy our working experience inside these mining districts to ship operational synergies and exploration success for our shareholders,” Keith Neumeyer, president and CEO of First Majestic, mentioned within the firm’s press launch.
The corporate goals to make use of its operational experience to reinforce the event of Cerro Los Gatos and combine it with its current belongings to enhance efficiencies and develop exploration alternatives.
Dale Andres, CEO of Gatos, expressed enthusiasm for the cope with First Majestic as effectively.
“This transaction additionally gives our shareholders with the advantages of First Majestic’s enhanced capital markets presence, liquidity and stability sheet, whereas combining its native Mexican experience and historical past of operations with our historical past of profitable efficiency,” he mentioned, highlighting First Majestic’s standing as a well-established silver producer.
The transaction is anticipated to shut in early 2025, topic to situations and to approval from each firms’ shareholders, in addition to clearance on each the New York and Toronto inventory exchanges.
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Securities Disclosure: I, Giann Liguid, maintain no direct funding curiosity in any firm talked about on this article.
