- First Majestic Silver Corp. (TSX:AG) has signed a merger agreement to acquire Gatos Silver Inc. (TSX:GATO)
- Under the deal, First Majestic will acquire all of the issued and outstanding common shares of Gatos, while Gatos shareholders will receive 2.550 common shares of First Majestic for each common share of Gatos held
- The transaction consolidates three producing silver mining districts in Mexico and enhances their production profile with combined annual production of 30 million to 32 million ounces of silver-equivalent, including 15 million to 16 million ounces of silver
- First Majestic Silver Corp. last traded at C$7.14 per share, and Gatos Silver Inc. last traded at $15.75 per share
First Majestic Silver Corp. (TSX:AG; NYSE:AG) has signed a merger agreement to acquire Gatos Silver Inc. (TSX:GATO).
Under the deal, First Majestic will acquire all of the issued and outstanding common shares of Gatos, while Gatos shareholders will receive 2.550 common shares of First Majestic for each common share of Gatos. The consideration implies a total offer value of US$13.49 per common share of Gatos.
The transaction consolidates three producing silver mining districts in Mexico under one family: Cerro Los Gatos, San Dimas and Santa Elena collectively provide the foundation of a diversified, intermediate primary silver producer. It also enhances their production profile with combined annual production of 30 million to 32 million ounces of silver-equivalent, including 15 million to 16 million ounces of silver at all-in sustaining costs of US$18 to US$20 per silver-equivalent ounce.
Gatos expected to immediately contribute annual free cash flow of approximately US$70 million to the combined entity while adding a third cornerstone – a long-life, low-cost, producing underground mine with exploration potential to the First Majestic portfolio.
Based on Gatos’ 2024 production guidance, First Majestic is anticipated to see annual attributable production by approximately 6 million ounces of silver and 9 million ounces of silver-equivalent.
“The acquisition of Gatos Silver is a highly compelling and transformative transaction that meaningfully enhances First Majestic’s operating platform through the addition of 70 per cent of Cerro Los Gatos – a high quality, long-life, unencumbered, free cash flow generating asset in the mining-friendly state of Chihuahua, Mexico,” First Majestic’s president and chief executive officer, Keith Neumeyer, said in a news release. “Mexico is a country that First Majestic has operated in for over 20 years, and we are extremely excited to deploy our operating expertise within these mining districts to deliver operational synergies and exploration success for our shareholders. We look forward to working with the operating team at Cerro Los Gatos and with our new joint venture partner Dowa Metals & Mining Co., Ltd., and we are pleased to welcome all Gatos shareholders as they transition into being shareholders of First Majestic going forward.”
“This transaction also provides our shareholders with the benefits of First Majestic’s enhanced capital markets presence, liquidity and balance sheet, while combining its local Mexican expertise and history of operations with our history of successful performance,” Gatos’ chief executive officer, Dale Andres, said. “I am confident that the combination of our strong operating teams will create an opportunity to generate significant value for all shareholders.”
The transaction is expected to close in early 2025.
First Majestic is a publicly listed mining company specializing in silver and gold production across Mexico and the United States. The company owns and operates the San Dimas Silver/Gold Mine, the Santa Elena Silver/Gold Mine, and the La Encantada Silver Mine, all in Mexico. It also holds a portfolio of development and exploration assets, including the Jerritt Canyon Gold project in northeastern Nevada.
Gatos is a company focused on the exploration, development, and production of silver. It has discovered a new mineral district rich in silver and zinc in southern Chihuahua State, Mexico.
First Majestic Silver Corp. (TSX:AG) last traded at C$7.14 per share.
Gatos Silver Inc. (TSX:GATO) last traded at $15.75 per share.
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