Canadian Mining Journal

News

MERGER: Tahoe, Lake Shore propose combination



VANCOUVER and TORONTO – Tahoe Resources and Lake Shore Gold have reached an agreement whereby Tahoe will purchase all of the issued and outstanding Lake Shore shares.

Lake Shore shareholders will receive 0.1467 of a Tahoe common share for each Lake Shore share. The implied value of a Lake Shore share is $1.71, a 14.8% premium to the closing price on Feb. 5 and a 28.6% premium on Feb. 4, 2016. These numbers value the Lake Shore equity at approximately $945 million.

The combined company will operate Tahoe’s Escobal silver mine in Guatemala, as well as the La Arena gold-copper and Shahuido gold-silver mines in Peru. In Canada the assets include Lake Shore’s Bell Creek and Timmins West gold mines near Timmins, ON, plus a number of advanced and exploration properties in Ontario. All operations are generating free cash flow as low cost producers (silver US$10 to US$11 per ounce, and gold US$950 to US$1,000 all-in sustaining costs).

Tahoe said it will welcome Alan Moon, currently chair of Lake Shore, to its board and Tony Makuch, now president and CEO of Lake Shore, as president of Canadian operations.

As Tahoe was announcing the merger, Lake Shore was announcing the initial resource estimate for its 144 Gap deposit in Timmins. There are 1.73 million indicated tonnes at 5.41 g/t Au containing 301,700 oz of gold plus 1.91 million inferred tonnes at 5.19 g/t Au containing 319,200 oz. The estimate includes the Main and East zone that cover a total vertical depth of about 400 metres, concentrated in between the 780 and 840 metre levels. Development and test stoping are planned.

Details of the proposed merger of Tahoe and Lake Shore can be found at either company’s web page – TahoeResources.com or LSGold.com.