Pan American Silver (TSX: PAAS; Nasdaq: PAAS) and Agnico Eagle (TSX: AEM; NYSE: AEM) announced Friday morning that they have delivered a definitive binding offer to the board of of Yamana Gold. The Canadian miners would acquire all of the issued and outstanding common shares of Yamana. The deal includes Yamana selling certain subsidiaries and partnerships which hold Yamana's interests in its Canadian assets to Agnico Eagle, including the Canadian Malartic gold mine. The transaction shall be implemented by way of a plan of arrangement under the Canada Business Corporations Act.
Last summer, South African miner Gold Fields (NYSE: GFI; JSE: GFI) made a US$6.7 billion offer for Yamana.
The Pan American-Agnico offer keeps Yamana in Canadian hands and consolidates 100% ownership of the Canadian Malartic mine. The combination of assets will create the leading precious metals producer in Latin America. It also offers incfreased value per Yamana share with low transaction risk, and the Yamana board has deterined the offer superior to that made by Gold Fields.
The offer consists of 153.5 million common shares of Pan American; US$1.0 billion in cash contributed by Agnico Eagle; and 36.1 million Agnico common shares. Each Yamana share would be exchanged for approximately US$1.04 in cash, 0.1598 Pan American share and 0.0376 Agnico shares, for an aggregate value of US$5.02 per Yamana share based on the closing share prices on Nov. 3, 2022. The binding offer is not subject to any financing condition or additional due diligence.
The arrangement would establish Pan American as a major precious metals producer in Latin America, with approximately 28.5 million to 30.0 million oz. of annual silver production and approximately 1.1 million to 1.2 million oz. of annual gold production, based on Pan American's and Yamana's 2022 guidance. The combined portfolio will consist of 12 operations concentrated in Latin America, a region where Pan American has over 28 years of proven expertise and experience operating mines. With the addition of four operating mines generating strong free cash flow, the arrangement is expected to enhance Pan American's overall financial position and improve its ability to internally fund its growth projects.
The consolidation of the Canadian Malartic mine would place a world-class asset into the hands of the best positioned operator to develop the mine's full potential and gives Agnico Eagle operational control during the remaining development period of the Odyssey project and future projects. Most importantly, Agnico has the unique ability to monetize future additional mill capacity at the Canadian Malartic mine, given its extensive operations and strategic land position in the region.