Pan American Silver (TSX:PAAS,NYSE:PAAS) has entered into a definitive agreement to acquire MAG Silver (TSX:MAG,NYSEAMERICAN:MAG) in a transaction valued at approximately US$2.1 billion, further cementing its position as a top-tier silver producer in the Americas.
The acquisition will bring MAG’s 44 percent stake in the high-grade Juanicipio silver and gold mine in Mexico into Pan American’s portfolio, expanding the company’s exposure to low-cost, high-margin silver production.
Under the deal, MAG shareholders will receive a mix of US$500 million in cash and 0.755 Pan American shares for each MAG share held — a 21 percent premium based on closing prices as of May 9.
Upon the deal’s closing, expected later this year pending regulatory approvals, MAG shareholders will own roughly 14 percent of Pan American on a fully diluted basis.
Pan American CEO Michael Steinmann called the deal “transformational’ in the company’s Sunday (May 11) press release, citing Juanicipio’s strong production profile and future exploration potential.
‘Our acquisition of MAG brings into Pan American’s portfolio one of the best silver mines in the world,’ he said.
‘Juanicipio is a large-scale, high-grade, low-cost silver mine that will meaningfully increase Pan American’s exposure to high margin silver ounces. Furthermore, we see future growth opportunities through the significant exploration potential at Juanicipio as well as MAG’s Deer Trail and Larder properties,’ Steinmann continued.
MAG President George Paspalas echoed this sentiment, noting that the transaction delivers immediate value and long-term upside through continued exposure to Juanicipio within Pan American’s diversified asset base.
Juanicipio, located in Mexico’s prolific Zacatecas district, processed 1.33 million metric tons of ore in 2024, producing 18.6 million ounces of silver and 39,029 ounces of gold — up over 10 percent from 2023.
Operated by Fresnillo (LSE:FRES,OTC Pink:FNLPF), which owns the remaining 56 percent stake, the mine posted an average silver head grade of 468 grams per metric ton and is set to deliver up to 16.7 million ounces of silver in 2025.
Pan American’s 2024 output totaled 21.1 million ounces of silver and 892,000 ounces of gold, in line with guidance.
The company has operations across seven countries, with its key assets including the La Colorada mine in Mexico and the Jacobina gold mine in Brazil. Pan American ended last year with US $887.3 million in cash and short-term investments, bolstered by its recent divestment of the La Arena mine in Peru.
News of the deal sent shares for both companies higher in pre-trading hours on Monday (May 12).
As of 9:13 a.m EST, Pan American shares were up 6.5 percent from the previous day to trade for US$27.21, while MAG shares had seen a 6.07 percent uptick over the same period, trading for C$23.58.
Securities Disclosure: I, Georgia Williams, hold no direct investment interest in any company mentioned in this article.