Precious Metals


The deal extends a trend of M&A activity in the mining space that saw Barrick Gold and Randgold Resources announce plans to join forces last week.

Contributing to a recent M&A trend, Americas Silver (TSX:USA,NYSEAMERICAN:USAS) and Pershing Gold (TSX:PGLC,NASDAQ:PGLC) have entered into a definitive agreement to create a low-cost precious metals growth company.

The combined company, set to be based somewhere in the Americas, will have a diversified portfolio of precious metals assets, including two producing polymetallic mines in Mexico and Idaho that are expected to produce 7 million silver equivalent ounces.

The new entity will also have a precious metals development project in Nevada with a potential production rate of 91,000 ounces of gold per year.

Pershing shareholders will receive 0.715 common shares of Americas Silver for each common share of Pershing, according to a press release.

That represents a value of US$1.69 per Pershing share based on Americas Silver’s NYSEAMERICAN closing price on September 28, and is a 39-percent premium to Pershing’s NASDAQ closing price.

Steve Alfers, Pershing president and CEO, expressed positivity towards the merger in a statement, highlighting the benefits for Pershing’s primary asset, Relief Canyon.

“We are excited to announce today’s transaction and believe this provides a clear path to the development of Relief Canyon,” Alfers said. “With the increased financial and operating capabilities of the combined company, our shareholders are better positioned to realize significant value from Relief Canyon as it is advanced through construction and into production.”

Similarly, Americas Silver President and CEO Darren Blasutti said he sees the merger as a growth opportunity for the company’s San Rafael silver-zinclead mine in Mexico.

“With the on-schedule and on-budget construction and rapid commissioning of San Rafael now successfully completed, we are focused on the next leg of growth — today’s transaction delivers this growth platform, while also providing us with additional precious metal exposure and a near-term operating presence in Nevada,” he said.

The mining sector has seen some major M&A activity in recent weeks, with Barrick Gold (TSX:ABX,NYSE:ABX) announcing plans to combine with Randgold Resources (LSE:RRS) just last week. The $18.3-billion merger will see the new company become the largest gold producer by value and output.

Additionally, Great Panther Silver (TSX:GPR,NYSEAMERICAN:GPL) acquired gold producer Beadell Resources (ASX:BDR) in a US$105-million deal last week.

Both deals were announced during the Denver Gold Forum, held in Colorado Springs last Monday to Wednesday (September 26) — click here and here for our coverage of the event.

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Securities Disclosure: I, Olivia Da Silva, hold no direct investment interest in any company mentioned in this article.

Editorial Disclosure: Great Panther Silver is a client of the Investing News Network. This article is not paid-for content.



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