Silver

Tahoe Resources Inc. (TSX:THO,NYSE:TAHO) and Lake Shore Gold Corp. (TSX:LSG) announced that they’ve entered into a definitive agreement under which Tahoe will acquire all of Lake Shore’s issued and outstanding shares in a deal worth C$945 million.

Tahoe Resources Inc. (TSX:THO,NYSE:TAHO) and Lake Shore Gold Corp. (TSX:LSG) announced that they’ve entered into a definitive agreement under which Tahoe will acquire all of Lake Shore’s issued and outstanding shares in a deal worth C$945 million.
According to the Financial Post’s Peter Koven, the move is being hailed as a “logical transaction” that will give Tahoe some diversification and let Lake Shore quickly develop its projects.
As quoted in the press release:

Under the terms of the Arrangement Agreement, all of the Lake Shore Gold issued and outstanding common shares will be exchanged on the basis of 0.1467 of a Tahoe common share per each Lake Shore Gold common share (the “Exchange Ratio”). Upon completion of the Transaction, existing Tahoe and Lake Shore Gold shareholders will own approximately 74% and 26% of the pro forma company, respectively, on a fully-diluted in-the-money basis.
The Exchange Ratio implies a consideration of C$1.71 per Lake Shore Gold common share, based on the closing price of Tahoe common shares on the Toronto Stock Exchange (TSX) on February 5, 2016, representing a 14.8% premium to the closing price of Lake Shore Gold on February 5, 2016 and a 28.6% premium to the closing share of Lake Shore Gold on February 4, 2016. Based on each company’s 20-day volume weighted average price on the TSX, the Exchange Ratio implies a premium of 25.7% and 30.4% to Lake Shore Gold common shares for the periods ending February 5, 2016 and February 4, 2016, respectively. The implied equity value (assuming the conversion of in-the-money convertible debentures) is equal to C$945 million.

Kevin McArthur, Tahoe’s executive chair, commented:

The combination with Lake Shore Gold enhances Tahoe’s position as the new leader in precious metals by adding another low-cost operation in Timmins, one of the most prolific gold camps in the world. We are impressed by the long-term presence and see tremendous regional opportunities going forward. We look forward to continuing the strong relationships that Lake Shore Gold has fostered in Timmins with local stakeholders. Finally, I am very pleased to welcome Alan Moon, the current Chair of Lake Shore Gold, to our Board of Directors upon completion of the Transaction, as well as Tony Makuch, the current CEO of Lake Shore Gold, to Tahoe’s management team as President of Canadian Operations.

Click here to read the full press release from Tahoe Resources Inc. (TSX:THO,NYSE:TAHO) and Lake Shore Gold Corp. (TSX:LSG).

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