Tahoe Resources Inc. (TSX:THO,NYSE:TAHO) and Rio Alto Mining Ltd. (TSX:RIO,NYSE:RIOM) announced that they have entered into a definitive agreement to combine their businesses.
Tahoe Resources Inc. (TSX:THO,NYSE:TAHO) and Rio Alto Mining Ltd. (TSX:RIO,NYSE:RIOM) announced that they have entered into a definitive agreement to combine their businesses. They believe the move will create a “new, leading intermediate precious metals producer.”
As quoted in the press release:
The combined company offers shareholders significant low cost production from the world-class Escobal silver mine in Guatemala and the established La Arena gold mine in Peru, in addition to long-term sustainable growth fueled by the development of the Shahuindo gold project with first production expected in early 2016. With strong operating margins and low capital risk, the combined company will boast industry-leading free cash flow generation, superior financial returns and a strong balance sheet with zero net debt. In addition, the combined company will benefit from a top-tier management team focused on delivering long-term shareholder returns.
Under the terms of the Arrangement Agreement, all of the Rio Alto issued and outstanding common shares will be exchanged on the basis of 0.227 of a Tahoe common share and C$0.001 in cash per Rio Alto share (Exchange Ratio). Upon completion of the Transaction, existing Tahoe and Rio Alto shareholders will own approximately 65 percent and 35 percent of the combined company, respectively.
Kevin McArthur, Tahoe’s vice chair and executive director, commented:
The combination of Tahoe and Rio Alto is designed to create a stronger and better positioned company going forward. In addition to diversifying our asset base into one of the most attractive precious metal producing regions in the world, this transaction establishes a strong platform for future growth.