TORONTO – Tahoe Resources Inc.’s friendly $945 million deal to buy Lake Shore Gold Corp. is being viewed as a logical transaction that addresses challenges faced by both companies.
Tahoe gets to diversify into Canada, increase its growth profile and reduce exposure to Guatemala, a very challenging jurisdiction. Lake Shore, meanwhile, can develop its projects quickly without worrying about diluting shareholders or taking on more debt.
“We believe this transaction brings strong mutual benefits to our respective shareholders and establishes the premier low-cost precious metals producer in the Americas,” Tahoe chief executive Kevin McArthur claimed on a conference call.
The Tahoe-Lake Shore transaction is the first big Canadian mining deal of the year, and there could be more in the near future as the gold price improves and executives put more emphasis on growth. M&A activity has been muted in the precious metals space over the last few years as miners prioritized cost cutting over expanding production.
Vancouver-based Tahoe, which was spun out of Goldcorp Inc. in 2010, has been one of the most aggressive buyers in the industry. It bought Rio Alto Mining Ltd. last year to expand into Peru, and the all-stock deal with Toronto-based Lake Shore gives the company a suite of mines and projects in the Timmins mining camp in Northern Ontario.
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