Summa Silver Corp. (TSXV: SSVR, OTC: SSVRF, FRA: 48X)
Silver Lives Here
Pan American Silver (TSX:PAAS,NYSE:PAAS), one of the world’s largest silver producers, announced that it has reached a definitive agreement with Canadian peer MAG Silver (TSX:MAG,NYSEAMERICAN:MAG) to acquire 100% of MAG’s shares for approximately $2.1 billion. With this transaction, Pan American will gain controlling interest in MAG’s large, high-grade silver project in Mexico, significantly strengthening its leadership position in the Americas’ silver industry.
As per the terms disclosed on May 13, MAG shareholders will receive $500 million in cash and 0.755 shares of Pan American Silver stock for every MAG share held. Based on the closing price on May 9, this offer corresponds to US$20.54 per share, representing a 21% premium. After the transaction is completed, MAG shareholders will hold approximately 14% of Pan American’s diluted equity.
A key element of the strategic asset integration is MAG’s 44% interest in the Juanicipio silver-gold mine in Mexico. Operated by global silver giant Fresnillo (which holds 56%), the mine processed 1.33 million tonnes of ore in 2024, producing 18.6 million ounces of silver and 39,029 ounces of gold, making it the world’s third-largest silver mine. The mine boasts an average silver grade of 468 grams per tonne, and its silver output is expected to increase to 16.7 million ounces in 2025. The transaction also includes two undeveloped projects in the United States (Utah) and Canada held by MAG.
Pan American’s CEO, Michael Steinmann, stated that this acquisition integrates the world’s finest silver assets into the company’s portfolio; the scale, high grade, and low cost of Juanicipio will significantly boost the company’s high-margin silver production capacity. MAG’s President, George Paspalas, noted that the deal creates immediate value and long-term growth opportunities for shareholders through Pan American’s diversified asset platform.
Market reactions were mixed: Following the announcement, Pan American’s stock dropped 14% to US$23.29, while MAG’s stock rose 7.4% to US$18.17. Analysts have indicated that the synergies from the transaction are expected to reduce Pan American’s overall production costs by around 20%, though concerns remain regarding the acquisition premium and integration costs.
The deal has received approval from both companies’ boards and is pending regulatory review and shareholder approval, with completion expected within this year. The agreement includes a US$60 million break fee clause. National Bank of Canada is acting as the financial advisor for Pan American, while Bank of Montreal and GenCap Mining Advisors are part of MAG’s advisory team. As of the end of last year, Pan American held US$887 million in cash and short-term investments, providing the financial flexibility to support its strategic expansion.
