Pan American Silver (NSYE:PAAS) has announced a $2.1 billion acquisition of MAG Silver in a cash-and-stock deal that will significantly expand its footprint in the silver mining industry. The agreement, revealed Sunday, will give Pan American a 44% interest in the Juanicipio mine, a high-grade underground silver operation located in Zacatecas, Mexico. Fresnillo plc, which currently operates the mine, holds the remaining 56% stake.

The Juanicipio mine is recognized as one of the highest-grade and lowest-cost silver operations in the world. With the acquisition, Pan American increases its exposure to silver production through an asset already generating considerable returns. The company said Juanicipio is expected to produce between 14.7 and 16.7 million ounces of silver in 2025. Based on the 44% interest Pan American is acquiring, its share of production will range between 6.5 and 7.3 million ounces.

Pan American’s president and CEO, Michael Steinmann, said in a statement that the acquisition adds a significant high-margin asset to the company’s portfolio. “Juanicipio is a large-scale, high-grade, low-cost silver mine that will meaningfully increase Pan American’s exposure to high margin silver ounces,” he said. Steinmann also pointed to the strategic nature of the deal, highlighting its alignment with Pan American’s focus on operations throughout the Americas.

The terms of the deal include a payment of $500 million in cash and 0.755 Pan American shares for each MAG share. Based on recent closing prices, the offer values MAG Silver at $20.54 per share, a 21% premium over its most recent market price and a 27% premium over its 20-day volume-weighted average as of May 9. Once the transaction closes, MAG shareholders will own about 14% of Pan American on a fully diluted basis.

MAG Silver CEO George Paspalas described the deal as a strong outcome for shareholders. He said the acquisition offers “an immediate premium” while giving MAG investors continued exposure to silver through Pan American’s larger and more diversified portfolio. Paspalas also noted that Pan American’s track record and scale bring further potential for growth and financial stability, especially in a volatile commodities market.

The transaction is structured as a plan of arrangement. It will not require shareholder approval from Pan American or a review under the Investment Canada Act. MAG shareholders who are residents of Canada will have access to a tax rollover option if they choose to receive Pan American shares as part of their compensation.

Pan American expects that its share of free cash flow from Juanicipio will reach $98 million in 2025, based on full-year production and silver prices, with the mine projected to generate around $200 million in free cash flow in total. Additionally, the company will add 58 million ounces of silver to its reserves through this acquisition.

The deal also strengthens Pan American’s position as one of the leading silver producers in the Americas. The company has focused heavily on silver-rich assets across the region, and the addition of Juanicipio—operated by Fresnillo, one of the most experienced miners in Mexico—fits that strategy. Company officials also acknowledged the cooperative nature of negotiations and recent site visits with Fresnillo and the mine’s management.

The above references an opinion and is for information purposes only. It is not intended to be investment advice. Seek a licensed professional for investment advice. The author is not an insider or shareholder of any of the companies mentioned above.

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