Market Overview

Tahoe Resources Announces Acquisition Of Lake Shore Gold


Tahoe Resources Inc (NYSE: TAHO), a mineral exploration, development and mine operator, announced on Monday it will acquire Lake Shore Gold Corp (NYSE: LSG), a Canada-based gold producer with operations in the Timmins Gold Camp of Northern Ontario.

As part of the 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 ratio implies a total consideration of C$1.71 per Lake Shore Gold common shore based on the closing price of Tahoe's stock on the Toronto Stock Exchange on February 5, 2016.

Lake Shore Gold's NYSE listed stock was trading higher by more than 12 percent following the announcement.

Tahoe Resources noted that the combined entity will create a leading Americas based precious metals producer and one of the largest and highest grade sliver miners globally.

Tahoe Resources continued that all of the combined entity's operations generate free cash flow in the current commodity price environment.

Tahoe Resources also added the following 2016 production guidance: 18-21 million ounces (mozs) of silver at total cash costs of US$7.50-US$8.50/oz and all-in sustaining costs (AISC) of US$10.00-US$11.00/oz and 370,000-430,000 ounces of gold at total cash costs of US$675-US$725/oz and AISC of US$950-US$1,000/oz.

Kevin McArthur, Executive Chair of Tahoe, said, "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."

Tony Makuch, President and CEO of Lake Shore Gold, stated, "The combination with Tahoe represents a unique opportunity for our shareholders to gain exposure to a high-quality portfolio of long life producing mines with substantial mineral reserves. Today's announcement of an initial resource at our 144 Gap Deposit is a perfect example of the long-term growth potential of our Timmins portfolio. Tahoe's strong balance sheet and superior cash generating capabilities will provide Lake Shore Gold with the financial resources to unlock the enormous growth potential of our asset base."


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Posted-In: Canadian Miners gold production Kevin McArthur Lake Shore Gold mining Silver ProductionM&A News