Tahoe snaps up two Ontario gold mines: to buy Lake Shore Gold for $945M

Lake Shore Gold’s Timmins West Mine in Timmins, Ont. PHOTO: Lake Shore Gold

VANCOUVER—Two gold mines in Timmins, Ont. are changing hands.

Nevada-headquartered Tahoe Resources Inc. has announced it and Lake Shore Gold Corp. are joining forces, merging in an all stock deal valued at approximately $945 million—assuming the conversion of in-the-money convertible debentures. The companies say the friendly deal will create a leading precious metals producer with significant low-cost production, zero debt and operations in several areas throughout the Americas. Tahoe operates Escobal mine in Guatemala as well as La Arena and Shahuindo mines in Peru, while Lake Shore runs the Timmins West and Bell Creek mines in Northern Ontario .

“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,” Kevin McArthur, executive chair of Tahoe, said. “We are impressed by the long-term presence and see tremendous regional opportunities going forward.”

The all-stock agreement would see Tahoe shareholders control 74 per cent of the new company, while Lake Shore owners would hold 26 per cent. The deal offers an approximately 25 per cent premium on Lake Shore shares against their 20-day volume weighted average.

“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,” Tony Makuch, president and CEO of Lake Shore Gold, said. “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.”

Shareholders of both companies are expected to meet to vote on the arrangement in early April. If approved, Makuch will join Tahoe as president of the company’s Canadian operations.