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VANCOUVER, BC and TORONTO, Nov. 4, 2022 – Pan American Silver Corp. (TSX: PAAS) (Nasdaq: PAAS) (“Pan American“) and Agnico Eagle Limited (TSX: AEM) (NYSE: AEM) (“Agnico Eagle“) are pleased to announce that we have delivered a definitive binding offer (the “Binding Offer“) to the board of directors of Yamana Gold Inc. (“Yamana“) pursuant to which Pan American would acquire all of the issued and outstanding common shares of Yamana (the “Yamana Shares“) and Yamana would sell certain subsidiaries and partnerships which hold Yamana’s interests in its Canadian assets to Agnico Eagle, including the Canadian Malartic mine. The transaction shall be implemented by way of a plan of arrangement under the Canada Business Corporations Act (the “Arrangement”).
The consideration consists of 153,539,579 common shares in the capital of Pan American (“Pan American Shares“); US$1.0 billion in cash contributed by Agnico Eagle; and 36,089,907 common shares in the capital of Agnico Eagle (“Agnico Eagle Shares“). Under the Binding Offer, each Yamana Share would be exchanged for approximately US$1.04 in cash, 0.1598 Pan American Shares and 0.0376 Agnico Eagle Shares, for an aggregate value of US$5.02 per Yamana Share based on the closing price of each Pan American Share and Agnico Eagle Share on November 3, 2022. The Binding Offer is not subject to any financing condition or additional due diligence.
Pan American and Agnico Eagle have been informed that Yamana’s Board of Directors, in consultation with Yamana’s financial and legal advisors, have determined that the Binding Offer constitutes a “Yamana Superior Proposal” as defined in the arrangement agreement dated May 31, 2022 (the “Gold Fields Agreement“) between Yamana and Gold Fields Limited (“Gold Fields“) and that Yamana has notified Gold Fields of its intention to accept the Binding Offer, subject only to Gold Fields’ “right to match” under the Gold Fields Agreement.
The Arrangement would establish Pan American as a major precious metals producer in Latin America, with approximately 28.5 to 30.0 million ounces of annual silver production and approximately 1.1 to 1.2 million ounces of annual gold production, based on Pan American’s and Yamana’s 2022 guidance. The combined portfolio will consist of 12 operations concentrated in Latin America, a region where Pan American has over 28 years of proven expertise and experience operating mines. With the addition of four operating mines generating strong free cash flow, the Arrangement is expected to enhance Pan American’s overall financial position and improve its ability to internally fund its growth projects.
The consolidation of the Canadian Malartic mine would place a world-class asset into the hands of the best positioned operator to develop the mine’s full potential and gives Agnico Eagle operational control during the remaining development period of the Odyssey project and future projects. Most importantly, Agnico Eagle has the unique ability to monetize future additional mill capacity at the Canadian Malartic mine, given its extensive operations and strategic land position in the region.
Pan American’s unparalleled track record in Latin America and Agnico Eagle’s deep existing knowledge of the Canadian Malartic mine and presence in the Abitibi region uniquely position the two companies to effectively operate and rapidly unlock further value from Yamana’s portfolio of assets to the benefit of the shareholders and other stakeholders of all three companies.
Michael Steinmann, President & CEO of Pan American, commented: “The combination of our existing portfolio with Yamana’s high-quality assets in Latin America would create a powerful precious metals mining company in the Americas with leading exposure to silver, and represents an exciting opportunity for growth for both Yamana and Pan American shareholders. The transaction is aligned with our disciplined approach of creating shareholder value through accretive acquisitions, together with our expertise in discovering, building and operating mines. Our established presence and expertise in Latin America will enable us to leverage the synergies and growth potential of Yamana’s assets in the region in a way that is highly complementary to Pan American’s existing mines there.”
Ammar Al-Joundi, President & CEO of Agnico Eagle, added: “This transaction is a continuation of Agnico Eagle’s strategy to operate in regions where we believe we have a competitive advantage, in this case over 50 years of operating history. The full integration of the Canadian Malartic team and landholdings into our operational base in the region would enhance our Abitibi operating platform, placing Agnico in the unique position to further optimize the asset and unlock potential value through exploration and the leveraging of existing infrastructure, people and regional relationships.”
Agnico Eagle and Pan American are subject to customary restrictions in connection with making a “superior proposal” for Yamana. As a result, Agnico Eagle and Pan American are unable to make any further comment on the subject matter of this press release or engage in any communication that could influence the voting of securities of Yamana. Accordingly, we will not be hosting a conference call or investor meetings and cannot respond to media or other inquiries at this time. As soon as Agnico Eagle and Pan American are legally permitted to do so, they will actively engage with shareholders and other stakeholders to discuss the transaction.
Strategic Rationale for Pan American and Agnico Eagle
The acquisition of Yamana by Pan American and Agnico Eagle would create significant value and deliver multiple benefits to Pan American’s and Agnico Eagle’s shareholders:
The Binding Offer would offer the following key benefits:
Increased Value per Yamana Share
Transaction has low Execution Risk
Agnico Eagle Investment in Pan American
Under the Binding Offer, each Yamana Share would be exchanged for approximately US$1.04 in cash, 0.1598 Pan American Shares and 0.0376 Agnico Eagle Shares, for an aggregate value of US$5.02 per Yamana Share. In addition, all outstanding restricted stock units of Yamana will be satisfied in cash.
The Arrangement contemplated under the Binding Offer will be implemented by way of a court-approved plan of arrangement under the Canada Business Corporations Act and will require the approval of 66 2/3% of the votes cast by the holders of Yamana’s common shares present in person or represented by proxy at a special meeting to consider the Arrangement. The completion of the Arrangement will also require approval of a simple majority of Pan American shareholders at a special meeting.
The completion of the Arrangement will also be subject to regulatory approvals and closing conditions customary in transactions of this nature. The agreement governing the Arrangement (the “Arrangement Agreement“) will provide for customary deal-protection provisions, including mutual non-solicitation covenants and rights to match superior proposals. The Arrangement Agreement will include a reciprocal termination fee of US$250 million, payable by Yamana to Pan American, or US$375 million payable from Pan American to Yamana, as the case may be, under certain circumstances.
The Arrangement would close late in the first quarter of 2023.
At closing, existing Pan American and Yamana shareholders would own approximately 58% and 42% of Pan American, respectively. Similarly, at closing, existing Agnico Eagle and Yamana shareholders would own approximately 93% and 7% of Agnico Eagle, respectively.
None of the securities to be issued pursuant to the Arrangement Agreement have been or will be registered under the United States Securities Act of 1933, as amended (the “U.S. Securities Act“), or any state securities laws, and any securities issued in the Arrangement are anticipated to be issued in reliance upon available exemptions from such registration requirements pursuant to Section 3(a)(10) of the U.S. Securities Act and applicable exemptions under state securities laws. This press release does not constitute an offer to sell or the solicitation of an offer to buy any securities.
Pan American and Agnico Eagle have been advised by Yamana that it has provided notice of the Binding Offer to Gold Fields as required by the Gold Fields Agreement and has advised Gold Fields that the five business day matching period (the “Gold Fields Response Period“) has commenced, during which Gold Fields has the right, but not the obligation, to propose to amend the terms of the Gold Fields Agreement for the Binding Offer to cease to be a Yamana Superior Proposal (the “Match Right“). The Gold Fields Response Period expires on November 15, 2022. Under the Gold Fields Agreement, the Binding Offer may be accepted and the Arrangement Agreement entered into between Pan American, Agnico Eagle and Yamana only upon the expiry or waiver by Gold Fields of the Match Right during the Gold Fields Response Period. The Arrangement Agreement would only become effective upon the Gold Fields Agreement not being approved by Yamana Shareholders at the Yamana special meeting scheduled for November 21, 2022 (the “Activation Date“). Upon termination of the Gold Fields Agreement in these circumstances, Yamana would pay a termination fee of US$300 million to Gold Fields within two business days of such termination.
Pan American currently does not own any Yamana Shares. Agnico Eagle currently owns 70,565 Yamana Shares, representing less than 1% of the issued and outstanding shares of Yamana.
At this time, there can be no assurance that the Binding Offer will lead to a termination of the Gold Fields Agreement and the execution of a definitive Arrangement Agreement with Pan American and Agnico Eagle.
BMO Capital Markets and GenCap Mining Advisory Ltd. are acting as financial advisors to Pan American in connection with the Binding Offer. BMO Capital Markets and National Bank Financial have each provided a fairness opinion to Pan American’s Board of Directors. Borden Ladner Gervais LLP is serving as counsel to Pan American.
Trinity Advisors Corporation and Maxit Capital LP are acting as financial advisors to Agnico Eagle in connection with the Binding Offer. Davies Ward Phillips & Vineberg LLP is serving as counsel to Agnico Eagle.
Pan American owns and operates silver and gold mines located in Mexico, Peru, Canada, Argentina and Bolivia. It also owns the Escobal mine in Guatemala that is currently not operating. Pan American provides enhanced exposure to silver through a large base of silver reserves and resources, as well as major catalysts to grow silver production. Pan American has a 28-year history of operating in Latin America, earning an industry-leading reputation for sustainability performance, operational excellence and prudent financial management.
Learn more at www.panamericansilver.com(opens in a new window).
Agnico Eagle is a senior Canadian gold mining company, producing precious metals from operations in Canada, Australia, Finland and Mexico. It has a pipeline of high-quality exploration and development projects in these countries as well as in the United States and Colombia. Agnico Eagle is a partner of choice within the mining industry, recognized globally for its leading environmental, social and governance practices. Agnico Eagle was founded in 1957 and has consistently created value for its shareholders, declaring a cash dividend every year since 1983.
Learn more at www.agnicoeagle.com(opens in a new window).
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