Mexican authorities have granted Canada's First Majestic Silver (NYSE:AG) (TSX:FR) their antitrust clearance to go ahead with its planned acquisition of fellow miner Primero Mining (TSX:P), in a cash and stock deal valued at $320 million, including debt.
The approval was the final government agency's permission the parties required to close the deal, Primero said in a statement.
With the friendly takeover First Majestic gains Primero's flagship asset, the San Dimas silver-gold mine, located in the state of Durango.With the transaction, first announced in January, First Majestic gains access to Primero's flagship asset, the San Dimas silver-gold mine, located in what the Mexico-focused company defines as it "backyard", in the state of Durango.
The all-share deal takes First Majestic's annual output to 30 million equivalent oz. silver a year, up from the 16.2-million equivalent oz. silver it produced in 2016.
As a result of the agreement, Wheaton Precious Metals (NYSE, TSX: WPM) - the world's largest pure silver and gold streaming company - ended its existing San Dimas silver purchase agreement with Primero, replacing it with a fresh contract with the mine's new owner.
The stream lowers the amount of payable metal compared to the current stream, which First Majestic has said would allow for greater free cash flow generation at San Dimas. In addition, basing the new stream on gold-equivalent production is likely to improve First Majestic's exposure to silver.
Primero said the deal is expected to close on Thursday.