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First Majestic Buys Gatos Silver for $970m in Mexico Expansion

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open pit silver mine

First Majestic Silver has announced a definitive merger agreement with Gatos Silver to acquire all issued and outstanding shares of Gatos in a $970 million all-share transaction marks a major consolidation of silver mining assets in Mexico.

This acquisition is valued at $13.49 per Gatos share, with Gatos shareholders receiving 2.550 First Majestic shares for each Gatos share held. Gatos shareholders will own approximately 38% of the combined entity following the merger.

The acquisition will integrate Gatos’ high-grade Cerro Los Gatos mine into First Majestic’s existing portfolio, which includes the San Dimas mine in Durango and the Santa Elena mine in Sonora.

The merger consolidates three key silver-producing districts in Mexico and is expected to deliver cost savings, supply chain, and procurement synergies.

Additionally, First Majestic owns the La Encantada silver mine in Coahuila and the Jerritt Canyon gold project in Nevada.

This move is expected to boost the merged company’s silver-equivalent output to between 30 and 32 million ounces annually, including 15 to 16 million ounces of silver at all-in sustaining costs (AISC) of $18.00-$20.00 per silver-equivalent ounce.

The macroeconomic environment in Latin America has contributed to increased foreign investment and is expected to spur further mergers and acquisitions in the region throughout 2024 and into 2025.

Gatos Silver share price rose nearly 8% in pre-market trading after the announcement.

Mexico Silver Mining

Mexico has been the top producer of silver for more than a decade. In 2022, the country produced approximately 200 million ounces of silver, accounting for about 24% of the world’s total silver production.

Mexico’s geology is particularly favorable for silver mining, with abundant epithermal veins that contain high-grade silver deposits found alongside other metals like lead, zinc, and gold. The Sierra Madre Occidental and the Central Mexican Silver Belt are two of the most prolific silver-bearing regions.

While Mexico remains the top silver producer, the mining sector faces various challenges, including resource depletion at older mines, increased regulatory pressures, and security concerns in some regions. Despite these hurdles, investment in new silver mining projects continues to grow.

New exploration and mining operations are underway, especially as global silver demand increases due to its use in industrial applications such as electronics, solar panels, and electric vehicles.

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Largest Silver Nuggets Ever Discovered

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Large gold nuggets have been discovered all over the world. However, large silver nuggets are much less common and are rarely discovered. Argentum ore deposits are often found mixed with other metals such as gold, copper and lead. Pure silver deposits in nature are very uncommon.

Smugglers Mine, Aspen, Colorado

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Silver was discovered in the Smugglers area shortly after Colorado became a state in the 1870s.

The largest documented silver nugget was discovered in Aspen in 1894. It weighed 1,840 pounds, roughly 834 kilograms and assayed as 96% pure silver.

The year prior to the discovery was one of the worst financial crisis in American history, the Panic of 1893, which had driven precious metals prices to record lows. Historical records from the St Louis Federal Reserve show that the average silver spot price in 1894 was $0.64 per troy ounce which would make the nugget worth roughly $17,160 to the mining company. Before it was melted down, a 12.5 pound section of it was removed and is currently on display at the Denver Museum.

During its years of operation, an extensive system of tunnels was dug by miners that extends more than 1,000 feet underground and below the city. During the height of mining activity the mine was responsible for nearly 20% of the world’s total silver output.

Silvery Slocan 125 ton Galena Boulder

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The Kootenay region is is known today for snowy peaks, hot springs, Arrow Lakes, and the headwaters of the Columbia River. In the 1880s, rail lines were extended north and this the part of the Rocky Mountains was the site of one of the largest silver rushes in North America.

During this time, men unearthed a boulder containing 125 tons of galena, which is a naturally occurring alloy of lead, sulfur and silver. Although the percentage of silver in galena is small at just .05%, the sheer size of this boulder yielded 6,250 kilos of pure silver.

The largest silver mine in the world today is the Polkowice-Sieroszowice mine in Poland. In 2018, the mine produced 196,000 tonnes of copper and over 428 tonnes of silver.

“Big Boy” Nugget – 417.8 pounds – Miami, AZ

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In 2018, three gigantic silver boulders were discovered in Arizona, along with an assortment of large silver nugget specimens. The largest of the silver nuggets weighing 417 pounds was found in an arroyo. It is believed that at one time these large boulders broken free from a vein outcropping a short distance away.