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.