Tahoe Resources to buy Lake Shore Gold in C$945 million deal


Tahoe Resources Inc. (TSX: THO, NYSE: TAHO) and Lake Shore Gold Corp. (TSX: LSG) announced that they have entered into a definitive agreement under which Tahoe will acquire all of the issued and outstanding shares of Lake Shore in a transaction valued at C$945 million.
According to Peter Koven of the Financial Post, the move is being hailed as a “logical transaction” that will give Tahoe some diversification and allow Lake Shore to quickly expand its projects.
As quoted in the press release:

Pursuant to the Arrangement Agreement, all of the issued and outstanding common shares of Lake Shore Gold will be exchanged on the basis of 0.1467 common shares of Tahoe for each common share of Lake Shore Gold (the “Exchange Ratio”) ). Upon closing of the transaction, existing shareholders of Tahoe and Lake Shore Gold will own approximately 74% and 26% of the company pro forma, respectively, on a fully diluted in-the-money basis.
The exchange ratio involves consideration of C$1.71 per Lake Shore Gold common share, based on the closing price of Tahoe common shares on the Toronto Stock Exchange (TSX) on February 5, 2016, which represents a 14.8% premium to the closing price of Lake Shore Gold. Shore Gold on February 5, 2016 and a 28.6% premium to the closing stock of Lake Shore Gold on February 4, 2016. Based on each company’s 20-day volume-weighted average price on the TSX, the exchange ratio implies a premium of 25.7% and 30.4% to the common shares of Lake Shore Gold for the periods ending February 5, 2016 and February 4, 2016, respectively. The implied equity value (assuming in-the-money conversion of convertible debentures) is C$945 million.

Kevin McArthur, Executive Chairman of Tahoe, commented:

The combination with Lake Shore Gold solidifies Tahoe’s position as a new leader in precious metals by adding another low-cost operation in Timmins, one of the most prolific gold camps in the world. We are impressed with the long-term presence and see huge regional opportunities in the future. We look forward to continuing the strong relationships that Lake Shore Gold has nurtured in Timmins with local stakeholders. Finally, I am very pleased to welcome Alan Moon, the current President of Lake Shore Gold, to our Board of Directors upon completion of the transaction, as well as Tony Makuch, the current CEO of Lake Shore Gold. , on the Tahoe management team as president. Canadian operations.

Click here to read the full press release from Tahoe Resources Inc. (TSX:THO,NYSE:TAHO) and Lake Shore Gold Corp. (TSX:LSG).


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