Editorial: Minefinders turns buyerfinder

Showing just how hard it is these days to find high-quality primary silver prospects to buy, Pan American Silver has turned some silver bugs’ heads by easing up on its long-held silver purity and tabling a friendly $1.5-billion offer for the seasoned Vancouver-based gold junior Minefinders and its flagship Dolores gold-silver mine in northern Mexico.

Despite the gold “contamination,” the acquisition looks to be a good fit for Pan American, giving it an immediate new source of cash as it builds its Navidad silver mine in Argentina, as well as more weighting of assets outside politically volatile regions of South America. 

Minefinders shareholders have had a great run with their company since Dolores was discovered in 1996, and can only be pleased with the juicy 36% takeover premium and the handing over of the reins to a top-notch outfit like Pan American.

The combined company would have a market of $4 billion, US$570 million in cash, little debt, and combined silver production in 2011 of 26 million oz. from eight mines in Mexico, Peru, Argentina and Bolivia, in descending order of importance.

But the larger Pan American could be producing at an astonishing rate of 50 million oz. silver by 2015, tapping into pro forma reserves of 350 million oz. silver and 3 million oz. gold, and even more in the resource category.

• In a remarkably similar M&A story involving silver and gold, and Mexico and Argentina, Rob McEwen’s year-long dream of merging his two juniors US Gold and Minera Andes has come to fruition as shareholders of both camps gave their blessings.

The new company, named McEwen Mining, will be led by 25% owner Rob McEwen, who will be chairman, president and CEO, along with remaining directors and officers to consist of Leanne Baker, Michele Ashby, Michael Stein, Richard Brissenden, Allen Ambrose, Donald Quick, Perry Ing, William Faust, Ian Ball, Stefan Spears and Nils Engelstad.

Flagship projects will include a 49% interest in the operating San Jose silver-gold mine in southern Argentina, the well-advanced El Gallo silver-gold mine project in Sinaloa, Mexico, the Gold Bar gold project in Nevada, plus the Los Azules copper deposit in San Juan, Argentina. 

In true Rob McEwen style, the company will start its life with US$80 million in cash and equivalents and no debt.

• On the eve of the Association for Mineral Exploration British Columbia’s top-quality Roundup convention in Vancouver, Halifax-based Metals Economics Group (MEG) has calculated that Canada has been the world’s top country for exploration for the last ten years, since overtaking Australia in 2002.

MEG finds in its latest edition of Corporate Exploration Strategies that Canada’s allocation for 2011 represents 18% of worldwide exploration spending for precious and base metals, diamonds, uranium, and some industrial minerals.

It notes that Ontario, Quebec and B.C. accounted for more than 60% of the $3.1 billion in planned Canadian nonferrous exploration spending in 2011, and that of the 781 companies that planned to explore in Canada in 2011, almost 91% were based in Canada.

Worldwide, MEG calculates that Canadian-based companies accounted for more than half of the 2,400+ active explorers it follows, and together they accounted for 40% of the $17.25 billion budgeted by all companies for nonferrous exploration in 2011 (which covers about 95% of worldwide commercially oriented nonferrous exploration budgets).

MEG concludes that worldwide exploration budgets in 2011 were up 50% from 2010 to set a new all-time high. 

• The World Gold Council comments that after a “tumultuous year” in global financial markets, gold was “one of few asset classes to deliver positive returns.” During 2011, the U.S. dollar price of gold rose by 9% to end the year in London at US$1,531 per oz., marking the 11th consecutive year of price increases.

During the first part of January 2012, the price of gold has continued its upward trend above the US$1,600-per-oz. level, and had just popped its head above US$1,700 again at presstime as the U.S. Federal Reserve recommitted to “easy money” policies going forward.