Pan American Silver (TSX, NYSE: PAAS) has taken a 14.7% stake in Galleon Gold (TSX-V: GGO) after buying 18.75 million units in the explorer and developer via private placement.
The Canadian precious metals miner paid C60¢ per unit as part of Galleon’s wider 50-million-unit financing. Each unit includes one common share and half a warrant, with full warrants exercisable at C75¢ until Dec. 4, 2027. Galleon holds the West Cache project in northern Ontario and the Neal project in Idaho.
The investment gives Pan American 18.75 million common shares, 9.38 million warrants and its previously issued unsecured convertible debenture, amounting to 14.7% ownership on a non-diluted basis and about 29.7% on a partially diluted basis.
Deal maker
The Galleon stake comes just over three months after Pan American Silver acquired MAG Silver in a $2.1-billion (C$2.9-billion) deal that hands Pan American the Juanicipio mine in Mexico, one of the world’s largest and highest-grade primary silver mines.
Shares in Pan American Silver gained 1.9% to C$62.85 apiece on Friday morning in Toronto, for a market capitalization of almost C$26.7 billion. Galleon Gold shares grew 5.8% to 73¢ each, for a market value of $55.3 million.
This marks Pan American’s first direct equity stake in Galleon, although it already held rights to acquire shares through the debenture. The company agreed not to convert the debenture or exercise warrants above a 19.9% ownership threshold unless Galleon shareholders approve it as a control person.
Pan American said it bought the securities for investment purposes and may adjust its holdings depending on market conditions and strategic needs.
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