Torex Gold buys Prime in $449M Mexico expansion

Torex Gold Resources (TSX: TXG), the largest gold producer in Mexico, is acquiring Prime Mining (TSX: PRYM; US-OTC: PRMNF) and its primary Los Reyes gold-silver project in Sinaloa in an all-share deal.

Under the a $449-million (US$327-million) agreement, Prime shareholders will receive 0.06 Torex shares for each Prime share, translating to roughly 10.5 million new Torex shares, or nearly 11% of the company. 

The acquisition, which follows the purchase in June of junior Reyna Silver, enhances Torex’s medium and long-term growth potential by adding a high-quality advanced exploration/development-stage asset, the company said. Reyna imparted access to early-stage exploration projects in northern Mexico and Nevada.

“The acquisition of Prime Mining, and the previously announced all-cash acquisition of Reyna Silver, support our strategy to systematically build a diversified, Americas-focused precious metals producer,” Torex CEO Jody Kuzenko said in the statement.

Shares in Torex Gold fell 6.6% on Monday morning in Toronto to $40.04 apiece, valuing the company at $3.48 billion. They’ve traded in a 52-week range of $19.01 to $49.25. Prime Mining stock rose 9.9% to $2.38 each, giving the company a market value of $401 million. It has ranged from $1.13 to $2.46 over the past year.  

Silver boost

The new deal also diversifies Torex’s portfolio with significantly increased silver exposure.

The Los Reyes gold-silver project hosts 1.47 million indicated tonnes grading 1.81 grams gold per tonne and 83.1 grams silver for 85,000 oz. gold and 3.9 million oz. silver within open-pit constrained shells, according to a May 2023 resource update. It has 36.9 million inferred tonnes grading 0.95 gram gold and 38.6 grams silver for 1.13 million oz. gold and 45.9 million oz. silver.  

Torex operates the Morelos mine complex 180 km southwest of Mexico City. The site includes the Media Luna and ELG underground deposits, the ELG open pit, a fully integrated processing plant, and supporting infrastructure. 

Morelos produces more than 450,000 oz. of gold annually, making Torex the largest gold producer in Mexico. The company also plans to bring a third underground deposit, EPO, into production by late 2026.