Excellon makes move for fellow Mexican silver miner Silver Eagle
Canadian/Mexican silver miner, Excellon Resources is to buy fellow silver miner Silver Eagle Mines in a stock deal which values Silver Eagle at about C$3.5 mln for the latter's mill and will increase output.
Posted: Friday , 06 Mar 2009
Canada's Excellon Resources Inc (EXN.TO: Quote) agreed to buy cash-strapped Silver Eagle Mines Inc (SEG.TO: Quote) for about C$3.5 million ($2.74 million) in stock, giving it access to the mill at Silver Eagle's Miguel Auza mine in Mexico.
Silver Eagle shareholders will get 6 Canadian cents a share, a discount of about 43 percent to Silver Eagle's closing price of C$0.105 on Wednesday.
Under the terms of the deal, Silver Eagle shareholders will get 0.2704 Excellon common shares for each share held.
Excellon has agreed to provide Silver Eagle with a bridge loan of $500 thousand and will provide any reasonable amounts required to facilitate the closing of the deal, it said in a statement.
Hurt by the a fall in prices for silver, lead and zinc prices, Silver Eagle had suspended all operations and put the Miguel Auza mine on a care and maintenance basis in mid-December last year as it pursued strategic alternatives.
Excellon will use the mill at Miguel Auza to process all ore produced from its Platosa mine and put the construction of its own mill at the mine on hold indefinitely, it said.
"We get access to a very good quality mill immediately, which was a sort of a big hole in our operations," an Excellon spokesperson told Reuters.
Excellon added it would be able to increase near-term production at its Platosa mine to 150 tonnes per day and plans to increase production to 250 tonnes per day or more in 2010.
Excellon said it would leave the Miguel Auza mine on a care and maintenance basis as it reviewed its future potential.
Shares of Silver Eagle were trading down 29 percent at C$0.075, while those of Excellon were trading up 4.4 percent at C$0.235 in afternoon trade on the Toronto Stock Exchange.
($1=1.279 Canadian Dollar) (Reporting by Krishna Chaithanya in Bangalore; Editing by Savio D'Souza)
© Thomson Reuters 2008. All rights reserved.