Torex Gold Resources Inc. (TSX: TXG | OTCQX: TORXF) announced a deal to acquire Prime Mining Corp. (TSX: PRYM | OTC: PRMNF | FSE: O4V3). The all-share transaction was reported at approximately $449 million (US$327.69).
Based on an implied Enterprise Value (EV) of US$322.1 million and total Indicated and Inferred gold-equivalent resources of approximately 3.0 million ounces, the transaction values Prime at roughly US$108 per gold-equivalent ounce.
Prime shareholders will receive 0.060 Torex shares for each share of Prime. Using Torex’s July 25 stock price, the deal values Prime shares at C$2.57, a 32.4% premium to the 30-day average price and 18.5% premium to the previous closing price.
When the deal closes, Torex will issue approximately 10.5 million shares, giving Prime shareholders about 10.7% ownership of the combined company. The all-stock deal structure allows Prime shareholders maintain an interest in the future of Los Reyes and benefit from Torex’s existing production.
Strategic Rationale
The acquisition gives Torex control of the Los Reyes gold-silver project in Mexico. It aligns with the company’s objective of building a diversified, precious metals producer in the Americas.
The Los Reyes project is a good fit for Torex’s existing operations in Mexico, including the cash-flowing Morelos Complex. Torex indicated that its current balance sheet and cash flow should support the development of Los Reyes without having to take additional debt.
The transaction also increases Torex’s exposure to silver and expands its total mineral resource base.
Los Reyes Asset Profile
Los Reyes is a high-grade, low-sulphidation epithermal gold-silver project in the Sinaloa State of Mexico. It is in the advanced exploration to development stage and hosts a reported resource (as of October 15, 2024) of:
- Indicated Resource: 49.0 million tonnes at 0.95 g/t gold (1.49 million ounces contained Au) and 34.2 g/t silver (54.0 million ounces contained Ag)
- Inferred Resources: 17.2 million tonnes at 0.97 g/t gold (538,000 ounces contained Au) and 39.0 g/t silver (21.6 million ounces contained Ag).
The resources contain both underground and open-pit mining areas. Prime has been actively working the site since it acquired the project in 2019. As the project is at the resource stage, no production guidance or project-level economic studies have been published yet.
Outlook
The deal requires the approval of the Prime shareholders, the court in British Columbia, and other regulatory approvals, such as the Mexican antitrust approval and the TSX. Torex shareholders are not required to approve the deal.
Closing is expected in the second half of 2025, pending all necessary approvals.
Torex plans to integrate Los Reyes into its Mexican development plan and operations. The company believes it can leverage its local knowledge, licenses, and local connections to move the Los Reyes project forward towards production.
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