10.15
Pan American and Aquiline Resources (TSX: AQI; not rated) announced a friendly merger, with Pan American offering 0.2495 PAA common share and 0.1 warrant to buy PAA shares for each AQI share, valuing Aquiline at C$7.47/sh. AQI’s management and board are in support of the offer. In RBC CM’ view, Pan American clearly needed to acquire additional silver projects to replenish the company’s growth pipeline. RBC CM considers Aquiline’s Navidad project to be one of the better undeveloped silver projects in the world, and a good fit for Pan American’s mine building team, which has just completed construction of the Manantial Espejo silver-gold mine in southern Argentina. RBC CM believes the permitting/political risks associated with the Navidad project are likely to be resolved in favour of allowing future mine development. With the assumption of successful acquisition(s) to replenish Pan American’s growth profile, RBC CM believes PAA shares can maintain their premium trading multiples among the silver equities. RBC CM has increased its price target to $29 from $25.
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