Silver producers in Latin America set for M&A action - Fortuna
Jorge Ganoza Durant, CEO of Fortuna Silver Mines, expects a wave of mergers and acquisitions among its Latin American peers as companies combine to increase their growth prospects.
Author: Thomas BiesheuvelPosted: Tuesday , 30 Oct 2012
LONDON (Bloomberg) -
Fortuna Silver Mines Inc., which produces the metal in Mexico and Peru, expects a wave of takeovers and mergers among its Latin American peers as companies combine to increase their growth prospects.
"There will be a natural phase of consolidation, you need a certain critical mass to face the challenges of the future," Jorge Ganoza Durant, chief executive officer of Fortuna, said in an interview in London today. "There is a small universe of emerging producers with which we could potentially join forces through a merger. I believe growth is imperative."
Silver deals have totaled $2.2 billion so far this year, headed for the highest annual total since 2008, according to data compiled by Bloomberg. Pan American Silver Corp. bought Minefinders Corp. for about $1.1 billion in this year's biggest deal to boost its output of the metal in Mexico.
Producers are seeking to benefit from silver prices that have almost doubled since the end of 2009. The metal averaged about $34.5 an ounce in the third quarter compared with $29.9 a year earlier. Fortuna advanced 1.4 percent to C$5.11 in Toronto trading on Oct. 26, valuing the company at about C$640 million ($640 million).
Fortuna expects production of about 4 million ounces of silver this year and 20,000 ounces of gold, exceeding the Vancouver-based company's output targets, Ganoza said.
The San Jose mine in Mexico is expanding to produce 3.5 million ounces a year, taking total output to about 4.5 million ounces in 2013 and 5.5 million ounces in 2014, Ganoza said. The company will make a decision on a further increase at the Mexican mine next year.
"There could be opportunities to support higher production," he said. "We will be likely looking at an increment of in the range of 15 to 20 percent."
--Editors: John Viljoen, Tony Barrett
To contact the reporter on this story: Thomas Biesheuvel in London at tbiesheuvel@bloomberg.net
To contact the editor responsible for this story: John Viljoen at jviljoen@bloomberg.net
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