Pan American Silver Corp (TSE: PAAS) (NYSE: PAAS) (FRA: PA2) is building on a previous convertible debenture financing in Galleon Gold Corp (CVE: GGO) (OTCMKTS: PNCKF) (FRA: 3H90) with an equity investment of C$11.25 million.
The high-ranking international silver producer now holds a 14.7 per cent stake in the Canadian junior gold prospector. Pan American acquired 18.75 million units comprised of one share and half a warrant apiece on Dec. 4.
Galleon has appealed to Pan American because of its proven gold resource in a top-tier mining district. According to the latest mineral resource estimate, the junior miner’s West Cache operation in northern Ontario holds 472,000 indicated gold ounces.
Through this capital injection, Pan American is seeking to secure a sizeable stake in future gold production as exploration costs continue to rise alongside the price of the precious metal. It also helps to diversify the major silver producer’s mining portfolio with an additional gold interest.
Conveniently, the project resides a mere 7 kilometres from Pan American’s Timmins West Mine. This underground gold mine and Galleon’s development-stage project are situated within a district that has produced over 70 million ounces of gold since 1910.
Timmins is still estimated to hold over 800,000 ounces of proven and probable gold reserves. It has been in commercial production since 2011 and has 6 to 7 years of life remaining.
Pan American’s Timmins West mill is currently operating well below nameplate capacity. Should West Cache advance into production, this excess milling capacity and shared tailings storage infrastructure could be beneficial for both companies.
Galleon’s mining asset is also situated in close proximity to Discovery Silver Corp‘s (TSE: DSV) (OTCMKTS: DSVSF) (FRA: 1CU0) Porcupine Operations. West Cache’s positioning between two mining industry players of scale could potentially help attract more investors in the years to come. Discovery Silver has stated that it plans to spend approximately C$69 million on exploration in the area by 2030.
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