Canada's First Majestic to buy Mexico-focused Gatos Silver for $970 million

(Reuters) - Canada's First Majestic has agreed to buy Gatos Silver for $970 million in an all-stock deal, the miners said on Thursday, against the backdrop of surging prices of the metal.

Gatos has a 70% interest in a joint venture with Japan's Dowa Metals & Mining for the Cerro Los Gatos underground silver mine in Mexico.

"Mexico is a country that First Majestic has operated in for over 20 years," CEO Keith Neumeyer said in a statement.

Gatos shareholders will receive 2.550 common shares of First Majestic, or $13.49, for each share they own.

Shares of Gatos rose 7.5% to $12.49 in premarket trading, while U.S.-listed shares of First Majestic fell 5.1% to $5.02.

Silver prices have climbed nearly 21% this year, tracking gold prices, but also from strong demand from a variety of industries such as solar panels and electronics. [GOL/]

Electrum Group, which owns roughly 32% of Gatos' common shares, has voted in favor of the transaction, which is expected to close in early 2025.

Combined annual production from all the mines is estimated to be 30-32 million ounces of silver-equivalent ore, including 15-16 million ounces of silver.

Costs of mining could edge up to $18-$20 per silver-equivalent ounce, from the roughly $15 reported by First Majestic in its second quarter.

(Reporting by Seher Dareen and Sourasis Bose in Bengaluru; Editing by Shilpi Majumdar and Sriraj Kalluvila)