UPDATE 2-Pan American Silver to buy Minefinders for C$1.5 bln

Mon, Jan 23 09:15 AM EST * Offer of C$15.60 a premium of 36 pct to Minefinders' Friday close * Total 2011 production of about 26 mln ounces of silver * Combined company to have 8 operating mines Jan 23 (Reuters) - Pan American Silver Corp said it will buy Canadian precious metals miner Minefinders Corp Ltd for about C$1.5 billion ($1.48 billion) to boost production from Mexico and cut output costs. Vancouver-based Minefinders owns and operates the multi-million ounce Dolores gold and silver mine in northern Mexico. The acquisition is in line with Pan American's vision to become the largest, low-cost primary producer of silver, Pan American Chief Executive Geoff Burns said in a statement. The offer of C$15.60 per share, represents a premium of 36 percent to Minefinders' Friday closing on the Toronto Stock Exchange. Under the deal, Minefinders shareholders can opt to receive either 0.55 shares of Pan American and C$1.84 in cash or 0.6235 shares of Pan American or C$15.60 in cash for each share held. The proposed deal is expected to be completed by the end of March 2012. The combined production for 2011 will be about 26 million ounces of silver, the companies said in a statement. The combined company will have eight operating mines and about half of the total production will be from mines in Mexico. Pan American currently operates seven mines in Mexico, Peru, Argentina and Bolivia. While CIBC World Markets Inc was Pan American's financial adviser, BMO Capital Markets advised Minefinders.