Sept 5 (Reuters) - Canada's First Majestic (AG.TO) , opens new tab has agreed to buy Gatos Silver (GATO.N) , opens new tab 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 (5714.T) , opens new tab 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.

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.

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https://www.reuters.com/markets/deals/canadas-first-majestic-buy-gatos-silver-970-mln-2024-09-05/