Pan American Silver To Acquire Minefinders  

VANCOUVER, BC - Pan American Silver Corp. and Minefinders Corporation Ltd. reported that they have entered into a definitive agreement pursuant to which Pan American will acquire all of the issued and outstanding common shares of Minefinders by way of a plan of arrangement. Under the terms of the Arrangement Agreement, Minefinders shareholders will be entitled to elect to receive, in exchange for each Minefinders share held, either: (i) 0.55 shares of Pan American and $1.84 in cash; or (ii) 0.6235 shares of Pan American; or (iii) $15.60 in cash, subject to pro-ration under total aggregate cash and share pools of approximately $176 million and approximately 53 million Pan American shares, respectively, on a fully-diluted basis. Assuming full pro-ration, Minefinders shareholders will receive 0.55 shares of Pan American and $1.84 in cash in exchange for each Minefinders share held.

The consideration represents a total offer value of $15.60 per Minefinders share, based on the January 20, 2012 closing price of Pan American common shares on the Toronto Stock Exchange and a premium of 36% to the January 20, 2012 closing price of Minefinders shares on the Toronto Stock Exchange (33% premium based on the respective volume weighted average prices of Pan American and Minefinders on the Toronto Stock Exchange for the 20 trading days ending January 20, 2012). The proposed transaction implies a total transaction value of approximately $1.5 billion. Upon completion of the transaction, existing Minefinders shareholders will own approximately 33% of Pan American on a fully-diluted basis.

Transaction Highlights: Creates the leading growth-oriented, geographically-diversified silver producer with combined market capitalization of approximately $4 billion: The combined company will be one of the largest diversified     silver mining companies by market capitalization, providing enhanced capital markets scale and profile and increased strategic flexibility; Exceptional growth profile with expected silver production to double by 2015: The combined company will have a leading and well sequenced growth profile combining immediate access to near-term cash flow with significant future growth opportunities. Combined production for the year ended 2011 of approximately 26 million ounces of silver (based on Pan American 2011 guidance and Minefinders disclosed 2011 results), expected to reach over 50 million ounces by the year 2015. Minefinders' Dolores property provides a number of attractive near-term opportunities to drive production growth prior to the expected commencement of     production at Pan American's Navidad project; Enhanced portfolio diversification and project pipeline: The combined company will consist of 8 operating mines and an extensive portfolio of development and exploration projects in jurisdictions throughout the Americas where Pan American currently operates. Based on expected silver production in 2011, approximately 52% of combined production will be from mines in Mexico, 21% from Peru, 15% from Argentina and 12% from Bolivia; Significant silver Mineral Reserves and Mineral Resources: The combined company will have a significant Mineral Reserve base consisting of 350 million ounces of Proven and Probable silver Mineral Reserves and 3.0 million ounces of Proven and Probable gold Mineral Reserves ? with additional Measured and Indicated Mineral Resources of 742 million ounces of silver and 2.0 million ounces of gold and Inferred Mineral Resources of 265 million ounces of silver and 1.4 million ounces of gold, as of the end of December 20101; Strong balance sheet and access to capital: The additional cash flow from Minefinders' Dolores property will solidify Pan American's ability to fund its industry-leading growth profile without equity dilution while maintaining its existing dividend. The pro forma company will have a cash balance of approximately US$5702million, undrawn credit     facilities in the amount of US$150 million, substantial cash flow generating capacity and negligible debt. In addition, Pan American shares will remain one of the world's most liquid silver investments with listings on both the TSX and NASDAQ and with one of the largest public market floats of primary silver producers; Attractive re-rating opportunity: The valuation of the combined company will be well positioned to benefit from enhanced scale, diversification and growth profile as well as strong transaction rationale.

Geoff Burns, President and CEO of Pan American, commented, "Given the location of Minefinders' assets, we believe this acquisition is logical and consistent with Pan American's vision to become the largest, low-cost primary producer of silver in the world. Silver production from Minefinders' Dolores mine has increased almost 200% over the last year and we expect to see further increases into the future. As a producing, long-life, low-cost mine, Dolores will not only add to Pan American's production, but will help balance our entire portfolio of producing and development assets." Burns continued, "Minefinders also has significant expansion potential and exceptional exploration opportunities at Dolores and a number of other promising early stage properties. The combined company will be in an excellent position to see those assets reach their ultimate potential. Once the transaction is complete, we will focus our combined team on the exciting longer-term expansion opportunities at Dolores. We also look forward to continuing to build on the positive relationship that Minefinders has established with the local communities, ejidos and its own workers, at and around the Dolores mine."

The company's address is 625 Howe Street, Suite 1500, Vancouver, BC V6C 2T6, (604) 684-1175, fax: (604) 684-0147, email: [email protected].