Pan American to Acquire Minefinders and Create the Leading Geographically-Diversified Silver Producer 01/23/2012

Pan American adds a long-life, low-cost operating silver and gold mine with significant expansion potential to its portfolio; Minefinders shareholders to receive a 36% premium and exposure to a world-class, geographically-diversified portfolio of silver producing and development assets

http://www.minefinders.com/Media-Centre/News-Releases/News-Releases-Details/2012/Pan-American-to-Acquire-Minefinders-and-Create-the-Leading-Geographically-Diversified-Silver-Producer/default.aspx

VANCOUVER, BRITISH COLUMBIA--(Marketwire - Jan. 23, 2012) -

(All amounts in Canadian dollars unless otherwise stated)

Pan American Silver Corp. (TSX:PAA)(NASDAQ:PAAS) ("Pan American") and Minefinders Corporation Ltd. (TSX:MFL)(NYSE Amex:MFN) ("Minefinders") are pleased to announce that they have entered into a definitive agreement (the "Arrangement 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$5702 million, 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." Mr. 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."

Mark Bailey, President and CEO of Minefinders, added, "Since drilling the discovery hole on the Dolores deposit in 1996, we have successfully advanced the project through exploration, permitting, and construction into a low-cost gold and silver producer. The proposed combination with Pan American represents an exciting next step for our shareholders as they gain exposure to a diverse portfolio of world class producing and development assets along with the substantial resources and expertise that a larger company possesses. Moreover, we believe that the addition of the Dolores deposit along with a strong portfolio of exploration and development projects and a dedicated team of employees provides a significant contribution to the future growth and success of Pan American".

Benefits to Pan American Shareholders

•Clearly establishes Pan American's position as the leading geographically-diversified primary silver mining company

•Enhances Pan American's growth profile with the addition of near-term production, combined with significant development and exploration opportunities, including a potential mill expansion at Dolores

•Meaningfully reduces Pan American's silver cash costs through the addition of low-cost production from Dolores

•Strengthens ability to finance organic growth using internally generated funds while maintaining Pan American's existing dividend

•Increases production from Mexico, a mining-friendly jurisdiction where Pan American already has extensive operations

•Logical combination with potential for meaningful synergies

•Adds a strong team of experienced mining professionals currently operating the Dolores mine

Benefits to Minefinders Shareholders

•Immediate and significant premium

•Exposure to a diverse portfolio of producing and development assets

•Ability to participate in the success of the combined company

•Enhanced growth profile and exposure to the upside associated with successful permitting and development of Navidad

•Expansion of current Mexican and Latin American management expertise that includes a proven track record of successful mill expansions and underground development

•Dividends, greater liquidity and increased market profile

Summary of the Transaction

The proposed transaction will be carried out by way of a plan of arrangement under the Ontario Business Corporations Act, whereby Pan American will acquire all of the issued and outstanding common shares of Minefinders. 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. Each outstanding option of Minefinders shall be exchanged for an option of Pan American that will entitle the holder to receive, upon the exercise thereof, 0.6235 of a Pan American share at an exercise price equal to the exercise price of the exchanged Minefinders option divided by 0.6235 (subject to rounding).

The proposed transaction is subject to certain customary conditions, including court approval, the approval of not less than (i) 66-2/3% of the votes cast by Minefinders shareholders voting as a single class, and (ii) 66-2/3% of the votes cast by Minefinders shareholders and Minefinders option holders, voting together as a single class at a special meeting of Minefinders security holders that is expected to be held in March 2012, and not less than a majority of the votes cast at a special meeting of Pan American shareholders that is expected to be held on the same date. Pursuant to the Arrangement Agreement, the proposed transaction is also subject to applicable stock exchange and regulatory approvals and the satisfaction of certain closing conditions customary for transactions of this nature. The Arrangement Agreement also provides for, among other things, customary reciprocal board support and non-solicitation covenants (subject to "fiduciary out" provisions that entitle either party to consider and accept a superior proposal and a 5-business day "right to match" in favour of Pan American in the event of a superior proposal for Minefinders). The Arrangement Agreement also provides for reciprocal termination payments of $42 million and reciprocal expense reimbursement payments of $5 million in certain specified circumstances.

The boards of directors of Pan American and Minefinders have each unanimously determined that the proposed transaction is fair and in the best interest of their respective companies and recommend that their respective security holders vote in favour of the proposed transaction. CIBC World Markets, exclusive financial advisor to Pan American, and Scotia Capital, independent fairness opinion provider to the board of directors of Pan American, have each provided an opinion to the effect that the consideration offered to Minefinders shareholders is fair, from a financial point of view, to Pan American. BMO Capital Markets, exclusive financial advisor to Minefinders and its board of directors, has provided an opinion to the effect that the consideration to be received by Minefinders shareholders is fair, from a financial point of view, to Minefinders shareholders.

Minefinders' directors and senior management, representing, in aggregate, approximately 3.5% of Minefinders' fully diluted shares outstanding, have entered into customary voting support agreements pursuant to which, among other things, they have agreed to vote their Minefinders shares in favour of the proposed transaction.

If approved by security holders of Minefinders and shareholders of Pan American, the proposed transaction is expected to be completed by the end of March 2012.

The terms and conditions for the proposed transaction will be summarized in the Management Information Circulars to be mailed to Minefinders and Pan American securityholders, respectively, in February 2012. Copies of the Arrangement Agreement, the Management Information Circulars, and certain related documents and agreements will be filed with Canadian and U.S. securities regulators and will be available at the SEDAR website at www.sedar.com under Pan American's and Minefinders' profiles, as applicable.

Pursuant to the indenture for Minefinders' 4.5% convertible senior notes due in 2015, Pan American will make an offer to purchase the convertible notes at face value (including accrued and unpaid interest) within 30 days of the effective closing date of the Arrangement.

Advisors and Counsel

Pan American's exclusive financial advisor is CIBC World Markets Inc., and its legal counsel are Borden Ladner Gervais LLP and Skadden, Arps, Slate, Meagher & Flom LLP. Scotia Capital Inc. provided a fairness opinion to the Board of Directors of Pan American in connection with the Arrangement Agreement. Minefinders' exclusive financial advisor is BMO Capital Markets and its legal advisors are Stikeman Elliott LLP and Dorsey & Whitney LLP.

Kingsdale Shareholder Services Inc. ("Kingsdale") has been retained by Pan American to act as Proxy Solicitation and Information Agent in connection with the proposed transaction. Pan American and Minefinders shareholders with questions about the proposed transaction may contact Kingsdale toll-free at 1-877-657-5859. Outside of North America, please dial 416-867-2272, or email contactus@kingsdaleshareholder.com.

Conference Call

Pan American and Minefinders will host a joint conference call and webcast on January 23, 2012 at 11:00 am ET (8:00 am PT) to discuss this announcement. The conference call can be accessed by dialing toll free 1-800-319-4610 (Canada & USA) or by dialing 1-604-638-5340 from outside North America. A live webcast of the conference and the presentation will be accessible at https://services.choruscall.com/links/pan120123.html and on Pan American's website at www.panamericansilver.com and on Minefinders' website at www.minefinders.com.

The call will be available for replay for one week after the conference by dialing 1-604-638-9010 and entering code 6218 followed by the # sign.

About Pan American

Pan American's mission is to be the world's largest low-cost primary silver mining company by increasing its low-cost silver production and silver reserves. It has seven operating mines in Mexico, Peru, Argentina and Bolivia. Pan American also owns the Navidad project in Chubut, Argentina, and is the operator of the La Preciosa project in Durango, Mexico.

About Minefinders

Minefinders is a precious metals mining and exploration company and operates the multi-million ounce Dolores gold and silver mine in Mexico. For more information, please visit our website at www.minefinders.com.

Footnotes

(1) Mineral Reserves and Resources:

Pan American Mineral Reserves and Resources