Tahoe Resources has signed an agreement to acquire Canada-based Lake Shore Gold in a C$751m ($540m) deal.

The acquisition will add low-cost gold mines in Ontario, Canada, to Tahoe Resources’ portfolio.

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Lake Shore Gold operates the Timmins West and Bell Creek mines in Timmins, while Tahoe operates the Escobal mine in Guatemala and Arena and Shahuindo mines in Peru.

"The company is expected to produce 370,000oz-430,000oz of gold in 2016."

Upon completion of the transaction, expected in April, existing shareholders of Tahoe and Lake Shore Gold will own 74% and 26% of the new company respectively.

The combined company will have a diversified portfolio of assets, including the Escobal mine and low-cost growing operations in Peru and Ontario.

The company is expected to produce 370,000oz-430,000oz of gold in 2016 at total cash costs of $675-$725 per ounce.

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Tahoe Resources executive chair Kevin McArthur said: "The combination with Lake Shore Gold enhances Tahoe’s position as the new leader in precious metals by adding another low-cost operation in Timmins, one of the most prolific gold camps in the world.

"We look forward to continuing the strong relationships that Lake Shore Gold has fostered in Timmins with local stakeholders."

Lake Shore Gold president and CEO Tony Makuch said: "The combination with Tahoe represents a unique opportunity for our shareholders to gain exposure to a high-quality portfolio of long life producing mines with substantial mineral reserves."