Coeur plans to acquire SilverCrest
Coeur Mining Inc. and SilverCrest Metals Inc. have entered into an agreement allowing Coeur to acquire all the shares of SilverCrest, which would add the Las Chispas underground silver and gold mine in Mexico to Coeur's portfolio that includes the Rochester Mine in Nevada.
"The acquisition of SilverCrest creates a leading global silver company by adding low-cost silver and gold production and significant free cash flow to our rapidly growing production and cash flow driven by the recent expansion of our Rochester silver and gold mine in Nevada," said Mitchell J. Krebs, chairman, president and chief executive officer of Coeur.
The companies estimated the combination will result in $350 million of free cash flow in 2025.
"Together with SilverCrest's large and growing cash balance and no debt, our balance sheet is expected to be materially strengthened on day one. This immediate deleveraging, along with the significant combined expected free cash flow, will allow for rapid debt repayment and investment in other organic growth opportunities while offering shareholders an unparalleled re-rating opportunity," he said in the Oct. 4 announcement.
Coeur's New York share price in mid-day trading on Oct. 4 was $6.46, down 62 cents, while SilverCrest's share price was at $ 10.24, up 95 cents.
"With over 15 years of experience operating our Palmarejo underground silver and gold operation next door in Chihuahua, we look forward to adding the high-quality Las Chispas mine to create a leading global silver company at a time when the demand for silver in renewable energy and a wide range of electrification end uses is rapidly rising," Krebs said.
The merger of the two companies is expected to generate roughly 21 million ounces of silver production in 2025 and 432,000 ounces of gold from five North American operations, including the recently expanded Rochester Mine in Pershing County, the Kensington gold mine in Alaska, the Wharf Mine in South Dakota, the Palmarejo gold and silver operation in Mexico, and Las Chispas.
Coeur also has the Silver Tip exploration project in Canada.
Under the agreement, Vancouver-based SilverCrest shareholders will receive 1.6 common shares of Coeur for each SilverCrest share. The companies announced on Oct. 4 that this share deal is an 18% premium for SilverCrest based on the New York Stock Exchange.
This also implies total equity value of roughly $1.7 billion based on SilverCrest's common shares outstanding, and when the arrangement is closed, Coeur shareholders will own roughly 63% of the combined company's stock, and SilverCrest shareholders will hold 37%, according to the joint announcement.
SilverCrest's CEO and director, N. Eric Fier, said he was "exceptionally proud of what the SilverCrest team has accomplished over the past nine years, taking Las Chipas from discovery to production and creating one of the world's premier silver operations. Our operational consistency since declaring commercial production in late 2022 is a testament not only to the asset quality, but also our outstanding team and strong stakeholder relationships."
Las Chispas sold 10.25 million silver equivalent ounces at average cash costs of $7.73 per ounce in 2023, according to the companies.
A slide presentation on Oct. 4 shows that Las Chispas employs 313 employees and 754 contractors.
Fier said he believes the transaction with Coeur is the best opportunity for SilverCrest shareholders to receive an immediate premium and become owners of a growing, U.S.-based silver and gold company. Coeur is based in Chicago.
SilverCrest and Coeur shareholders must vote on the proposed transaction, and the vote is expected around year-end, the announcement states. The boards of both companies voted in favor of the arrangement. The merger is expected to close late in the first quarter of next year.
Once the deal is final, Fier and one other current SilverCrest director are expected to join the Coeur board.
"I am excited to continue to be involved as an ongoing director of Coeur," Fier said.
