US-based precious metals producer Coeur Mining has agreed to acquire Canada-based SilverCrest Metals in an all-stock deal valued ats around $1.7bn.
According to the terms of the definitive agreement, shareholders of SilverCrest Metals will receive 1.6022 Coeur Mining common shares for each SilverCrest Metals common share.
SilverCrest Metals, which is also a precious metals producer, is listed on both Toronto Stock Exchange (TSX) and New York Stock Exchange (NYSE) American.
Coeur Mining is listed on the NYSE.
As per the exchange ratio, the consideration for SilverCrest Metals is $11.34 per share. This is based on the closing price of Coeur Mining common shares on the NYSE on 3 October 2024.
The consideration represents a premium of 18% based on 20-day volume-weighted average prices of Coeur Mining and SilverCrest Metals each as on 3 October 2024 on the NYSE and NYSE American, respectively.
Following the completion of the proposed deal, existing shareholders of Coeur Mining will own approximately 63% of the newly combined silver company, with SilverCrest Metals shareholders holding the remaining 37%.
Coeur Mining’s portfolio includes four wholly owned operations. Three of these are in the US, namely the Rochester silver-gold mine in Nevada, the Kensington gold mine in Alaska, and the Wharf gold mine in South Dakota.
The company also operates in Mexico through the Palmarejo underground gold-silver complex.
Additionally, Coeur Mining fully owns the Silvertip polymetallic critical minerals exploration project in British Columbia, Canada.
SilverCrest Metals, which is headquartered in Vancouver, British Columbia, is focused on the Las Chispas underground silver-gold operation in Sonora, Mexico. The Las Chispas project started production in late 2022.
SilverCrest Metals CEO and director Eric Fier said: “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.”
Through the combination of the recently expanded Rochester and Palmarejo mines with the Las Chispas mine, Coeur Mining expects to draw around 21 million ounces of silver in 2025 from five North American operations.
About 56% of revenue is projected to be derived primarily from US-based operations while nearly 40% is expected to come from silver sales, said Coeur Mining.
Besides, the enlarged entity is estimated to produce about 432,000 ounces of gold next year.
In addition, the proposed silver company is projected to generate nearly $700m in EBITDA and $350m in free cash flow by 2025, benefiting from reduced costs and increased margins.
Coeur Mining CEO, chairman, and president Mitchell Krebs said: “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.
“Together with SilverCrest’s large and growing cash balance and no debt, our balance sheet is expected to be materially strengthened on day one.”
The board of directors of both Coeur Mining and SilverCrest Metals have unanimously approved the proposed deal.
Subject to shareholder, court, and regulatory approvals along with other customary conditions, the acquisition is anticipated to be completed in late Q1 2025.
For the transaction, BMO Capital Markets and Goldman Sachs & Co are acting as financial advisers to Coeur Mining, while Cormark Securities and Raymond James are financial advisers to SilverCrest Metals.
