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On Friday, Coeur Mining Inc (NYSE:CDE) maintained its Buy rating and $8.50 price target following the announcement of an all-stock acquisition agreement with SilverCrest (SILV-NC). The transaction, announced on October 4, 2024, would result in SilverCrest shareholders owning 37% of the combined entity. A shareholder vote is anticipated to be the primary obstacle to finalizing the deal, which is expected to conclude by the end of the first quarter of 2025.
The acquisition brings both advantages and challenges. Coeur Mining is set to gain a high-grade asset that is projected to immediately contribute to cash flow per share (CFPS). The cash flow from SilverCrest's Las Chispas project is expected to facilitate Coeur Mining's debt repayment and exploration efforts. Yet, there are concerns regarding the longevity of the acquired asset's mine life, which is currently estimated to wind down by 2032, with the company's latest technical report suggesting a wind down in 2030.
The analyst from Roth/MKM highlighted that the success of the acquisition would likely hinge on future exploration outcomes and metal prices. Despite the potential for significant near-term benefits for Coeur Mining from the acquisition, the long-term prospects remain uncertain. This has led to the decision to keep the current Buy rating and price target unchanged.
The agreement stipulates that SilverCrest shareholders will receive 1.6022 Coeur Mining shares for each share of SilverCrest they hold. The transaction is a strategic move for Coeur Mining, aiming to enhance its portfolio and market position through the addition of SilverCrest's assets. The finalization of the acquisition is subject to shareholder approval, with the outcome expected to shape the future trajectory of the combined company.
In other recent news, Coeur Mining, Inc. is set to acquire SilverCrest Metals (NYSE:SILV) Inc. in a deal valued at approximately $1.7 billion, positioning Coeur as a significant global silver company. The merger is expected to produce around 21 million ounces of silver and 432,000 ounces of gold annually by 2025, with the Las Chispas mine in Sonora, Mexico, making a substantial contribution. The acquisition is projected to generate about $700 million in EBITDA and $350 million in free cash flow in 2025.
Analysts from Roth/MKM and BMO Capital have raised their price targets for Coeur Mining, reflecting the current performance of precious metals in the market and the success of the company's Rochester mine expansion. On the personnel front, Coeur Mining's director, Robert Krcmarov, resigned to pursue a new professional opportunity.
In addition, Coeur Mining has reported considerable progress in its second-quarter operations, particularly at the Rochester mine, which saw a near 40% increase in silver and gold production. The company's quarterly adjusted EBITDA increased by 136%, largely due to higher commodity prices.
InvestingPro Insights
Recent InvestingPro data adds context to Coeur Mining's acquisition strategy and financial position. The company's market capitalization stands at $2.58 billion, reflecting investor sentiment following the acquisition announcement. Despite a strong revenue growth of 17.7% over the last twelve months, Coeur Mining is currently not profitable, with a negative operating income of $4.13 million. This underscores the importance of the SilverCrest acquisition in potentially boosting cash flow and profitability.
InvestingPro Tips highlight that Coeur Mining's stock price movements have been quite volatile, with a remarkable 223.29% return over the past year. This volatility aligns with the uncertain long-term prospects mentioned in the analyst's report. Additionally, the tip indicating that net income is expected to grow this year supports the potential positive impact of the SilverCrest acquisition on Coeur's financial performance.
For investors seeking a more comprehensive analysis, InvestingPro offers 8 additional tips that could provide further insights into Coeur Mining's financial health and future prospects.
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