Coeur Mining to acquire SilverCrest in a $1.7 billion deal

CHICAGO - Coeur Mining, Inc. (NYSE: NYSE:CDE) and SilverCrest Metals (NYSE:SILV) Inc. (TSX: SIL; NYSE American: SILV) announced a definitive agreement for Coeur to acquire all issued and outstanding shares of SilverCrest. The transaction, valued at approximately $1.7 billion, is expected to position Coeur as a leading global silver company.

Under the agreement terms, SilverCrest shareholders will receive 1.6022 Coeur shares for each SilverCrest share, implying an $11.34 value per SilverCrest share based on Coeur's October 3, 2024, NYSE closing price. This represents an 18% premium over the 20-day volume-weighted average prices of both companies and a 22% premium over SilverCrest's October 3 closing price on the NYSE American.

The combined entity anticipates producing around 21 million ounces of silver and 432,000 ounces of gold annually by 2025, with the Las Chispas mine in Sonora, Mexico, contributing significantly. Las Chispas, which started production in late 2022, has been operating with high margins and low costs, selling approximately 10.25 million silver equivalent ounces at $7.73 average cash costs per ounce in 2023.

Coeur's acquisition is expected to generate approximately $700 million in EBITDA and $350 million in free cash flow in 2025. The transaction will also expedite Coeur's deleveraging initiatives, with SilverCrest's strong balance sheet and cash flow expected to immediately reduce Coeur's leverage ratio by 40%.

Upon completion, Coeur stockholders and SilverCrest shareholders will own roughly 63% and 37% of the combined company, respectively. SilverCrest CEO N. Eric Fier and another SilverCrest director will join Coeur's board, contributing their expertise to the expanded company.

The transaction is subject to shareholder and court approvals, with special meetings for both Coeur and SilverCrest shareholders anticipated around year-end. It also requires regulatory nods, including Mexican antitrust and NYSE listing approvals for the new shares issued. If all conditions are met, the deal is expected to close in late Q1 2025.

Coeur and SilverCrest have recommended their shareholders vote in favor of the transaction, which has been unanimously approved by both companies' boards. Financial advisors provided fairness opinions, affirming the deal's financial soundness for SilverCrest shareholders.

This news is based on a press release statement and does not constitute financial advice or an offer to sell or solicit any securities. The information is meant for general informational purposes only.

In other recent news, Coeur Mining Inc. has seen substantial changes and developments. The company reported significant progress in its second-quarter operations, particularly at the Rochester mine, which experienced a near 40% increase in silver and gold production. This progress was mirrored in a 136% surge in the company's quarterly adjusted EBITDA, largely due to higher commodity prices.

Roth/MKM maintained a positive stance on Coeur Mining Inc, raising the company's stock price target to $8.50, up from the previous $8.00. This adjustment was attributed to the current performance of precious metals in the market. BMO Capital has also raised its price target for Coeur Mining Inc. to $8.00, up from the previous $7.50, following a site visit to the company's Rochester mine.

In other company news, Coeur Mining's director, Robert Krcmarov, resigned to pursue a new professional opportunity. Additionally, the company has acquired two key concessions from Fresnillo (LON:FRES), expanding opportunities at its Palmarejo operation. Exploration efforts at Silvertip and Kensington are also underway, set to further enhance the company's portfolio.

InvestingPro Insights

Coeur Mining's acquisition of SilverCrest Metals comes at a time of significant momentum for the company. According to InvestingPro data, Coeur has seen a remarkable 223.29% price total return over the past year, with a strong 63.13% return in the last six months alone. This upward trajectory aligns with the company's ambitious expansion plans through the SilverCrest acquisition.

The deal's timing appears strategic, as Coeur's revenue growth has been robust, with a 25.27% increase in the most recent quarter. This growth, coupled with the expected production boost from Las Chispas mine, could significantly enhance Coeur's market position in the silver industry.

InvestingPro Tips highlight that Coeur's net income is expected to grow this year, and analysts predict the company will be profitable. This outlook bodes well for the integration of SilverCrest's assets, particularly the high-margin Las Chispas mine, which could accelerate Coeur's path to improved profitability.

However, investors should note that Coeur's stock price movements are quite volatile, and the company is currently trading at a high EBITDA valuation multiple. These factors may introduce some uncertainty as the merger progresses.

For those seeking a deeper understanding of Coeur's financial health and prospects, InvestingPro offers 11 additional tips, providing a more comprehensive analysis to inform investment decisions in light of this significant acquisition.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.