The mining newspaper for Alaska and Canada's North
The mining newspaper for Alaska and Canada's North
North of 60 Mining News - October 4, 2024
The first silver bar poured at SilverCrest Metals' Las Chispas Mine in Sonora, Mexico, in June 2022.
With the addition of Las Chispas, Coeur will have five operating gold and silver mines in Mexico, Nevada, South Dakota, and Alaska in 2025.
A drone view of the processing plant at Las Chispas during the final stages of construction.
In a deal that will elevate its silver production to roughly 21 million ounces per year and gold output to 432,000 oz/y, Coeur Mining Inc. has agreed to acquire SilverCrest Metals Inc. in an all-shares deal worth $1.7 billion.
"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 Coeur Mining Chairman, President and CEO Mitchell Krebs.
SilverCrest's primary asset is Las Chispas, a high-grade underground silver-gold mine in Sonora, Mexico, that is expected to produce more than 41 million oz of silver and 421,600 oz of gold over eight years of mining that began in 2023.
stSilverCrest achieved commercial production at Las Chispas in November 2022, and the operation is on pace to produce 10 to 10.3 oz silver-equivalent, which includes the value of the gold produced in silver terms, at an average cost of $9.25 to $975 per silver-equivalent-oz produced.
"I'm exceptionally proud of what the SilverCrest team has accomplished over the past nine years taking Las Chispas from discovery to production and creating one of the world's premier silver operations," said SilverCrest Metals CEO Eric Fier. "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."
A drone view of the processing plant at Las Chispas during the final stages of construction.
As the operator of one of the world's highest-grade, lowest-cost, and highest-margin silver and gold operations, SilverCrest has grown its treasury to $122 million, which consists of $98 million in cash and cash-equivalents and $24 million of bullion.
This strong balance sheet, coupled with no debt and its strong cash flow profile, is expected to accelerate Coeur's debt reduction initiative.
"Together with SilverCrest's large and growing cash balance and no debt, our balance sheet is expected to be materially strengthened on day one," said Krebs. "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."
Las Chispas also fits well within Coeur's portfolio, which includes the Palmarejo silver-gold mine to the southeast in Chihuahua, Mexico.
"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 added.
With the addition of Las Chispas, Coeur will have five operating gold and silver mines in Mexico, Nevada, South Dakota, and Alaska in 2025.
With the addition of Las Chispas, Coeur's expects to produce 21 million oz of silver and 432,000 oz of gold from its five operations in 2025.
Under a definitive buy-out agreement, SilverCrest shareholders will receive a fraction above 1.6 Coeur shares for each SilverCrest share held, implying a value of $11.34 per SilverCrest share, which is an 18% premium based on the 20-day average share price of both companies.
Based on the number of SilverCrest shares outstanding, this implies an equity value of $1.7 billion for the company.
"I feel confident that the Coeur team will extend this track record of success at Las Chispas and believe this transaction is the best opportunity for shareholders to not only receive an immediate premium, but also have the opportunity to become meaningful owners of a growing, multi-asset, U.S.-based, NYSE-listed silver and gold company with tremendous upside potential," said Fier.
Pending shareholder, court, and regulatory approvals, the transaction is expected to close in the first quarter of 2025.
Over his more than 16 years of covering mining and mineral exploration, Shane has become renowned for his ability to report on the sector in a way that is technically sound enough to inform industry insiders while being easy to understand by a wider audience.
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