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The merged company will own five mines in North America, with three of them considered top silver producers — Rochester in Nevada; Palmarejo in Mexico’s Chihuahua; and Las Chispas in Sonora, also Mexico.
Las Chispas mine, which began production in late 2022, has shown strong operational performance, Coeur’s President and CEO, Mitchell J. Krebs told investors on a conference call on Friday morning. The executive said that in 2023, the mine’s first full-year of operations, it produced over 10.25 million silver equivalent ounces at a cash cost of $7.73 per ounce.
SilverCrest shares have risen nearly 45% since the start of the year, closing at C$12.59, or $9.29, on Thursday. The stock has more than doubled its value in the past 52 weeks, rising 113%. Coeur’s shares have rocketed 117.2% year-to-date through Thursday, as gold prices have rallied to record highs.
Combined company will have 56% of its revenue coming from US mines and about 40% of revenue from silver. (Source: Coeur’s presentation.)
Coeur’s proposed acquisition price of $11.34 per share represents an 18% premium over the 20-day volume-weighted average prices of both companies as of October 3 closing price. It also implies a 22% premium to SilverCrest’s closing price on the NYSE American that same day.
Upon completion, Coeur shareholders will own 63% of the merged company, while SilverCrest shareholders will control 37%.
Both companies’ boards have unanimously endorsed the deal, urging their shareholders to vote in favor. The agreement includes break fees of up to $100 million if the transaction does not proceed.
The transaction still requires approval from SilverCrest and Coeur shareholders, as well as regulatory authorities, including Mexican antitrust approval. A special meeting is expected by the end of 2024, with the deal anticipated to close in Q1 2025.
Silver prices have climbed nearly 35% this year, hitting a 12-year high in late September. The metal, essential in industries such as solar panels and electronics, not only has become one of the year’s best-performing major commodities, it has also sparked a race among miners to secure reserves.
Last month, Canada’s First Majestic (TSX: AG) agreed to acquire Mexico-focused Gatos Silver (NYSE: GATO) for $970 million, marking a major consolidation in the silver mining sector.
The silver market experienced last year a 15% supply deficit, and between 2020 and 2024, is expected to face a cumulative deficit of 1,093.4 million ounces.
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