This MineralFunds Report provides a summary of Gold and Precious Metal Funds that hold:
1) The acquirer only: Coeur Mining Inc. (NYSE: CDE)
2) The acquired company only: SilverCrest Metals Inc. (TSX: SIL | NYSE: SILV)
3) Both the acquirer and acquired company
On Friday October 4th, 2024 Coeur Mining Inc. (NYSE: CDE) (‘Coeur’) announced acquisition of SilverCrest Metals Inc. (TSX: SIL | NYSE: SILV) (‘SilverCrest’) in a deal valued at US$1.7 billion. This deal will further Coeur’s position as a leading global silver producer with producing assets in Mexico, Nevada, Alaska and South Dakota while SilverCrest’s Las Chispas mine is located in Sonora State, Mexico.
The acquisition will see Coeur integrate SilverCrest’s Las Chispas mine, a high-grade, low-cost silver and gold operation in Sonora State, Mexico. The merged company may be expected to produce ~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. Las Chispas mine, which began production in late 2022, has shown strong operational performance, Coeur’s president and CEO, Mitchell J. Krebs, told investors. The executive said that in 2023, the mine’s first full-year of operations, Las Chipas produced more than 10.25 million silver-equivalent ounces at a cash cost of US$7.73 per ounce. The combined entity is projected to generate ~US$700 million in EBITDA and ~$350 million in free cash flow in 2025.
SilverCrest shareholders will receive 1.6022 Coeur common shares for each of their SilverCrest shares. Upon completion of the transaction, Coeur shareholders will own approximately 63 percent of the combined company, while SilverCrest shareholders will hold approximately 37 percent. Cash flow from Las Chispas, in combination with SilverCrest’s clean balance sheet, which is absent debt and holding treasury assets of ~US$122 million, including ~US$98 million in cash and equivalents and ~US$24 million of bullion, should help accelerate Coeur’s debt-reduction initiatives. Coeur was holding ~US$555 million in net debt at the end of the second quarter of 2024. The deal valuation is “somewhat justified thanks to Las Chispas’ extremely low-cost structure, which is supported by the high-grade reserve and resource base,” said National Bank analyst Mike Parkin.
The acquisition is slated to close by late Q1 2025, pending approval from SilverCrest and Coeur shareholders, as well as regulatory clearances in Canada, Mexico and the US. Any prospective ‘outside’ acquirer of either SilverCrest or Coeur will have to factor in the break fees that are payable if the current tie-up falls apart. If SilverCrest terminates the deal, a ~US$60-million break fee is payable; If Coeur walks, the break fee is ~US$100 million. At least two-thirds of votes cast by SilverCrest shareholders in a meeting to be held at year-end must be in support of the transaction for the deal to succeed. The transaction also requires Coeur Mining shareholders to approve the issuance of new shares to pay for the acquisition.
Twenty-Three Funds show holding SilverCrest Metals (TSX: SIL | NYSE: SILV) only, and will be the biggest performance beneficiaries from this transaction:
Source: https://mineralfunds.com/managed-funds/
MineralFunds.com provides prices, performance and trade information for all the world’s metal ETFs including: Precious Metals, Battery Metals, Platinum Group Metals and Base Metals and comprehensive fund information, including asset allocations, for Gold & Precious Metals Managed Funds from all investment jurisdictions.
Report prepared by: Kay Samnani, Analyst and Christopher J. Berlet BSc, CFA
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