With the addition of the Las Chispas mine – one
of the world’s lowest-cost and highest-grade silver/gold operations
– the combined company is expected to produce 21 million ounces of
silver annually1 with peer leading EBITDA and free cash flow
Coeur Mining, Inc. (“Coeur”) (NYSE: CDE) and SilverCrest Metals
Inc. (“SilverCrest”) (TSX: SIL; NYSE American: SILV) announce that
they have entered into a definitive agreement (the “Agreement”)
whereby, a wholly-owned subsidiary of Coeur will acquire all of the
issued and outstanding shares of SilverCrest pursuant to a
court-approved plan of arrangement (the “Transaction”).
Under the terms of the Agreement, SilverCrest shareholders will
receive 1.6022 Coeur common shares for each SilverCrest common
share (the “Exchange Ratio”). The Exchange Ratio implies
consideration of $11.34 per SilverCrest common share, based on the
closing price of Coeur common shares on the New York Stock Exchange
(“NYSE”) on October 3, 2024. This represents an 18% premium based
on 20-day volume-weighted average prices of Coeur and SilverCrest
each as at October 3, 2024 on the NYSE and NYSE American,
respectively, and a 22% premium to the October 3, 2024 closing
price of SilverCrest on the NYSE American. This implies a total
equity value of approximately $1.7 billion based on SilverCrest’s
common shares outstanding. Upon completion of the Transaction,
existing Coeur stockholders and SilverCrest shareholders will own
approximately 63% and 37% of the outstanding common stock of the
combined company, respectively.
Transaction Highlights
- Creates a Leading Global Silver Company – Together with
Coeur’s growing silver production from its recently expanded
Rochester mine in Nevada and its Palmarejo underground mine in
northern Mexico, the addition of Las Chispas is expected to
generate peer-leading 2025 silver production of approximately 21
million ounces from five North American operations, with
approximately 56% of revenue generated from U.S.-based mines and
approximately 40% of revenue from silver. In addition to the
peer-leading silver production, the combined company is expected to
produce approximately 432,000 ounces of gold next year1.
- Adds World-Class Las Chispas Operation to Coeur’s
Portfolio – SilverCrest’s Las Chispas underground mine in
Sonora, Mexico is one of the world’s highest-grade, lowest cost,
and highest-margin silver and gold operations. Las Chispas
commenced production in late 2022 and has delivered strong
operational and financial results in 2023, selling approximately
10.25 million silver equivalent ounces at average cash costs of
$7.73 per ounce.
- Significant and Immediate Addition to Coeur’s Rising Free
Cash Flow – The combined company is expected to generate
approximately $700 million of EBITDA1 and $350 million of free cash
flow1 in 2025 at lower overall costs and higher overall
margins.
- Dramatically Accelerates Coeur’s Deleveraging
Initiatives – The combination of SilverCrest’s strong balance
sheet consisting of total treasury assets of $122 million (cash and
equivalents position of $98 million and $24 million of bullion) and
no debt and its strong cash flow profile are expected to accelerate
Coeur’s debt reduction initiative and result in an immediate 40%
expected reduction in Coeur’s leverage ratio upon closing.
- Bolsters Coeur Board by Adding Two SilverCrest Directors
– Upon closing, current SilverCrest Chief Executive Officer and
Director, N. Eric Fier and one other current SilverCrest Director
will join Coeur’s board of directors, adding extensive and relevant
experience to an already distinguished board of directors.
- Continued Commitment to ESG Leadership – A shared
commitment to ESG with a specific focus on water usage, emissions,
community and workforce development, and leading governance
practices.
"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 Mitchell J. Krebs, Chairman,
President and Chief Executive Officer of Coeur. “Together with
SilverCrest’s large and growing cash balance and no debt, our
balance sheet is expected to be materially strengthened on day one.
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. 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.”
N. Eric Fier, Chief Executive Officer, and Director of
SilverCrest said, “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. 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. 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. I am excited to continue to be involved as an ongoing
Director of Coeur.”
Benefits to Coeur Stockholders
- Pro forma Coeur is positioned to be a leading global silver
company, with expected 2025 production of approximately 21 million
ounces of silver, accounting for approximately 40% of pro forma
Coeur’s expected total 2025 revenue. In addition, combined 2025
gold production is expected to reach approximately 432,000 ounces,
equal to approximately 55 million silver equivalent ounces2 in
total
- Exposure to a high-grade, low-cost, underground primary silver
mine with strong operational track record and compelling
exploration potential
- Las Chispas is expected to significantly improve Coeur’s cost
and margin profile and materially increase its annual free cash
flow given its high grades while maintaining 100% exposure to
precious metals
- SilverCrest’s robust balance sheet combined with Las Chispas’
strong cash flow generation positions Coeur to significantly
accelerate deleveraging
- Strong potential to add to Las Chispas’ current mine life based
on near-mine exploration opportunities on over 20 kilometers of
underexplored potential vein strike length. Current resources are
estimated on only approximately 55% of the over 100 known
silver-gold veins located at the project
- Leverages Coeur’s long track record of successfully operating
the Palmarejo underground silver and gold mine in Chihuahua,
Mexico
- Significant revaluation opportunity given positioning of the
combined company as a leading silver mining company based on its
pro forma production and cash flow profile and the expected
near-term impacts from the recently completed expansion of the
Rochester silver and gold operation in Nevada
Benefits to SilverCrest Shareholders
- Immediate and significant premium of approximately 18% based on
the 20-day volume-weighted average prices of both companies (22%
premium to the October 3, 2024 closing price)
- Substantial equity participation in Coeur’s balanced portfolio
of producing mines located in North America while retaining
meaningful exposure to future upside at Las Chispas
- Pro forma entity uniquely positioned to unlock the full
potential of Las Chispas given Coeur’s extensive underground mining
experience including the past 15 years of experience operating the
Palmarejo underground silver and gold mine
- Combined entity’s robust financial strength and flexibility is
expected to allow for continued future investments in Las
Chispas
- Significantly improved trading liquidity and capital markets
exposure
- Significant re-rate opportunity for the pro forma entity,
providing additional potential value for SilverCrest
shareholders
Transaction Summary
The proposed Transaction will be effected pursuant to a plan of
arrangement under the Business Corporations Act (British Columbia),
which is required to be approved by a British Columbia court. The
Transaction will require approval by 66 2/3 percent of the votes
cast by the shareholders of SilverCrest and 66 2/3 percent of the
votes cast by the shareholders and option holders of SilverCrest,
voting together as a single class, at a special meeting of
SilverCrest shareholders expected to be held around year-end. The
Transaction will also require approval of a simple majority of
votes cast by the shareholders of SilverCrest, excluding those
votes attached to SilverCrest common shares held by persons
required to be excluded pursuant to Multilateral Instrument 61-101
– Protection of Minority Security Holder in Special Transaction.
The issuance of shares by Coeur pursuant to the Transaction and an
amendment to the Coeur certificate of incorporation to increase the
number of authorized shares of Coeur stock is also subject to
approval by the Coeur stockholders at a special meeting also
expected to be held around year-end. The directors and senior
officers of SilverCrest and Coeur have entered into customary
voting support agreements, pursuant to which they have committed to
vote their common shares held in favor of the Transaction. Upon
completion of the Transaction, existing Coeur stockholders and
SilverCrest shareholders will own approximately 63% and 37% of the
issued and outstanding shares of common stock of the combined
company, respectively. Additionally, upon closing of the
Transaction, N. Eric Fier and one other current SilverCrest
director are expected to join Coeur’s board of directors.
In addition to shareholder and court approvals, the Transaction
is subject to applicable regulatory approvals, including Mexican
antitrust approval, approval of the listing of the Coeur common
shares to be issued under the Transaction on the NYSE, and the
satisfaction of certain other closing conditions customary for a
transaction of this nature. Subject to the satisfaction of such
conditions, the Transaction is expected to close in late Q1 2025.
The Agreement includes customary deal protections, including
reciprocal fiduciary-out provisions, non-solicitation covenants,
and the right to match any superior proposals. Additionally, break
fees in the amount of $60 million and $100 million are payable by
SilverCrest and Coeur, respectively, and a reciprocal expense
reimbursement fee is payable by one party to the other party in
certain circumstances if the Transaction is not completed.
Full details of the Transaction will be included in the Coeur
proxy statement and SilverCrest information circular.
Board of Directors’ Recommendations
After consultation with its outside financial and legal
advisors, the Board of Directors of Coeur have unanimously approved
the Transaction. The Board of Directors of Coeur recommends that
Coeur shareholders vote in favor of the Transaction.
SilverCrest appointed a special committee of independent
directors to consider and make a recommendation with respect to the
Transaction. Based on the unanimous recommendation of the
SilverCrest special committee of independent directors, and after
consultation with its outside financial and legal advisors, the
Board of Directors of SilverCrest has unanimously approved the
Transaction. The Board of Directors of SilverCrest recommends that
SilverCrest shareholders vote in favor of the Transaction.
Cormark Securities Inc. and Raymond James Ltd. have each
provided fairness opinions to the SilverCrest Board of Directors,
and Scotiabank has provided a fairness opinion to the SilverCrest
special committee, to the effect that, as of the date thereof, and
based upon and subject to the assumptions, limitations and
qualifications stated in each such opinion, the consideration
received is fair, from a financial point of view, to the
shareholders of SilverCrest.
Advisors and Counsel
BMO Capital Markets is acting as financial advisor to Coeur.
Goldman Sachs & Co. LLC is also acting as a financial advisor
to Coeur. Goodmans LLP and Gibson, Dunn & Crutcher LLP are
acting as Coeur's legal advisors.
Cormark Securities Inc. and Raymond James Ltd. are acting as
financial advisors to SilverCrest and Scotiabank acted as financial
advisor to the special committee. Cassels Brock & Blackwell LLP
and Paul, Weiss, Rifkind, Wharton & Garrison LLP are acting as
SilverCrest’s legal advisors.
Conference Call
Coeur will conduct a conference call to discuss the Transaction
on October 4, 2024 at 8:00 a.m. Eastern Time. An accompanying
presentation will be made available on the Company’s website at
www.coeur.com.
Dial-In Numbers:
(855) 560-2581 (U.S.)
(855) 669-9657 (Canada)
(412) 542-4166 (International)
Conference ID:
Coeur Mining
Hosting this call will be Mitchell J. Krebs, Chairman, President
and Chief Executive Officer of Coeur, who will be joined by N. Eric
Fier, Chief Executive Officer and Director of SilverCrest. A replay
of the call will be available through October 11, 2024.
Replay numbers:
(877) 344-7529 (U.S.)
(855) 669-9658 (Canada)
(412) 317-0088 (International)
Conference ID:
521 50 06
About Coeur
Coeur Mining, Inc. is a U.S.-based, well-diversified, growing
precious metals producer with four wholly-owned operations: the
Palmarejo gold-silver complex in Mexico, the Rochester silver-gold
mine in Nevada, the Kensington gold mine in Alaska and the Wharf
gold mine in South Dakota. In addition, Coeur wholly-owns the
Silvertip polymetallic critical minerals exploration project in
British Columbia.
About SilverCrest
SilverCrest is a Canadian precious metals producer headquartered
in Vancouver, British Columbia. SilverCrest’s principal focus is
its Las Chispas Operation in Sonora, Mexico. SilverCrest has an
ongoing initiative to increase its asset base by expanding current
resources and reserves, acquiring, discovering, and developing high
value precious metals projects and ultimately operating multiple
silver-gold mines in the Americas. SilverCrest is led by a proven
management team in all aspects of the precious metal mining sector,
including taking projects through discovery, finance, on time and
on budget construction, and production.
Notes All figures are in U.S. dollars unless denoted
otherwise. 1. Source: FactSet, street research, public disclosure.
2. Silver equivalent production based on Street consensus pricing
of US$2,340/oz Au and US$29.66/oz Ag.
No Offer or Solicitation
Communications in the news release do not constitute an offer to
sell or the solicitation of an offer to subscribe for or buy any
securities or a solicitation of any vote or approval with respect
to the proposed Transaction or otherwise, nor shall there be any
sale, issuance or transfer of securities in any jurisdiction in
which such offer, solicitation or sale would be unlawful prior to
registration or qualification under the securities laws of any such
jurisdiction.
Important Additional Information
In connection with the Transaction, Coeur and SilverCrest intend
to file materials with the Securities and Exchange Commission (the
“SEC”) and on SEDAR+, as applicable. Coeur intends to file a
definitive proxy statement on Schedule 14A (the “Proxy Statement”)
with the SEC in connection with the solicitation of proxies to
obtain Coeur stockholder approval of (A) the issuance of shares of
common stock of Coeur in connection with the Transaction (the
“Stock Issuance”) and (B) the amendment of the Coeur certificate of
incorporation to increase the number of authorized shares of Coeur
common stock (the “Charter Amendment”), and SilverCrest intends to
file a notice of the SilverCrest shareholder meeting and
accompanying management information circular (the “Circular”) with
the Toronto Stock Exchange and on SEDAR+ and with the SEC in
connection with the solicitation of proxies to obtain SilverCrest
shareholder approval of the Transaction. After the Proxy Statement
is cleared by the SEC, Coeur intends to mail a definitive Proxy
Statement to the stockholders of Coeur. This communication is not a
substitute for the Proxy Statement, the Circular or for any other
document that Coeur or SilverCrest may file with the SEC or on
SEDAR+ and/or send to Coeur stockholders and/or SilverCrest’s
shareholders in connection with the Transaction. INVESTORS AND
SECURITY HOLDERS OF COEUR AND SILVERCREST ARE URGED TO CAREFULLY
AND THOROUGHLY READ THE PROXY STATEMENT AND THE CIRCULAR,
RESPECTIVELY, AS EACH MAY BE AMENDED OR SUPPLEMENTED FROM TIME TO
TIME, AND OTHER RELEVANT DOCUMENTS FILED BY COEUR AND/OR
SILVERCREST WITH THE SEC OR ON SEDAR+, WHEN THEY BECOME AVAILABLE
BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT COEUR,
SILVERCREST, THE TRANSACTION, THE RISKS RELATED THERETO AND RELATED
MATTERS.
Stockholders of Coeur and shareholders of SilverCrest will be
able to obtain free copies of the Proxy Statement and the Circular,
as each may be amended from time to time, and other relevant
documents filed by Coeur and/or SilverCrest with the SEC or on
SEDAR+ (when they become available) through the website maintained
by the SEC at www.sec.gov or on SEDAR+ at www.sedarplus.ca, as
applicable. Copies of documents filed with the SEC by Coeur will be
available free of charge from Coeur’s website at www.coeur.com
under the “Investors” tab or by contacting Coeur’s Investor
Relations Department at (312) 489-5800 or investors@coeur.com.
Copies of documents filed with the SEC or on SEDAR+ by SilverCrest
will be available free of charge from SilverCrest’s website at
www.silvercrestmetals.com under the “Investors” tab or by
contacting SilverCrest’s Investor Relations Department at
604-694-1730 ext. 104.
Participants in the Solicitation
Coeur, SilverCrest and their respective directors and certain of
their executive officers and other members of management and
employees may be deemed, under SEC rules, to be participants in the
solicitation of proxies from Coeur’s stockholders and SilverCrest’s
shareholders in connection with the Transaction. Information
regarding the executive officers and directors of Coeur is included
in its definitive proxy statement for its 2024 annual meeting under
the headings “Proposal No. 1 – Election of Directors”, “Information
about our Executive Officers”, “Compensation Discussion and
Analysis”, and “Director Compensation”, which was filed with the
SEC on April 4, 2024 and is available at
https://www.sec.gov/ix?doc=/Archives/edgar/data/215466/000114036124017966/ny20018623x1_def14a.htm.
Information regarding the directors and certain executive officers
of SilverCrest is included in its information circular and proxy
statement for its 2024 annual meeting under the headings
“Compensation of Executive Officers and Directors” and
“Compensation Discussion and Analysis”, which was filed on SEDAR+
on April 18, 2024 and is available at
https://www.silvercrestmetals.com/_resources/agm/2024-Information-Circular.pdf?v=093009.
Additional information regarding the persons who may be deemed
participants and their direct and indirect interests, by security
holdings or otherwise, will be set forth in the Proxy Statement,
the Circular and other materials when they are filed with the SEC
or on SEDAR+ in connection with the Arrangement. Free copies of
these documents may be obtained as described in the paragraphs
above.
Cautionary Note to U.S. Investors
Coeur’s public disclosures are governed by the U.S. Securities
Exchange Act of 1934, as amended, including Regulation S-K 1300
thereunder, whereas SilverCrest discloses estimates of “measured,”
“indicated,” and “inferred” mineral resources as such terms are
used in Canada’s National Instrument 43-101. Although S-K 1300 and
NI 43-101 have similar goals in terms of conveying an appropriate
level of confidence in the disclosures being reported, they at
times embody different approaches or definitions. Consequently,
investors are cautioned that public disclosures by SilverCrest
prepared in accordance with NI 43-101 may not be comparable to
similar information made public by companies, including Coeur,
subject to S-K 1300 and the other reporting and disclosure
requirements under the U.S. federal securities laws and the rules
and regulations thereunder. The scientific and technical
information concerning Coeur’s mineral projects in this
communication have been reviewed and approved by a “qualified
person” under Item 1300 of SEC Regulation S-K, namely Coeur’s
Senior Director, Technical Services, Christopher Pascoe. The
SilverCrest “qualified person” under NI 43-101 for this
communication is N. Eric Fier, CPG, P.Eng, CEO for SilverCrest, who
has reviewed and approved its contents.
Forward-Looking Statements and Cautionary Statements
Certain statements in this document concerning the proposed
Transaction, including any statements regarding the expected
timetable for completing the Arrangement, the results, effects,
benefits and synergies of the Transaction, future opportunities for
the combined company, future financial performance and condition,
guidance and any other statements regarding Coeur’s or
SilverCrest’s future expectations, beliefs, plans, objectives,
financial conditions, assumptions or future events or performance
that are not historical facts are “forward-looking” statements
based on assumptions currently believed to be valid.
Forward-looking statements are all statements other than statements
of historical facts. The words “anticipate,” “believe,” “ensure,”
“expect,” “if,” “intend,” “estimate,” “probable,” “project,”
“forecasts,” “predict,” “outlook,” “aim,” “will,” “could,”
“should,” “would,” “potential,” “may,” “might,” “anticipate,”
“likely” “plan,” “positioned,” “strategy,” and similar expressions
or other words of similar meaning, and the negatives thereof, are
intended to identify forward-looking statements. Specific
forward-looking statements include, but are not limited to,
statements regarding Coeur’s or SilverCrest’s plans and
expectations with respect to the proposed Transaction and the
anticipated impact of the proposed Transaction on the combined
company’s results of operations, financial position, growth
opportunities and competitive position, including maintaining
current Coeur and SilverCrest management, strategies and plans and
integration. The forward-looking statements are intended to be
subject to the safe harbor provided by Section 27A of the
Securities Act, Section 21E of the Securities Exchange Act of 1934
and the Private Securities Litigation Reform Act of 1995 and
applicable Canadian securities laws.
These forward-looking statements involve significant risks and
uncertainties that could cause actual results to differ materially
from those anticipated, including, but not limited to, the
possibility that shareholders of SilverCrest may not approve the
Transaction or stockholders of Coeur may not approve the Stock
Issuance or the Charter Amendment; the risk that any other
condition to closing of the Transaction may not be satisfied; the
risk that the closing of the Transaction might be delayed or not
occur at all; the anticipated timing of mailing proxy statements
and circulars regarding the Transaction; the risk that the either
Coeur or SilverCrest may terminate the Agreement and either Coeur
or SilverCrest is required to pay a termination fee to the other
party; potential adverse reactions or changes to business or
employee relationships of Coeur or SilverCrest, including those
resulting from the announcement or completion of the Transaction;
the diversion of management time on transaction-related issues; the
ultimate timing, outcome and results of integrating the operations
of Coeur and SilverCrest; the effects of the business combination
of Coeur and SilverCrest, including the combined company’s future
financial condition, results of operations, strategy and plans; the
ability of the combined company to realize anticipated synergies in
the timeframe expected or at all; changes in capital markets and
the ability of the combined company to finance operations in the
manner expected; the risk that Coeur or SilverCrest may not receive
the required stock exchange and regulatory approvals of the
Transaction; the expected listing of shares on the NYSE; the risk
of any litigation relating to the proposed Transaction; the risk of
changes in governmental regulations or enforcement practices; the
effects of commodity prices, life of mine estimates; the timing and
amount of estimated future production; the risks of mining
activities; and the fact that operating costs and business
disruption may be greater than expected following the public
announcement or consummation of the Transaction. Expectations
regarding business outlook, including changes in revenue, pricing,
capital expenditures, cash flow generation, strategies for the
combined company’s operations, gold and silver market conditions,
legal, economic and regulatory conditions, and environmental
matters are only forecasts regarding these matters.
Additional factors that could cause results to differ materially
from those described above can be found in Coeur’s Annual Report on
Form 10-K for the year ended December 31, 2023, and subsequent
Quarterly Reports on Form 10-Q, which are on file with the SEC and
available from Coeur’s website at www. coeur.com under the
“Investors” tab, and in other documents Coeur files with the SEC
and in SilverCrest’s annual information form for the year ended
December 31, 2023, which is on file with the SEC and on SEDAR+ and
available from SilverCrest’s website at www.silvercrestmetals.com
under the “Investors” tab, and in other documents SilverCrest files
with the SEC or on SEDAR+.
All forward-looking statements speak only as of the date they
are made and are based on information available at that time.
Neither Coeur nor SilverCrest assumes any obligation to update
forward-looking statements to reflect circumstances or events that
occur after the date the forward-looking statements were made or to
reflect the occurrence of unanticipated events except as required
by applicable securities laws. As forward-looking statements
involve significant risks and uncertainties, caution should be
exercised against placing undue reliance on such statements.
Non-GAAP and Non-IFRS Financial Measures
This press release contains certain non-GAAP and non-IFRS
financial measures, which management believes may enable investors
to better evaluate the Coeur and SilverCrest performance, liquidity
and ability to generate cash flow. These measures do not have any
standardized definition under U.S. GAAP or IFRS, and should not be
considered in isolation or as a substitute for measures of
performance prepared in accordance with U.S. GAAP or IFRS, as
applicable. Other companies may calculate these measures
differently.
Free Cash Flow Free cash flow subtracts sustaining capital
expenditures from net cash provided by operating activities,
serving as an indicator of the capacity to generate cash from
operations post-sustaining capital investments.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20241004279894/en/
Coeur Mining, Inc. Attention: Jeff Wilhoit, Senior Director,
Investor Relations Phone: (312) 489-5800 www.coeur.com SilverCrest
Metals Inc. Attention: Lindsay Bahadir, Manager Investor Relations
& Organizational Effectiveness Phone: +1 (604) 694-1730
www.silvercrestmetals.com
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