Coeur Mining, Inc. (“Coeur”) (NYSE: CDE) and Northern
Empire Resources Corp. (“Northern Empire”) (TSXV: NM) are
pleased to announce that they have entered into a definitive
agreement (the “Arrangement Agreement”) pursuant to which
Coeur has agreed to acquire, by way of a plan of arrangement (the
“Arrangement”), all of the issued and outstanding securities
of Northern Empire not currently owned by Coeur.
Northern Empire’s principal asset is the Sterling Gold Project
located in Nevada, which consists of four high-grade heap-leachable
deposits with a total inferred gold resource of approximately
709,000 ounces averaging 2.23 g/t located on a dominant 143 km2
land package approximately 185 km from Las Vegas within the
historic Walker Lane trend. The high-grade Sterling gold deposit is
a fully-permitted, past-producing mine with near-term, low-cost,
low-capital production potential. The remaining deposits are
collectively known as the Crown Block, which contain significant
exploration potential, and the land package also includes 17 new
targets that remain untested.
Transaction Highlights
- Transaction values Northern Empire at
approximately US$90 million (C$117 million), inclusive of the
approximately 7.4 million Northern Empire shares currently owned by
Coeur, representing a premium of 40% to Northern Empire’s 20-day
trailing volume-weighted average share price (“VWAP”) based
on the 20-day VWAPs for both companies as at August 1, 2018
- Acquisition adds multiple high-quality,
high-grade oxide gold deposits to Coeur’s evolving development
pipeline that have the potential to become future long-life,
low-cost operating assets
- Expands Coeur’s historical focus on
Nevada, considered one of the world’s top mining jurisdictions
- Coeur will be focused on a quick
restart of the Sterling Mine while aggressively exploring the
highly prospective Crown Block and other targets
- Development of the Sterling Gold
Project benefits from Coeur’s financial flexibility through its
strong balance sheet and diversified cash flow generation
Under the Arrangement, each common share of Northern Empire will
be exchanged for 0.1850 (the “Exchange Ratio”) common shares
of Coeur. Based on the closing price of Coeur’s common shares on
the New York Stock Exchange (“NYSE”) on August 1, 2018, the
transaction values each Northern Empire share at C$1.64. The
consideration received by Northern Empire shareholders represents a
40% premium based on the 20-day VWAP of Coeur from all trading on
the NYSE and Northern Empire from all trading on the TSX Venture
Exchange (“TSXV”) for the period ended August 1, 2018 and a
premium of 20% over Northern Empire’s closing share price on the
TSXV on August 1, 2018. Under the Arrangement, Coeur will also
acquire all of the outstanding options and warrants exercisable for
Northern Empire common shares at the in-the-money value of such
securities, satisfied by delivery of Coeur common shares based on
the Exchange Ratio.
Expected Benefits to Coeur Shareholders
- Unique opportunity to generate
near-term value from expected high-margin production and cash flow
at the Sterling Mine while aggressively exploring the highly
prospective Crown Block deposits and other targets at the property
with the goal of developing a long-life, low-cost gold
operation
- Enhances Coeur’s existing U.S.-centric
footprint in a top jurisdiction where it has operated open pit,
heap leach operations for over thirty years
- Crown Block ground is the core of an
emerging and highly prospective gold district – potential to unlock
value through aggressive success-based exploration and drilling
program
- Adds projects with the potential of
being first and second quartile cost operations
- Potential opportunity to leverage
Coeur’s U.S. net operating loss tax synergies
- Property and district scale exploration
opportunities
Expected Benefits to Northern Empire Shareholders
- Immediate premium of 40% to the 20-day
volume weighted average price of Northern Empire shares based on
the 20-day VWAPs for both companies as at August 1, 2018
- Total return of 119% to investors who
participated in the C$0.75 acquisition financing and 82% to those
who participated in the most recent C$0.90 financing
- All investors who bought shares of
Northern Empire have an opportunity for positive gains as the
consideration exceeds the all-time high
- Continued exposure to the Sterling Gold
Project as well as the opportunity to benefit from the ownership of
Coeur shares, a Company poised for significant growth
- Reduced investment risk by
transitioning from an “single asset development” company to a
balanced portfolio of high quality producing mines and near-term
development projects
“The acquisition of Northern Empire, with its high-grade
Sterling Gold Project and large, prospective land package, comes at
an opportune time for us to bolster our pipeline with high-quality
projects. The transaction, which provides a unique opportunity for
Coeur to leverage its operational expertise in Nevada, a leading
mining jurisdiction, and add expected near-term, high margin
production and cash flow with minimal upfront capital, together
with significant exploration potential, satisfies all of our
acquisition criteria and is accretive on all key financial and
operational metrics,” said Mitchell Krebs, President & CEO of
Coeur.
Michael G. Allen, President, CEO and Director of Northern Empire
stated, “Our focus has been steadfast in creating value for
shareholders. Acquiring the Sterling Gold Project and rapidly
advancing it towards an accretive transaction such as this is an
exceptional outcome. We believe Coeur’s focus and expertise in the
Western US will result in Sterling reaching its full potential.
Northern Empire is pleased to enter into this agreement, and its
Board unanimously recommends the transaction to shareholders. We
wish to thank our employees and stakeholders for all their hard
work advancing the Sterling Gold Project.”
Transaction Summary
The proposed business combination will be effected by way of a
Plan of Arrangement completed under the Business Corporations Act
(British Columbia). The Arrangement will be subject to the approval
of at least 66-⅔% of the votes cast by Northern Empire security
holders present in person or represented by proxy at a special
meeting of Northern Empire security holders expected to take place
in September 2018 and the approval of the majority of the minority
of Northern Empire security holders after excluding votes cast in
respect of Northern Empire shares held by Coeur. In addition to the
Northern Empire shareholder approvals, the Arrangement is also
subject to the receipt of certain regulatory, court and stock
exchange approvals and other closing conditions customary in
transactions of this nature.
The Arrangement Agreement has been unanimously approved by the
boards of directors of each of Northern Empire and Coeur. Cormark
Securities and Canaccord Genuity have each provided a fairness
opinion to the board of directors of Northern Empire that, subject
to the assumptions, limitations and qualifications set out in such
fairness opinion, the consideration to be received by the Northern
Empire shareholders pursuant to the Transaction is fair, from a
financial point of view, to the Northern Empire shareholders (other
than Coeur).
The directors and executive officers of Northern Empire, holding
in aggregate approximately 8% of Northern Empire’s outstanding
common shares have entered into customary voting support agreements
in favor of the Arrangement.
The Arrangement Agreement includes customary restrictive
covenants including a non-solicitation covenant on the part of
Northern Empire and gives Northern Empire the right to accept a
superior proposal in certain circumstances and terminate the
Arrangement Agreement. Coeur has a five business day right to match
any superior proposal. The Arrangement Agreement also provides for
the payment by Northern Empire of a C$4.7 million termination fee
if the Arrangement Agreement is terminated in certain circumstances
and a reciprocal expense reimbursement of C$500,000 payable under
certain circumstances.
Further information regarding the Arrangement will be contained
in a management information circular that Northern Empire will
prepare, file and mail in due course to the Northern Empire
security holders in connection with the special meeting of the
Northern Empire security holders to be held to consider the
Arrangement. All security holders are urged to read the information
circular once available as it will contain additional important
information concerning the Arrangement. The Arrangement Agreement
will be filed on the SEDAR.
This press release does not constitute an offer to sell or the
solicitation of an offer to buy any securities. The Coeur shares to
be issued under the Arrangement have not been and will not be
registered under the U.S. Securities Act of 1933, and may not be
offered or sold in the United States absent registration or an
applicable exemption from registration requirements. It is
anticipated that any securities to be issued under the Arrangement
will be offered and issued in reliance upon the exemption from the
registration requirements of the U.S. Securities Act of 1933
provided by Section 3(a)(10) thereof.
Advisors and Counsel
BMO Capital Markets is acting as exclusive financial advisor to
Coeur. Goodmans LLP, Gibson, Dunn & Crutcher LLP, Perkins Coie
LLP and Lawson Lundell LLP are acting as legal counsel to Coeur.
Cormark Securities Inc. is acting as exclusive financial advisor to
Northern Empire. DuMoulin Black LLP, Dorsey and Whitney LLP, and
Parsons Behle & Latimer are acting as legal counsel to Northern
Empire. Cormark Securities Inc. and Canaccord Genuity Inc., have
provided opinions to the Northern Empire Board of Directors and
Special Committee, respectively, as of the date of such opinions
and subject to the assumptions, limitations, and qualifications
stated in such opinions, the consideration to be received by the
Northern Empire shareholders under the transaction is fair, from a
financial point of view, to the Northern Empire shareholders other
than Coeur and its affiliates.
About Coeur
Coeur Mining, Inc. is a well-diversified, growing precious
metals producer with five mines in North America. Coeur produces
from its wholly-owned operations: the Palmarejo silver-gold complex
in Mexico, the Silvertip silver-zinc-lead mine in British Columbia,
the Rochester silver-gold mine in Nevada, the Kensington gold mine
in Alaska, and the Wharf gold mine in South Dakota. In addition,
Coeur has interests in several precious metals exploration projects
throughout North America.
About Northern Empire
Northern Empire Resources Corp. (TSXV: NM) (OTC: PSPGF) is
expanding and discovering heap leach gold deposits in Nevada.
Northern Empire presently has initial resource statements on four
potentially heap-leachable deposits, three of which are past
producing, at the 100%-owned Sterling Gold Project.
Cautionary Statements
This news release contains forward-looking statements within the
meaning of securities legislation in the United States and Canada,
including statements regarding the anticipated acquisition of
Northern Empire by Coeur and the anticipated benefits thereof. Such
forward-looking statements involve known and unknown risks,
uncertainties and other factors which may cause Coeur and/or
Northern Empire’s actual results, performance or achievements to be
materially different from any future results, performance or
achievements expressed or implied by the forward-looking
statements. Such factors include, among others, the risk that the
Northern Empire acquisition does not close on a timely basis or at
all or that some or all of the anticipated benefits thereof are not
achieved, the risks and hazards inherent in the mining business
(including risks inherent in developing large-scale mining
projects, environmental hazards, industrial accidents, weather or
geologically related conditions), changes in the market prices of
gold and silver and a sustained lower price environment, the
uncertainties inherent in Coeur’s production, exploratory and
developmental activities, including risks relating to permitting
and regulatory delays, ground conditions, grade variability, any
future labor disputes or work stoppages, the uncertainties inherent
in the estimation of resources, changes that could result from
Coeur’s future acquisition of new mining properties or businesses,
the loss of any third-party smelter to which Coeur markets
commodities, the effects of environmental and other governmental
regulations, the risks inherent in the ownership or operation of or
investment in mining properties or businesses in foreign countries,
Coeur’s ability to raise additional financing necessary to conduct
its business, make payments or refinance its debt, as well as other
uncertainties and risk factors set out in filings made from time to
time with the United States Securities and Exchange Commission, and
the Canadian securities regulators, including, without limitation,
Coeur’s most recent reports on Form 10-K or Form 10-Q. Actual
results, developments and timetables could vary significantly from
the estimates presented. Readers are cautioned not to put undue
reliance on forward-looking statements. Coeur and Northern Empire
disclaim any intent or obligation to update publicly such
forward-looking statements, whether as a result of new information,
future events or otherwise. Additionally, Coeur and Northern Empire
undertake no obligation to comment on analyses, expectations or
statements made by third parties in respect of Coeur and/or
Northern Empire, their financial or operating results or their
securities.
Michael G. Allen, P. Geo., President & CEO of Northern
Empire, and a Qualified Person as defined by NI 43-101, has
approved the scientific and technical information contained in this
news release. For further information on the Sterling Gold Project,
and a description of the key assumptions, parameters and methods
used to estimate mineral resources, as well as data verification
procedures and a general discussion of the extent to which the
estimates may be affected by any known environmental, permitting,
legal, title, taxation, socio-political, marketing or other
relevant factors, please refer to the technical report on the
project dated July 12, 2017, found on the Northern Empire’s
website, www.northernemp.com, and SEDAR at www.sedar.com.
Sterling Gold Project Resource Estimate – Effective March
29, 2017*
Sterling Deposit Inferred Gold Resource
(Metric Measurement)
Resource Type Cutoff Grade
Tonnes Average Grade
Contained Au (Au g/t)
(‘000)
(Au g/t)
(oz ‘000) Surface 0.3
3,081 2.57 254 Surface
0.7 2,399 3.15 243
Surface
1.0 1,958
3.67 231 Non-pit constrained
1.0 614 2.50 49
Non-pit constrained 1.4 454
2.98 43
Non-pit constrained
1.7 350
3.38 38
Notes
- Results based on cyanide soluble assay
testing.
- CIM definitions are followed for
classification of Mineral Resource.
- Mineral Resource surface pit extent has
been estimated using a gold price of US$1,200 per ounce and mining
cost of US$2.10 per ton (US$2.31 per tonne) and a leached gold
recovery of 88%.
- Non-pit constrained resources below the
surface pit and targeted for underground mining are based on a gold
price of US$1,200 per ounce and mining costs of $US45 per ton.
Other modifying factors remain unchanged.
- Imperial (A-series) to metric
(B-series) conversion: 1 ton =0.907185 tonne, 1 opt = 34.2857
g/t.
- Totals may not represent the sum of the
parts due to rounding.
- The Mineral Resource estimate has been
prepared by Derek Loveday, P. Geo. of Norwest Corporation in
conformity with CIM “Estimation of Mineral Resource and Mineral
Reserves Best Practices” guidelines and are reported in accordance
with the Canadian Securities Administrators NI 43-101. Mineral
resources are not mineral reserves and do not have demonstrated
economic viability. There is no certainty that any mineral resource
will be converted into mineral reserve.
Daisy Deposit Inferred Gold Resource
(Metric Measurement)
Resource Type Cutoff Grade
Tonnes Average Grade
Contained Au (Au
g/t) (‘000) (Au g/t)
(oz ‘000) Surface 0.3
5,362 1.34 232 Surface
0.7 3,766 1.71 207
Surface
1.0
2,556 2.12
174
Notes
- Results based on fire assay
testing.
- CIM definitions are followed for
classification of Mineral Resource.
- Mineral Resource surface pit extent has
been estimated using a gold price of US$1,200 per ounce and mining
cost of US$2.10 per ton (US$2.31 per tonne) and a leached gold
recovery of 88%.
- Imperial (A-series) to metric
(B-series) conversion: 1 ton =0.907185 tonne, 1 opt = 34.2857
g/t.
- Totals may not represent the sum of the
parts due to rounding.
- The Mineral Resource estimate has been
prepared by Derek Loveday, P. Geo. of Norwest Corporation in
conformity with
- CIM “Estimation of Mineral Resource and
Mineral Reserves Best Practices” guidelines and are reported in
accordance with the Canadian Securities Administrators NI 43-101.
Mineral resources are not mineral reserves and do not have
demonstrated economic viability. There is no certainty that any
mineral resource will be converted into mineral reserve.
Secret Pass Deposit Inferred Gold
Resource (Metric Measurement)
Resource Type Cutoff Grade
Tonnes Average Grade
Contained Au (Au
g/t) (‘000) (Au g/t)
(oz ‘000) Surface 0.3
11,143 0.93 335 Surface
0.7 6,096 1.30 256
Surface 1.0 3,534
1.65 188
Notes
- Results based on fire assay
testing.
- CIM definitions are followed for
classification of Mineral Resource.
- Mineral Resource surface pit extent has
been estimated using a gold price of US$1,200 per ounce and mining
cost of US$2.10 per ton (US$2.31 per tonne) and a leached gold
recovery of 80%.
- Imperial (A-series) to metric
(B-series) conversion: 1 ton =0.907185 tonne, 1 opt = 34.2857
g/t.
- Totals may not represent the sum of the
parts due to rounding.
- The Mineral Resource estimate has been
prepared by Derek Loveday, P. Geo. of Norwest Corporation in
conformity with CIM “Estimation of Mineral Resource and Mineral
Reserves Best Practices” guidelines and are reported in accordance
with the Canadian Securities Administrators NI 43-101. Mineral
resources are not mineral reserves and do not have demonstrated
economic viability. There is no certainty that any mineral resource
will be converted into mineral reserve.
SNA Deposit Inferred Gold Resource
(Metric Measurement)
Resource Type Cutoff Grade
Tonnes Average Grade
Contained Au (Au
g/t) (‘000) (Au g/t)
(oz ‘000) Surface 0.3
3,875 1.03 126 Surface
0.7 2,543 1.30 105
Surface 1.0 1,510
1.61 78
Notes
- Results based on fire assay
testing.
- CIM definitions are followed for
classification of Mineral Resource.
- Mineral Resource surface pit extent has
been estimated using a gold price of US$1,200 per ounce and mining
cost of US$2.10 per ton (US$2.31 per tonne) and a leached gold
recovery of 88%.
- Imperial (A-series) to metric
(B-series) conversion: 1 ton =0.907185 tonne, 1 opt = 34.2857
g/t.
- Totals may not represent the sum of the
parts due to rounding.
- The Mineral Resource estimate has been
prepared by Derek Loveday, P. Geo. of Norwest Corporation in
conformity with CIM “Estimation of Mineral Resource and Mineral
Reserves Best Practices” guidelines and are reported in accordance
with the Canadian Securities Administrators NI 43-101. Mineral
resources are not mineral reserves and do not have demonstrated
economic viability. There is no certainty that any mineral resource
will be converted into mineral reserve.
* Cutoff grade for resource is 1.0 g/t other than the non-pit
constrained Sterling Deposit resource, which has a 1.7 g/t cutoff
grade); all other cutoff grades are included for sensitivity
analysis purposes
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Coeur Contact InformationCoeur Mining, Inc.Jonathan
Chung, Associate, Investor RelationsPhone: (312)
489-5800www.coeur.comorNorthern Empire Contact
InformationNorthern Empire Resources CorpPhone: (604)
646-4522www.northernemp.com
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