Coeur Mining to Acquire SilverCrest

US-based Coeur Mining has reached an agreement to acquire all outstanding shares of SilverCrest Metals, gaining control of the Las Chispas mine in Sonora, a high-grade, low-cost silver and gold operation. Coeur Mining highlights the strategic benefits of the acquisition, including increased production capacity and strengthened financial performance.

Coeur Mining said the acquisition will proceed via a court-approved plan of arrangement. SilverCrest shareholders will receive 1.6 Coeur Mining common shares for each SilverCrest common share, valuing SilverCrest shares at US$11.34, based on Coeur Mining’s Oct. 3, 2024 closing price. The company says this represents an 18% premium to the 20-day volume-weighted average price and a 22% premium to SilverCrest’s Oct. 3, 2024 closing price.

The transaction, valued at approximately US$1.7 billion, will result in Coeur Mining shareholders owning 63% and SilverCrest shareholders owning 37% of the combined company. The merger is expected to be completed by late 1Q25, pending shareholder, court, and regulatory approvals.

The acquisition will add SilverCrest’s Las Chispas underground mine to Coeur Mining’s portfolio, which includes its expanded Rochester silver mine in Nevada, the United States and Palmarejo underground mine in Chihuahua. Together, the combined company is projected to produce approximately 21Moz of silver and 432,000oz of gold in 2025. Coeur Mining says the merger will increase its silver production by adding one of the industry’s lowest-cost, highest-margin silver and gold operations. “Together with SilverCrest’s large and growing cash balance and no debt, our balance sheet is expected to be materially strengthened on Day 1. 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,” said Mitchell J. Krebs, President and CEO, Coeur Mining. 

The transaction is expected to significantly enhance Coeur Mining’s free cash flow, with estimates of US$700 million in EBITDA and US$350 million in free cash flow in 2025. The addition of SilverCrest’s debt-free balance sheet, along with its cash reserves and bullion, will allow Coeur Mining to accelerate its deleveraging initiatives, reducing its leverage ratio by 40% upon closing.

Upon closing, Eric Fier, CEO and Director, SilverCrest and one additional SilverCrest director will join Coeur’s board. Both companies’ boards of directors have approved the transaction. SilverCrest also appointed a special committee of independent directors to assess the transaction. “I feel confident that the Coeur (Mining) 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, US-based, NYSE-listed silver and gold company with tremendous upside potential,” Fier added.

Shareholder meetings are expected to be held around the end of the year. The deal will require a 2/3 percent majority vote from SilverCrest shareholders and option holders, along with other regulatory approvals, including from Mexican authorities. The transaction includes standard protections, such as non-solicitation covenants, fiduciary-out provisions, and break fees, with Coeur Mining and SilverCrest agreeing to pay US$100 million and US$60 million, respectively, under certain conditions if the deal is not completed.