DEFA14A: Coeur Mining Acquires New Gold in $7 Billion Deal

Coeur Mining announces the acquisition of New Gold, creating a North American precious metals powerhouse with enhanced production and cash flow.

Summary

• Coeur Mining will acquire all outstanding common shares of New Gold via a plan of arrangement.
• New Gold shareholders will receive 0.4959 Coeur shares for each New Gold share, implying a total equity value of approximately $7 billion.
• This represents a 16% premium based on New Gold's closing share price last Friday.
• Upon completion, existing Coeur and New Gold shareholders will own approximately 62% and 38% of the combined company, respectively.
• The combined company will be a $20 billion U.S.-based precious metals producer, expected to be one of the world's top 10 largest precious metals companies and remain a top 5 global silver producer.
• Combined 2026 EBITDA is projected to be approximately $3 billion, and free cash flow approximately $2 billion.
• Expected 2026 production includes approximately 20 million ounces of silver, 900,000 ounces of gold, and 100 million pounds of copper, totaling approximately 1.25 million gold equivalent ounces.
• Over 80% of the combined company's 2026 revenue will be generated from U.S. and Canadian operations.
• The transaction is per share accretive for Coeur stockholders across all key metrics, with approximately 40% accretion in free cash flow per share.
• The combined company expects a net cash position at closing and a rapidly growing cash balance.
• Coeur will maintain New Gold's Toronto office, along with its existing Vancouver office.

Sentiment

Score: 9

Explanation: The filing presents a highly optimistic and strategic acquisition, emphasizing significant financial accretion, enhanced scale, improved liquidity, and a strong North American focus. Management highlights numerous benefits for shareholders and the combined entity's future prospects, with minimal explicit negatives.

Positives

• Creates the industry's only all North American senior precious metals mining company with an unrivaled production, cash flow, and liquidity profile.
• Expected to result in lower costs, higher margins, and a stronger, more resilient business for the combined entity.
• Projected 2026 EBITDA of approximately $3 billion and free cash flow of approximately $2 billion, representing a massive increase.
• Achieves a sector-leading free cash flow yield and a rapidly growing cash balance.
• Potential for an investment-grade credit rating, higher levels of capital returns to stockholders, and enhanced trading liquidity.
• Uniquely positioned for potential inclusion in key major U.S. indexes.
• The transaction is per share accretive for Coeur stockholders across all key metrics, including approximately 40% free cash flow per share accretion.
• New Gold shareholders receive an immediate and attractive 16% premium over their current share price.
• Combines 7 high-quality operations (Coeur's 5 and New Gold's 2) with strong growth profiles in favorable jurisdictions.
• Diversifies risk across 7 assets, with no single asset representing more than 25% of the combined company's Net Asset Value (NAV).
• Provides New Gold shareholders with exposure to silver, complementing their existing gold and copper holdings.
• Leverages Coeur's experience in operating and optimizing underground operations at New Afton and Rainy River.
• Commitment to accelerating exploration investment at K-Zone (New Afton) and across the large land package at Rainy River.
• Maintains New Gold's strong culture of safety and commitment to excellence.
• Creates career development opportunities for employees from both companies.
• The combined company will be better positioned to be opportunistic during low price environments rather than just surviving them.

Negatives

• New Gold's Rainy River asset currently has a shorter reserve mine life (out to 2023), though management highlights significant exploration potential.
• The 16% premium paid to New Gold shareholders represents a cost for Coeur Mining.
• Integration of two companies, while emphasized as culturally aligned, inherently carries operational and management complexities.

Risks

• Shareholders of New Gold may not approve the Transaction.
• Stockholders of Coeur may not approve the Stock Issuance or the Charter Amendment.
• Any other condition to closing of the Transaction may not be satisfied.
• The closing of the Transaction might be delayed or not occur at all.
• Either Coeur or New Gold may terminate the Arrangement Agreement and be required to pay a termination fee to the other party.
• Potential adverse reactions or changes to business or employee relationships of Coeur or New Gold, including those resulting from the announcement or completion of the Transaction.
• Diversion of management time on transaction-related issues.
• The ultimate timing, outcome, and results of integrating the operations of Coeur and New Gold.
• 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.
• Coeur or New Gold may not receive the required stock exchange and regulatory approvals of the Transaction, including Investment Canada Act approval.
• Risk of any litigation relating to the proposed Transaction.
• Risk of changes in governmental regulations or enforcement practices.
• Effects of commodity prices and life of mine estimates.
• Timing and amount of estimated future production.
• Risks inherent in mining activities.
• Operating costs and business disruption may be greater than expected following the public announcement or consummation of the Transaction.

Future Outlook

The combined company anticipates significant growth in production, cash flow, and liquidity, aiming for an investment-grade credit rating and higher capital returns to stockholders. It expects to accumulate billions of dollars in cash over the next several years, which will be reinvested in organic growth opportunities like the K-Zone at New Afton and brownfields exploration across all operations, with remaining capital returned to stockholders. The transaction is expected to close in the first half of 2026.

Management Comments

• "This combination creates the industry's only all North American senior precious metals mining company with an unrivaled production, cash flow and liquidity profile." Mitchell J. Krebs, President, CEO & Chairman, Coeur Mining, Inc.
• "We see right now as a unique window of opportunity to be bold to take advantage of the current macro environment and to leverage what our 2 companies have worked to put in place over the last several years and create a one-of-a-kind North American precious metals mining powerhouse like this." Mitchell J. Krebs, President, CEO & Chairman, Coeur Mining, Inc.
• "Without a doubt, this transaction makes Coeur a stronger, more resilient company and importantly, is per share accretive for our stockholders across all key metrics." Mitchell J. Krebs, President, CEO & Chairman, Coeur Mining, Inc.
• "Combining with Coeur was the best transaction for New Gold shareholders and for our 2 operations for several reasons." Patrick Godin, CEO, President & Director, New Gold Inc.
• "We are bolting 7 mines in great reduction with exploration potential. And I think it's going to be a really nice platform and derisk for a lot the value for shareholders in the long term." Patrick Godin, CEO, President & Director, New Gold Inc.
• "This is less about synergies and really more about what these 2 companies together represent and how unique and special of a company this is with the scale, the quality with the U.S./Canada footprint with likely an investment-grade credit profile." Mitchell J. Krebs, President, CEO & Chairman, Coeur Mining, Inc.
• "It's a high-class problem, but we'll think of it less as spending and more about investing and how do we prioritize that in a way that feeds the best returns and drives that ROIC that's gone -been going up for us." Mitchell J. Krebs, President, CEO & Chairman, Coeur Mining, Inc.

Industry Context

The transaction creates a unique "all North American" senior precious metals mining company, positioning it as a top 10 global producer and top 5 silver producer. This move aligns with a trend towards consolidation and regional focus in the mining sector, leveraging the current macro environment. The combined entity aims to offer superior liquidity and investment appeal compared to peers, potentially attracting institutional investors and enhancing its market position.

Comparison to Industry Standards

• The combined company will be one of the world's top 10 largest precious metals companies.
• It will remain a top 5 global silver producer.
• Expected to have a sector-leading free cash flow yield of around 10%.
• Expected to be among the most liquid names in the sector.
• The combined company's 2026 cost per ounce is expected to decline by double digits, improving its position on the global cost curve.
• The $20 billion combined market capitalization places the company in a unique and leading position compared to peers.
• Silver will represent over 30% of the value of total reserves, in line with other traditional silver peers.

Management Changes

Corporate Governance

Stakeholder Impact

• Shareholders (Coeur): Expected to benefit from per share accretion, higher cash flow, increased liquidity, potential investment-grade rating, and higher capital returns.
• Shareholders (New Gold): Receive a 16% premium and gain exposure to a larger, more diversified, and resilient North American precious metals producer.
• Employees: Creation of career development opportunities for talented colleagues from both companies, with New Gold's team considered critical for success and retention of the Toronto office.
• Communities: Coeur commits to upholding responsible stewardship of Canadian operations, maintaining strong relationships with First Nations, and having a positive impact in operating communities.
• Creditors: Potential for an investment-grade credit rating for the combined entity, suggesting improved creditworthiness and financial stability.

Next Steps

• Shareholder meetings for Coeur and New Gold are expected in the first quarter of 2026 to approve the transaction.
• Obtain required stock exchange and regulatory approvals, including Investment Canada Act approval.
• Integration of Coeur and New Gold operations and teams.
• Accelerate exploration investment at the K-Zone (New Afton) and across the Rainy River land package.
• Evaluate the high-grade Silvertip critical minerals project, including further drilling and project stage gates (initial assessment, PFS).
• Post-closing, Coeur plans to seek a TSX listing.
• Discussion with the Board about a robust capital return policy to stockholders as cash builds up.
• Continue efforts to deliver a meaningful increase in mine life at Wharf by the end of this year.

Key Dates

Recommendation

The acquisition of New Gold by Coeur Mining is highly strategic and financially accretive, creating a dominant North American precious metals producer with significantly enhanced scale, cash flow, and liquidity. The transaction is expected to boost Coeur's EBITDA to $3 billion and free cash flow to $2 billion by 2026, with a sector-leading free cash flow yield and approximately 40% free cash flow per share accretion for Coeur stockholders. The combined entity will have a robust balance sheet, diversified assets across favorable jurisdictions, and strong organic growth opportunities. The potential for an investment-grade credit rating and inclusion in major U.S. indexes further enhances its appeal, making it a compelling investment for long-term growth and value creation.

Keywords

Coeur Mining, New Gold, M&A, acquisition, precious metals, gold, silver, copper, mining, North America, Canada, U.S., New Afton, Rainy River, EBITDA, free cash flow, shareholder approval, investment-grade, exploration, CDE, NYSE, TSX