DEFA14A: Coeur Mining to Acquire SilverCrest Metals in $1.7 Billion Deal, Creating a Leading Global Silver Company

Coeur Mining announces the acquisition of SilverCrest Metals for approximately $1.7 billion, aiming to create a leading global silver company with enhanced production and financial capacity.

Summary

• Coeur Mining is set to acquire SilverCrest Metals in a transaction valued at approximately $1.7 billion.
• SilverCrest shareholders will receive 1.6022 Coeur shares for each SilverCrest share, representing an 18% premium based on the 20-day volume-weighted average prices as of October 3, 2024.
• The combined company is projected to produce approximately 21 million ounces of silver and 432,000 ounces of gold in 2025.
• The acquisition is expected to generate approximately $700 million in EBITDA and $350 million in free cash flow in 2025.
• The transaction is anticipated to reduce Coeur's leverage ratio by 40% immediately.
• The deal requires approval from SilverCrest shareholders, a British Columbia court, and Coeur stockholders.
• The transaction is expected to close in late Q1 2025.
• Upon closing, SilverCrest's CEO, N. Eric Fier, and another SilverCrest director will join Coeur's board.

Sentiment

Score: 8

Explanation: The document presents a highly positive outlook on the acquisition, emphasizing the strategic benefits, financial improvements, and growth opportunities for the combined company. The language is optimistic and forward-looking, suggesting a strong belief in the success of the transaction.

Positives

• The acquisition creates a leading global silver company.
• The combined company is expected to generate peer-leading production of approximately 21 million ounces of silver and 432,000 ounces of gold in 2025.
• The transaction is expected to significantly improve Coeur's cost profile and materially increase its annual free cash flow.
• Coeur is positioned to significantly accelerate its deleveraging initiative.
• SilverCrest shareholders receive an immediate and significant premium of approximately 18% based on the 20-day volume-weighted average prices of both companies.
• SilverCrest shareholders gain 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.
• The combined entity's robust financial strength and flexibility will allow for continued future investments in Las Chispas.
• SilverCrest shareholders benefit from significantly improved trading liquidity and capital markets exposure.
• There is a significant re-rate opportunity for the pro forma entity, providing additional potential value for SilverCrest shareholders.

Negatives

• The transaction is subject to various approvals and conditions, including shareholder and regulatory approvals, which could delay or prevent the deal from closing.
• Break fees of $100 million payable by Coeur and $60 million payable by SilverCrest in certain circumstances could impact financial flexibility.
• The success of the combined company depends on the integration of operations and realization of synergies, which may not be fully achieved.

Risks

• The risk that anticipated production, cost and expense levels are not attained.
• Risks and hazards inherent in the mining business, including environmental hazards and industrial accidents.
• Changes in the market prices of gold and silver.
• Uncertainties inherent in Coeur's and SilverCrest's respective production, exploration and development activities, including risks relating to permitting and regulatory delays.
• Any future labor disputes or work stoppages.
• The risk of adverse outcomes in litigation.
• The uncertainties inherent in the estimation of mineral reserves and resources.
• Impacts from Coeur's and SilverCrest's respective future acquisitions of new mining properties or businesses.
• The loss of access or insolvency of any third-party refiner or smelter to whom Coeur or SilverCrest markets their respective production.
• Materials and equipment availability.
• Inflationary pressures.
• Continued access to financing sources.
• The effects of environmental and other governmental regulations and government shut-downs.
• The risks inherent in the ownership or operation of or investment in mining properties or businesses in foreign countries.
• Coeur's and SilverCrest's respective ability to raise additional financing necessary to conduct its business, make payments or refinance its debt.

Future Outlook

The combined company is expected to generate peer-leading production and significant free cash flow, accelerating debt reduction and allowing for continued investment in organic growth opportunities.

Industry Context

The acquisition positions the combined entity as a leading global silver company, competing with other major players in the silver mining industry such as First Majestic, Hecla, and Silvercorp.

Comparison to Industry Standards

• The combined company is expected to have peer-leading silver production compared to companies like First Majestic, Hecla, and Silvercorp.
• The pro forma company is expected to have a strong cash flow profile compared to its peers.
• The document suggests a significant re-valuation opportunity compared to other silver mining companies.

Management Changes

Stakeholder Impact

• Shareholders of both Coeur and SilverCrest will be impacted by the transaction, with SilverCrest shareholders receiving Coeur shares and both groups potentially benefiting from the combined company's performance.
• Employees of both companies may experience changes as a result of the integration of operations.
• Customers and suppliers of both companies may see changes in their relationships as a result of the merger.
• The local communities where the mines are located may be impacted by changes in operations and investment.

Next Steps

• Shareholder meetings will be held to approve the transaction.
• Regulatory approvals will be sought.
• The transaction is expected to close in late Q1 2025.

Key Dates

Keywords

acquisition, silver, gold, mining, Coeur Mining, SilverCrest Metals, Las Chispas, production, EBITDA, free cash flow, merger