Coeur Mining to acquire SilverCrest Metals in $1.7bn deal to create leading global silver powerhouse

Coeur Mining, Inc. has announced its acquisition of SilverCrest Metals Inc. through a definitive agreement, seeking to consolidate its position as a preeminent global silver producer. The acquisition entails Coeur Mining obtaining all of SilverCrest Metals’ issued and outstanding shares, whereby SilverCrest Metals shareholders will receive 1.6022 Coeur Mining common shares for each of their SilverCrest Metals shares. The deal is valued at approximately $1.7 billion, representing an 18% premium based on the 20-day volume-weighted average prices as of October 3, 2024. This acquisition signifies a major strategic move in the precious metals industry, allowing Coeur Mining to substantially enhance its silver production, expand its resource portfolio, and fortify its position as a global leader.

The acquisition is expected to strengthen Coeur Mining’s position in the precious metals sector, combining SilverCrest Metals’ high-grade Las Chispas mine in Mexico with Coeur Mining’s existing assets, including the expanded Rochester mine in Nevada. This merger is anticipated to generate an estimated 21 million ounces of silver by 2025. Mitchell J. Krebs, Chairman and CEO of Coeur Mining, emphasized that this acquisition will significantly boost production capabilities and cash flow, enhancing the balance sheet to create a more resilient and diversified company. The transaction is also intended to capitalize on the escalating demand for silver driven by its use in renewable energy technologies, electrification, and broader industrial applications.

The incorporation of SilverCrest Metals is not simply an addition to Coeur Mining’s portfolio; rather, it represents a transformative opportunity to enhance production efficiency, geographical footprint, and market reach. The Las Chispas mine, recognized for its high-grade silver and gold ore, has demonstrated significant production potential since commencing operations in late 2022. The integration of Las Chispas into Coeur’s existing operations is expected to substantially elevate the company’s overall production profile and improve operational synergies, positioning Coeur Mining as a competitive force in the global precious metals market.

Transaction highlights: expanding silver and gold footprint

The combined entity is poised to produce approximately 21 million ounces of silver annually across five North American operations, complemented by an estimated production of 432,000 ounces of gold. Coeur Mining projects that approximately 40% of its revenue will be derived from silver production, in alignment with its strategic emphasis on meeting the growing demand for silver in industrial and technological applications. The addition of SilverCrest Metals’ Las Chispas mine, which is one of the world’s highest-grade silver and gold operations, is pivotal to Coeur’s strategy. With remarkable operational results in 2023, Las Chispas is positioned to significantly augment Coeur’s cash flow while driving down production costs, thus enhancing profitability.

SilverCrest Metals boasts a robust financial position with a cash balance of $98 million and no debt obligations, which will serve to assist Coeur Mining in reducing its overall debt and improving its leverage ratio by approximately 40% upon transaction closure. The acquisition, structured as a plan of arrangement under British Columbia law, is subject to shareholder approval from both companies, as well as regulatory approvals, including Mexican antitrust clearance. The transaction is anticipated to be finalized in the first quarter of 2025, following the satisfaction of these conditions.

Mitchell J. Krebs further articulated that the integration of SilverCrest Metals would yield significant value for Coeur Mining’s stakeholders. The high-grade silver and gold assets brought into Coeur’s portfolio through this acquisition are expected to drive substantial growth and provide a robust foundation for future exploration initiatives. Krebs also underscored the synergies that are likely to arise from combining the operational expertise of both organizations, which will ultimately enhance the efficacy of Coeur Mining’s overall operations and further strengthen its balance sheet.

Industry-leading exploration and expansion opportunities

This acquisition is set to enhance Coeur Mining’s exploration potential significantly. The experience gained from operating the Palmarejo underground mine in Chihuahua, Mexico, will be instrumental in maximizing the potential of the Las Chispas site, which offers over 20 kilometers of largely underexplored vein strike length. The untapped exploration opportunities present substantial potential for extending the life of the mine and increasing resource estimates, thereby enhancing the long-term value derived from the acquisition.

N. Eric Fier, Chief Executive Officer of SilverCrest Metals, conveyed his confidence in Coeur Mining’s capability to sustain the operational success of Las Chispas. He highlighted the immediate premium available to SilverCrest Metals shareholders as well as the opportunity to participate in a significantly larger, diversified enterprise. Fier also indicated that the combined financial strength of the two entities would enable sustained investments in further exploration and expansion, thereby delivering enduring value for shareholders.

The acquisition will not only incorporate the high-grade assets of SilverCrest Metals but also bring invaluable expertise to Coeur Mining. Upon completion of the transaction, N. Eric Fier and another director from SilverCrest Metals will join Coeur Mining’s board of directors, thereby enhancing the governance framework with additional industry knowledge and insights, which are critical for the continued expansion of the company.

Strategic value for stakeholders

The acquisition positions Coeur Mining to emerge as a preeminent silver company, augmented by substantial gold production and robust operational cash flow. This move is in alignment with Coeur Mining’s strategic objective of leveraging the growing demand for silver, driven largely by its applications in renewable energy, including photovoltaic cells in solar panels, and the broader shift towards electrification. By expanding its production capacity and resource base, Coeur Mining is set to meet increasing global demand for silver and other precious metals, thereby solidifying its reputation as a top-tier producer.

For SilverCrest Metals shareholders, the acquisition offers immediate value from the premium, as well as the long-term benefits of holding equity in Coeur Mining, a larger and more diversified company. This strategic participation enables SilverCrest shareholders to capitalize on a broader set of assets and increased production capabilities, while the combined entity’s scale enhances its ability to access capital markets, improve trading liquidity, and attract institutional investors—factors critical to sustained growth and value creation.

Additionally, the merger is anticipated to unlock substantial operational synergies. The integration of SilverCrest Metals’ Las Chispas mine with Coeur Mining’s existing assets is expected to result in improved cost efficiencies, optimized resource allocation, and enhanced production capabilities. Such strategic advantages are expected to be instrumental in driving future growth opportunities, including both organic expansions and potential acquisitions that may arise in the sector.

Commitment to ESG and governance

Both Coeur Mining and SilverCrest Metals maintain a steadfast commitment to environmental, social, and governance (ESG) principles, a key tenet that will continue to be central to the operations of the combined entity. The newly formed company will prioritize responsible mining practices, with a particular emphasis on sustainable water usage, emission reduction, community development, and robust corporate governance. The addition of SilverCrest Metals’ operations to Coeur Mining will further its sustainability ambitions, enhancing its capacity to meet stringent ESG standards and fostering long-term resilience.

The merger also presents an opportunity to strengthen relationships with the local communities in Mexico, where both companies have established significant operations. By aligning their ESG initiatives, the companies aim to foster a positive social impact through initiatives such as job creation, workforce development, and community engagement. The sustained commitment to governance and responsible mining practices will be vital in maintaining stakeholder trust and ensuring the long-term success of the combined company.

Expert insights on market impact

Industry analysts have opined that the acquisition holds considerable potential for Coeur Mining, with the prospect of being re-rated as a premier North American silver producer. The merger is projected to create substantial value for shareholders through increased production volumes, enhanced cash flow, and heightened financial flexibility. The timing of this acquisition is particularly noteworthy given the increasing importance of silver in renewable energy technologies and industrial applications, which positions Coeur Mining favorably to benefit from evolving market dynamics.

Experts suggest that the amalgamation of Coeur Mining’s diversified asset portfolio with SilverCrest Metals’ high-grade Las Chispas mine will result in a formidable presence in the silver and gold markets. The expanded production capabilities, coupled with an optimized cost structure, are expected to drive substantial financial performance, while the combined entity’s commitment to exploration will underpin sustained growth. Analysts have also underscored the potential for significant cost reductions and operational efficiencies, which will likely bolster profitability and enhance shareholder value.

BMO Capital Markets and Goldman Sachs acted as financial advisors to Coeur Mining, while Cormark Securities and Raymond James served as advisors to SilverCrest Metals. Scotiabank also provided a fairness opinion to the special committee of SilverCrest Metals’ board, attesting to the financial soundness of the transaction. Following the completion of the acquisition, SilverCrest Metals’ CEO and another director will join Coeur Mining’s board, thereby enhancing the leadership team and contributing to the combined entity’s strategic direction.

Regulatory and shareholder approvals

The transaction is subject to several requisite approvals, including those from regulatory authorities in Mexico, judicial approval, and consent from the shareholders of SilverCrest Metals. Both companies’ boards of directors have unanimously recommended that shareholders vote in favor of the acquisition, emphasizing the potential value creation and strategic advantages that the merger presents. Additionally, the directors and senior officers of both companies have entered into customary voting support agreements, committing to vote in favor of the transaction.

Aside from shareholder and judicial approvals, the transaction must also meet other regulatory requirements, including Mexican antitrust approval and the listing of the newly issued Coeur Mining shares on the NYSE. The agreement includes customary deal protections such as reciprocal fiduciary-out clauses, non-solicitation provisions, and matching rights for any superior proposals. Break fees and reciprocal expense reimbursement clauses have also been established to ensure that both parties are protected if the transaction does not proceed as planned.

Looking forward

This acquisition is poised to redefine the silver mining landscape in North America, positioning Coeur Mining as a leading global producer of silver. The integration of SilverCrest Metals’ world-class assets is expected to enhance Coeur Mining’s production profile, boost its exploration potential, and contribute to long-term shareholder value. As the world moves toward renewable energy and sustainable technologies, the demand for silver is expected to rise, and Coeur Mining is strategically positioned to capitalize on these trends.

The ongoing focus for both companies is to ensure a seamless integration process that maximizes value for all stakeholders. By leveraging the expertise of Coeur Mining and SilverCrest Metals, as well as their shared commitment to responsible mining and community engagement, the combined entity is expected to thrive. The strategic merger will create a formidable silver and gold producer in North America, delivering significant benefits to shareholders, employees, and the local communities in which it operates.