Coeur Mining to buy Silvercrest in $1.7 billion deal

Coeur Mining (NYSE: CDE) has reached an agreement to acquire Canadian precious metals producer Silvercrest (TSX: SIL) (NYSE: SILV) in an all-share deal valued at $1.7 billion. 

The addition of Silvercrest’s Las Chispas mine Mexico, one of the world’s lowest-cost, highest-grade silver operations, is expected to make Coeur a leading global silver miner with 21 million ounces of the metal and 432,000 ounces of gold a year.

The merged company will own five mines in Norh America, with three of them considered top silver producers — Rochester in Nevada; Palmarejo in Mexico’s Chihuahua; and Las Chispas in Sonora, also Mexico.

Las Chispas mine, which began production in late 2022, has shown strong operational performance, Coeur’s President and CEO, Mitchell J. Krebs told investors on a conference call on Friday morning. The executive said that in 2023, the mine’s first full-year of operations, it produced over 10.25 million silver equivalent ounces at a cash cost of $7.73 per ounce.

SilverCrest shares have risen nearly 45% since the start of the year, closing at C$12.59, or $9.29, on Thursday. The stock has more than doubled its value in the past 52 weeks, rising 113%. Coeur’s shares have rocketed 117.2% year-to-date through Thursday, as gold prices have rallied to record highs.

Coeur’s proposed acquisition price of $11.34 per share represents an 18% premium over the 20-day volume-weighted average prices of both companies as of October 3 closing price. It also implies a 22% premium to SilverCrest’s closing price on the NYSE American that same day.

Upon completion, Coeur shareholders will own 63% of the merged company, while SilverCrest shareholders will control 37%.

Both companies’ boards have unanimously endorsed the deal, urging their shareholders to vote in favor. The agreement includes break fees of up to $100 million if the transaction does not proceed.

Last month, Canada’s First Majestic (TSX: AG) agreed to acquire Mexico-focused Gatos Silver (NYSE: GATO) for $970 million, marking a major consolidation in the silver mining sector.

The silver market experienced last year a 15% supply deficit, and between 2020 and 2024, is expected to face a cumulative deficit of 1,093.4 million ounces.