Coeur Secures San Miguel, Paramount To Spin Off Nevada Assets
This month's rumors that Coeur Mining was planning to acquire Paramount Gold and Silver turned out to be true on Wednesday morning. The companies announced that Coeur will acquire all outstanding shares of Paramount in an all-stock deal valued at $146 million, securing Paramount's San Miguel project and the Don Ese deposit.
Not surprisingly, this month's rumors that Coeur Mining (NYSE:CDE) was planning to acquire Paramount Gold and Silver (TSX:PZG) turned out to be true. The companies announced Wednesday morning that Coeur will acquire all outstanding shares of Paramount in an all-stock deal valued at $146 million, securing Paramount's San Miguel project and the Don Ese deposit. San Miguel is right next to Coeur's silver-gold Palmarejo project, where some mining operations are expected to wind down over the next two years. The miner has accelerated development of its Guadalupe deposit 6 kilometers south of the main mine, and is planning to quickly integrate San Miguel into those operations. "[It's] a significant new ore source for us to mine and process back at our Palmarejo processing facility," said Coeur CEO Mitchell J. Krebs. To be sure, the deal to secure San Miguel has seemed inevitable for quite some time. "We first set foot on San Miguel in 2007, so we've had a dialogue with them for many years," said Krebs. "It's always been a forgone conclusion that ultimately their San Miguel project would become a part of what we have been doing at Palmarejo." Chris Crupi, CEO of Paramount Gold and Silver, agreed with that sentiment. He noted that partnering up with Coeur will allow him to avoid diluting Paramount shareholders by going out to raise $70 million to develop San Miguel independently. With the company completing a preliminary economic assessment for San Miguel in August and with the plant at Palmarejo ready to move towards more high-grade ore, the timing was finally right for the deal. Crupi also noted that the deal gets San Miguel to production faster, and that Paramount shareholders will still have exposure to the project since they'll get 0.2016 Coeur shares per Paramount share to end up owning about 24 percent of Coeur.