
Furthermore, Coeur won't be acquiring all of Paramount's assets. Immediately before the merger Paramount will spin off its non-Mexican assets into a Paramount subsidiary that currently holds the company's Nevada assets, including its 5.5-million-ounce Sleeper gold project. The new publicly traded company, expected to be called Paramount Nevada Gold, will get $10 million in cash from Coeur, while Coeur will get a 4.9-percent common interest in the company.
It's a deal that Rob Chang of Cantor Fitzgerald believes Paramount shareholders should take. The analyst said that while the value of the deal is a bit lower relative to Cantor's net asset value for Paramount, "the market premium is still quite high," especially considering Paramount's share price prior to a Reuters article released ahead of the agreement. "On top of that, they're getting a significant portion of Coeur, and Coeur is probably going to go higher because the overhang of Palmarejo being a underutilized operation will be removed with this acquisition," he added. "It's a win-win for everyone." For his part, Crupi seems excited about Paramount's new direction, and pointed out that those who are shareholders of the company "before the record date goes final" will get a "bonus equity" in the spin-off company. It seems that the market agrees with him, as shares of the company gained nearly 30 percent on the Toronto Stock Exchange to close at $1.01. As for what's next, Crupi is hoping for a repeat performance in Nevada. "I would like to do the same thing that I did with the Mexican project and sell [Sleeper] to another group and make my shareholders a whole lot more money," he said. The deal is expected to close in the second quarter of 2015. Securities Disclosure: I, Teresa Matich, hold no direct investment interest in any company mentioned in this article. Coeur Secures San Miguel, Paramount to Spin Off Nevada Assets from Silver Investing News