Coeur Acquires Silvertip Silver-Zinc-Lead Mine In Canada
Editor's Note: Kitco readers, have your say! Check out our newest feature – KITCO CHAT! – where you can share your comments and ask questions directly to us.
(Kitco News) - Coeur Mining, Inc. (NYSE: CDE) has agreed to acquire privately-owned JDS Silver Holdings, Ltd. and its subsidiary, which would make Coeur the new owner of the silver-zinc-lead Silvertip mine in northern British Columbia, Coeur announced Monday.
Under the agreement, Coeur will initially pay $146.5 million in cash, $38.5 million in Coeur shares (approximately 4.3 million new shares) and will assume $15 million in existing debt, the company said. Additional potential payments of up to $50 million are contingent upon achieving specified future permitting and exploration milestones at Silvertip.
Coeur described the Silvertip mine as one of the industry’s highest-grade silver-zinc-lead mines, with a silver-equivalent indicated resource grade of 1,166 grams per tonne (g/t) and a silver-equivalent inferred resource grade of 1,155 g/t. Silvertip began production in the fourth quarter.
Coeur said completion of the transaction is expected next month. Then the company intends to invest $25 million to $35 million in surface infrastructure, accelerated underground development, and drilling and mill optimization over a six-month period, recommencing commercial production by the end of the first quarter of next year.
Once an anticipated daily average mining rate of 1,000 tonnes of ore per day is achieved, Coeur said, Silvertip should produce an average of approximately 10 million silver-equivalent ounces annually -- consisting of some 3 million ounces of silver, 45 million to 50 million pounds of zinc, and 40 million to 45 million pounds of lead -- over an estimated 7.5-year initial mine life.
Coeur said this will a significant potential increase compared to the company’s 2017 production guidance range of 38 million to 41 million silver-equivalent ounces.
The acquisition provides an “expected near-term, low-cost, high-margin cash flow from an attractive jurisdiction,” said Mitchell J. Krebs, Coeur's president and chief executive officer.
At full capacity, Silvertip’s all-in sustaining costs are expected to average approximately $10.50 to $11.50 per silver-equivalent ounce, Coeur said.
The company intends to use a portion of existing cash and equivalents, which were approximately $250 million as of June 30, to fund the cash portion of the acquisition, officials said. To boost its financial flexibility, the company also plans to establish a new $200 million secured revolving credit facility prior to closing of the transaction.