Provides Immediate Positive Cash Flow
From Established, Low-Cost U.S. Gold Mine
Accretive Transaction Adds to Company's
Production and Cash Flow Growth
Coeur Mining, Inc. ("Coeur" or the "Company") (NYSE:CDE) announced
today it has entered into a definitive agreement with a subsidiary
of Goldcorp Inc. (NYSE:GG) (TSX:G) to acquire 100% of the Wharf
gold mine, a producing gold mine located near Lead, South Dakota
("Wharf") for cash consideration of $105 million.
Key Highlights
- Mine expected to produce 85,000 – 90,000 ounces of gold in 2015
at an all-in sustaining cost of $800 – $875 per gold ounce1
- Expected to increase Company's 2015 EBITDA by over 30% and
boost free cash flow
- Anticipated to reduce Coeur's consolidated unit costs
- Provides quality, immediate growth from accretive
transaction
- Adds stable, established source of production and cash flow to
Coeur's existing portfolio
- Enhances Company's overall geopolitical risk profile
- Leverages Coeur's 25 years of open-pit, heap leach
experience
- Would represent a 24% increase to Coeur's total gold
reserves2
"The acquisition of Wharf further establishes Coeur as a
leading, growing producer of silver and gold in the Americas while
improving our overall portfolio with strong cash flow generation in
a low-risk jurisdiction. Wharf is a straightforward open-pit
operation that has been well-run for over thirty years. Ongoing
capital requirements are expected to be minimal, resulting in low
expected all-in costs and significant expected free cash flow,"
said Mitchell J. Krebs, Coeur's President and Chief Executive
Officer. "We believe this transaction will generate an attractive
rate of return and is immediately accretive to cash flow and net
asset value. We are excited to welcome our new team members at
Wharf as we look to pursue identified opportunities to optimize the
operation, add incremental value, and extend the mine life."
Transaction Overview
Under the terms of the agreement, Coeur will acquire a 100%
interest in Wharf for cash consideration of $105 million. Although
financing is not a condition to closing, Coeur has received term
sheets for a senior secured line of credit for up to half of the
purchase price in order to maintain the Company's liquidity and
financial flexibility. The transaction is subject to United States
antitrust approval and other customary closing conditions. Coeur
anticipates closing the transaction in the first quarter of
2015.
Wharf Mine Overview
Wharf is an open-pit gold mine located in the Black Hills mining
district in Lead, South Dakota. The Black Hills district was
historically the second largest gold producing district in the
United States and includes the renowned Homestake mine. Wharf has
been in production for over 30 years after commencing production
with an estimated three-year mine life. During that period, Wharf
has produced over 2.0 million ounces of gold and has a current
reserve base of 560,000 ounces of gold.
Processing consists of crushing followed by heap leaching,
providing gold recovery rates around 80%. Wharf is expected to
produce 85,000 – 90,000 ounces of gold in 2015 at an all-in
sustaining cost of $800 – $875 per gold ounce1.
The mine has a highly experienced, stable, and dedicated local
workforce totaling approximately 190 people with a strong safety
track record. In addition, Wharf operates with a strong social
license, which has provided substantial benefits to the
operation.
1. Guidance provided by Goldcorp on January 12, 2015.
2. Represents the addition of Coeur's gold reserves effective
December 31, 2013 (except La Preciosa, effective July 29, 2014) and
Wharf's gold reserves effective December 31, 2013.
Wharf Reserves and Resources
As reported by Goldcorp at December 31, 2013, mineral reserves
and resources for Wharf are shown below. For Coeur's purposes,
these estimates for Wharf are considered to be historical estimates
under National Instrument 43-101 - Standards of Disclosure for
Mineral Projects ("NI 43-101") as they were prepared by Goldcorp
prior to Coeur's agreement to acquire Wharf. Coeur anticipates
completing the work necessary to prepare and file a National
Instrument 43-101 technical report after the transaction
closes.
|
Tons |
Grade (oz/t) |
Ounces (000s) |
|
(000s) |
Gold |
Silver |
Gold |
Silver |
Proven and Probable Reserves |
|
|
|
|
|
Proven Reserves |
15,179 |
0.022 |
0.078 |
340 |
1,190 |
Probable Reserves |
8,245 |
0.026 |
0.108 |
220 |
890 |
Total Proven and Probable
Reserves |
23,424 |
0.024 |
0.089 |
560 |
2,080 |
Measured and Indicated Resources |
|
|
|
|
|
Measured Resources |
4,795 |
0.020 |
0.104 |
100 |
500 |
Indicated Resources |
1,642 |
0.020 |
0.102 |
30 |
170 |
Total Measured and Indicated
Resources |
6,437 |
0.020 |
0.104 |
130 |
670 |
Notes:
1. Mineral Reserves and Mineral Resources estimate as reported
by Goldcorp in its Annual Information Form dated March 31, 2014
("AIF") for the financial year ended December 31, 2013, available
at www.sedar.com under Goldcorp's profile. As discussed in the AIF,
Mineral Reserves and Mineral Resources were prepared by Goldcorp in
accordance with NI 43-101 under the supervision of a qualified
person. Coeur is not treating these historical estimates as current
and has not completed sufficient work to classify the historical
estimate as current mineral reserves or mineral resources for
Coeur's purposes. Coeur's qualified person will review and verify
the scientific and technical information of Goldcorp, as well as
complete the other work necessary for purposes of preparing a
43-101 technical report, including validation of data quality,
resource model accuracy, and costs used in reserve and resource
cutoffs.
2. As discussed in the AIF, mineral reserves were calculated by
Goldcorp using metal prices of $1,300 per gold ounce and $22 per
silver ounce, and mineral resources were calculated using $1,500
per gold ounce and $24 per silver ounce. Mineral resources are in
addition to mineral reserves and do not have demonstrated economic
viability. Rounding of tons, as required by reporting guidelines,
may result in apparent differences between tons and grade.
Conversion
Table |
1 short ton |
= |
0.907185 metric tons |
1 troy ounce |
= |
31.10348 grams |
Advisors
Morgan Stanley & Co. LLC is serving as financial advisor to
Coeur on this transaction and Gibson, Dunn & Crutcher LLP is
serving as legal advisor.
Conference Call Information and Presentation
Materials
Coeur will conduct a conference call and webcast at
www.coeur.com to discuss the transaction announcement on January
13, 2015 at 11:00 a.m. Eastern time. A slide presentation to
accompany the conference call will also be available at
www.coeur.com.
Dial-In Numbers: |
(877) 768-0708 (U.S. and Canada) |
|
(660) 422-4718 (International) |
Conference ID: |
631 17 395 |
A replay of the call will be available on Coeur's website
through February 13, 2015.
Replay Numbers: |
(855) 859-2056 (U.S. and Canada) |
|
(404) 537-3406 (International) |
Conference ID: |
631 17 395 |
About Coeur
Coeur Mining is the largest U.S.-based primary silver producer
and a significant gold producer with four precious metals mines in
the Americas employing nearly 2,000 people. Coeur produces from its
wholly owned operations: the Palmarejo silver-gold mine in Mexico,
the San Bartolomé silver mine in Bolivia, the Rochester silver-gold
mine in Nevada and the Kensington gold mine in Alaska. The Company
also has a non-operating interest in the Endeavor mine in Australia
in addition to net smelter royalties on the Cerro Bayo mine in
Chile, the El Gallo complex in Mexico, and the Zaruma mine in
Ecuador. In addition, the Company has two silver-gold feasibility
stage projects - the La Preciosa project in Mexico and the Joaquin
project in Argentina. The Company also conducts ongoing exploration
activities in Alaska, Argentina, Bolivia, Mexico, and Nevada. The
Company owns strategic investment positions in several silver and
gold development companies with projects in North and South
America.
Cautionary Statement
This news release contains forward-looking statements within the
meaning of securities legislation in the United States and Canada,
including statements regarding anticipated benefits of the Wharf
acquisition, reserves and resource estimates, production, costs,
mine life, liquidity, cash flow and financing initiatives. Such
forward-looking statements involve known and unknown risks,
uncertainties and other factors which may cause Coeur's actual
results, performance or achievements to be materially different
from any future results, performance or achievements expressed or
implied by the forward-looking statements. Such factors include,
among others, the risk that regulatory approvals of the
contemplated transaction are not obtained on the proposed terms and
schedule, the risk that the contemplated transaction will not be
consummated, the risk that Coeur will not realize any or all of the
anticipated or expected benefits from the transaction, the risk
that development and operating synergy goals for the transaction
will not be met and that disruptions from the transaction will harm
relationships with customers, employees, suppliers and regulators,
the risk that unexpected costs will be incurred, the outcome of
litigation (including with respect to the transaction) and
regulatory proceedings, the risks and hazards inherent in the
mining business (including risks inherent in developing large-scale
mining projects, environmental hazards, industrial accidents,
weather or geologically related conditions), changes in the market
prices of gold and silver and a sustained lower price environment,
the uncertainties inherent in Coeur's production, exploratory and
developmental activities, including risks relating to permitting
and regulatory delays, ground conditions, grade variability, any
future labor disputes or work stoppages, the uncertainties inherent
in the estimation of gold and silver ore reserves, changes that
could result from Coeur's future acquisition of new mining
properties or businesses, reliance on third parties to operate
certain mines where Coeur owns silver production and reserves and
the absence of control over mining operations in which Coeur or its
subsidiaries hold royalty or streaming interests and risks related
to these mining operations including results of mining and
exploration activities, environmental, economic and political risks
of the jurisdiction in which the mining operations are located, the
loss of any third-party smelter to which Coeur markets silver and
gold, the effects of environmental and other governmental
regulations, the risks inherent in the ownership or operation of or
investment in mining properties or businesses in foreign countries,
Coeur's ability to raise additional financing necessary to conduct
its business, make payments or refinance its debt, as well as other
uncertainties and risk factors set out in filings made from time to
time with the United States Securities and Exchange Commission, and
the Canadian securities regulators, including, without limitation,
Coeur's most recent reports on Form 10-K and Form 10-Q. Actual
results, developments and timetables could vary significantly from
the estimates presented. Readers are cautioned not to put undue
reliance on forward-looking statements. Coeur disclaims any intent
or obligation to update publicly such forward-looking statements,
whether as a result of new information, future events or otherwise.
Additionally, Coeur undertakes no obligation to comment on
analyses, expectations or statements made by third parties in
respect of Coeur, its financial or operating results or its
securities.
W. David Tyler, Coeur's Vice President, Technical Services and a
qualified person under Canadian National Instrument 43-101,
reviewed the information in this news release.
Cautionary Note to U.S. Investors - The United States Securities
and Exchange Commission permits U.S. mining companies, in their
filings with the SEC, to disclose only those mineral deposits that
a company can economically and legally extract or produce. We may
use certain terms in public disclosures, such as "measured,"
"indicated," "inferred" and "resources," that are recognized by
Canadian regulations, but that SEC guidelines generally prohibit
U.S. registered companies from including in their filings with the
SEC. U.S. investors are urged to consider closely the disclosure in
our Form 10-K which may be secured from us, or from the SEC's
website at www.sec.gov.
CONTACT: Bridget Freas, Director, Investor Relations
(312) 489-5819
Donna Mirandola, Director, Corporate Communications
(312) 489-5842
www.coeur.com
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