Coeur Announces Sale of its 100%-Owned Bolivian Subsidiary
December 22 2017 - 6:53PM
Business Wire
Represents major step in Company’s ongoing
portfolio optimization efforts
Sale expected to positively impact Companywide
costs, margins, cash flow, and mine life
Coeur Mining, Inc. (“Coeur” or the “Company”) (NYSE: CDE) is
pleased to announce that it and certain of its subsidiaries have
entered into a definitive agreement (the “Agreement”) to sell all
of the outstanding capital stock of its wholly-owned subsidiary,
Empresa Minera Manquiri, S.A. (“Manquiri”), which is the owner and
operator of the San Bartolomé Mine and processing facility located
near Potosí, Bolivia (the “Transaction”). The Agreement provides
that Manquiri will be sold to Argentum Investments, AB
(“Argentum”), a privately-held Swedish company owned by a group of
Mexican individuals with extensive mining experience in Latin
America.
Under the Agreement, affiliates of Argentum will acquire
Manquiri from Coeur for the following consideration:
- 2.0% net smelter returns royalty (the
“NSR”) payable to Coeur on all metals processed through the San
Bartolomé Mine’s processing facility, commencing on the first
anniversary of the closing of the Transaction. Coeur estimates the
value of this NSR to be approximately $5 million.
- All refunds of pre-closing value added
tax (“VAT”) that will be collected or received by Manquiri in the
future will be paid to Coeur (net of collection costs). The balance
of outstanding VAT as of November 30, 2017 was $13 million.
- One-year promissory notes to Coeur with
an aggregate principal amount equal to Manquiri’s cash and cash
equivalents as of the earlier of closing of the Transaction and
January 31, 2018 (the “Notes”). Manquiri’s cash and cash
equivalents were $28 million as of November 30, 2017. Coeur
believes structuring this component of consideration as one-year
promissory notes will provide Manquiri with a robust level of
working capital as Argentum begins to execute its multi-year
operating plan.
As an all-stock transaction, except as otherwise specifically
provided in the Agreement, all of the current and future assets and
liabilities of Manquiri, including its processing facility, mineral
rights and other assets, and its current and long-term liabilities
(including future reclamation and closure liabilities), will remain
with Manquiri after ownership of the entity is transferred to
Argentum.
“The sale of 100% of the shares of Manquiri reflects our
strategy to continually optimize our portfolio and to focus on
developing and operating high-quality, North American precious
metals assets. San Bartolomé was an important operation for the
Company after it was constructed and placed into production in
2008. However, the mine’s short remaining life, higher operating
costs and future estimated closure-related costs led the Company to
conclude that a sale to a new owner at this time made strong
strategic sense,” said Mitchell J. Krebs, Coeur’s President and
Chief Executive Officer. “By retaining a 2.0% NSR, Coeur will also
preserve upside exposure to San Bartolomé as Argentum continues to
operate the mine and pursue opportunities to generate additional
value from this asset.”
Other terms of the Transaction include a guaranty by Coeur,
subject to there being no uncured default under the Notes, of (i)
any extension or amendment of Manquiri’s credit facility, which
provides $12 million of undrawn borrowing capacity, for one-year
post-closing, to bolster Manquiri’s continued access to working
capital, and (ii) 50% of the currently estimated future reclamation
costs of San Bartolomé, equal to approximately $9 million based on
currently estimated reclamation costs of $18 million, payable as
and when incurred by Manquiri, if San Bartolomé permanently ceases
operations within one year of closing. For clarity, these
guaranties will be effective only if there is no uncured default
under the Notes.
The Transaction is expected to close in early 2018.
About Coeur
Coeur Mining, Inc. is a well-diversified, growing precious
metals producer with six precious metals mines in the Americas
employing approximately 2,300 people. Coeur’s wholly-owned
operations include the Palmarejo silver-gold complex in Mexico, the
Rochester silver-gold mine in Nevada, the Kensington gold mine in
Alaska, the Wharf gold mine in South Dakota, the Silvertip
silver-zinc-lead mine in British Columbia and the San Bartolomé
silver mine in Bolivia. In addition, the Company owns the La
Preciosa project in Mexico, a silver-gold exploration stage
project. Coeur conducts exploration activities in North
America.
Cautionary Statements
This news release contains forward-looking statements within the
meaning of securities legislation in the United States and Canada,
including statements regarding the anticipated sale of Manquiri,
Coeur’s Bolivian subsidiary that holds the San Bartolomé mine and
processing facility, and anticipated consideration value. Such
forward-looking statements involve known and unknown risks,
uncertainties and other factors which may cause 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 the transaction does not close on a timely basis or
at all, the risk that anticipated consideration value for the sale
of Manquiri is not realized due to Manquiri’s inability to operate
successfully post-closing or other factors, 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 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 resources, 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, the political risks
and uncertainties associated with operations in Bolivia, 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 or
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.
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version on businesswire.com: http://www.businesswire.com/news/home/20171222005530/en/
Coeur Mining, Inc.104 S. Michigan Avenue, Suite 900Chicago,
Illinois 60603Attention: Courtney Lynn, Vice President, Investor
Relations and TreasurerPhone: (312) 489-5800www.coeur.com
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