Coeur d’Alene Mines Corporation (the “Company” or
“Coeur”) (NYSE: CDE) (TSX: CDM) today confirmed that it has
submitted a binding proposal (“Coeur’s Proposal”) to acquire all of
the issued and outstanding common shares of Orko Silver Corp.
(“Orko”) (TSX VENTURE: OK) in a transaction with a total value of
approximately CAD$384 million. Orko today announced that its Board
of Directors has unanimously determined, after receiving the advice
of its financial and legal advisors, that Coeur’s Proposal
constitutes a “Superior Proposal” pursuant to its arrangement
agreement with First Majestic Silver Corporation (“First Majestic”)
(FR.TO) (AG) (FMV.F). Orko has provided notice of such
determination to First Majestic. Orko also announced that under the
arrangement agreement, First Majestic now has five business days,
expiring at 11:59 p.m. PST on Tuesday, February 19, 2013, to offer
to amend the terms of that agreement to match Coeur’s Proposal,
failing which Orko will terminate the arrangement agreement with
First Majestic and enter into a definitive agreement with Coeur
reflecting Coeur’s Proposal.
Under the terms of Coeur’s Proposal, Orko shareholders may elect
to receive in exchange for each Orko share:
- 0.0815 common shares of Coeur (“Coeur
Shares”) and CAD$0.70 cash and 0.01118 warrants to purchase Coeur
shares (“Coeur Warrants”);
- 0.1118 Coeur Shares and 0.01118 Coeur
Warrants, subject to pro-ration as to the number of Coeur Shares if
the total number of Coeur Shares elected by Orko shareholders
exceeds approximately 11.6 million; or
- CAD$2.60 in cash and 0.01118 Coeur
Warrants, subject to pro-ration as to the amount of cash if the
total cash elected by Orko shareholders exceeds CAD$100
million.
If all Orko shareholders were to elect either the all cash (and
Coeur Warrants) or the all share (and Coeur Warrants) alternative,
each Orko shareholder would receive 0.0815 Coeur Shares and
CAD$0.70 in cash, together with 0.01118 Coeur Warrants, for each
Orko share.
Based on the closing prices of the shares of each of Coeur, Orko
and First Majestic as of February 12, 2013, Coeur’s Proposal
implies a value of CAD$2.70 per Orko share, which represents a
premium of approximately 71% to the unaffected Orko share price on
December 14, 2012, the last trading day prior to the announcement
of Orko’s agreement with First Majestic, and a premium of
approximately 25% to the implied value of the consideration offered
pursuant to the First Majestic arrangement agreement.
“We are pleased that Orko’s Board of Directors unanimously
determined that our proposal is superior to the First Majestic
offer,” said Mitchell J. Krebs, Coeur’s President and Chief
Executive Officer. “Based upon the substantial cash component of
the proposal and the liquidity of Coeur’s common shares, we believe
our proposal provides Orko shareholders with an attractive premium,
superior value certainty, and the opportunity to share in the
significant upside potential of the combined entity. We have a
demonstrated track record of developing, commissioning and
operating large-scale precious metals assets as well as the
financial resources necessary to bring Orko’s La Preciosa project
into production. The combination with Orko will deliver enhanced
asset and geographic portfolio diversification and robust growth
prospects for our combined shareholder base. We are committed to
this strategic combination and look forward to expeditiously
executing the proposed agreement.”
Strategic Rationale of the Transaction
- Continued Participation in the La
Preciosa Project. Orko shareholders, through their
ownership of Coeur Shares and Coeur Warrants, would receive a
significant premium to the current Orko share price and would also
have the opportunity to continue to participate in any future value
increases associated with the development and operation of the La
Preciosa project, which ranks as one of the world’s largest
undeveloped primary silver projects.
- Access to the Capabilities of
Coeur. With its 80-year operating track record and demonstrated
success in developing, commissioning and operating large-scale
projects, Coeur has the necessary financial strength, and
development and operating experience to bring the La Preciosa
project into production. Coeur has successfully built and now
operates the San Bartolomé mine in Bolivia (US$238 million capital
cost, start-up in 2008), the Palmarejo mine in Mexico (US$353
million capital cost, start-up in 2009) and the Kensington mine in
Alaska (US$435 million capital cost, start-up in 2010) and as such
Coeur believes it is better equipped than its peers to develop and
operate La Preciosa.
- Participation in a Company with
Geographically Diverse Projects and Robust Growth
Prospects. Orko shareholders would also benefit from
having an equity position in a company with greater geographic
diversity. At present, Coeur has interests in mining properties
located in Mexico, Bolivia, Alaska, Nevada, Australia and Argentina
and operates mines in Alaska, Nevada, Mexico and Bolivia. The
combination would improve the overall profile of the combined
business by further diversifying Coeur’s asset mix and by adding a
world-class development asset to its portfolio. After closing the
proposed transaction, the combined company would have an attractive
portfolio of open-pit and underground operations and a robust
growth profile. The commodity exposure of the combined entity would
be approximately 75% silver and 25% gold.
- Availability of Capital, Strong Cash
Flow, and Substantial Production Profile. Coeur has over
US$500 million in available liquidity to support mine development
and further growth initiatives. In addition, Coeur generates
substantial cash flow from its existing portfolio of mines. During
the trailing twelve month period ended September 30, 2012, Coeur’s
Adjusted EBITDA was US$406 million1. (Net income was $22.5 million
for the equivalent period.) In addition, Coeur produced 18.0
million ounces of silver and an all-time high 226,491 ounces of
gold for the full year ended December 31, 2012.
- Increased Market Capitalization of
Coeur and Liquidity. Coeur is listed on both the New York Stock
Exchange and Toronto Stock Exchange and has a market capitalization
of more than US$2 billion. Coeur’s shares are highly liquid with an
average daily trading volume of 1.6 million shares, representing
US$38 million on a daily basis over the last twelve months. Coeur’s
Board of Directors and management are confident that Orko
shareholders would effectively view Coeur’s share consideration as
an equivalent to cash as it would take just seven days to trade the
entire share consideration under the proposed transaction.
Coeur’s Proposal has been approved by the Coeur Board of
Directors and no further corporate or shareholder approvals are
required by Coeur to complete the transaction. Coeur’s Proposal is
not conditional on any financing.
Additional Transaction Details
Each whole Coeur Warrant will be exercisable for one Coeur Share
for a period of four years at an exercise price of US$30.00, all
subject to adjustment in accordance with the terms of the warrant
(the “Coeur Warrants”). While Coeur will use commercially
reasonable efforts to register the Coeur Shares issuable on
exercise of the Coeur Warrants under applicable United States
securities laws and have the Coeur Warrants listed and posted for
trading on the Toronto Stock Exchange and New York Stock Exchange,
the completion of such registration and listing will not be a
condition of closing of the transaction.
In addition, Coeur will use commercially reasonable efforts,
subject to compliance with certain Coeur contractual obligations,
to make any necessary amendments to permit Orko shareholders who
are residents of Canada for purposes of the Income Tax Act (Canada)
(other than such Orko shareholders who are exempt from tax
thereunder) and who would receive Coeur Shares under Coeur’s
Proposal to receive, instead of Coeur Shares, shares of a
Canadian-incorporated subsidiary of Coeur (the “Exchangeable
Shares”) that are exchangeable into Coeur Shares to allow such Orko
shareholders to receive a tax-deferred roll-over under the Income
Tax Act (Canada) to the extent that the non-share consideration
received does not exceed the shareholder’s cost base for Canadian
tax purposes. While Coeur will use commercially reasonable efforts
to register the Coeur Shares issuable on exchange of the
Exchangeable Shares under applicable United States securities laws,
the completion of such registration will not be a condition of
closing of the transaction.
Coeur’s Proposal contemplates that the Coeur Shares will be
issued in a transaction exempt from the registration requirements
of the United States Securities Act of 1933, as amended (the “U.S.
Securities Act”) pursuant to Section 3(a)(10) of the U.S.
Securities Act. Consequently, the Coeur Shares, other than Coeur
Shares to be issued upon exercise of the Coeur Warrants or the
exchange of the Exchangeable Shares, will not be registered under
the U.S. Securities Act or under any U.S. state securities laws.
This news release shall not constitute an offer to sell or a
solicitation of an offer to purchase the Coeur Shares, Coeur
Warrants, Exchangeable Shares or any other securities, and shall
not constitute an offer, solicitation or sale in any jurisdiction,
province or state in which such an offer, solicitation or sale
would be unlawful.
Advisors
J.P. Morgan is serving as financial advisor to Coeur on this
transaction and Fasken Martineau DuMoulin LLP and Gibson, Dunn
& Crutcher LLP are serving as legal advisors.
Conference Call Information
Coeur will host a conference call and webcast at 9:00 a.m. EST
today to provide more information on this announcement. The webcast
and accompanying slides can be accessed at www.coeur.com. An audio
archive of the call will be available at Coeur’s website until
March 13, 2013 at 11:59 p.m. EDT.
Conference Call Dial-in:
Domestic: 866-610-1072
International: 973-935-2840 Passcode: 10427347 Replay
Dial-in: Domestic: 800-585-8367 International: 404-537-3406
Passcode: 10427347
About Coeur
Coeur d'Alene Mines Corporation is the largest U.S.-based
primary silver producer and a growing gold producer. The Company
has four precious metals mines in the Americas generating strong
production, sales and cash flow in continued robust metals markets.
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 owns a
non-operating interest in a low-cost mine in Australia, and
conducts ongoing exploration activities in Mexico, Argentina,
Nevada, Alaska and Bolivia.
1 Adjusted EBITDA is a financial measure not calculated in
accordance with U.S. generally accepted accounting principles.
Please see the table in the Appendix for reconciliation of Adjusted
EBITDA to U.S. GAAP.
Cautionary Statement
This news release contains forward-looking statements within the
meaning of securities legislation in the United States and Canada,
including expectations regarding the enterprise value of Orko, the
value of Coeur’s shares and Orko’s shares, the consideration to be
issued pursuant to the proposal, the ability of Coeur and Orko to
consummate the transaction on the terms and in the manner
contemplated thereby, and Coeur operating results, production
levels and operating costs. 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 permits necessary for
the planned Rochester expansion may not be obtained, the risks and
hazards inherent in the mining business (including environmental
hazards, industrial accidents, weather or geologically related
conditions), changes in the market prices of gold and silver, the
uncertainties inherent in Coeur's production, exploratory and
developmental activities, including risks relating to permitting
and regulatory delays and disputed mining claims, 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, 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.
Current mineralized material estimates include disputed and
undisputed claims at Rochester. While the Company believes it holds
a superior position in the ongoing claim dispute, the Company
believes an adverse legal outcome would cause it to modify
mineralized material estimates. 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.
Donald J. Birak, Coeur's Senior Vice President of Exploration
and a qualified person under Canadian National Instrument 43-101,
supervised the preparation of the scientific and technical
information in this news release. For a description of the key
assumptions, parameters and methods used to estimate mineral
reserves and resources, as well as data verification procedures and
a general discussion of the extent to which the estimates may be
affected by any known environmental, permitting, legal, title,
taxation, socio-political, marketing or other relevant factors,
please see the Technical Reports for each of Coeur's properties as
filed on SEDAR at www.sedar.com.
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 http://www.sec.gov.
Additional Information and Where to Find It
This document relates to Coeur D’Alene Mines Corporation’s
(“Coeur”) proposed acquisition (the “Transaction”) of Orko Silver
Corp. Shares of Coeur’s common stock (the “Coeur Shares”) issuable
upon (i) the exercise of warrants (the “Warrants”) to acquire Coeur
Shares to be issued by Coeur in connection with the proposed
Transaction and (ii) the exchange of exchangeable securities (the
“Exchangeable Shares”) to be issued by a subsidiary of Coeur in
connection with the proposed Transaction which may be registered
pursuant to a registration statement on Form S-4 to be filed with
the U.S. Securities and Exchange Commission (the “SEC”) or issued
pursuant to an available exemption. This document is not a
substitute for any registration statement or any other document
that Coeur may file with the SEC or send to its shareholders in
connection with the offer and/or issuance of Coeur Shares in
connection with the exercise of the Warrants and exchange of the
Exchangeable Shares. Investors who may receive Warrants or
Exchangeable Shares in the Transaction are urged to read Coeur’s
registration statement on Form S-4, if and when filed, including
the prospectus, and all other relevant documents that may be filed
with the SEC as and if they become available because they will
contain important information about the issuance of Coeur Shares
upon the exercise of any Warrants and exchange of any Exchangeable
Shares. All documents, if and when filed, will be available free of
charge at the SEC’s website (www.sec.gov). You may also obtain
these documents by contacting Coeur’s Investor Relations department
at Coeur D’Alene Mines Corporation; Investor Relations; (208)
665-0345; wyang@coeur.com. This document does not constitute an
offer to sell or the solicitation of an offer to buy any
securities.
Non-U.S. GAAP Measures
This news release discloses our Adjusted EBITDA, which is a
supplemental financial measure not calculated under United States
generally accepted accounting principles (U.S. GAAP). We believe
that this adjusted measure provides meaningful information to
assist management, investors and analysts in understanding our
financial results and assessing our prospects for future
performance. We believe Adjusted EBITDA is a useful indicator of
our recurring operations because it excludes items that may not be
indicative of, or are unrelated to our core operating results, and
provides a better baseline for analyzing trends in our underlying
businesses.
APPENDIX
(in thousands)
Twelve Months EndedSeptember 30,
2012
Net income (loss) $ 22,491 Income tax provision 109,163 Interest
expense, net of capitalized interest 29,800 Interest and other
income (9,753 ) Fair value adjustments, net 25,687 Loss on debt
extinguishments 3,886 Depreciation and depletion
224,626
Adjusted EBITDA $
405,900
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