Company Website:
http://www.coeur.com
CHICAGO -- (Business Wire)
Coeur Mining, Inc. (âCoeurâ or the âCompanyâ) (NYSE:CDE) (TSX:CDM) today
announced the formation of a new wholly-owned subsidiary, Coeur Capital,
Inc. (âCoeur Capitalâ), which will hold Coeurâs existing and any
future-acquired royalty and streaming interests along with its portfolio
of strategic equity investments. Increasing Coeurâs interests in
royalties and streams through Coeur Capital is expected to provide the
Companyâs stockholders with higher-margin, less volatile free cash flow1,
diversified metal exposure, and future avenues for growth.
In addition, Coeur today announced that it has entered into an agreement
for Coeur Capital to acquire Global Royalty Corp. (âGlobal Royaltyâ), a
Vancouver-based privately-held company holding precious metals royalty
interests in operating mines located in Mexico and Ecuador. Total
consideration for the transaction, which is expected to close in
December 2013, will be approximately $23.8 million, consisting of $0.3
million in cash and $23.6 million in Coeur common shares, which
represents a 2.1% increase in Coeurâs current outstanding shares of
100.5 million. Upon closing of the transaction, Mark Kucher, President
and CEO of Global Royalty, has agreed to join Coeur Capital as Managing
Director and will have primary responsibility for its daily management
and growth. Mr. Kucher, who is the largest shareholder of Global
Royalty, has agreed to support the transaction with Coeur.
âWe are pleased to announce our agreement to acquire Global Royalty,â
said Mitchell J. Krebs, Coeurâs President and Chief Executive Officer.
âCombining Global Royaltyâs cash flowing royalties with those already
owned by Coeur into a newly-formed entity is expected to enhance the
quality and stability of our cash flows, offer superior leverage to
metals prices, reduce our overall risk profile, and increase our margins
and current net cash flow. Over time, we believe Coeur Capital can build
sufficient critical mass to make a meaningful impact on our overall
margins and cash flow and eventually be valued by the equity markets at
the multiples currently enjoyed by streaming and royalty companies due
to the attractive nature of this business model. While the acquisition
of Global Royalty and the formation of Coeur Capital are expected to
augment and balance our composite asset portfolio and complement our
business development initiatives, our focus and priority will remain on
our core business, which is exploring, developing, and operating
precious metals assets.â
Global Royalty owns a tiered royalty on McEwen Mining Inc.âs (âMcEwen
Miningâ) (NYSE: MUX, TSX: MUX) El Gallo/Magistral mine in Mexico,
currently paying a 3.5% net smelter royalty (NSR), and a 1.5% NSR
royalty on Dynasty Metals & Mining, Inc.âs (âDynastyâ) (TSX: DMM) Zaruma
gold mine in Ecuador. Both mines are currently in production and paying
royalties. Global Royalty also has an option to acquire an additional
1.5% NSR on Zaruma (for a total of 3.0%), plus 1.0% NSR interests on
Dynastyâs Jerusalem and Dynasty Goldfields projects in Ecuador, for an
additional $5.0 million. Coeur Capital intends to exercise this option
upon closing the Global Royalty transaction.
El Gallo Complex2
Under McEwen Miningâs ownership, El Gallo has been in production since
September 2012 and reached commercial production on January 1, 2013.
Global Royalty has received proceeds from McEwen totaling $1,117,227
since September 2012. The mine remains on track to meet its production
guidance of 27,310 gold equivalent ounces in 2013.
The El Gallo plant is currently being expanded from 3,000 to 4,500
tonnes per day. The expansion is ahead of schedule with completion
expected at the end of Q1 2014. The increased capacity, combined with
higher grades as mining moves deeper in the pit, is expected to increase
production from 27,310 gold equivalent ounces in 2013, to 37,500 gold
equivalent ounces in 2014 and 75,000 gold equivalent ounces by 2015. The
royalty on the El Gallo mine is currently 3.5% until cumulative
production of 350,000 ounces of gold equivalent production has been
reached, of which approximately 275,000 ounces remain to be produced at
this royalty rate. The royalty then decreases to 1.0% in perpetuity. To
date 28,426 ounces of gold equivalent has been produced at El Gallo.
Zaruma Project3
The Zaruma project is in pre-commercial production, with processing of
ore to doré at the Zaruma processing plant located in Zaruma, Ecuador.
For the nine months ended September 30, 2013, Dynasty received proceeds
of $23.3 million from the sale of approximately 15,245 ounces of
processed gold and 45,409 ounces of processed silver derived from
intermittent operations at its processing plant in Zaruma during the
continued development of the Zaruma mines. Global Royalty Corp. has
received proceeds from Dynasty totaling $565,082 since January 2012.
Subsequent to September 30, 2013, and up to the date of this news
release, Dynasty exported approximately 4,500 ounces of gold and 9,000
ounces of silver with an aggregate approximate value of $6.1 million.
Existing Coeur Royalty and Streaming Interests
Endeavor is an underground lead/zinc/silver mine and associated mill
facility operated by a subsidiary of Toho Zinc in Australia and has been
in production since 1983. Coeur owns 100% of the silver production and
reserves (up to 20 million payable ounces). Endeavor generated $10.4
million of after-tax cash flow1,4 and produced 665,816
payable ounces of silver in 2012 and is expected to produce
600,000-800,000 payable ounces of silver in 20135.
Cerro Bayo is a silver-gold mine operated by Mandalay Resources Corp. in
Chile. The mine has a 2% NSR for the life of mine; Coeur received its
first royalty payment from this royalty in the third quarter 2013. 2014
production6 is expected to be 3.0-3.2 million ounces of
silver and 23,000-27,000 ounces of gold. 2014 cash costs per silver ounce1,6
are expected to be $6-$8.
A slide deck and Q&A information sheet to accompany this release are
posted at www.coeur.com.
Coeur is being represented by Goodmans LLP in the Global Royalty
acquisition.
1. |
Â
| Non-GAAP measure. |
2. | | Source: Publicly available information published by McEwen
Mining Inc. including the technical report dated August 30, 2013
on file at www.sedar.com. |
3. | | Source: Publicly available information published by Dynasty
Metals & Mining Inc. including the technical report dated August
21, 2006 on file at www.sedar.com. |
4. | | Source: Coeur December 31, 2012 Form 10-K. Calculated as net
income plus depreciation, depletion and amortization. |
5. | | Guidance as published on November 6, 2013 by Coeur. |
6. | | Guidance as published on November 5, 2013 by Mandalay
Resources Corp. |
| |
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About Coeur
Coeur Mining, Inc. is the largest U.S.-based primary silver producer and
a significant gold producer. The Company has four precious metals mines
in the Americas generating strong production, sales and cash flow. 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 a 2.0% net smelter royalty on the Cerro Bayo
silver-gold mine in Chile. In addition, the Company has two silver-gold
feasibility stage projects â the La Preciosa project in Mexico and the
Joaquin project in Argentina. The Company also conducts ongoing
exploration activities in Mexico, Argentina, Nevada, Alaska and Bolivia.
The Company owns strategic investment positions in eight silver and gold
development companies with projects in North and South America.
Cautionary Statements
This news release shall not constitute an offer to sell or a
solicitation of an offer to purchase the Coeur shares 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.
This news release contains forward-looking statements within the meaning
of securities legislation in the United States and Canada, including
statements regarding the anticipated closing of the Global Royalty
transaction, strategic priorities and initiatives and expectations
regarding leverage to metals prices, risk exposures, valuations,
margins, cash flow, growth and anticipated production. 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
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,
the absence of control over mining operations in which Coeur or Coeur
Capital holds 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
jurisdictions in which the mining operations are located and changes in
project parameters as plans continue to be refined; 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.
Inferred mineral resources are considered too speculative geologically
to have the economic considerations applied to them that would enable
them to be characterized as mineral reserves. Mineral resources that are
not mineral reserves do not have demonstrated economic viability.
Mineral resource estimates do not account for minability, selectivity,
mining loss and dilution. There is no certainty that the inferred
mineral resources will be converted to the measured and indicated
categories or that the measured and indicated mineral resources will be
converted to the proven and probable mineral reserve categories. For
additional information, please refer to the Canadian National Instrument
43-101-compliant Technical Reports for the applicable properties
available on www.sedar.com
or other publicly available disclosure of the applicable mine operators.
Non-U.S. GAAP Measures â We supplement the reporting of our financial
information determined under United States generally accepted accounting
principles (U.S. GAAP) with certain non-U.S. GAAP financial measures,
including cash costs, after-tax cash flow, and free cash flow. We
believe that these adjusted measures provide meaningful information to
assist management, investors and analysts in understanding our financial
results and assessing our prospects for future performance. We believe
these adjusted financial measures are important indicators of our
recurring operations because they exclude items that may not be
indicative of, or are unrelated to our core operating results, and
provide a better baseline for analyzing trends in our underlying
businesses. We believe cash costs, after-tax cash flow, and free cash
flow are important measures in assessing the Company's overall financial
performance.
Contacts:
Coeur Mining, Inc.
Bridget Freas, 312-489-5819
Director,
Investor Relations
Donna Mirandola, 312-489-5842
Director,
Corporate Communications
www.coeur.com
Source: Coeur Mining, Inc.
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