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Silvercrest to be acquired by Coeur Mining

SilverCrest Metals and Coeur Mining have reached a deal for Coeur Mining to acquire Silver Crest in an all shares deal.

After the recent acquisition news of Gatos Silver to be acquired by First Majestic, this is the second successful silver junior producer being acquired. Recently, the ongoing consolidation in the silver space is eclipsing merger and acquisition news in the much more diverse gold mining sector.

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On Oct 3rd, before the news, the take-over meant a premium of 22% for SilverCrest Metals. Following the news, Coeur Mining nosedived 9.48% in trading on Friday. closing at $6.41, while SilverCrest Metals rallied 9.04% closing at $10.13. 

Coeur Mining to buy SilverCrest for $1.7 billion in bets on silver boom is what Reuters titled.

The 1.6022 share price ratio as announced in the press report, nearly materialized at the Friday Oct 4 close. The ratio stands at 1.58 now.

Historic track record of both silver miners

The historic track record of the incumbent silver producer Coeur Mining (CDE and previously Coeur d’Alène) is lack-luster to say the least. It is one of the less successful silver miners on the gold-miner-pulse list which I have been maintaining since November 2010. On Sept 27 (days before the news) CDE was down 57.6% since inclusion. Over the very long term (there are data since mid 1980) the performance is even catastrophic.
Coeur Mining Graph over the very long term.

The above graph is corrected for the 10:1 share consolidation in May 2009 and for the bonus share attributed in the 1980’s. Eight shares bought at the IPO result in 1 share now. From the mid 80’s to the mid 90’s Coeur paid a dividend.  

SilverCrest (SILV) or should we say SilverCrest 2.0 is the explorer developer that was spun out after First Majestic Silver successfully acquired the Australian producer Silver Crest and integreted its Santa Elena Mine into the First Majestic Mexican silver mining portfolio. SilverCrest 2.0 retained a few exploration assets of its existing portfolio and of First Majestic Silver. It has evolved from a sucesssful explorer developer to a junior silver producer since July 2015. According to the Miners’ performance list of Sep 27, this silver miner was up 222% since inclusion. Since it started quoting on the NYSE, it is more than a tenbagger. On TSX (in CAD) SILV has been up 100.x at its peak in 2021.
Silvercrest:graph over the long term, since it started quoting on the NYSE in 2016

Much of the outperformance of SILV has been over the last 12 months, during which silver has risen to well over $30 for the first time since 2012. But CDE has also progressed significantly, reviving after a dreadful and cumbersome swoon and recovering some of the losses incurred. Note that late April 2011 silver peaked at a sigh of $50/Oz, a price level it once attained at the end of the Hunt brothers speculative frenzy in 1980. 

As a result of the acquisition announcement the stock performance disparity has only grown. CDE currently has a market cap of $2.56 B, while the Australian SILV has a market cap of $1.51 B on Nasdaq. SilverCrest shareholders will own about 38% of Coeur Mining after the acquisition.

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