(Bloomberg) -- Shares of precious metals miner Coeur Mining Inc. tumbled after the company said it entered a deal to acquire SilverCrest Metals Inc. for a value of $1.7 billion at a time when silver prices have been surging.
The deal compares with SilverCrest’s market value of about $1.38 billion as of Thursday. The combined company is expected to produce about 21 million ounces of silver per year and generate about $700 million of earnings before some items in 2025, Coeur said in a statement on Friday.
Shares of Chicago-based Coeur fell as much 12% after the announcement, the biggest intraday loss since Aug. 5. The stock traded down 8.5% to $6.48 a share at 12:41 p.m. in New York. SilverCrest jumped as much as 14%, the most since March.
The transaction comes as silver prices have rallied to the highest since 2012, boosted by expectations for further US Federal Reserve interest rate cuts. The silver market is also set to record a fourth-consecutive year of supply deficit. The metal is one of the year’s best-performing commodities.
The move allows Coeur to tap into SilverCrest’s Las Chispas mine in Mexico.
The deal valuation is “somewhat justified thanks to Las Chispas’ extremely low-cost structure, which is supported by the high-grade reserve and resource base,” said National Bank analyst Mike Parkin.
In the statement, Coeur Chief Executive Officer Mitchell J. Krebs said the company’s “balance sheet is expected to be materially strengthened on day one” thanks to the deal.
--With assistance from Susanne Barton.
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