Top silver miner Coeur Mining Inc. has announced its acquisition of Paramount Gold and Silver Corp., creating a $146 million spin-off for Paramount’s subsidiary-run Nevada assets and its Mexican San Miguel operation, through common stock.
CEO Mitchell J. Krebs said the agreement allows Coeur assets “well-positioned with higher grades and lower costs,” enhancing “long-term viability and growth,” in particular, through the low-cost San Miguel project in northwest Mexico’s Palmarejo District.
The new subsidiary, Paramount Nevada Gold, will hold interests in the Sleeper Gold, Mill Creek and Spring Valley operations, while benefitting from a $10 million Coeur cash infusion, according to officials. Paramount shareholders will hold a 95.1% interest in the unit; Coeur will own the remainder.
Paramount CEO Christopher Crupi expressed similar enthusiasm. Moreover, the deal empowers “the major producer best able to maximize value,” he said. “Our plan is to continue developing and partnering assets with established producers.”
Coeur will invest $5.25 million in Paramount for 0.7% in smelter royalty returns from San Miguel, officials added. Covering 299,000 acres surrounding Coeur’s Palmarejo Chihuahua complex, San Miguel’s Don Ese deposit lies 800 m from Coeur’s Guadalupe deposit, where development is under way. Don Ese represents the southeast extension of Coeur’s Independencia structure, officials noted, containing high-grade silver and gold mineralization and is free of nongovernment, third-party royalties or obligations. Coeur forecasts recovery rates of 80% in silver and 95% for gold reserves.
Coeur plans to further Don Ese by $15 million pending a Q4 2015 first pour before ramping up to 2,500 tons per day (t/d) by Q4 2017. Palmarejo’s 6,000 t/d processing facility, meanwhile, is pending capacity as open-pit production ends in 2015, as activities transition to Guadalupe.
Don Ese and Guadalupe could produce up to 6 million silver oz and 110,000 gold oz annually through 2023, according to company representatives.