Coeur d'Alene Mines Corp., of Coeur d'Alene, says it has reached a definitive agreement to acquire the assets of Orko Silver Corp., of Vancouver, British Columbia, in a transaction that's valued at about $350 million and expected to close in April.
That transaction amount, in Canadian currency, is about the same in U.S. dollars at current exchange rates.
Orko is developing a large silver deposit, La Preciosa, near the city of Durango, Mexico. La Preciosa and neighboring mineral concessions cover 80,000 acres of mining claims.
"Orko's key asset, the La Preciosa silver project in Mexico, is one of the largest undeveloped silver deposits in the world and adds a large-scale development opportunity with significant exploration upside to Coeur's portfolio," says Mitchell J. Krebs, Coeur's president and CEO, in a press release about the transaction.
Coeur says it entered into the agreement Feb. 20 to complete its acquisition of all of the issued and outstanding common shares of Orko. Krebs adds, "The combination with Orko will deliver enhanced asset and geographic portfolio diversification and robust growth prospects for our combined shareholder base."
Orko's president and CEO, Gary Cope, says in the same press release that Coeur has the financial and operational resources needed "to realize the true value of La Preciosa."
The transaction is required to follow "a plan of arrangement" under British Columbia's Business Corporations Act that includes court and regulatory approvals, Coeur says.
Coeur's board of directors approved the transaction, which doesn't require further corporate or shareholder approvals, Coeur says. Orko's board also approved it and recommends that Orko shareholders vote in favor of the transaction at a special meeting expected to take place in April. It will require approval by at least two-thirds of the votes cast by Orko shareholders.
Orko's board determined Coeur's offer to be a "superior proposal" to an agreement Orko had with First Majestic Silver Corp., also of Vancouver. First Majestic had five business days to match Coeur's proposal, but opted not to do so.
Based on the closing price of Coeur shares on Feb. 19, Coeur's offer implies a Canadian value of $2.46 per Orko share, representing a premium of about 56 percent to the unaffected Orko share price on Dec. 14, Coeur says. The December date was the last trading day before Orko announced the previous agreement to be acquired by First Majestic.
Under terms of the agreement with Coeur, Orko shareholders can elect to receive different combinations of Coeur common shares, cash, and warrants to buy Coeur shares, in exchange for each Orko share.
After the transaction is complete, the current shareholders of Orko will hold about 11 percent of the issued and outstanding shares of Coeur, prior to the exercise of the Coeur warrants.
In a Feb. 21 earnings report, Coeur announced that the company had an operating cash flow of $338.7 million from metal sales of $895.5 million for 2012. Last year, its production totaled 18 million silver ounces and a record 226,500 gold ounces. Coeur says it expects a robust operating cash flow for this year, from projected production of 18 million to 19.5 million ounces of silver and 250,000 to 265,000 ounces of gold.
Coeur currently operates the Palmarejo silver-gold mine in Mexico, the San Bartolome silver mine in Bolivia, the Rochester silver-gold mine in Nevada, and the Kensington gold mine in Alaska. The company also owns nonoperating interest in an Australian mine and conducts ongoing exploration in Nevada, Alaska, Mexico, Bolivia, and Argentina.
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