Silver Miners Increasingly Becoming Gold Miners

Two silver majors announce deals to expand gold holdings

New Gold’s Rainy River mine in Canada

Two major deals announced in the past few days highlights a trend of silver miners moving further into the gold space.

Monday kicked off in North America with the news that Coeur Mining (NYSE: CDE) would acquire New Gold Inc (TSX/NYSE: NGD) in a deal valuing New Gold at around US$7 billion.

New Gold shareholders will receive 0.4959 of a Coeur share each New Gold share held, implying consideration of US$8.51 per New Gold share or a 16% premium.

Coeur said the addition of New Gold’s Rainy River and New Afton mines in Canada to its portfolio would result in a combined company with a pro-forma market capitalisation of US$20 billion with seven mines in North America generating US$3 billion of expected EBITDA and US$2 billion of expected free cashflow in 2026 from production of around 20 million ounces of silver, 900,000 ounces of gold and 100 million pounds of copper.

The company is expected to be a top 10 global precious metals producer and a top five silver producer.

New Gold shareholders will hold 38% of the company, while president Patrick Godin and one other New Gold director will join the New Gold board.

“This transaction provides clear and compelling benefits for New Gold and Coeur shareholders by bringing together two companies with similar cultures to create a stronger, more resilient, and larger scale precious metals mining company,” Coeur chairman, president and CEO Mitchell J Krebs said.

“Both companies are in the early stages of generating significant cashflow after several years of heavy investment. We believe this is an extraordinary opportunity to create an unrivalled North American-only, mining powerhouse at just the right time.”

Coeur will retain New Gold’s corporate office in Toronto and apply for a Toronto Stock Exchange listing.

The deal follows Coeur’s US$1.7 billion takeover of SilverCrest Metals in the fourth quarter of 2024.

Fresnillo to acquire Probe

In another case of a silver miner acquiring a gold company, on Friday, Fresnillo (LSE: FRES) announced a C$780 million cash takeover for Canadian gold developer Probe Gold Inc (TSX: PRB).

Fresnillo will pay C$3.65 per share, a 24% premium to the 30-day volume weighted average price.

The deal marks Fresnillo’s entry into Canada, more specifically the Val d’Or Mining camp in Quebec.

Probe holds the 8Moz Novador project in the district, which has the potential to produce over 200,000oz of gold per annum over more than 10 years.

The project neighbours Eldorado Gold’s (TSX: ELD) Lamaque Complex and Eldorado has agreed to vote its 12% stake in Probe in favour of the deal.

Speaking on a conference call on Friday, Eldorado CEO George Burns said the company had invested in Probe with the view its ground could provide supplemental mill feed.

“Our hope was that they would discover some high-grade, high-value underground opportunities that subsequently could be part of the Lamaque complex,” he said.

“Really, how that has evolved is they’ve discovered a large low-grade open pit opportunity. As we assessed that opportunity, it really didn’t stack up with our other capital allocation opportunities.”

Agnico Eagle Mines (TSX: AEM) and Wesdome Mines (TSX: WDO) also have operations in the region.

Fresnillo CEO Octavio Alvídrez told a conference call the company was open to collaborating with other companies in the region.

“We believe we have the technical capabilities to develop this project in Quebec, starting with more exploration,” he said.

“And then as we all know, we have a very good track record in developing, constructing and operating assets as we’ve seen in Mexico in which we doubled the number of operations we had in 10 years, and we expect to apply these technical capabilities in this new endeavour.”