Coeur d’Alene Mines Corp. (CDE:US), the biggest U.S. silver producer, is looking for more acquisitions after the purchase of Orko Silver Corp. (OK), with an eye for smaller deals near existing assets.
“There are some incremental-sized deals that could have an impact on our existing assets between now and 2016 that we’ll turn our attention to,” Chief Executive Officer Mitch Krebs said in an interview yesterday. The Coeur d’Alene, Idaho-based company will consider deals “smaller than Orko but big enough to be meaningful enough to the company,” he said.
Coeur agreed last week to buy Orko for C$346.2 million ($337 million), trumping a bid from First Majestic Silver Corp. (FR) The company plans to start production in late 2016 from Orko’s La Preciosa project in Mexico, one of the largest undeveloped silver deposits in the world, Krebs said in the interview in Hollywood, Florida, where he’s attending the BMO Capital Markets global metals and mining conference.
Silver prices on the Comex in New York averaged a record $35.269 an ounce during 2011 as investors sought an alternative investment. Silver futures for May delivery gained 0.9 percent to $29.32 today.
Coeur, which mines in Mexico, Bolivia and the U.S., is also expanding existing operations while seeking to contain costs, Krebs said. The company will assess potential deals against the requirements of its existing growth plans, including La Preciosa, Krebs said.
Coeur, which “took a hard look” at Orko last year, made its offer after the value of First Majestic’s all-stock bid declined with the Vancouver-based company’s share price, Krebs said. The deal is expected to close in April.
The company was also prepared to take on La Preciosa because the estimated $300 million to $500 million in capital costs is “well within our means,” Krebs said. Coeur, with a market valuation of $1.75 billion, rose (CDE:US) 0.8 percent to $19.31 at the close in New York.
“It’s not a company maker or breaker kind of mega- project,” he said. “It’s very digestible growth for a company our size.”
The depressed market valuations and financing difficulties for so-called junior companies for may be positive for Coeur, Krebs said.
“The capital markets have been largely shut down for the juniors,” he said. “It’s going to be a very interesting year for the non-producers and that means opportunities for a company like us.”
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