A Rainy River mine is one of the properties involved in the world’s largest merger and acquisition transaction in recent years.
That’s according to Robert Sinn, founder of mining market analyst outfit Goldfinger Capital.
Coeur Mining announced on Tuesday their $7 billion (USD) acquisition of gold producer New Gold. Sinn said the merger is expected to generate $3 billion before interest and taxes and depreciation. It’s expected to put $2 billion of free cash flow into company coffers in 2026.
The deal includes New Gold properties Rainy River’s brownfield exploration about 65 kilometres northwest of Fort Frances and the New Afton K-Zone mine in British Columbia.
Coeur and New Gold believe that the combined entity will provide multiple tangible benefits to Ontario, Canada, and British Columbia, according to a Coeur press release.
The company expects to yield as much as 20 million ounces of silver, 900,000 ounces of gold, and 100 million pounds of copper, according to a company press release.
“With the acquisition of New Gold, Coeur suddenly vaults itself into the senior gold producer category, cementing an impressive growth-turnaround story over the last couple years for the Chicago-based miner,” Sinn said after the merger was announced.
“And that’s a big deal.”
It also makes sense, he said.
“There’s a lot of synergies between these two companies,” Sinn said.
“From a G&A (general and administrative expenses) standpoint, they can cut a lot of that corporate overhead. Save money there. There’s some operational synergies as well.”
The two Canadian mines expands Coeur’s stable of properties to seven operations and births an all-North American senior precious metals producer, the company said in a press release.
More than 80 per cent of the company’s revenue will be generated by work in Canada and the United States.
“Both companies are in the early stages of generating significant cash flow after several years of heavy investment,” said Mitchell Krebs, Coeur’s CEO, chairperson, and president.
“We believe this is an extraordinary opportunity to create an unrivaled North American-only, mining powerhouse at just the right time.”
For New Gold, the merger marks a monumental day. It’s the culmination of diligent focus on operational and developmental work that has transformed it into a financially strong and significant free cash flow generating company, said Patrick Godin, New Gold’s CEO.
“Together, we will be a cash flow powerhouse, leaping above larger peers, with significant exploration upside and the potential to significantly extend mine life and grow net asset value per share,” he said.
