Coeur Mining’s attempt to swallow Vancouver-based New Gold landed with a thud on Monday as the U.S. acquirer’s shares fell more than 12 per cent in early New York trading, erasing roughly US$1.2-billion of its own market value.
The all-stock offer, worth about C$9.5-billion at current exchange rates, would give New Gold investors 0.4959 Coeur share for each of their shares, a 16 percent premium to the Canadian miner’s last close. Coeur insists the deal will create a North American precious-metals major producing 1.25-million gold-equivalent ounces in 2026, yet the market’s first verdict was swift and negative.
Dilution risk worries Coeur holders
The offer would require Coeur to issue roughly 620-million new shares, boosting its count by nearly 60 per cent. That scale of paper raises questions about earnings dilution and future dividends that management has yet to answer. By contrast, New Gold stock jumped about 10 percent on the Toronto exchange, a move that tracks the premium built into the proposal and mirrors pre-market gains flagged by trade-desk data. Coeur’s plunge, highlighted in a Benzinga note citing a 12.4 percent intraday drop, suggests its own shareholders see the math differently.
Mitchell Krebs, Coeur’s chief executive, said the combined business would be “a cash-flow powerhouse” with US$3-billion of expected EBITDA in 2026. That forecast assumes metal prices near current records and flawless integration, a tall order given Coeur is still digesting its US$1.7-billion purchase of SilverCrest Metals that closed in February. The back-to-back deals risk stretching balance-sheet capacity, especially if gold or silver prices retreat.
Regulatory and cost questions loom
Because New Gold operates two large mines in B.C. and Ontario, the takeover must clear Investment Canada, Competition Bureau and provincial environmental reviews. Those processes rarely derail mining mergers, but timelines can slip, and Coeur’s own filings point to a first-half 2026 closing at the earliest. Any delay extends the period during which both companies must run separate systems and hedging books, eroding projected synergies.
New Gold chief executive Patrick Godin called the offer “a monumental day for New Gold” that “unlocks the next level of potential for our shareholders.”
Shareholders may welcome that optimism, yet the exchange ratio ties their fate to Coeur’s volatile stock, which has now fallen almost 30 per cent since peaking in late September. If that weakness persists into the shareholder vote expected early next year, the implied value of the offer will slide with it.
Canada-focused synergies still hazy
Coeur argues that owning Rainy River and New Afton will lower its average cost per ounce and lift free cash flow to US$2-billion in 2026. Analysts counter that Rainy River’s strip ratio is set to climb and that New Afton’s K-Zone expansion requires fresh capital just as borrowing costs crest. Additionally, there are concerns over integration and funding, pointing to a 7 percent pre-market sell-off even before regular trading volumes built.
For Bay Street the key question is whether Coeur can finance two capital programmes, service existing debt and absorb a C$9.5-billion equity issuance without tapping the market again. Until management puts detailed cost curves and funding plans on the table, the 12 per cent vote of non-confidence in Coeur’s share price is hard to ignore.
Deal arithmetic may yet turn, especially if gold holds above US$3,300 an ounce, but today’s price action underlines investor scepticism. A bigger miner is not automatically a better one.
