Resource World Magazine

F E B R U A R Y / M A R C H 2 0 1 5 www.resourceworld.com 37 before ascribing any value to the Paramount spin-off company. Upon completion of the merger, Paramount shareholders will own approximately 32.7 million shares of Coeur representing approximately 24% of the outstanding shares of Coeur common stock. The implied transaction value, before ascribing any value to Paramount's spin-off company, is approximately $146 million. Speaking in support of the transaction when it was announced, Paramount CEO, Christopher Crupi said, "This transaction unlocks the value we have created in San Miguel for our stockholders, by trading this asset for a substantial ownership in the major producer best able to maximize its value. We expect San Miguel to make a sig- nificant contribution to the future success of Coeur and Paramount stockholders will be able to share in this success as owners of Coeur. This transaction also provides Paramount stockholders with an opportunity to share in further value creation as owners of our new spin-off company, which we expect to be named Paramount Nevada Gold. Our focus will be on gold assets in Nevada, anchored by the advanced Sleeper Gold Project which already has a large resource base and a low capital and operating cost profile." In a press release, Paramount discussed benefits for Paramount shareholders. These include an attractive value creation oppor- tunity for Paramount stockholders, significant interest in Coeur's portfolio of producing assets and immediate exposure to financial resources sufficient to fund the development of the San Miguel Project as a part of Coeur's portfolio. A second PEA for San Miguel was completed in August 2014. Coeur has sufficient capital to proceed with the development of San Miguel in a timely manner as its has $295.4 million in cash, cash equivalents and short-term investments as of September 30, 2014 on the balance sheet plus strong operating cash flow from existing operations. Leveraging existing infrastructure at Coeur's Palmarejo Mine complex will result in significantly lower development costs. The merger will also provide continuing stockholder participa- tion in Nevada exploration assets through 95.1% ownership of Paramount's new spin-off company and provides initial funding to the new company, enabling it to advance its Sleeper Gold Project. The funds will also offer the potential to acquire additional gold assets at a time when valuations are at historic lows. In addition to shareholder approvals, the proposed transac- tion will be subject to regulatory approvals and other conditions, including approval of the Mexican Federal Economic Competition Commission. Paramount's Board of Directors has determined that the proposed transaction is in the best interest of the company and its shareholders, having taken into account advice from its financial advisor, and has unanimously approved execution of the merger agreement. Paramount's Board of Directors recommends that its stockholders vote in favor of the proposed transaction. Paramount and Coeur have also entered into a royalty agreement whereby Coeur paid $5.25 million to Paramount for a 0.7% net smelter returns royalty with respect to the San Miguel Project. n

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