ISS Backs New Gold Deal: A Tactical Play on the 38% Stake

The immediate event is a significant reduction in near-term deal risk. Institutional Shareholder Services (ISS), a major proxy advisory firm, has recommended that New Gold shareholders vote 'FOR' the plan of arrangement. ISS called the deal 'strategically sound' and noted the implied per-share consideration has increased since the transaction was announced. This endorsement is a tactical win, as ISS's guidance often sways institutional investors.

The critical shareholder vote is scheduled for January 27, 2026, with a deadline to submit votes on January 23. The deal is an all-stock transaction where New Gold shareholders receive 0.4959 shares of Coeur common stock for each New Gold share held. This exchange ratio implies a value of $8.51 per New Gold common share, representing a premium from the stock's last close. With ISS backing the plan, the path to the January 27 meeting looks clearer, removing a key overhang for the stock.

The Tactical Setup: Valuation and the 38% Bet

The financial mechanics of this deal create a clear, immediate value proposition for New Gold shareholders. The exchange ratio of 0.4959 shares of Coeur common stock for each New Gold share implies a per-share value of $8.51. This represents a 16% premium to New Gold's stock price on the day the deal was announced. For a tactical investor, this is the core of the setup: a guaranteed premium over the pre-announcement price, contingent only on the deal closing.

Upon completion, the ownership structure shifts dramatically. New Gold shareholders will collectively own approximately 38% of the outstanding common stock of the combined company. This is not a passive stake; it is a direct bet on the combined entity's explosive growth in profitability. The numbers tell the story. The standalone Coeur was expected to generate about $1 billion in EBITDA in 2025. The combined company, however, is projected to produce approximately $3.0 billion of EBITDA in 2026. That is a 200% step-up in earnings power from Coeur's current run-rate.

The cash flow impact is even more pronounced. The combined entity is expected to generate $2.0 billion of free cash flow in 2026, a figure that dwarfs Coeur's standalone forecast. This leap in financial scale is the engine behind the deal's strategic rationale and the primary driver of the implied premium. It transforms New Gold shareholders from owners of a single producer into owners of a major, cash-generating force in the sector. The 38% stake is a leveraged bet on that transformation.

Catalysts and Risks: The Path to the Trade

The immediate next step is the shareholder vote on January 27. The deal requires approval from both companies' shareholders and is expected to close in the first half of 2026. With ISS's strong endorsement for New Gold shareholders, the path forward is clearer. Yet the stock price reaction to the announcement reveals the underlying tension. Coeur shares fell 7% in premarket trading, while New Gold shares rose 4.9%. This divergence signals mixed market sentiment, with Coeur investors pricing in integration risks and dilution, while New Gold investors see the 16% premium.

The primary risk to the thesis is that ISS is the only major proxy advisory firm to endorse the deal. While ISS's recommendation carries weight, it does not guarantee a smooth vote. If there is significant shareholder opposition-particularly from Coeur's base-the vote could fail. The setup hinges on the January 27 meeting passing without a major surprise. For now, the tactical play is to own the premium and the 38% stake in the combined entity, but the trade remains exposed to the outcome of that single vote.