(Reuters) -U.S.-based Coeur Mining will buy North American peer SilverCrest Metals for about $1.7 billion, the companies said on Friday, as miners look to secure reserves amid surging demand for silver.

Silver prices have climbed nearly 35% in 2024 and are hovering near a 12-year high, tracking gold's stellar rally and demand for the white metal used in industries ranging from solar panels to electronics.

Canada's First Majestic agreed to buy Gatos Silver for $970 million last month.

SilverCrest shareholders will receive 1.6022 Coeur common stock for each owned, or $11.34 per share — a 22% premium to the U.S.-listed shares' last close.

Coeur shares fell 6.8%, while SilverCrest's U.S.-listed shares jumped 12.5%.

Coeur operates in Mexico, Nevada, Alaska and South Dakota, while the Las Chispas mine in Sonora, Mexico is SilverCrest's biggest.

The deal combines the Las Chispas to Coeur's Palmarejo underground silver and gold operation next door in Chihuahua.

The cash flow from Las Chispas will allow Coeur to stick to its aggressive exploration over the next two-three years to help get SilverTip, its exploration project in British Columbia, to the project stage, company executives said on a conference call.

Coeur's silver production is expected to rise to nearly 21 million ounces in 2025, compared with 10.7-13.3 million ounces estimated for this year.

The combined company is also expected to produce about 432,000 ounces of gold next year versus the 310,000-355,000 ounces estimated in 2024.

Coeur and SilverCrest shareholders will own about 63% and 37% of the combined company, respectively, when the deal closes, expected late in the first quarter of 2025.

If the deal fails, SilverCrest and Coeur will pay a fee of $60 million and $100 million, respectively.

(Reporting by Seher Dareen in Bengaluru; Editing by Mrigank Dhaniwala and Shilpi Majumdar)