By Lauren Tara LaCapra and Mike Stone

Nov 30 (Reuters) - Coeur Mining Inc, the biggest U.S. producer of silver, is in advanced negotiations to acquire Paramount Gold and Silver Corp, according to people familiar with the matter, as it seeks to expand its mining footprint in Mexico.

The talks are the latest sign of low metal prices driving mining companies into consolidation, as they strive to lower their cost base, expand their deposits and become more profitable.

Paramount's San Miguel mining project neighbors Coeur's Palmarejo silver-gold mine in Northern Mexico. The deal would enable Palmarejo to continue as one of the largest and highest grade silver and gold mines in the world for at least another seven years, according to the people.

Under the terms being negotiated, Paramount shareholders would be paid in Coeur shares, the people said. Coeur and Paramount have a market capitalization of $425 million and $107 million respectively.

As part of the deal, Paramount plans to spin off its non-Mexican assets into a standalone publicly listed company, the people said. Coeur would have a 4.9 percent stake in that new company, the people added.

Further terms of the deal, which have not yet been finalized by the two companies, could not be learned. The sources asked not to be identified because the negotiations are confidential. A Coeur spokesman declined to comment, while Paramount did not respond to a request for comment.

Paramount's San Miguel project is made up of 40 concessions and spans more than 350,000 acres around Coeur's Palmarejo mine complex.

Besides Palmarejo, Chicago-based Coeur also owns the San Bartolomé silver mine in Bolivia, the Rochester silver-gold mine in Nevada and the Kensington gold mine in Alaska. Winnemucca, Nevada-based Paramount also owns the Sleeper gold project in Nevada.

(Reporting by Lauren Tara LaCapra and Mike Stone in New York)