Coeur d'Alene Mines Corp. on Thursday said it agreed to buy Australia's Bolnisi Gold NL and Mexico's Palmarejo Silver and Gold Corp. for $1.1 billion in cash and stock.

Bolnisi and Palmarejo together own 100 percent of the Palmarejo project, a silver mine in Mexico's Chihuahua state bordering Texas. The purchase gives Coeur d'Alene its first project in Mexico, a top silver-producing country.

Under the transaction, Bolnisi shareholders will receive 0.682 Coeur shares for each Bolnisi share they own, and Palmarejo shareholders will get 2.715 Coeur shares per Palmarejo share held. Bolnisi is Palmarejo's majority shareholder, with a 73.6 percent stake.

Based on Coeur d'Alene's closing stock price on May 2, Bolnisi holders will receive the equivalent of $2.76 per share, and Palmarejo shareholders will receive $11 per share. That's a 9 percent premium on Bolnisi's stock price on May 1 and a 40 percent premium on Palmarejo shares.

Shareholders of both companies will also receive three-tenths of a cent per Bolnisi and Palmarejo share they hold.

Idaho-based Coeur d'Alene said the combination will create a silver mining powerhouse with 364 million ounces of measured and indicated silver mineral resources. The company expects silver production to swell about 47 percent annually this year through 2009.

Palmarejo is currently building a processing plant capable of producing 12 million ounces of silver and 110,000 ounces of gold annually.

Coeur d'Alene currently owns and operates three silver mines in North and South America, owns silver production and mineral reserves in Australia and is building a silver mine in Bolivia and a gold mine in Alaska.

To pay for the deal, Coeur d'Alene plans to list its shares on the Australian Stock Exchange as depositary interests.

The Bolnisi and Palmarejo boards have approved the deal.

The transaction is expected to close in the third quarter this year, subject to approval by the shareholders of Coeur d'Alene, Bolnisi and Palmarejo. CIBC World Markets is acting as financial adviser to Coeur.