Silvercorp to Acquire OreCorp, Creating a Diversified, High Growth Precious Metals Company - Silvercorp Metals Inc.
M2 PRESSWIRE-August 7, 2023-: Silvercorp to Acquire OreCorp, Creating a Diversified, High Growth Precious Metals Company - Silvercorp Metals Inc.
(C)1994-2023 M2 COMMUNICATIONS
RDATE:07082023
Trading Symbol: TSX: SVM/NYSE AMERICAN: SVM
ASX: ORR
VANCOUVER, British Columbia and Perth, Western Australia - August 6, 2023 - Silvercorp Metals Inc. ("Silvercorp") (TSX/NYSE American: SVM) and OreCorp Limited (ASX: ORR) ("OreCorp") are pleased to announce the signing of a binding scheme implementation deed (the "Agreement") whereby Silvercorp will acquire all fully-paid ordinary shares of OreCorp not held by Silvercorp or its associates (the "OreCorp Shares"), pursuant to an Australian scheme of arrangement under Part 5.1 of the Corporations Act 2001 (Cth) (the "Scheme"), subject to the satisfaction of various conditions.
Transaction Highlights
* OreCorp shareholders to receive A$0.15 in cash and 0.0967 of a Silvercorp common share (valued at A$0.45) for each OreCorp Share held, representing total consideration with an implied value of A$0.60 per OreCorp Share.[1]
* OreCorp's Board unanimously recommends OreCorp shareholders vote in favour of the Scheme, subject to no Superior Proposal[2] emerging for OreCorp and an independent expert concluding, and continuing to conclude, that the Scheme is in the best interests of OreCorp shareholders.
* Silvercorp to provide OreCorp with approximately A$28 million in funding via an equity placement (more fully described below) to immediately advance development of its Nyanzaga Gold Project in Tanzania ("Nyanzaga"), including progressing resettlement activities and early project works.
* The Agreement aims to:
- Create a diversified, highly profitable precious metals company with a pro forma market cap of US$630 million[3], a robust growth pipeline and exposure to a highly prospective emerging mining jurisdiction;
- Provide a re-rating opportunity on the successful development of Nyanzaga, which is expected to commence commercial gold production in H2 2025; and
- Enable OreCorp and Silvercorp shareholders to participate in a larger company with greater access to capital, higher liquidity, increased scale and enhanced capital markets relevance.
* Silvercorp has the balance sheet strength to fund construction and aggressive exploration of Nyanzaga, as well as pursue regional M&A opportunities.
* Silvercorp's best-in-class technical team has the track record and expertise to build Nyanzaga and pursue opportunities for optimization.
* Consideration mix preserves Silvercorp's strong balance sheet, allowing funds to be deployed for development of Nyanzaga, managing risk and optimizing future opportunities.
* Existing OreCorp shareholders will own 17.8% of Silvercorp's common shares outstanding on a fully-diluted in-the-money basis following implementation of the Scheme.
* The Scheme is subject to various customary closing conditions, including OreCorp shareholder approval and Court approval.
* Silvercorp has agreed to use reasonable endeavours to apply for admission of Silvercorp to the official list of the Australian Securities Exchange (the "ASX").
* Proposed development of Nyanzaga by Silvercorp supported by Tanzania Government Authorities.
Nyanzaga Highlights
OreCorp holds an 84% interest in the Nyanzaga Gold Project located in the Mwanza region, Tanzania, in partnership with the Government of Tanzania. Key permits are in place to develop Nyanzaga for first gold in H2 2025. A definitive feasibility study, announced in August 2022, estimated that Nyanzaga could deliver 2.5 million ounces of gold over a 10.7 year life. [4] As reported in OreCorp's June 2023 Quarterly Activities Report released on July 21, 2023, Nyanzaga's post-tax net present value at a 5% discount rate is US$905 million and the internal rate of return is 32%, using a recent spot gold price of US$2,000/oz.[5]
Nyanzaga is located approximately 40 km north east of the Bulyanhulu mine, one of Barrick Gold Corporation's two gold mines in the Lake Victoria Goldfields, which together with the North Mara mine produced approximately 547,000 ounces of gold in 2022.[6] The Geita Gold Mine, one of AngloGold Ashanti Limited's flagship mines, located 80 km west of Nyanzaga, produced 521,000 ounces of gold in 2022.[7]
Silvercorp Chairman and CEO, Dr. Rui Feng, said:
This transaction will create a new globally diversified precious metals producer. We believe this is a rare opportunity to leverage our technical expertise and strong balance sheet to unlock value for all shareholders by bringing Nyanzaga into commercial production by H2 2025. Under the leadership of Her Excellency, President Samia Suluhu Hassan, Tanzania is becoming an attractive place for foreign investment. We look forward to partnering with the Government of Tanzania and leveraging OreCorp's existing team and relationships to ensure a successful development that benefits all stakeholders.
OreCorp Managing Director and CEO, Henk Diederichs, said:
This transaction provides our shareholders with an immediate and significant upfront premium and exposure to a geographically diverse mid-tier precious metals company. With a strong operating history, solid balance sheet and significant mine building and operational experience, Silvercorp's management team is well-positioned to fund and advance Nyanzaga into commercial production.
Honorable Minister of Minerals, Dr. Doto Mashaka Biteko, said:
"The Tanzanian Government is supportive of the proposed partnership between OreCorp and Silvercorp and looks forward to working together to develop Nyanzaga as a robust project delivering beneficial outcomes to the people of Tanzania and other stakeholders."
Benefits for OreCorp Shareholders
* Total implied consideration of A$0.60 per OreCorp Share (being A$0.15 in cash and 0.0967 of a Silvercorp common share valued at A$0.45), [8] representing:
- a 41.7% premium to the 20-day volume weighted average price ("VWAP") of OreCorp's shares on the ASX for the period ending August 4, 2023;[9] and
- a 31.5% premium to...
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