Canadian mining firm Silvercorp Metals Inc. (TSX: SVM) has entered into a binding scheme implementation agreement to acquire the ordinary shares of OreCorp, an Australian gold developer. With a projected market capitalization of A$960 million, the combined precious metals enterprise is poised to tap into the potential of a promising emerging mining region.
As per the agreement, Silvercorp will purchase all outstanding shares of OreCorp that are not currently under its ownership or that of its affiliates. OreCorp shareholders will receive A$0.15 in cash along with 0.0967 shares of Silvercorp common stock for each of their OreCorp shares. This arrangement reflects a calculated value of A$0.60 per OreCorp share.
OreCorp last traded at A$0.48 per share.
Furthermore, Silvercorp has inked a placement arrangement with OreCorp, outlining a commitment to provide an equity placement of A$28 million to OreCorp. This infusion of funds will bolster OreCorp’s efforts in advancing the development of the Nyanzaga gold project situated in Mwanza, Tanzania. Under the terms of the placement, OreCorp will issue 70.4 million shares to Silvercorp at a rate of A$0.40 per share.
Silvercorp elaborated in a statement, saying, “The capital raised from the placement will be utilized to promptly initiate resettlement activities in line with the relocation action plan, thereby expediting the development of the Nyanzaga project.”
OreCorp retains an 84% ownership stake in the Nyanzaga Gold Project, which is set to commence production in the latter half of 2025.
Following the successful conclusion of the placement, Silvercorp’s share of the total outstanding ordinary shares in OreCorp will amount to approximately 15%.
In the absence of a superior proposal, OreCorp’s board has unanimously recommended its shareholders endorse Silvercorp’s takeover proposition.
Dr. Rui Feng, Chairman and CEO of Silvercorp, expressed his views on the transaction: “This transaction will give rise to a novel, globally diversified producer of precious metals. We view this as a unique chance to leverage our technical prowess and robust financial position to unlock value for all shareholders by achieving commercial production of the Nyanzaga project by H2 2025.”
The scheme is contingent upon customary closing conditions, including the approval of OreCorp shareholders.
Henk Diederichs, OreCorp’s Managing Director and CEO, highlighted the significance of the deal: “This transaction offers our shareholders an immediate and substantial upfront premium, coupled with exposure to a geographically varied mid-tier precious metals enterprise.”
Recently, the Canadian miner has announced a postponement of the release date for its first quarter financial results of fiscal year 2024 (which concluded on June 30, 2023). This delay is due to unexpected travel undertaken by certain members of the company’s board and taking into consideration the observance of a public holiday on Monday, August 7, in various regions of Canada. The new release date has been rescheduled one week later to August 10, 2023.
Silvercorp Metals Inc. last traded at $2.88 on the NYSE American.
Information for this briefing was found via Sedar and the companies mentioned. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.