Canadian mining company Silvercorp Metals has signed a binding scheme implementation deed to take over the fully paid ordinary shares of gold developer OreCorp, to create a diversified, high-growth precious metals company.
With a pro forma market cap of A$960m ($630m), the precious metals company will have exposure to a highly prospective emerging mining jurisdiction.
Under the deed, Silvercorp will acquire all fully paid ordinary shares of OreCorp that are not already held by it or its associates.
Shareholders of OreCorp will get A$0.15 in cash and be issued 0.0967 of Silvercorp common shares for every share held. This represents an implied value of A$0.60 for each OreCorp share.
Furthermore, Silvercorp has signed a placement agreement with OreCorp whereby the former would provide an equity placement of A$28m to OreCorp to advance the latter’s development of the Nyanzaga gold project in Mwanza, Tanzania.
Under the placement, OreCorp would issue 70.4 million shares to Silvercorp at a price of A$0.40 per OreCorp share.
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Silvercorp said in a statement: “Proceeds from the placement will be used to immediately commence resettlement activities as contemplated in the relocation action plan, facilitating the prompt development of Nyanzaga.”
OreCorp owns an 84% stake in the Nyanzaga Gold Project, which is scheduled to start production in H2 2025.
Following completion of the placement, Silvercorp will own around 15% of the total outstanding ordinary shares in OreCorp.
The board of OreCorp has unanimously recommended its shareholders vote in favour of Silvercorp’s takeover offer in the absence of a superior proposal.
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.”
The scheme is subject to customary closing conditions including approval from OreCorp shareholders.
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.”