TORONTO, Jan. 13, 2017 /PRNewswire/ - Sierra Metals
Inc. (TSX: SMT) (BVL: SMT) ("Sierra Metals" or "the Company")
is pleased to announce that its wholly-owned subsidiary, Cautivo
Mining Inc. ("Cautivo"), has filed a preliminary prospectus (the
"Preliminary Prospectus") with the securities regulatory
authorities in each of the provinces and territories of
Canada, other than Québec, for the
purpose of qualifying the distribution by Sierra Metals to holders
of Sierra's common shares ("Sierra Shares") of all of the issued
and outstanding common shares ("Cautivo Shares") in the capital of
Cautivo (the "Distribution") as a return of capital and to effect a
rights offering under which recipients of Cautivo Shares under the
Distribution will be entitled to purchase additional Cautivo Shares
(the "Rights Offering"). The exercise price for the Rights Offering
will be determined in the context of the market prior to the filing
of Cautivo's final prospectus (the "Final Prospectus"). Dundee
Capital Partners has been retained as managing dealer to solicit
the exercise of Rights in connection with the Rights Offering. The
effect of the Distribution and the Rights Offering will be to
spin-off Cautivo as a standalone public company (the "Spin-Off")
and to capitalize Cautivo to enable it to pursue its business
plan.
On the completion of the Spin-off, Cautivo's main asset will be
its indirect interest in the Las Lomas Project (the "Las Lomas
Project"). Mark Brennan, President
and CEO of Sierra Metals commented: "As part of an ongoing
program to maximize value for Sierra shareholders and after
completing an extensive review of the Company's assets in
Peru, Sierra Metals has decided to
spin-out to existing shareholders its 100% owned Las Lomas Project,
consisting of approximately 32,000 hectares of greenfield
exploration properties located in northern Peru, into a new public entity named Cautivo
Mining. The Las Lomas Project is not considered to be part of the
Company's core focus going forward. Furthermore, management and the
Board of Directors believe the value of the Las Lomas Project is
not fully reflected in the current share price of Sierra Metals and
that the spin-out would reduce the Company's concession maintenance
liability and allow for the accelerated exploration and development
of the properties, enhancing value to Sierra
shareholders.".
Certain details of the Distribution and the Rights Offering,
including the number of Cautivo Shares to be received by
shareholders of the Company for each Sierra
Share held, the number of rights ("Rights") to be
distributed, the subscription price for Cautivo Shares under the
Rights Offering, the total size of the Rights Offering and the
timing of the Distribution and the Rights Offering have not been
finalized. Such details will be contained in the Final Prospectus,
if any. Complete details of the Distribution and the Rights
Offering, including the tax treatment of the Distribution, will
also be contained in the Final Prospectus which will be sent to
each holder of Sierra Shares and which will be made accessible on
SEDAR at www.sedar.com under Cautivo's profile.
In connection with the Distribution, Sierra Metals intends to
effect a reduction in the stated capital of the Sierra Shares in an
amount equal to the aggregate fair market value of the Cautivo
Shares to be distributed under the Distribution. Such a reduction
will require the approval of the holders of Sierra Shares.
Accordingly, a meeting of the shareholders of Sierra Metals has
been called for 10:00 a.m.
(Toronto time) on February 16, 2017 (the "Meeting") for the purpose
of considering a special resolution to approve the stated capital
reduction. The completion of the Distribution and the Rights
Offering is conditional on at least two-thirds of the votes cast by
holders of Sierra Shares at the Meeting being in favour of the
stated capital reduction. In this regard, Sierra Metals has filed a
notice of meeting and management information circular in connection
with the Meeting (the "Circular'). The Circular is available on
SEDAR at www.sedar.com under the Company's profile.
The Preliminary Prospectus contains important information
relating to the Cautivo Shares and the Rights and is still subject
to completion or amendment. A copy of the Preliminary Prospectus is
available under Cautivo's profile on SEDAR at www.sedar.com. There
will not be any distribution of the Cautivo Shares or the Rights
until a receipt for the Final Prospectus has been issued.
About Sierra Metals
Sierra Metals is Canadian based growth oriented mining company
with production from its polymetallic Yauricocha Mine in Perú, its
Bolivar Copper Mine and its Cusi Silver
Mine in Mexico. The Company
recently completed a very successful operational improvements
program at it Yauricocha mine and is now focused on completing
similar programs at its other operations. Sierra Metals continues
to grow its mineral resources with several exciting brownfield
opportunities such as the successful Esperanza Zone at the Yauricocha Mine which went
from first discovery to mining in less than one year. The Company
has numerous other brownfield exploration opportunities at all
three of its mines within or very close to existing mining
infrastructure. The Sierra Shares trade on the Toronto Stock
Exchange (the "TSX") under the symbol "SMT" and on the Lima Stock
Exchange (Bolsa de Valores de
Lima).
Forward-Looking Statements
Except for statements of historical fact contained herein, the
information in this press release may constitute "forward-looking
information" within the meaning of Canadian securities law.
Statements containing forward-looking information express, as at
the date of this news release, the Company's plans, estimates,
forecasts, projections, expectations or beliefs as to future events
or results. Forward-looking information includes, but is not
limited to information with respect to expectations regarding
completion of the Spin-Off, the expected effects of the Spin-Off on
Sierra Metals and expectations for other economic and business
factors. These statements reflect the Company's current views with
respect to future events and are necessarily based upon a number of
assumptions and estimates that, while considered reasonable by the
Company, are inherently subject to significant business, economic,
competitive, political and social uncertainties and contingencies.
Actual results might differ materially from results suggested in
any forward-looking statements. The Company assumes no obligation
to update the forward-looking statements, or to update the reasons
why actual results could differ from those reflected in the
forward-looking statements unless required by securities laws
applicable to the Company. Additional information identifying risks
and uncertainties is contained in filings by the Company with the
Canadian securities regulators, which filings are available at
www.sedar.com.
Neither the TSX nor its Regulation Services Provider (as that
term is defined in the policies of the TSX) accepts responsibility
for the adequacy or accuracy of this release.
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SOURCE Sierra Metals Inc.