Trading Symbols:
TSX/NYSE
AMERICAN: SVM
TSX: GUY
VANCOUVER and TORONTO, April 27,
2020 /CNW/ - Silvercorp Metals Inc. ("Silvercorp")
(TSX/NYSE American: SVM) and Guyana Goldfields Inc. (TSX:
GUY) ("Guyana Goldfields") are pleased to announce that they have
entered into a definitive agreement (the "Arrangement Agreement")
whereby Silvercorp will acquire all of the issued and outstanding
shares of Guyana Goldfields by way of a plan of arrangement under
the Canada Business Corporations Act (the "Transaction").
The Transaction will create a diversified precious metals producer
with two profitable underground silver mining operations in
China and a gold mining operation
in Guyana with a strong balance
sheet to fund growth opportunities.
Under the terms of the Transaction, each holder of Guyana
Goldfields shares will have the option to receive, for each Guyana
Goldfields share held, C$0.60 in cash
or 0.1195 of a Silvercorp common share (valued at C$0.60 based on the volume weighted average price
for Silvercorp common shares for the 20 trading days ended
April 24, 2020), subject to a maximum
cash consideration of C$33.2 million.
If all Guyana Goldfields shareholders elect to receive cash,
consideration for each share will consist of C$0.20 in cash and 0.0796 of a Silvercorp common
share (valued at C$0.40 based on the
volume weighted average price for Silvercorp common shares for the
20 trading days ended April 24,
2020). Assuming the maximum cash consideration, existing
Guyana Goldfields shareholders will own 7.1% of Silvercorp's pro
forma basic shares outstanding following the Transaction. The
consideration of C$0.60 per share
represents a 71% premium to the 20-day volume weighted average
price of Guyana Goldfields as of the close of trading on
April 24, 2020. The implied
equity value of the Transaction is approximately C$105 million.
Concurrently with entering into the Arrangement Agreement,
Silvercorp and Guyana Goldfields have also entered into a loan
agreement, whereby Silvercorp will lend Guyana Goldfields up to
US$15 million (the "Interim Loan
Facility") with a defined use of proceeds related to ongoing
operations at the Aurora Underground Project, as well as for
certain working capital and general corporate purposes.
Transaction Rationale
- Creates a leading precious metals producer:
Combined company will benefit from enhanced strategic positioning
and greater diversification, providing the opportunity for a
significant re-rate upon the successful development of the Aurora
Underground Project;
- Strong financial position: A strong balance sheet and a
robust cash flow profile will provide the capital to develop the
Aurora Underground Project and pursue further potential M&A
opportunities;
- An attractive growth profile: Gold project pipeline
includes the BYP gold project in China and the Aurora underground project in
Guyana;
- Exploration upside: Ability to fund exploration programs
to test numerous, high-priority brownfield and greenfield
exploration targets within a 1,200 km2 land package
hosted in the highly prospective Guiana Shield Greenstone Belt,
providing an opportunity to unlock value from an underexplored land
package;
- Significant pro-forma synergies: The combined company
will benefit from the strong underground mining skill set of a
proven management team and will have the ability to deliver
efficiencies at the corporate level and leverage Guyana Goldfield's
deep experience and network in Guyana during a transition period, working
towards near-term development; and
- Enhanced capital markets profile: Bolstering trading
liquidity and shareholder base with a newly diversified asset
portfolio, in addition to the recent inclusion of Silvercorp in
major indices including the VanEck Gold Miners (GDX) and
S&P/TSX Composite Index.
Rui Feng, Chairman and CEO of
Silvercorp, stated:
"This transaction will create a new globally diversified
precious metals producer with the addition of Aurora to our growing
asset portfolio. We believe this is a rare opportunity to leverage
our underground mining expertise and strong balance sheet to unlock
value for all shareholders through the development of the Aurora
Underground Project as well as aggressive exploration programs in a
proven gold district.
We look forward to partnering with the Government of
Guyana to make a successful entry
into the region, leveraging Guyana Goldfield's existing team and
relationships to ensure a smooth transition and continued
development that benefits all stakeholders."
Alan Pangbourne, President and
CEO of Guyana Goldfields stated:
"This transaction provides our shareholders with an immediate
and significant upfront premium and exposure to a geographically
diverse mid-tier precious metal company. With a strong
operating history, solid balance sheet and significant underground
experience, Silvercorp's management team is well-positioned to fund
and continue to advance the underground project at
Aurora."
Benefits for Guyana Goldfields Shareholders
- Exposure to an immediate premium, enhanced trading liquidity,
and a significant re-rating opportunity;
- Reduces development risk given Silvercorp's track record of
operational excellence in underground mining over the last 15
years;
- Silvercorp's balance sheet eliminates the funding risk
associated with the Aurora Underground Project, providing access to
Silvercorp's strong balance sheet and financing options available
to a larger company during these times of uncertain market
conditions; and
- Provision of Interim Loan Facility to fund expenditures at the
Aurora Underground Project during the period before closing of the
Transaction.
Benefits for Silvercorp Shareholders
- Adds a gold development project to significantly increase
Silvercorp's precious metals production profile and exposure to
gold;
- Re-rating opportunity due to enhanced scale, asset
diversification, exploration upside, and a foothold in South America; and
- Cash and share transaction preserves cash, while minimizing
dilution, in order to maintain a strong balance sheet that will
enable the Company to weather current market conditions and pursue
further growth opportunities.
Board of Directors' Recommendations
The Arrangement Agreement has been unanimously approved by the
Board of Directors of Guyana Goldfields who recommends that Guyana
Goldfields shareholders vote in favour of the Transaction. The
Board of Directors of Guyana Goldfields has received a fairness
opinion from each of RBC Capital Markets and Stifel GMP, which
state that the consideration to be received by Guyana Goldfields
shareholders pursuant to the Transaction is fair from a financial
point of view, to Guyana Goldfields shareholders (other than
Silvercorp). The Arrangement Agreement has also been unanimously
approved by the Board of Directors of Silvercorp.
Transaction Conditions and Timing
Full details of the Transaction will be included in the
management information circular of Guyana Goldfields that is
expected to be mailed to Guyana Goldfields' shareholders by late
May 2020. The Transaction will be
effected by way of a court-approved plan of arrangement under the
Canada Business Corporations Act and will be subject to the
approval of 66⅔% of votes cast by shareholders of Guyana Goldfields
at a special meeting of Guyana Goldfields shareholders expected to
be held by the end of June 2020.
Directors and officers of Guyana Goldfields have entered into
voting support agreements pursuant to which they have agreed to
vote their common shares in favour of the Transaction. In addition
to shareholder and court approvals, the Transaction is subject to
applicable regulatory approvals including TSX and NYSE American
approval and the satisfaction of certain other closing conditions
customary in transactions of this nature.
The Arrangement Agreement provides for, among other things
customary board support and non-solicitation covenants, with
"fiduciary out" provisions that allow Guyana Goldfields to accept a
superior proposal, subject to a "right to match period" in favour
of Silvercorp. The Arrangement Agreement also provides for a
termination fee of C$3.65 million to
be paid by Guyana Goldfields to Silvercorp if the Arrangement
Agreement is terminated in certain specified circumstances, and
reimbursement of expenses for Silvercorp if the Arrangement
Agreement is terminated in certain other specified
circumstances.
None of the securities to be issued pursuant to the Transaction
have been or will be registered under the United States Securities
Act of 1933, as amended (the "U.S. Securities Act"), or any state
securities laws, and any securities issuable in the Transaction are
anticipated to be issued in reliance upon available exemptions from
such registration requirements pursuant to Section 3(a)(10) of the
U.S. Securities Act and applicable exemptions under state
securities laws. This press release does not constitute an offer to
sell or the solicitation of an offer to buy any securities.
Management Team and Board of Directors
The combined entity will continue to have its headquarters in
Vancouver and detailed integration
plans will be finalized over the next few months.
Advisors and Counsel
Canaccord Genuity Corp. is acting as financial advisor to
Silvercorp and McCarthy Tétrault LLP is acting as Silvercorp's
legal advisor.
RBC Capital Markets is acting as financial advisor to Guyana
Goldfields and Fasken Martineau DuMoulin LLP is acting as Guyana
Goldfield's legal advisor.
Conference Call/Webcast
Management will host a joint conference call and webcast today,
at 8:00 am Eastern Time /
5:00 am Pacific Time to provide
further information. Participants are advised to dial in five
minutes prior to the scheduled start time of the call. A
presentation will be made available on both companies' websites
prior to the webcast. Webcast details:
Date:
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April 27, 2020 at
8:00 am Eastern Time / 5:00 am Pacific Time
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Toll-free:
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Canada/USA
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1-800-319-4610
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International
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1-604-638-5340
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Hong Kong
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800-930-470
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Conference
ID
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10009469
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Webcast:
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http://services.choruscall.ca/links/silvercorp20200427.html
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About Silvercorp
Silvercorp is a profitable Canadian mining company producing
silver, lead and zinc metals in concentrates from mines in
China. The Company's goal is to
continuously create healthy returns to shareholders through
efficient management, organic growth and the acquisition of
profitable projects. Silvercorp balances profitability, social and
environmental relationships, employees' wellbeing, and sustainable
development.
About Guyana Goldfields
Guyana Goldfields Inc. is a Canadian based gold producer
primarily focused on the exploration, development and operation of
gold deposits in Guyana,
South America.
CAUTIONARY DISCLAIMER - FORWARD LOOKING
STATEMENTS
Certain of the statements and information in this press
release constitute "forward-looking statements" within the meaning
of the United States Private Securities Litigation Reform Act of
1995 and "forward-looking information" within the meaning of
applicable Canadian provincial securities laws. Any statements or
information that express or involve discussions with respect to
predictions, expectations, beliefs, plans, projections, objectives,
assumptions or future events or performance (often, but not always,
using words or phrases such as "expects", "is expected",
"anticipates", "believes", "plans", "projects", "estimates",
"assumes", "intends", "strategies", "targets", "goals",
"forecasts", "objectives", "budgets", "schedules", "potential" or
variations thereof or stating that certain actions, events or
results "may", "could", "would", "might" or "will" be taken, occur
or be achieved, or the negative of any of these terms and similar
expressions) are not statements of historical fact and may be
forward-looking statements or information. Forward-looking
statements or information relate to, among other things: the price
of silver and other metals; the accuracy of mineral resource and
mineral reserve estimates at the Company's material properties; the
sufficiency of the Company's capital to finance the Company's
operations; estimates of the Company's revenues and capital
expenditures; estimated production from the Company's mines in the
Ying Mining District; timing of receipt of permits and regulatory
approvals; availability of funds from production to finance the
Company's operations; and access to and availability of funding for
future construction, use of proceeds from any financing and
development of the Company's properties.
Forward-looking statements or information are subject to a
variety of known and unknown risks, uncertainties and other factors
that could cause actual events or results to differ from those
reflected in the forward-looking statements or information,
including, without limitation, risks relating to: fluctuating
commodity prices; calculation of resources, reserves and
mineralization and precious and base metal recovery;
interpretations and assumptions of mineral resource and mineral
reserve estimates; exploration and development programs;
feasibility and engineering reports; permits and licenses; title to
properties; property interests; joint venture partners; acquisition
of commercially mineable mineral rights; financing; recent market
events and conditions; economic factors affecting the Company;
timing, estimated amount, capital and operating expenditures and
economic returns of future production; integration of future
acquisitions into the Company's existing operations; competition;
operations and political conditions; regulatory environment in
China and Canada; environmental risks; foreign exchange
rate fluctuations; insurance; risks and hazards of mining
operations; key personnel; conflicts of interest; dependence on
management; internal control over financial reporting as per the
requirements of the Sarbanes-Oxley Act; and bringing actions and
enforcing judgments under U.S. securities laws.
This list is not exhaustive of the factors that may affect
any of the Company's forward-looking statements or information.
Forward-looking statements or information are
statements about the future and are inherently uncertain, and
actual achievements of the Company or other future events or
conditions may differ materially from those reflected in the
forward-looking statements or information due to a variety of
risks, uncertainties and other factors, including, without
limitation, those referred to in the Company's Annual Information
Form for the year ended March 31,
2019 under the heading "Risk Factors".
Although the Company has attempted to identify important factors
that could cause actual results to differ materially, there may be
other factors that cause results not to be as anticipated,
estimated, described or intended. Accordingly, readers should
not place undue reliance on forward-looking statements or
information.
The Company's forward-looking statements and information are
based on the assumptions, beliefs, expectations and opinions of
management as of the date of this press release, and other than as
required by applicable securities laws, the Company does not assume
any obligation to update forward-looking statements and information
if circumstances or management's assumptions, beliefs, expectations
or opinions should change, or changes in any other events affecting
such statements or information. For the reasons
set forth above, investors should not place undue reliance on
forward-looking statements and information.
SOURCE Guyana Goldfields Inc.