Silvercorp announces OreCorp takeover offer

Silvercorp Metals Inc. [SVM-TSX, NYSE American], a company with operations in China, is offering to acquire all the shares of Australia’s Orecorp Ltd. [ORR-ASX] that it doesn’t already own.

“We are pleased to adjust our transaction with OreCorp after it became clear that the previously proposed scheme, due to outside interference, was at risk of not completing,’’ said Silvercorp Chairman and CEO Dr. Rui Feng.

Silvercorp shares gained 0.81% or $0.03 to $3.71 and trade in a 52-week range of $5.59 and $2.88.

Orecorp is a Western Australia-based mining development company. Its shares are listed on the Australian Securities Exchange (ASX). OreCorp.’s key project is the Nyanzaga Gold Project in Tanzania. SilverCorp currently holds 73.8 million OreCorp shares, or 15.74% of the fully paid ordinary shares.

Silvercorp is offering to acquire all of the OreCorp shares it doesn’t already own for A$0.19 cash plus 0.0967 SilverCorp shares per OreCorp share (the same consideration offered under the scheme of arrangement that this offer is replacing).

The off-market takeover offer is subject only to a 50.1% minimum acceptance conditions (and other customary conditions).

The latest offer values Orecorp at approximately A$276.5 million, and represents a premium of 40.1% to the 20-day volume-weighted average price (VWAP) of Orecorp shares of A$0.42 on the ASX for the period ending August 4, 2023.

It also represents a 21.8% premium to the 20-day VWAP of OreCorp shares of A$0.484 on the ASX for the period ended December 2023, and 15.5% to the closing price of OreCorp shares of A$0.51 on the ASX on December 22, 2023.

The OreCorp Board, who collectively hold 3.94% of the OreCorp shares, is unanimously recommending that OreCorp shareholders accept the offer in the absence of a superior proposal.

Feng said the transaction aims to create a globally diversified precious metals producer, and will provide enhanced trading liquidity, re-rating potential and the opportunity to participate in further upside from the Nyanzaga Project and Silvercorp’s existing mining portfolio to shareholders of both companies.

The Nyanzaga project is an advanced development project located approximately 60 kilometres southwest of the city of Mwanza, 60 kilometres east of the Geita Gold mine (AngloGold Ashanti Ltd. [AU-NYSE, ANG-JSE, AGG-ASX]) and 30 kilometres northeast of Barrick Gold Corp.’s [ABX-TSX, GOLD-NYSE] Bulyanhulu gold mine.

The project consists of a special mining license covering 23.4 square kilometres, including the Nyanzaga and Kilomani deposits and other exploration prospects. The Tanzanian Government holds a 16% free-carried interest in Sotta Mining Corp. Ltd., an OreCorp subsidiary and holder of the special mining license.

Maiden probable ore reserves are estimated at 40.08 million tonnes at 2.02 g/t gold or 2.60 million ounces.

That material is expected to sustain life of mine average gold production of 234,000 ounces annually over 10.7 years. Pre-production capital cost is pegged at US$474 million, including underground development, open pit pre-strip and associated project infrastructure and a US$36 million contingency.