TSX- and NYSE-listed Silvercorp Metals has launched a takeover deal for ASX-listed gold developer OreCorp, with the two companies signing a binding implementation deed.
Under the deed, Silvercorp will acquire all of the shares in OreCorp not already held for 15c in cash and 0.0967 of a Silvercorp share for every OreCorp share held, representing an implied value of 60c for each OreCorp share.
The offer presents a 41.7% premium to OreCorp’s 20-day volume weighted average share price, and a 31.5% premium to the company’s last share trade on August 4.
Silvercorp will also provide OreCorp with $28-million in funding through an equity placement to advance the development of its Nyanzaga gold project, in Tanzania. Under the placement, 70.4-million share will be issued to Silvercorp at a price of 40c a share.
The placement will occur in two tranches, with the first to raise A$18-million and be completed on the third business day following the execution of the agreement, while the second tranche placement to raise a further A$10-million will be completed ten business days thereafter.
On the completion of the placement, Silvercorp will hold a near 155 interest in OreCorp.
The OreCorp board has unanimously recommended that shareholders accept the takeover offer in the absence of a superior offer, and subject to an independent expert concluding that the scheme is in the best interest of shareholders.
“This transaction provides our shareholders with an immediate and significant upfront premium and exposure to a geographically diverse midtier precious metals company,” said OreCorp MD and CEO Henk Diderichs.
“With a strong operating history, solid balance sheet and significant mine building and operational experience, Silvercorp’s management team is well-positioned to fund and advance Nyanzaga into commercial production.”
OreCorp holds an 84% interest in the Nyanzaga gold project in partnership with the government of Tanzania. Key permits are in place to develop Nyanzaga for first gold in the second half of 2025. A definitive feasibility study, announced in 2022 estimated that Nyanzaga could deliver 2.5-million ounces of gold over a 10.7-year life.
The takeover will create a diversified precious metals company with a pro forma market cap of $630-million, and will enable the shareholders of both companies to participate in a larger company with greater access to capital, higher liquidity, increased scale and enhanced capital market relevance.
“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 the second half of 2025,” said Silvercorp chairperson and CEO Dr Rui Feng.
“Under the leadership of Her Excellency, President Samia Suluhu Hassan, Tanzania is becoming an attractive place for foreign investment. We look forward to partnering with the Government of Tanzania and leveraging OreCorp’s existing team and relationships to ensure a successful development that benefits all stakeholders.”
The scheme is subject to a number of conditions, including shareholder and court approval, as well as the completion of the placement and an independent expert concluding that the offer was in the best interest of OreCorp shareholders. The deal was also subject to Tanzanian Fair Competition Commission and Australian Foreign Investment Review Board approvals, if required.
