First Majestic Silver Corp. ("First Majestic")
(TSX:FR)(NYSE:AG)(FRANKFURT:FMV) and Orko Silver Corp. ("Orko")
(TSX VENTURE:OK)(PINKSHEETS:OKOFF)(FRANKFURT:OG3) are pleased to
announce that the companies have entered into a definitive
agreement (the "Arrangement Agreement") pursuant to which First
Majestic has agreed to acquire all of the issued and outstanding
common shares of Orko for consideration of 0.1202 of a common share
of First Majestic (the "Exchange Ratio") plus $0.0001 in cash per
Orko common share. The offer implies a value of C$2.72 per Orko
share based on the closing prices of both First Majestic and Orko's
common shares on the Toronto Stock Exchange ("TSX") and TSX Venture
Exchange, respectively, on December 14, 2012. The offer represents
a premium of approximately 69% to Orko's 30-day volume-weighted
average price ("VWAP") for the period ending December 14, 2012. The
transaction will be implemented by way of a plan of arrangement
(the "Arrangement") under the Business Corporations Act (British
Columbia).
BENEFITS TO FIRST MAJESTIC SHAREHOLDERS
-- Adds La Preciosa, one of the largest undeveloped primary silver
resources globally, to First Majestic's already robust growth portfolio
of Mexican assets
-- Further enhances First Majestic's land position in the Sierra Madre
Belt, one of the world's most prolific silver and gold regions
-- Increases leverage to silver with very large, predominantly silver,
resource base
-- La Preciosa's planned development timeline blends well with First
Majestic's existing organic growth strategy, with anticipated start up
timed after the ramp up of Del Toro and La Guitarra
-- La Preciosa, located in the State of Durango, is in close proximity to
First Majestic's existing La Parrilla and Del Toro mines, allowing First
Majestic to strengthen its position in the area, employ its in-country
expertise in mine development and realize potential operational
synergies
-- The transaction is accretive to First Majestic's net asset value per
share, resources per share and longer-term production and cash flow per
share
BENEFITS TO ORKO SHAREHOLDERS
-- Provides Orko shareholders with a significant premium to the current
market price
-- Opportunity to participate in a leading silver producer through an all-
share transaction
-- Diversifies Orko's single asset risk profile and provides exposure to
First Majestic's diversified portfolio of producing and development
assets in Mexico
-- Obtains access to First Majestic's mine building experience, operating
expertise and financial strength reducing risk of the development of La
Preciosa
-- Enhances capital markets presence with a pro forma market capitalization
in excess of $3 billion based on current share prices including
increased analyst coverage, trading liquidity and a broader
institutional investor base
Keith Neumeyer, President & CEO of First Majestic, stated:
"We believe this transaction provides an exceptional opportunity
for the shareholders of both companies. Orko is an excellent
strategic fit within First Majestic, further strengthening our
presence in Mexico by providing another high quality development
project to our existing asset portfolio in an area that we are
already very familiar with. Orko shareholders stand to realize a
substantial premium and to capitalize on the track record of value
creation that First Majestic brings."
Gary Cope, President & CEO of Orko, said: "We believe this
transaction is highly attractive to Orko shareholders and is the
culmination of many years of success Orko has had in growing and
advancing one of the largest undeveloped primary silver deposits in
the world. We are very pleased to join forces with First Majestic
in a transaction which brings the necessary capital and mine
building expertise that is required to advance La Preciosa to
production."
TRANSACTION SUMMARY
Under the terms of the Arrangement Agreement, on closing, each
Orko shareholder will receive 0.1202 common shares of First
Majestic plus $0.0001 in cash per Orko common share held. Pursuant
to the transaction, First Majestic will (assuming exercise of all
existing Orko stock options) issue approximately 17.1 million
common shares, valuing Orko's equity at approximately C$387
million. Following the completion of the transaction, the current
shareholders of Orko will hold approximately 13% of the issued and
outstanding shares of First Majestic. The transaction will be
carried out by way of a court-approved plan of arrangement and will
require the approval of at least 66 2/3% of the votes cast by the
shareholders and optionholders of Orko, voting together as a single
class, at a special meeting expected to take place in February
2013. In addition to shareholder and court approvals, the
transaction is subject to applicable regulatory approvals and the
satisfaction of certain other closing conditions customary in
transactions of this nature.
The Arrangement Agreement includes customary provisions,
including non-solicitation of alternative transactions, right to
match superior proposals and fiduciary-out provisions. In addition,
Orko has agreed to pay a termination fee to First Majestic of
C$11.6 million upon the occurrence of certain events. First
Majestic and Orko have each agreed to reimburse the other party for
certain expenses upon the occurrence of certain other events.
The Board of Directors of Orko has unanimously approved the
transaction and will provide a written recommendation that Orko
securityholders vote in favour of the transaction which will be
included in the information circular to be mailed to
securityholders in connection with the Arrangement. Each of the
directors and senior officers of Orko, who hold in the aggregate
approximately 8% of the issued and outstanding Orko shares
(assuming exercise of all existing Orko stock options) have entered
into a voting agreement with First Majestic and have agreed to vote
in favour of the transaction at the special meeting of Orko
securityholders to be held to consider the Arrangement.
Full details of the Arrangement will be included in a Management
Information Circular to be filed with the regulatory authorities
and mailed to Orko securityholders in accordance with applicable
securities laws. Orko expects to mail the Management Information
Circular in January 2013.
ADVISORS AND COUNSEL
Dundee Capital Markets acted as exclusive financial advisor and
McCullough O'Connor Irwin LLP acted as legal counsel to First
Majestic. Dundee Capital Markets has provided an opinion to the
First Majestic Board of Directors that, based upon and subject to
the assumptions, limitations and qualifications in the opinion, the
consideration being offered by First Majestic to Orko pursuant to
the transaction is fair, from a financial point of view, to First
Majestic.
BMO Capital Markets and GMP Securities L.P. acted as financial
advisors and Stikeman Elliott LLP acted as legal advisor to Orko.
BMO Capital Markets and GMP Securities L.P. have each provided an
opinion to the Board of Directors of Orko that, based upon and
subject to the assumptions, limitations, and qualifications in the
opinions, the consideration to be received is fair, from a
financial point of view, to the shareholders of Orko.
CONFERENCE CALL
First Majestic and Orko will host a joint conference call and
webcast on December 17, 2012 at 8:30 am Eastern time / 5:30 am
Pacific time for members of the investment community to discuss the
proposed transaction. The call-in details are as follows:
Toll Free Canada & USA: 1-800-319-4610
Outside of Canada & USA: 1-604-638-5340
Toll Free Germany: 0800 180 1954
Toll Free UK: 0808 101 2791
Click on WEBCAST on the First Majestic homepage as a
simultaneous audio webcast of the conference call at
www.firstmajestic.com.
The Conference call will be recorded and you can listen to an
archive of the conference by calling:
Toll Free Canada & USA: 1-800-319-6413
Outside of Canada & USA: 1-604-638-9010
Pin Code: 3928
An archived webcast of the conference call will also be
available at www.firstmajestic.com.
ABOUT FIRST MAJESTIC
First Majestic is a producing silver company focused on silver
production in Mexico and is aggressively pursuing its business plan
of becoming a senior silver producer through the development of its
existing mineral property assets and the pursuit through
acquisition of additional mineral assets which contribute to First
Majestic achieving its corporate growth objectives.
For further information, contact info@firstmajestic.com or visit
our website at www.firstmajestic.com.
ABOUT ORKO
Orko Silver Corp. is developing one of the world's largest
undeveloped primary silver deposits, La Preciosa, located near the
city of Durango, in the State of Durango, Mexico.
For further information, contact Orko Silver Corp. via our
website online at www.orkosilver.com.
ON BEHALF OF THE BOARD OF FIRST ON BEHALF OF THE BOARD OF ORKO
MAJESTIC SILVER CORP. SILVER CORP.
"Keith Neumeyer" "Gary Cope"
Keith Neumeyer Gary Cope
President & CEO President & CEO
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This news release includes certain "Forward-Looking Statements"
within the meaning of the United States Private Securities
Litigation Reform Act of 1995 and "forward-looking information"
under applicable Canadian securities laws. When used in this news
release, the words "anticipate", "believe", "estimate", "expect",
"target", "plan", "forecast", "may", "schedule" and similar words
or expressions, identify forward-looking statements or information.
These forward-looking statements or information relate to, among
other things: completion of the Arrangement and the various steps
thereto, including filing and mailing of securityholder documents
and holding securityholder meetings; liquidity of First Majestic
shares; future growth potential for First Majestic and its
business; future mine development plans; the price of silver and
other metals; the accuracy of mineral reserve and resource
estimates and estimates of future production and costs of
production at our properties; estimated production rates for silver
and other payable metals produced by us, the estimated cost of
development of our development projects.
These statements reflect First Majestic's current views with
respect to future events and are necessarily based upon a number of
assumptions and estimates that, while considered reasonable by
First Majestic, are inherently subject to significant business,
economic, competitive, political and social uncertainties and
contingencies. Many factors, both known and unknown, could cause
actual results, performance or achievements to be materially
different from the results, performance or achievements that are or
may be expressed or implied by such forward-looking statements or
information and First Majestic has made assumptions and estimates
based on or related to many of these factors. Such factors include,
without limitation: satisfaction or waiver of all applicable
conditions to closing of the Arrangement including, without
limitation, receipt of all necessary securityholder, court, stock
exchange and regulatory approvals or consents and lack of material
changes with respect to First Majestic and Orko and their
respective businesses, all as more particularly set forth in the
Arrangement Agreement; fluctuations in general macro-economic
conditions; fluctuations in securities markets and the market price
of First Majestic's shares; fluctuations in the spot and forward
price of silver, gold, base metals or certain other commodities
(such as natural gas, fuel oil and electricity); fluctuations in
the currency markets (such as the Canadian dollar and Mexican peso
versus the U.S. dollar); changes in national and local government,
legislation, taxation, controls, regulations and political or
economic developments in Canada or Mexico; operating or technical
difficulties in connection with mining or development activities;
risks and hazards associated with the business of mineral
exploration, development and mining (including environmental
hazards, industrial accidents, unusual or unexpected formations,
pressures, cave-ins and flooding); risks relating to the credit
worthiness or financial condition of suppliers, refiners and other
parties with whom First Majestic does business; inability to obtain
adequate insurance to cover risks and hazards; and the presence of
laws and regulations that may impose restrictions on mining,
including those currently enacted in Mexico; employee relations;
relationships with and claims by local communities and indigenous
populations; availability and increasing costs associated with
mining inputs and labour; the speculative nature of mineral
exploration and development, including the risks of obtaining
necessary licenses, permits and approvals from government
authorities; diminishing quantities or grades of mineral reserves
as properties are mined; First Majestic's title to properties; and
the factors identified under the caption "Risk Factors" in First
Majestic's Annual Information Form, under the caption "Risks
Relating to First Majestic's Business".
Readers are cautioned against attributing undue certainty to
forward-looking statements or information. Although First Majestic
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 anticipated, estimated or intended. First
Majestic does not intend, and does not assume any obligation, to
update these forward-looking statements or information to reflect
changes in assumptions or changes in circumstances or any other
events affecting such statements or information, other than as
required by applicable law.
This News Release may contain forward-looking statements
including but not limited to comments regarding the completion of
the Arrangement and the various steps thereto, including filing and
mailing of securityholder documents and holding securityholder
meetings, value of Orko shares, liquidity of First Majestic shares,
future growth potential for First Majestic and its business, future
mine development plans, the price of silver and other metals, the
accuracy of mineral resource estimates, reasonable prospects of
economic extraction of a mineral resource, timing and content of
upcoming work programs, geological interpretations, receipt of
property title, potential mineral recovery processes, etc.
Forward-looking statements address future events and conditions and
therefore involve inherent risks and uncertainties. Actual results
may differ materially from those currently anticipated in such
statements and Orko undertakes no obligation to update such
statements, except as required by law. The resource estimate is
based on a geological model based on interpretations of multiple
veins in wide spaced drill holes. There is risk that the
interpreted continuity and orientation of the veins could change
with additional drilling. The sample values in the drill core may
not be representative of those portions of the deposit as precious
metal deposits are subject to nugget effect and rapid changes to
grade over relatively short distances. Sampling gaps in the
modelled veins may allow higher grade samples to be projected into
unsampled lower grade areas of the model. This could cause
overestimation of tonnes and grade. The converse is also true.
Density values of the blocks are based on a model that may not be
accurate and may cause local biases in tonnage estimates.
Neither the TSX Venture Exchange nor its Regulation Services
Provider (as that term is defined in the policies of the TSX
Venture Exchange) accepts responsibility for the adequacy or
accuracy of this release.
Contacts: First Majestic Silver Corp. Todd Anthony Investor
Relations 1.866.529.2807info@firstmajestic.com
www.firstmajestic.com Contacts: Orko Silver Corp. 604.687.6310
www.orkosilver.com
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