Americas Silver Corporation (TSX: USA) (NYSE American: USAS)
(“Americas Silver” or the “Company”) is pleased to announce the
closing of the acquisition of Pershing Gold Corporation
(“Pershing”), originally announced on September 28, 2018 (the
“Transaction”), and a financing package to fully-fund the
development of the Relief Canyon Project (the “Project”).
Highlights
- The Committee on Foreign Investment in
the United States (CFIUS) completed its review of the Transaction
allowing the parties to proceed to closing
- Board of Director (“Board”) approval to
commence constructing expanded mining and heap leaching facilities
at the Relief Canyon Project
- Concurrent financing signed with
Sandstorm Gold Ltd. (“Sandstorm”) for gross proceeds of
approximately US$42.5 million to completely fund restarting mining
and heap leaching at the Project
- The conversion of the C$5.5 million
convertible debentures (issued in October 2018) into common shares
of the Company by Mr. Pierre Lassonde and Trinity Capital Partners
Corporation (“Trinity Capital”)
- Sale of option on San Felipe
zinc/silver/lead deposit to Premier Gold for US$10.8 million
- Mr. Stephen Alfers appointed to the
Board of Americas Silver
"The closing of the Pershing acquisition is a landmark event for
Americas Silver shareholders,” said Darren Blasutti, President
& CEO of Americas Silver. “The Company can immediately begin
construction at Relief Canyon now that the Transaction has closed,
and we have secured financing and Board approval. With Sandstorm as
our financing partner, we have raised the necessary capital to fund
the Project through to sustainable cash flow while adding an
important strategic partner as the Company’s largest shareholder.
The addition of Mr. Pierre Lassonde as a significant shareholder
further strengthens and enhances confidence in the Project and the
management of the Company.”
Mr. Blasutti continued, “The high-return Relief Canyon Project
is anticipated to add substantial precious metal production and
cash flow growth for the Company in 2020 and beyond. The gold
production from the Project is expected to catalyze a re-rating of
the share price and increase the liquidity of the Company’s shares
as a larger, precious metal-focused company with operations focused
in North America.”
Pershing Gold
Transaction
The Company received notice on April 1, 2019 that CFIUS had
completed its review and determined that there are no unresolved
national security concerns with respect to the Transaction,
satisfying the final outstanding condition to closing the
Transaction following approval by the shareholders of both Americas
Silver and Pershing as previously announced on January 9, 2019 (as
well as other certain customary requirements). Effective
immediately, Mr. Stephen Alfers, the former CEO &
President of Pershing, has been appointed to the Americas Silver
Board. Mr. Alfers has a distinguished thirty-year career and is
nationally and internationally recognized for his expertise in
natural resource development, privatization of state-owned
enterprises and foreign investment. Mr. Alfers has extensive
experience in private and public corporate finance, mergers and
acquisitions, complex international business transactions and
governmental affairs.
Under the terms of the Transaction, holders of Pershing common
shares (“Pershing Shares”) received 0.715 common shares of Americas
Silver (“Americas Silver Shares”) for each Pershing Share (the
“Exchange Ratio”). Holders of Pershing preferred shares elected to
receive either (i) new non-voting preferred shares of Americas
Silver, adjusted in respect of conversion ratio and number based on
the Exchange Ratio, or (ii) Americas Silver Shares based on the
Exchange Ratio. Americas Silver now owns 100% of the outstanding
Pershing shares with Pershing becoming a wholly-owned subsidiary of
the Company. On closing of the Transaction, Americas Silver issued
an aggregate of 24,849,270 Americas Silver common shares and
3,678,135 preferred shares to former Pershing shareholders on an
undiluted basis.
Pershing will cease trading on NASDAQ, the Frankfurt Stock
Exchange and the TSX on or about April 3, 2019. Americas Silver
will continue to trade on the TSX under the symbol “USA”, on the
NYSE American under the symbol “USAS” and on the Frankfurt Stock
Exchange under the symbol “SZ71.”
Full details of the Transaction and certain other matters are
set out in the management information circular dated December
12, 2018 (the "Information Circular"). A copy of the Information
Circular filed by Americas Silver in connection with the
Transaction can be found on SEDAR at www.sedar.com and on
EDGAR at www.sec.gov.
Pershing shareholders who have questions are advised to contact
Computershare Investor Services Inc., the depository for the
Transaction at 800-274-1088 or web.queries@computershare.com.
Relief Canyon Construction
Commencement
In connection with the Transaction closing, the Company’s Board
gave approval to commence construction of the expanded mining and
heap leaching facilities at the Project. The capital cost to
develop the Project to initial gold pour is estimated to be
approximately US$28-30 million with up to an additional US$8
million in working capital (primarily for pre-commercial production
operating costs) required prior to the Project sustaining positive
cash flow. The Company expects to achieve first gold pour from the
Project in late Q4, 2019 or early Q1, 2020.
Relief Canyon is located approximately 95 miles northeast of
Reno in Pershing County, Nevada. The Project includes three
historic open-pit mines and a state-of-the-art, fully permitted and
constructed heap-leach processing facility. The Company’s
landholdings in and around Relief Canyon cover over 11,700
hectares. This land package provides the Company with the
opportunity to expand the Relief Canyon Mine deposit and to explore
and make new discoveries close to existing processing
infrastructure.
Based on the Feasibility Study filed by Pershing on July 11,
2018, Relief Canyon is expected to have an average life of mine
production of approximately 91,000 oz of gold per year over a 5.6
year mine life with an all-in sustaining cost of $801/oz Au. The
Project includes gold proven and probable reserves of 635,0001
ounces, a measured and indicated resource of 789,000 ounces, and
inferred resources of 45,000 ounces.
During the period prior to closing, the combined Company’s
management worked diligently to further optimize the Project,
including the advancement of Phase II permitting to expand the mine
and heap leach facilities. On February 13, 2019, Pershing received
notice from the U.S. Bureau of Land Management (“BLM”) that the
Relief Canyon Phase II application was deemed technically complete.
On March 14, 2019, Pershing provided BLM with an Environmental
Assessment describing the impacts associated with the Phase II
expansion. The BLM will prepare an Environmental Impact Study
(“EIS”) that the Company expects will take approximately 12 months
to complete once the BLM selects a third-party consultant to
prepare the EIS and publishes a Notice of Intent in the Federal
Register announcing the agency’s decision to prepare the EIS.
Concurrent Sandstorm Financing and
Partnership Highlights
Concurrent with the closing and the Board’s construction
commencement decision, the Company has entered into financing
agreements with Sandstorm to primarily fund the construction of the
Project and associated working capital. Under the terms of the
US$42.5 million financing package, the Company has secured:
- a US$25 million Precious Metal Delivery
and Purchase Agreement;
- a US$10 million Convertible Debenture;
and
- a US$7.5 million equity placement.
“We are pleased to be partnering with Americas Silver, a rising
mid-tier, precious metals producer in supporting the development of
Relief Canyon, a gold heap leach project in a prospective area with
exploration upside,” said Nolan Watson, President and CEO of
Sandstorm. “Americas Silver has assembled an excellent operational
team to build and operate Relief Canyon.”
Further Details of Sandstorm Financing
Precious Metals Delivery and Purchase
Agreement
Americas Silver and Sandstorm have entered into a Metals
Delivery and Purchase Agreement (the “Purchase Agreement”),
pursuant to which Sandstorm has committed to fund aggregate
advances of US$25 million for the construction and development of
the Project against future fixed and variable deliveries of refined
gold and silver. The fixed deliveries will consist of 32,022 ounces
of refined gold over a period of 66 months that will commence
between 12 to 18 months from the date of the Purchase Agreement
(subject to extension in certain circumstances), depending on the
timing of the first gold pour. Beginning 60 months after the
commencement of the fixed delivery period, variable deliveries will
commence requiring Americas Silver to sell and deliver refined gold
and silver equivalent to 4% of the production from the Project. For
the variable deliveries, Sandstorm will pay the Company a cash
price of between 30% and 65% of the market price of gold and silver
sold and delivered depending on the area mined. No cash price is
payable by Sandstorm for the fixed deliveries. Americas Silver may
elect to reduce the variable delivery amount under the Purchase
Agreement from 4% to 2% of production by delivering the metal
repurchase price (initially 4,000 ounces of refined gold,
increasing at a rate of 10% compounded annually).
The US$25 million advance is conditional upon, among other
things, commencement of construction of the Project and the
associated development plan and operational contracts.
Americas Silver and its subsidiaries, Pershing and Gold
Acquisition Corp. (“GAC”) (the direct owner of the Project) have
provided security, in the form of first ranking pledges of the
shares of Pershing and GAC, guarantees from Pershing and GAC, and a
first ranking security interest over all of the property and assets
of GAC (other than assets which do not relate to the Project), for
the performance of the obligations under the Purchase
Agreement.
Equity Investment
As part of the financing package, Sandstorm has entered into a
subscription agreement to purchase US$7.5 million of Americas
Silver Shares based on 5-day volume weighted average price of
Americas Silver shares. The private placement is subject to
standard conditions precedent, including, but not limited to, the
approval of the Toronto Stock Exchange and the NYSE American.
Royalty on Surrounding Property
As part of the financing package, Pershing and two of its
subsidiaries have granted a royalty over certain properties owned
by these entities in the area surrounding the Relief Canyon Project
to a wholly-owned subsidiary of Sandstorm. Royalty rates vary
between 1.4% and 2.8% of net smelter returns (“NSR”) depending on
existing royalty obligations on the various claims. In the event
the buy-down right described above is exercised, the royalty
obligations on all claims will be reduced to 1% NSR.
Sandstorm Convertible Debenture
Americas Silver issued a convertible debenture (the “Sandstrom
Convertible Debenture”) to Sandstorm, in an amount of up to US$10
million in aggregate. The Sandstorm Convertible Debenture bears
interest at a rate of 6.0% per annum, has a maturity date of April
3, 2023 and is repayable by the Company at its option, prior to
maturity. The principal amount outstanding under the Sandstorm
Convertible Debenture is convertible at any time at Sandstorm’s
option, into common shares of Americas Silver at a conversion price
of US$2.14 per share, being a 35% premium to the 5-day volume
weighted average price of an Americas Silver Share at the time of
issuance, subject to typical anti-dilution provisions. The
obligations of the Company under the Sandstorm Convertible
Debenture are secured by pledges of the shares of Pershing and GAC.
The Company intends to fully draw upon the Convertible Debenture on
closing of the Transaction.
Conversion of Outstanding June 2019
Debentures
The Company previously issued C$5.5 million of convertible
debentures to Pierre Lassonde and Trinity Capital in October 2018
in connection with the Transaction (the “Debentures”). The parties
have agreed to convert all the Debentures into common shares of the
Company in accordance with the terms of the agreement. The net
proceeds of the Debentures were used by Americas Silver to fund a
US$4.0 million short term secured first lien convertible loan to
Pershing Gold in connection with the Acquisition in order to
address Pershing’s near-term working capital requirements.
Sale of San Felipe Option to Premier
Gold
The Company has agreed to sell its option on the San Felipe
zinc/silver/lead project in Sonora, Mexico (“San Felipe”) to a
subsidiary of Premier Gold Mines Limited (“Premier”) for US$10.8
million. The payment schedule from Premier consists of an initial
US$7 million payable on the closing of the transaction with the
remaining US$3.8 million payable over two milestones equally
triggered by (i) commencing construction at San Felipe; and (ii)
commercial production. Under the terms of the agreement, Premier
would assume the obligations of Americas Silver under the option
with Minera Hochschild Mexico S.A. de C.V. (“Hochschild” or the
“Optionor”). Premier owns the Mercedes mine near the San Felipe
project with a 2,000 tonne per day operating mill.
The proceeds of the sale would allow the Company to fully
recover its investment in San Felipe. In addition, the funds add
balance sheet strength and better position the Company to execute
on its near-term growth and optimization strategies. The sale is
subject to certain standard conditions, including the consent of
the Optionor.
Capital Structure Update
Subsequent to the Transaction closing, the Sandstorm equity
placement, and the conversion of the Debentures, the Company is
expected to have approximately 77,789,466 basic common shares and
3,678,135 non-voting preferred shares outstanding on a pro-forma
basis.
Conference Call
The Company will hold a conference call to discuss the Relief
Canyon construction commencement and Sandstorm financing details on
April 4, 2019 at 8:30am EDT. A new investor presentation will be
available on the Company’s website prior to the call. The call-in
details are as follows:
Local and international: +1 (416) 981-9004Canada and US
toll-free: +1-800-954-0584Participant URL:
https://cc.callinfo.com/r/1ltruftldam1q&eom
About Americas Silver Corporation
Americas Silver is a precious metal mining company focused on
growth from its existing asset base and execution of targeted
accretive acquisitions. It owns and operates the Cosalá Operations
in Sinaloa, Mexico and the Galena Complex in Idaho, USA. The
Company is building the fully funded Relief Canyon Project, near
Reno, Nevada and expects first gold pour in the fourth quarter of
2019. For further information, please see SEDAR or
americassilvercorp.com.
Cautionary Statement on Forward-Looking Information:
This news release contains “forward-looking information” within
the meaning of applicable securities laws. Forward-looking
information includes, but is not limited to, Americas Silver’s
expectations, intentions, plans, assumptions and beliefs with
respect to, among other things, Americas Silver’s financing
efforts; construction, production, and development plans at the
Relief Canyon Project and performance expectations for the Project
and impact on Americas Silver’s financial performance; and the
estimated construction timeline and costs for the Relief Canyon
Project; the estimated timeline for environmental approvals for the
second phase of the Relief Canyon Project; and the impact of the
Transaction on the liquidity of the Company’s shares. Often, but
not always, forward-looking information can be identified by
forward-looking words such as “anticipate”, “believe”, “expect”,
“goal”, “plan”, “intend”, “potential’, “estimate”, “may”, “assume”
and “will” or similar words suggesting future outcomes, or other
expectations, beliefs, plans, objectives, assumptions, intentions,
or statements about future events or performance. Forward-looking
information is based on the opinions and estimates of Americas
Silver as of the date such information is provided and is subject
to known and unknown risks, uncertainties, and other factors that
may cause the actual results, level of activity, performance, or
achievements of Americas Silver to be materially different from
those expressed or implied by such forward-looking information.
With respect to the Sandstorm financing, risks and uncertainties
include the ability of the Company and its subsidiaries to fulfill
the conditions to drawing the available funds under the Purchase
Agreement and Convertible Debenture and the potential for, and
consequences of, default thereunder. With respect to the business
of Americas Silver, these risks and uncertainties include
interpretations or reinterpretations of geologic information;
unfavorable exploration results; inability to obtain permits
required for future exploration, development or production; general
economic conditions and conditions affecting the industries in
which the Company operates; the uncertainty of regulatory
requirements and approvals; fluctuating mineral and commodity
prices; the ability to obtain necessary future financing on
acceptable terms or at all; the ability to develop, complete
construction and operate the Relief Canyon Project; and risks
associated with the mining industry such as economic factors
(including future commodity prices, currency fluctuations and
energy prices), ground conditions and other factors limiting mine
access, failure of plant, equipment, processes and transportation
services to operate as anticipated, environmental risks, government
regulation, actual results of current exploration and production
activities, possible variations in ore grade or recovery rates,
permitting timelines, capital and construction expenditures,
reclamation activities, labor relations, social and political
developments and other risks of the mining industry. Although the
Company has attempted to identify important factors that could
cause actual results to differ materially from those contained in
forward-looking information, there may be other factors that cause
results not to be as anticipated, estimated, or intended. Readers
are cautioned not to place undue reliance on such information.
Additional information regarding the factors that may cause actual
results to differ materially from this forward‐looking information
is available in Pershing Gold’s filings with the SEC, including the
Annual Report on Form 10‐K for the year ended December 31, 2017 and
the Proxy Statement of Pershing Gold dated November 29, 2018, and
in Americas Silver’s filings with the Canadian Securities
Administrators on SEDAR and with the SEC, including the management
information circular of Americas Silver dated December 4, 2018.
Americas Silver does not undertake any obligation to update
publicly or otherwise revise any forward-looking information
whether as a result of new information, future events or other such
factors which affect this information, except as required by law.
Americas Silver does not give any assurance (1) that Americas
Silver will achieve its expectations, or (2) concerning the result
or timing thereof. All subsequent written and oral forward‐looking
information concerning Americas Silver, the Transaction, the
Sandstorm financing package, the combined Company or other matters
attributable to Americas Silver or any person acting on its behalf
are expressly qualified in their entirety by the cautionary
statements above.
1 For notes related to mineral reserves please refer to the
company’s website at www.americassilvercorp.com.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20190403005898/en/
Darren BlasuttiPresident and CEOAmericas Silver
Corporation416‐848‐9503
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