Trading
Symbol:
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TSX:
SVM
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NYSE AMERICAN: SVM
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VANCOUVER, BC, May 15, 2023
/CNW/ - Silvercorp Metals Inc. ("Silvercorp" or the
"Company") (TSX: SVM) (NYSE American: SVM) is pleased to
announce that it has signed a non-binding term sheet (the "Term
Sheet") with Celsius Resources Limited ("Celsius")
(ASX/AIM: CLA) regarding a proposed transaction (the "Proposed
Transaction") pursuant to which Silvercorp will acquire all of
the issued and outstanding shares of Celsius. The addition of
Celsius' advanced-stage Maalinao-Caigutan-Biyog copper-gold project
("MCB Project") in the
Philippines to Silvercorp's profitable underground silver
mining operations will move Silvercorp into being a diversified
precious-base metals producer.
The major terms of the Proposed Transaction are:
- Silvercorp has offered to acquire all of the outstanding shares
of Celsius from the shareholders of Celsius, at a fixed price of
AUD$0.030 per share, in exchange for consideration comprising 90%
Silvercorp shares + 10% in cash. Silvercorp's share price
will be determined based on the volume weighted average trading
price on the NYSE for the 20 business days ending on the scheme
record date.
- The consideration of AUD$0.030 per share represents a 76%
premium to the 20-day volume weighted average price of Celsius as
of the close of trading on the Australian Securities Exchange (ASX)
on May 11, 2023. The total
consideration is approximately AUD$56 million. Using
Silvercorp's current share price, the proposed transaction will
result in Silvercorp issuing approximately 9.7 million shares and
paying AUD$5.6 million to the shareholders of Celsius.
- Celsius and Silvercorp have also executed a private placement
subscription agreement at AUD$0.015 per Celsius share for a total
of AUD$5 million. This will provide interim funding for
further development of Celsius' MCB Project. On closing of
the private placement, Silvercorp will own approximately 15% of the
outstanding shares of Celsius.
- In addition to the consideration, Celsius shareholders will
receive shares in a new exploration company ("Spinco") which will
hold all of Celsius' rights and interests with respect to the Sagay
(Philippines) and Opuwo
(Namibia) projects. The
Spinco shares will be distributed on a 10 Celsius shares for 1
Spinco share basis. Spinco will seek a listing on the ASX or
London Stock Exchange Alternative Investment Market (AIM) via a
demerger and concurrent initial public offering. Silvercorp
has agreed to invest AUD$4 million in Spinco, valued at a
post-financed market capitalization of AUD$30 million.
- The Proposed Transaction will be implemented by way of a Scheme
of Arrangement ("Arrangement") or other appropriate form of
transaction under Australian laws, under a definitive agreement
("Definitive Agreement") to be negotiated and entered into by
Silvercorp and Celsius within one month of the Term Sheet.
The final structure of the Proposed Transaction will be governed by
the terms of the Definitive Agreement. The Term Sheet does
not create a binding agreement with Celsius for the Proposed
Transaction, and there is no assurance that Silvercorp and Celsius
will reach agreement on the terms of the Definitive Agreement as
set out in the Term Sheet, or at all. If the Proposed
Transaction is not completed, Silvercorp will have the right to
maintain its percentage interest in Celsius pursuant to the
placement agreement. In addition to entering into the
Definitive Agreement, completion of the Proposed Transaction is
subject to, among other conditions, satisfactory completion of due
diligence, voting support of key Celsius shareholders, Celsius
shareholder approval, and regulatory approvals.
Dr. Rui Feng, Chairman and CEO of
Silvercorp, commented:
"The addition of the MCB Project to our growing project
portfolio aligns with our strategic objectives of diversifying and
growing our asset base and will position us to benefit from
copper's strong fundamentals, a key ingredient in the green energy
revolution. We believe this is a rare opportunity to leverage
our underground mining expertise and financial strength to unlock
value for all shareholders through the development of the MCB
Project, as well as aggressive exploration programs in the Pacific
Rim Metallogenic Belt, one of the most important porphyry
copper-gold belts in the world.
We look forward to partnering with the Government of
the Philippines to make a
successful entry into the region, leveraging Celsius'
well-established team and strong local relationships, to ensure a
smooth transition and continued development that benefits all
stakeholders."
Transaction Rationale for
Silvercorp
- Greater diversification: The acquisition of
Celsius' MCB Project gives Silvercorp exposure to a high-grade
copper-gold project well suited to our extensive underground mining
experience, in a promising jurisdiction with substantial local
relationships and support, and together with Silvercorp's ongoing
acquisition strategy, provides the opportunity for a significant
re-rate upon successful development of the MCB Project;
- Enhanced strategic positioning: MCB Project
provides significant exposure to copper and aligns with our
strategy of being a responsible supplier of strategic metals for
the expanding green energy sector;
- Exploration upside: Silvercorp's substantial free cash
enables funding exploration programs to test numerous,
high-priority brownfield and greenfield exploration targets within
a land package covering 27.2 km2 of the highly
prospective (and productive) MCB Project area;
- Significant pro-forma synergies: The acquisition of
Celsius will combine Silvercorp's strong management and underground
mining skill set with Celsius' deep experience and network in
the Philippines to ensure
near-term development of the MCB Project; and
- Strong financial position: Through a share and cash
transaction, Silvercorp can preserve its cash reserves while
minimizing dilution. As a result, the Company's strong
financial position, supported by its robust cash flow profile, will
provide ample funding to optimize and develop the MCB Project, as
well as pursue additional M&A opportunities.
The MCB Project
Based on Celsius' publicly released information, the MCB Project
is located in the Cordillera Administrative Region of the Philippines, approximately 320 km north of
Manila. Porphyry-style mineralization in the MCB Project area
was first discovered in the early 1930s, but modern exploration was
limited until Freeport McMoRan entered in 2006. Over the next
seven years, Freeport conducted
systematic exploration work and completed approximately 25,500
metres of drilling in 46 diamond drill holes. Celsius entered an
agreement to acquire the MCB Project in September 2020 and has since drilled nine more
diamond holes, bringing the total number of drill holes to 55.
A maiden JORC Compliant Mineral Resource Estimate (MRE) was
released for the MCB Project in January
2021, reporting 290.3 million tonnes of Indicated Resources
grading 0.48% copper and 0.15 grams per tonne ("g/t") gold, and
23.5 million tonnes of Inferred Resources grading 0.48% copper and
0.10 g/t gold.
An updated JORC compliant MRE was announced in December 2022, reporting 296 million tonnes of
measured + indicated resources grading 0.46% copper and 0.12 g/t
gold, containing 1.36 million tonnes of copper and 1.146 million
ounces ("oz") of gold, and 42 million tonnes of Inferred Resources
grading 0.52% copper and 0.11 g/t gold, containing 0.218 million
tonnes of copper and 0.149 million oz of gold.
A Scoping Study for the MCB Project was released by Celsius in
December 2021, which outlined a
development plan for an underground mining operation with
back-filling and a flotation mill at 2.28 million tonnes per year
to produce high quality copper-gold concentrates for a 25-year mine
life. The estimated average head grade is 1.18% copper and
0.56 g/t gold with a 94% recovery rate for copper and 79% for
gold, producing 22,000 tonnes of copper and 27,000 oz of gold
annually for the first 10 years.
Assuming a copper price of US$4.00/lb, a gold price of US$1,695/oz, and an estimated initial capital
expenditure of US$253 million, the
Scoping Study concluded that the MCB Project has a post-tax NPV
(8%) of US$464 million, an IRR of
31%, and a payback period of approximately 2.7 years.
11 significant drill holes (out of the 55 total) are shown
below:
Hole
Number
|
From
(m)
|
To
(m)
|
Interval
(m)
|
Cu
(%)
|
Au
(g/t)
|
MCB-002
|
119.0
|
289.0
|
170.0
|
1.69
|
0.98
|
MCB-009
|
377.1
|
551.0
|
173.9
|
1.94
|
0.90
|
MCB-010A
|
168.0
|
186.0
|
18.0
|
1.61
|
0.05
|
MCB-018
|
359.6
|
528.0
|
168.4
|
2.05
|
0.99
|
MCB-029
|
380.0
|
446.0
|
66.0
|
2.19
|
1.44
|
MCB-030
|
272.0
|
520.0
|
248.0
|
1.52
|
0.65
|
MCB-033
|
340.0
|
391.9
|
51.9
|
1.52
|
0.55
|
MCB-034
|
387.0
|
416.9
|
29.9
|
1.53
|
0.26
|
MCB-036
|
89.0
|
102.0
|
13.0
|
3.69
|
0.39
|
MCB-038
|
207.2
|
358.0
|
150.9
|
1.90
|
1.57
|
And
|
391.6
|
626.0
|
234.5
|
1.90
|
0.87
|
MCB-041
|
66.0
|
131.0
|
65.0
|
1.73
|
0.37
|
Significant MCB Permitting
Progress
A Memorandum of Agreement (MOA) has been signed with the local
communities and the National Commission on Indigenous Peoples
(NCIP) in November 2022 which allows
the development and operation of the MCB Project for 25 years,
renewable for another 25 years. With the endorsement of local
communities and an Environmental Compliance Certificate issued by
the Philippine government, Celsius is in the final stage of
obtaining the mining permit from the Philippine government, the
Mining Production Sharing Agreement (MPSA), necessary for the
development of the MCB Project.
About Silvercorp
Silvercorp is a Canadian mining company producing silver, gold,
lead, and zinc with a long history of profitability and growth
potential. The Company's strategy is to create shareholder value by
1) focusing on generating free cashflow from long life mines; 2)
organic growth through extensive drilling for discovery; 3) ongoing
merger and acquisition efforts to unlock value; and 4) long term
commitment to responsible mining and ESG.
For further information
Silvercorp Metals
Inc.
Lon Shaver
Vice President
Phone: (604) 669-9397
Toll Free 1(888) 224-1881
Email: investor@silvercorp.ca
Website: www.silvercorpmetals.com
CAUTIONARY DISCLAIMER -
FORWARD-LOOKING STATEMENTS
Certain of the statements and information in this news
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 (collectively,
"forward-looking statements"). 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. Forward-looking statements relate to, among other
things: creating shareholder value; generating free cashflow from
long life mines; organic growth; mergers and acquisitions; and
estimated production from the Company's mines in the Ying Mining
District and the GC Mine.
Forward-looking statements 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, including, without limitation, risks
relating to: social and economic impacts of COVID-19; 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 licences; 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; legislative and
regulatory initiatives addressing global climate change or other
environmental concerns; foreign exchange rate fluctuations;
insurance; risks and hazards of mining operations; key personnel;
conflicts of interest; dependence on management; internal control
over financial reporting; 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. Forward-looking
statements 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 due to a variety of risks,
uncertainties and other factors, including, without limitation,
those referred to in the Company's Annual Information Form 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.
The Company's forward-looking statements are based on the
assumptions, beliefs, expectations and opinions of management as of
the date of this news release, and other than as required by
applicable securities laws, the Company does not assume any
obligation to update forward-looking statements if circumstances or
management's assumptions, beliefs, expectations or opinions should
change, or changes in any other events affecting such statements.
For the reasons set forth above, investors should not place undue
reliance on forward-looking statements.
Additional information related to the Company, including
Silvercorp's Annual Information Form, can be obtained under the
Company's profile on SEDAR at www.sedar.com, on EDGAR at
www.sec.gov, and on the Company's website at
www.silvercorpmetals.com.
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SOURCE Silvercorp Metals Inc