TORONTO, Sept. 30, 2018 /PRNewswire/ -- Americas
Silver Corporation (TSX: USA)
(NYSE American: USAS) ("Americas Silver") and Pershing Gold
Corporation (NASDAQ: PGLC) (TSX: PGLC) (FWB: 7PG1) ("Pershing") are pleased to announce that they
have entered into a definitive agreement (the "Agreement") to
complete a business combination (the "Transaction") and create a
low-cost, precious metal growth company in the Americas.
Highlights of the Transaction
Key investment highlights of the combined company include:
- Diversified portfolio of precious metal assets in the
Americas: Combines two producing polymetallic mines in
Mexico and Idaho that are expected to produce
approximately 7.0 million silver equivalent ounces with an
attractive shovel-ready, precious metal development project in
Nevada with the potential,
demonstrated by a feasibility study, to add approximately 91,000
gold ounces annually.
- Enhanced growth and scale: Near-term precious
metal production growth from Relief Canyon and Zone 120 and ongoing
ramp-up at the San Rafael mine is
expected to meaningfully improve production and cash flow in 2020
and beyond.
- Proven management team and Board: Demonstrated
experience in financing, acquiring, building and operating open pit
and underground mines.
- Strong financial position: Increasing cash flow
generation from the San Rafael
mine and greater access to capital to fund the development of
Relief Canyon.
- Enhanced capital markets profile: The combined company
is expected to appeal to a broader institutional shareholder base,
increase research coverage, and improve share trading
liquidity.
- Compelling value proposition: Leading leverage among
junior precious metal equities and attractive relative valuation to
support a potential future re-valuation.
- Unanimous board approval and significant Pershing shareholder support: The Board of
Directors of both companies have unanimously recommended support
for the Transaction. Additionally, Mr. Barry Honig has entered into an unconditional
lock-up agreement in favour of the Transaction, representing
support for the Transaction of approximately 31% of the outstanding
common shares and 87% of the outstanding preferred shares of
Pershing.
"This transaction aligns with our stated initiative of building
a profitable and low-cost precious metal company in the Americas by
operating and building low risk, low capital, high return
projects," said Darren Blasutti,
President and Chief Executive Officer of Americas Silver.
"With the on-schedule and on-budget construction and rapid
commissioning of San Rafael now
successfully completed, we are focused on the next leg of growth –
today's transaction delivers this growth platform, while also
providing us with additional precious metal exposure and a
near-term operating presence in Nevada."
"We are excited to announce today's transaction and believe this
provides a clear path to the development of Relief Canyon," stated
Steve Alfers, President and Chief
Executive Officer of Pershing. "With the increased financial
and operating capabilities of the combined company, our
shareholders are better positioned to realize significant value
from Relief Canyon as it is advanced through construction and into
production."
Under the terms of the Agreement, holders of Pershing common shares will receive 0.715
common shares of Americas Silver for each common share of
Pershing by way of a share
exchange (the "Exchange Ratio"). Holders of Pershing preferred shares may elect to
exchange those shares for new non-voting preferred shares of
Americas Silver, adjusted in respect of exercise price and number
based on the Exchange Ratio, or common shares of Americas Silver
based on the Exchange Ratio. Based on the closing price of
Americas Silver on the NYSE American on September 28, 2018, this implies a value of
US$1.69 per Pershing common share. This represents a
39% premium to Pershing's closing
price on the NASDAQ and a 39% premium based on the volume weighted
average prices of Americas Silver and Pershing for the 10-day period ending on
September 28, 2018. Existing
shareholders of Americas Silver and Pershing will own approximately 64% and 36%,
respectively, on an undiluted basis, following the close of the
Transaction.
Benefits to Americas Silver
- Addition of a high quality shovel-ready, precious metal
development project with low capital intensity and robust project
economics at current gold prices
- Nevada operations base with a
large prospective and underexplored land package
- Immediately accretive to precious metal mineral reserves and
resources and on all financial metrics by 2020
- Feasibility study for the Relief Canyon project highlights
approximately 91,000 ounces of annual gold production, a pre-tax
NPV (5% discount) of US$118M and
pre-tax IRR of 71% at spot gold prices
Benefits to Pershing
- Immediate upfront premium of approximately 40% to the closing
price of Pershing common shares
prior to announcement of the Transaction
- Meaningful ongoing exposure to future value creating milestones
at Relief Canyon, as well as Americas Silver's quality portfolio of
producing, development and exploration assets through significant
ownership in a larger and more diversified company
- Proven mine building and operating team to develop Relief
Canyon
- Enhanced size and quality enable financing of Relief Canyon at
a lower cost of capital
- Mitigation of single-asset risk
Board of Directors' Recommendations
The Board of Directors of each company has determined that the
proposed Transaction is in the best interests of their respective
shareholders based on a number of factors, including receipt of
independent opinions as to the fairness, from a financial point of
view, of the Transaction. Each company's Board of Directors
unanimously approved the terms of the Transaction and recommends
that their respective shareholders vote in favor of the
Transaction.
Each of the officers and directors of Americas Silver and
Pershing have entered into
agreements supporting the Transaction pursuant to which they will
vote any common shares of the companies that are held by them in
favor of the approval of the Transaction. In addition, Mr.
Barry Honig who holds or controls
(collectively under his various holdings) approximately 31% of the
outstanding Pershing common shares
and 87% of the outstanding Pershing preferred shares has entered into an
unconditional lock-up agreement and has agreed to vote in favor of
the Transaction.
Management Team and Board of Directors
The combined company will be managed by the executive team of
Americas Silver, led by Darren
Blasutti as President and Chief Executive Officer.
Alex Davidson will be the
Chairman of the combined company, which will comprise nine
members. Pershing's board
will designate one individual to join the combined board.
Bridge Loan
In connection with the proposed Transaction, Pierre Lassonde and Trinity Capital Partners
have provided Americas Silver with a C$5.5
million short-term secured convertible loan with interest
payable at 1.25% per month. The net proceeds of this loan
will be used by Americas Silver to fund a US$4 million short-term secured first lien
convertible loan (the "Bridge Loan") to address Pershing's near-term working capital
requirements, including permit advancements, ongoing property
maintenance and corporate requirements.
The terms of the Pershing Bridge Loan include a repayment date
which is 9 months from the date of the loan and interest payable at
16% per annum. If the Transaction is not consummated, the
loan must be repaid in cash, however, if the Transaction is not
consummated due to certain circumstances, Pershing will have the option to repay the
loan through issuance of its common shares priced at the
then-prevailing market price (but not less than $1.18 per share).
Details of the Transaction
The Transaction will be structured as a share exchange under
Nevada law, whereby all of the
issued and outstanding common shares of Pershing shall be acquired,
directly or indirectly, by Americas Silver for common shares of
Americas Silver based upon the Exchange Ratio. It requires
the approval of Pershing
shareholders by way of special resolution by shareholders holding
at least a majority of the outstanding voting shares of Pershing,
and approval by preferred shareholders holding at least 75% of the
Pershing preferred stock, each at
a special meeting of Pershing
shareholders to be held in connection with the Transaction.
Approval by (i) a simple majority of votes cast by Americas Silver
shareholders and (ii) a special resolution of shareholders of
Americas Silver to approve the amendment of its articles to provide
for the new non-voting preferred shares to be issued, will also be
required at a special meeting of the shareholders of Americas
Silver that will be held in connection with the Transaction.
In addition, the Transaction will be subject to the approval
of the listing of the additional Americas Silver shares by the
Toronto Stock Exchange and NYSE American.
The Agreement includes customary provisions including, among
other things, a non-solicitation covenant with respect to
Pershing, and associated fiduciary
out covenants and a right by Americas Silver to match any superior
proposal. In the event that Pershing wishes to terminate the Agreement in
order to support a superior proposal, Pershing would be obligated to pay Americas
Silver an amount equal to US$4
million as a termination payment. Expense
reimbursement of up to US$600,000 is
payable by each party in the event that approval from its
shareholders is not obtained.
Timing
Americas Silver and Pershing
expect to mail shareholder information circulars in Q4, 2018
subject to required regulatory approvals and plan to hold their
respective shareholder meetings promptly thereafter. The
Transaction is expected to close in Q1, 2019.
Advisors and Counsel
Trinity Advisors Corporation is acting as financial advisor to
Americas Silver. Blake, Cassels & Graydon LLP is acting as
Canadian legal counsel, Troutman Sanders LLP is acting as U.S.
legal counsel and Parsons Behle & Latimer is acting as Nevada
Counsel to Americas Silver.
Clarus Securities Inc. provided a fairness opinion to the Board
of Directors of Americas Silver. H.C. Wainwright & Co. acted as
strategic advisor to Americas Silver.
Canaccord Genuity is acting as financial advisor to Pershing and provided a fairness opinion to
the Board of Directors to Pershing. Davis Graham & Stubbs LLP
is acting as U.S. legal counsel and Stikeman Elliott LLP is acting
as Canadian legal counsel to Pershing.
Conference Call
A joint conference call will be held on October 1, 2018 at 8:30am
EDT to discuss the Transaction. An investor
presentation will be available on each company's website prior to
the call. The call-in details are as follows:
- Local and international: +1 (416) 981-9018
- Canada and US toll-free:
+1-800-584-0405
- Participant URL:
https://cc.callinfo.com/r/1wcvxnrrh48jn&eom
Callers are advised to dial-in 10-15 minutes prior to the call.
As there is no audio on the participant URL, please dial-in to
follow along with the presentation.
Qualified Persons
Daren Dell, Chief Operating
Officer and a Qualified Person under Canadian Securities
Administrators guidelines, has approved the applicable contents of
this news release. For further information please see the
"Technical Report and Estimated Resources for the San Felipe
Project, Sonora, Mexico" with an
effective date of March 15, 2018,
the "Americas Silver Corporation Technical Report on the
Galena Complex, Shoshone County,
Idaho, USA" with an effective date of December 23, 2016, and "Technical Report and
Preliminary Feasibility Study for the San Rafael Property,
Sinaloa, Mexico" with an effective
date of March 18, 2016, as
applicable, which are available on Americas Silver's profile on
SEDAR at www.sedar.com or at americassilvercorp.com.
All scientific and technical information related to Relief
Canyon project has been reviewed and approved by either
Paul Tietz, Certified Professional
Geologist #11720, Neil Prenn, P.E. #7844, Carl Defilippi, registered member SME#775870RM,
or Mark Jorgensen, MMSA#01202QP who
are each Qualified Persons under the definitions established by
Canadian National Instrument 43-101. For further information
please see "Technical Report and Feasibility Study for the Relief
Canyon Project, Pershing County,
Nevada, U.S.A." with an effective date of May 24, 2018, which is available on Pershing's EDGAR profile at
https://www.sec.gov/ and on SEDAR at www.sedar.com.
About Americas Silver
Americas Silver is a silver mining company focused on growth in
precious metals from its existing asset base and execution of
targeted accretive acquisitions. It owns and operates the
Cosalá Operations in Sinaloa,
Mexico and the Galena Mine Complex in Idaho, USA. Americas Silver holds an option on
the San Felipe development project
in Sonora, Mexico. For
further information please see SEDAR or americassilvercorp.com.
About Pershing Gold Corporation
Pershing Gold Corporation is an emerging gold producer whose
primary asset is the Relief Canyon open-pit gold mine in
Pershing County, Nevada. Under the
Feasibility Study completed in May
2018, Relief Canyon is expected to have an average
life-of-mine gold production of 91,000 ounces per year with cash
costs of US$769 per ounce and AISC of
$801 per ounce. Upon successful
project financing, Relief Canyon is expected to have a short
six-to-nine month construction period before commencing
production.
Pershing's landholdings cover
over 29,000 acres that include Relief Canyon Mine and surrounding
lands in all directions. This provides Pershing with the opportunity to expand the
Relief Canyon Mine deposit and to explore and make new discoveries
nearby. Pershing is currently
permitted to resume mining at Relief Canyon under the existing Plan
of Operations.
Pershing Gold is listed on the NASDAQ Global Market and the
Toronto Stock Exchange under the symbol "PGLC" and on the Frankfurt
Stock Exchange under the symbol 7PG1.
About Trinity Capital Partners
Trinity Capital Partners is a mining investment and advisory
firm backed by leading North American investors with many decades
of international mine operating and investment experience. Together
with Pierre Lassonde, it seeks to
acquire interests in mining assets and companies, both public and
private, around the world with a specific focus on precious and
base metals. The firms' principals have executed many
billions of dollars worth of M&A transactions, mine finance
(equity, debt and royalty/streaming) and mining investments.
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 and
Pershing's expectations
intentions, plans, assumptions and beliefs with respect to, among
other things, the realization of exploration, operational,
production, and development plans, the Cosalá Operations (including
Zone 120) and Galena Complex; Americas Silver's financing efforts;
the consummation of the Transaction in accordance with its terms;
the anticipated silver and gold production of the combined company;
potential improvements in production, cash flow, shareholder
liquidity, and access to capital; perceptions of institutional
shareholders and analysts; any potential re-rating; references to
anticipated profits, risk, realized value and return; construction,
production, and development plans at Relief Canyon Mine; the
relative ownership of shareholders in the combined company; the
future management and board of the combined company; the timing of
shareholder proxies, meetings and the closing of the Transaction;
estimates and forecasts with respect to the expected project
economics for Relief Canyon derived from the Feasibility Study,
such as estimates of average production, AISC, IRR, NPV; cash
costs; the availability of financing and the estimated construction
timeline for Relief Canyon Mine; and opportunities for expanding
the Relief Canyon Mine deposit and exploring opportunities on
nearby lands. Often, but not always, forward‐looking information
can be identified by forward‐looking words such as "anticipate",
"believe", "expect", "goal", "plan", "intend", "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 and Pershing 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 or Pershing to
be materially different from those expressed or implied by such
forward looking information. With respect to the Transaction, these
risks and uncertainties include the risk that Americas Silver or
Pershing may be unable to obtain
any regulatory approvals required for the Transaction, or that
regulatory approvals may delay the transaction or cause the parties
to abandon the Transaction; the risk that required stockholder
approvals may not be obtained; the risk that other conditions to
closing may not be satisfied; the length of time needed to
consummate the proposed Transaction, which may be longer than
anticipated for various reasons; the risk that the businesses will
not be integrated successfully; the diversion of management time on
transaction-related issues; the risk that costs associated with the
integration are higher than anticipated; and litigation risks
related to the Transaction. With respect to the businesses of
Americas Silver and Pershing,
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 and
Pershing operate; the uncertainty
of regulatory requirements and approvals; fluctuating mineral and
commodity prices, and the ability to obtain necessary future
financing on acceptable terms or at all; the ability to develop and
operate the Cosalá, Galena, Relief Canyon properties, risks
associated with the mining industry such as economic factors
(including future commodity prices, currency fluctuations and
energy prices), ground conditions and factors 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 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 these forward-looking statements
is available in Pershing's filings
with the Securities and Exchange Commission, including the Annual
Report on Form 10-K for the year ended December 31, 2017, and in the Americas Silver's
filings with on SEDAR. Neither Americas Silver nor Pershing 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. Neither Americas Silver nor Pershing gives any assurance (1) that Americas
Silver and Pershing will achieve
its expectations, or (2) concerning the result or timing thereof.
All subsequent written and oral forward-looking statements
concerning Pershing, Americas
Silver, the proposed transaction, the combined company or other
matters and attributable to Pershing or Americas Silver or any person
acting on their behalf are expressly qualified in their entirety by
the cautionary statements above.
No Offer or Solicitation
This press release is for informational purposes only and does
not constitute an offer to sell or the solicitation of an offer to
buy any securities or a solicitation of any vote or approval with
respect to the proposed transaction between Americas Silver and
Pershing or otherwise, nor shall
there be any sale of securities in any jurisdiction in which such
offer, solicitation or sale would be unlawful prior to registration
or qualification under the securities laws of any such
jurisdiction. No offer of securities shall be made except by means
of a prospectus meeting the requirements of Section 10 of the
United States Securities Act of 1933, as amended.
Participants in Merger Solicitation
Pershing, Americas Silver and
certain of their respective directors, executive officers and other
members of management and employees may be deemed to be
participants in the solicitation of proxies from the stockholders
of Pershing and Americas Silver in
connection with the proposed transaction. Information about the
directors and executive officers of Pershing is set forth in its proxy statement
for its 2018 annual meeting of stockholders, which was filed with
the U.S. Securities and Exchange Commission (the "SEC") on
April 30, 2018. Information about the
directors and executive officers of Americas Silver is set forth in
its Form 6-K for its 2018 annual meeting of shareholders, which was
filed with the SEC on April 13, 2018.
These documents can be obtained free of charge from the sources
indicated below. Other information regarding those persons who are,
under the rules of the SEC, participants in the proxy solicitation
and a description of their direct and indirect interests, by
security holdings or otherwise, will be contained in Pershing's proxy statement/prospectus and
other relevant materials to be filed with or furnished to the SEC
when they become available.
Additional Information and Where to Find It
The proposed transaction (or certain matters related thereto)
between Americas Silver and Pershing will be submitted to the respective
stockholders of Americas Silver and Pershing for their consideration. Americas
Silver will file with the SEC a registration statement on Form F-4
that will include a proxy statement of Pershing that also constitutes a prospectus of
Americas Silver. Americas Silver will file an Information Circular
with the applicable Canadian securities administrators.
Pershing will deliver the proxy
statement/prospectus to its stockholders as required by applicable
law. Americas Silver will deliver the Information Circular to its
stockholders as required by applicable law. Americas Silver and
Pershing also plan to file or
furnish other documents with the SEC regarding the proposed
transaction. This press release is not a substitute for any
prospectus, proxy statement, information circular or any other
document which Americas Silver and Pershing may file with or furnish to the SEC
in connection with the proposed transaction. INVESTORS AND SECURITY
HOLDERS OF AMERICAS SILVER AND PERSHING ARE URGED TO READ THE PROXY
STATEMENT/PROSPECTUS AND INFORMATION CIRCULAR AND ANY OTHER
RELEVANT DOCUMENTS THAT WILL BE FILED WITH THE SEC CAREFULLY AND IN
THEIR ENTIRETY WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN
IMPORTANT INFORMATION ABOUT AMERICAS SILVER, PERSHING, THE PROPOSED TRANSACTION AND RELATED
MATTERS. Investors and stockholders will be able to obtain free
copies of the proxy statement/prospectus and information circular
and other documents containing important information about Americas
Silver and Pershing, once such
documents are filed with the SEC through the website maintained by
the SEC at www.sec.gov, and with the Canadian securities
administrators, through the website at www.sedar.com. Pershing and Americas Silver will make
available free of charge at www.pershinggold.com and
www.americassilvercorp.com, respectively (in the "Investor
Relations" and "Investors" section, as applicable), copies of
materials they file with, or furnish to, the SEC and the Canadian
securities administrators.
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SOURCE Pershing Gold Corporation