Silvermet Inc. (“
Silvermet”) (TSX-V:SYI) is
pleased to announce that it has entered into a definitive agreement
(the “
Definitive Agreement”) with Global Atomic
Fuels Corporation (“
Global Atomic”) pursuant to
which Silvermet will acquire all of the outstanding common shares
of Global Atomic by way of a “three-cornered amalgamation” and
subsequently complete a share consolidation and corporate name
change (the “
Transaction”) to create a high
quality uranium development company, Global Atomic Corporation.
Transaction Structure
In accordance with the terms of the Definitive
Agreement, upon completion of the Transaction, shareholders of
Global Atomic (other than Silvermet) will receive 2.147 shares of
Silvermet for each share of Global Atomic (the “Exchange
Ratio”). The shares of Global Atomic currently held by
Silvermet will be cancelled as a result of the Transaction.
Immediately following completion of the Transaction, Silvermet will
complete a 2.75:1 share consolidation, resulting in a combined
company with approximately 103 million shares on issue.
Upon completion of the Transaction, the former
Global Atomic shareholders (other than Silvermet) will own 50% of
the combined company. The board of the combined company will be
reduced to 5 directors, comprising 3 nominees of Silvermet and 2
nominees of Global Atomic.
Highlights of the
Transaction
- The creation of a new uranium development story with best
in-class fundamentals, including near term production
- Positive cash flows from zinc operations will support continued
project development
- Provides exposure to both uranium and zinc markets
- Creates a unique opportunity for new investors
- Unlocks value for both Global Atomic and Silvermet shareholders
as a combined entity
- Proven development team combined under a single portfolio of
assets
Benefits to Silvermet
Shareholders
- Acquisition of a significant uranium asset at currently
attractive valuations, with positive market expectations for
uranium
- One of the highest-grade uranium projects positioned to enter
production in the near term
- Global Atomic assets are well understood by Silvermet
management
- Near-term growth story with a pipeline of development
opportunities within the Global Atomic portfolio
- Flexibility to fund development and expansion pipeline for both
Global Atomic and Silvermet’s Iskenderun operations with existing
cash flows
- Access to a wider investor base following the merger, including
the current, significant institutional shareholders of Global
Atomic
- Provides added liquidity for the Silvermet shareholders
Benefits to Global Atomic
Shareholders
- Improved balance sheet with the addition of cash flow
- Opportunity to reset baseline value for Global Atomic’s assets
as a public company
- Public market listing provides mark-to-market reference
valuation and liquidity for Global Atomic shareholders
- Cash flow provides working capital for development of Global
Atomic’s high-grade DASA uranium project in the Republic of Niger
and reduces the dependency on raising external public capital
- Production timing coincides with expected rise in uranium
prices
Stephen G. Roman, Chairman, President and CEO of
Silvermet, stated: “The proposed merger will be
transformative for both companies, creating a uniquely positioned
base metals and uranium producer with a diversified asset base. We
see tremendous value potential in the assets of both Silvermet and
Global Atomic, and the combination should allow us to realize this
potential in an accelerated timeframe.”
Board of Directors’
Recommendations
The board of directors of Silvermet (with the
exclusion of certain directors that also serve as directors or
officers of Global Atomic), and with the abstention of one
director, have determined that the Transaction is in the best
interests of Silvermet based on, among other factors, a fairness
opinion delivered by Evans & Evans Inc., financial adviser to
Silvermet, and the benefits set forth above, and have consequently
approved the Transaction. Certain directors and senior officers of
Global Atomic have entered into voting support agreements pursuant
to which they have agreed to vote their Global Atomic shares in
favour of the Transaction. Such directors and senior officers hold
Global Atomic shares representing approximately 12.2% of Global
Atomic’s issued and outstanding shares as at August 17, 2017.
The board of directors of Global Atomic (with
the exclusion of certain directors that also serve as directors or
officers of Silvermet not participating) have determined that the
Transaction is in the best interests of Global Atomic based on,
among other factors, the benefits set forth above, and have
approved the Transaction. Certain directors and senior officers of
Silvermet have entered into voting support agreements pursuant to
which they have agreed to vote their Silvermet shares in favour of
the Transaction. Such directors and senior officers hold Silvermet
shares representing approximately 12.0% of Silvermet’s issued and
outstanding shares as at August 17, 2017.
Further Transaction Details
The Transaction will be carried out by way of a
“three-cornered amalgamation” under the provisions of the Business
Corporations Act (Ontario). Pursuant to the amalgamation,
shareholders of Global Atomic will receive shares in Silvermet
based on the Exchange Ratio. Upon completion of the Transaction,
the outstanding options, warrants and convertible notes to purchase
common shares of Global Atomic will entitle the holders thereof to
common shares of Silvermet with the number of common shares and/or
exercise price adjusted, as appropriate, to reflect the
consideration to be received by shareholders of Global Atomic
pursuant to the Transaction.
A special meeting of the shareholders of Global
Atomic will be held to consider the Transaction. The Transaction
requires the approval of not less than two-thirds of the votes cast
by Global Atomic shareholders. The Transaction is also subject to
the receipt of customary regulatory approvals, including acceptance
by the TSX Venture Exchange of the Transaction and the listing of
the Silvermet shares to be issued to Global Atomic shareholders
pursuant to the Transaction.
Silvermet will also hold a special meeting of
its shareholders to consider the Transaction. The Transaction
requires the approval of a simple majority of the votes cast by
disinterested Silvermet shareholders. A total of 16.8 million
Silvermet shares held by those directors and officers of Silvermet
who also hold board positions or offices with Global Atomic will
not be counted for the purposes of determining shareholder
approval.
Each of Silvermet and Global Atomic has agreed
not to solicit alternative proposals. The parties each have the
right to consider unsolicited superior proposals subject to other
customary rights, including a right to match competing offers.
Full details of the proposed Transaction, a copy
of the fairness opinion prepared by Evan & Evans Inc. for the
board of directors of Silvermet and other information relevant to
the Transaction will be included in an information circular to be
prepared in connection with the Silvermet shareholders meeting,
which Silvermet expects to mail to shareholders in September
2017.
It is expected that the meetings of shareholders
of both Silvermet and Global Atomic to approve the Transaction will
be held near the end of September 2017, and, if approved at those
meetings, the Transaction would close shortly thereafter.
Financing
In connection with the Transaction, Cantor
Fitzgerald Canada Corporation (“Cantor
Fitzgerald”) has been retained by Global Atomic to lead a
“best efforts” marketed private placement equity financing.
Securities issued under the financing will be included in the
Transaction and exchanged for securities of the combined company.
Stikeman Elliott LLP is acting as legal counsel to Cantor
Fitzgerald in connection with such financing.
Advisory & Counsel
Evans & Evans Inc. has provided a fairness
opinion to the board of directors of Silvermet and is acting as
financial advisor to the Silvermet board. Peterson McVicar LLP is
acting as legal counsel to Silvermet.
Cantor Fitzgerald has also been engaged by
Global Atomic to provide certain financial advisory services.
WeirFoulds LLP is acting as legal counsel to Global Atomic.
About Silvermet
Silvermet’s major investment is a 49% interest
in the Befesa Silvermet Turkey, S.L. (“BST”) joint
venture, which operates a Waelz kiln facility located in
Iskenderun, Turkey through its wholly-owned subsidiary, Befesa
Silvermet Iskenderun Celik Tozu Geri Donusumu A.S.
(“BSI”). BSI acquires electric arc furnace dust
(“EAFD”) from steel mills and recycles the EAFD
through its Waelz kiln to produce a high-grade zinc oxide
concentrate which is sold to zinc smelters throughout the
world.
On a 100% basis, BST processed 28,400 tonnes
EAFD in the first half (“H1”) 2017 and 52,900
tonnes in the latest 12 months (“LTM”). Revenues
were C$19.7 million for H1 2017 and C$36.7 million for LTM. EBITDA
was C$10.6 million for H1 2017 and C$18.6 million for LTM.
Silvermet’s joint venture partner, Befesa Zinc
S.A.U. (“Befesa”), is the operator of BST. Befesa
has facilities throughout Europe and processes between 45% and 50%
of European EAFD. It also has facilities in Korea as well as the
Turkish operation.
About Global Atomic
Global Atomic is a private Ontario corporation
with six exploration permits in the Republic of Niger covering an
area of approximately 750 sq km. Uranium mineralization has been
identified on each of the permits, with the most significant
discovery being the DASA deposit. In a technical report dated July
31, 2017, CSA Global Pty Ltd (“CSA”) estimated the
mineral resources for the DASA deposit as of January 1, 2017, using
a 1,200 ppm cutoff as follows:
|
|
|
Tonnes(millions) |
|
|
eU3O8(ppm) |
|
|
eU3O8(million lbs) |
|
|
|
|
|
|
|
|
|
|
|
|
Indicated |
|
|
3.7 |
|
|
2,608 |
|
|
21.4 |
|
Inferred |
|
|
7.7 |
|
|
2,954 |
|
|
49.8 |
|
CSA estimated the mineral resource based on a
cutoff grade of 1,200 ppm
On July 17, 2017, Global Atomic and AREVA Mines
S.A. (“AREVA”) signed a Memorandum of
Understanding to advance the development of the DASA deposit,
including the use of AREVA’s mill facilities in Arlit.
AREVA has been mining uranium in Niger at its
mines located in Arlit, 80 km north of the DASA deposit,
continuously since 1971. AREVA is one of the world’s largest
uranium mining companies, with 11,186 tonnes of uranium produced in
2016, from operations in Canada, Kazahkstan and Niger.
A photo accompanying this announcement is available at
http://www.globenewswire.com/NewsRoom/AttachmentNg/6dce4037-5725-46ba-8262-d3a705ac99fc
Since its inception in 2005, Global Atomic has
raised $53 million in equity capital and has over 300 registered
shareholders, including major international institutions. There are
presently 67,425,441 common shares of Global Atomic outstanding.
Further information about Global Atomic can be found on its website
at www.globalatomicfuels.com.
There are currently 142,104,716 common shares of
Silvermet outstanding. Excluding the impact off any fractional
shares, Silvermet will issue 142,078,672 common shares to the
Global Atomic shareholders in accordance with the Exchange Ratio.
After consolidation of the Silvermet shares, the combined company
will have 103,339,414 common shares outstanding.
Stephen G. Roman, Doug Scharf and Derek Rance
are directors of both Silvermet and Global Atomic. Rein Lehari is a
director of Silvermet and an officer of Global Atomic. Tim Campbell
is an officer of both Silvermet and Global Atomic. As a group,
these Non-Arms’ Length Parties hold 8.5% of the common shares of
Global Atomic and 11.6% of the common shares of Silvermet.
For further information, please contact:
Stephen G. Roman
Chairman, President & CEO
sroman@silvermet.ca
QP Statement
Mr. George A. Flach, BSc., P.Geo., Vice
President of Exploration of Global Atomic, has reviewed this press
release as the Qualified Person (QP) as defined in National
Instrument
43-101.
THIS NEWS RELEASE IS INTENDED FOR
DISTRIBUTION IN CANADA ONLY AND IS NOT AUTHORIZED FOR DISTRIBUTION
TO UNITED STATES NEWSWIRE SERVICES OR FOR DISSEMINATION IN THE
UNITED STATES.
“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.”
Caution concerning forward-looking statements:
The information in this release may contain forward-looking
information under applicable securities laws. Forward-looking
statements in this news release include, but are not limited to,
information relating to the timing and completion of a transaction
involving Silvermet. This forward-looking information is subject to
known and unknown risks, uncertainties and other factors that may
cause actual results to differ materially from those implied by the
forward-looking information. Factors that may cause actual results
to vary include, but are not limited to, inaccurate assumptions
concerning the exploration for and development of mineral deposits,
political instability, currency fluctuations, unanticipated
operational or technical difficulties, changes in laws or
regulations, the risks of obtaining necessary licenses and permits,
changes in general economic conditions or conditions in the
financial markets and the inability to raise additional financing.
In particular, there can be no assurance that a transaction will be
completed on terms satisfactory to Silvermet, if at all. Readers
are cautioned not to place undue reliance on this forward-looking
information. Silvermet does not assume the obligation to revise or
update his forward-looking information after the date of this
release or to revise such information to reflect the occurrence of
future unanticipated events except as may be required under
applicable securities laws. The information in this news release
includes the following non-IFRS financial measure: EBITDA. These
financial measures does not have any standardized meaning
prescribed by IFRS and are therefore unlikely to be comparable to
similar measures presented by other issuers.