Canada’s Silvercorp to acquire Orefcorp

Dar es Salaam. A Canadian mining company Silvercorp Metals has signed a placement agreement with OreCorp whereby the former would provide an equity placement of $28 million Australian Dollars (about Sh46.7 billion) to OreCorp to advance the latter’s development of the Nyanzaga gold project in Mwanza, Tanzania.

Under the placement, OreCorp would issue 70.4 million shares to Silvercorp at a price of $0.40 Australian Dollars (Sh666.7) per OreCorp share, according to a statement availed to the media yesterday.

 “Proceeds from the placement will be used to immediately commence resettlement activities as contemplated in the relocation action plan, facilitating the prompt development of Nyanzaga,” Silvercorp said in a statement.

OreCorp owns an 84 percent stake in the Nyanzaga Gold Project, which is scheduled to start production in 2025.

Following completion of the placement, Silvercorp will own around 15 percent of the total outstanding ordinary shares in OreCorp.

Looking at a broader picture, Silvercorp has signed a binding scheme implementation deed to take over the fully paid ordinary shares of gold developer OreCorp, to create a diversified, high-growth precious metals company.

With a pro forma market cap of 960 million Australian Dollars (about Sh1.6 trillion), the precious metals company will have exposure to a highly prospective emerging mining jurisdiction, according to a press release.

Under the deed, the statement added, Silvercorp will acquire all fully paid ordinary shares of OreCorp that are not already held by it or its associates.

OreCorp shareholders are set to receive 0.15 Australian Dollar in cash and 0.0967 of a Silvercorp common share (valued at $0.45) for each OreCorp Share held.

This, according to the statement, represents an implied value of $0.60 Australian Dollars (about Sh1,000) per OreCorp share.

The board of OreCorp has unanimously recommended its shareholders vote in favour of Silvercorp’s takeover offer in the absence of a superior proposal.

Silvercorp chairman and CEO Dr Rui Feng asserted: “This transaction will create a new globally diversified precious metals producer.”

“We believe this is a rare opportunity to leverage our technical expertise and strong balance sheet to unlock value for all shareholders by bringing Nyanzaga into commercial production by H2 2025.”