Mining Technology

Daily Newsletter

07 August 2023

Daily Newsletter

Silvercorp makes takeover bid for gold developer OreCorp

OreCorp shareholders will get A$0.15 in cash and be issued 0.0967 Silvercorp common shares for every share held.

Canadian mining company Silvercorp Metals 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 A$960m ($630m), the precious metals company will have exposure to a highly prospective emerging mining jurisdiction.

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

Shareholders of OreCorp will get A$0.15 in cash and be issued 0.0967 of Silvercorp common shares for every share held. This represents an implied value of A$0.60 for each OreCorp share.

Furthermore, Silvercorp has signed a placement agreement with OreCorp whereby the former would provide an equity placement of A$28m 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 A$0.40 per OreCorp share.

Silvercorp said in a statement: “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.”

OreCorp owns an 84% stake in the Nyanzaga Gold Project, which is scheduled to start production in H2 2025.

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

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 said: “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.”

The scheme is subject to customary closing conditions including approval from OreCorp shareholders.

OreCorp managing director and CEO Henk Diederichs said: “This transaction provides our shareholders with an immediate and significant upfront premium and exposure to a geographically diverse mid-tier precious metals company.”

ESG 2.0 marks a shift towards stricter environmental rules

ESG is moving into a different era, which we call ESG 2.0. While ESG 1.0 was driven by voluntary corporate action, spurred by pressure from activist consumers and investors, ESG 2.0 is being driven by a new wave of government policies. The EU has taken the regulatory lead, with rules introduced or in the pipeline that will price emissions, regulate the use of the terms ‘ESG’ and ‘sustainability’ in marketing materials, and make ESG reporting mandatory. The US has taken a different approach, favoring less regulation and more financial support in the form of tax breaks for clean industry (renewables plus nuclear and hydrogen). China is planning to expand its emissions trading system to more sectors, decarbonize its heavy industry, and ramp up its use of renewables. The new policy direction is mainly motivated by the ambition to hit net zero emissions targets. But on top of this, governments are now competing for clean industry and trying to challenge China’s leadership on the production of the world’s green technologies such as solar panels and batteries, as well as the production and refinement of materials needed for energy transition such as lithium. These driving forces are leading to policy that will impact every sector, not just heavy industry, and will keep ESG near the top of the regulatory agenda over the longer term.