Great Panther Silver (TSX:GPR; NYSE:GPL) (“Great Panther”) and Beadell Resources Limited (ASX: BDR) (“Beadell”) are pleased to announce that they have entered into a Scheme Implementation Deed (the “Implementation Deed”) dated September 23, 2018, pursuant to which Great Panther will acquire all of the issued ordinary shares of Beadell by means of a Beadell scheme of arrangement (“Scheme”) under the Australian Corporations Act 2001.
Key highlights of the transaction include:
- The creation of a new emerging and growth-oriented precious metals producer;
- Strong balance sheet;
- Robust growth profile;
- Geographic diversity;
- Diverse asset portfolio including three producing mines, an advanced stage project, and significant exploration potential; and
- Attractive re-rating potential.
The directors of Beadell unanimously recommend that shareholders vote in favour of the Scheme in the absence of a superior proposal1 and subject to the independent expert opining that the Scheme is in the best interests of shareholders, and have provided support agreements confirming that they will vote the shares they own or control in favour of the Scheme, subject to the same conditions. Shareholders holding in aggregate 18.06% of Beadell Shares agreed to vote in favour of the Scheme, in the absence of a superior proposal and not to dispose of their Beadell shares, except in respect of a superior proposal. Those shareholders include funds associated with Equinox Partners holding 9.84%, Donald Smith & Co. holding 7.15%, other smaller shareholders, directors and management.
The transaction will create a new emerging and growth-oriented precious metals producer focused on the Americas with strong geographic diversity across three leading mining jurisdictions, and a diverse asset portfolio including three producing mines, an advanced stage project, and significant exploration potential.
Beadell operates the 100% owned Tucano Gold Mine (“Tucano”) in mining-friendly Amapá State, northern Brazil. Tucano is part of an approximate 2,500 square kilometre land package which is highly prospective and located in the under-explored ‘Birimian age’ greenstone terrane. Beadell has a pipeline of high potential in-mine and near-mine resource growth opportunities, including multiple in-mine lease discoveries.
Beadell has undertaken a number of key initiatives to more fully optimize Tucano. These include the execution of the life of mine contract with U&M Mineração e Construção S/A, which is expected to deliver improved efficiencies resulting in an expected US$100 million in cost savings over the life of mine. In addition, Beadell remains on track for completion of the Tucano plant upgrade by early November 2018. This will result in greater ore type processing flexibility allowing a greater focus on mining for grade rather than ore type.
James Bannantine, President and CEO of Great Panther, stated: “This is a transformational transaction for the shareholders of Great Panther and Beadell. Great Panther has grown and optimized its operations in Mexico, acquired and advanced its Coricancha project in Peru, and is now positioned to add a sizeable producing mine in Brazil with exceptional exploration potential. Great Panther brings the capital to deliver on Tucano’s substantial near- and long-term resource growth potential and to continue mine optimization initiatives. The combination of assets, capital and management provides a unique opportunity to unlock a significant re-rating potential for the benefit of both existing shareholders and Beadell’s shareholders who will gain a meaningful interest in Great Panther.”
Dr. Nicole Adshead-Bell, CEO and Managing Director of Beadell, stated: “By undertaking this transaction, Beadell shareholders will benefit from Great Panther’s strong balance sheet, steady cash flow, experienced management team and improved market liquidity via Great Panther’s TSX and NYSE American listings. The combined company will pool resources to expedite the execution of Tucano’s ongoing operational turnaround. Jim Bannantine, the President & CEO of Great Panther, has the technical background and corporate experience, including several years living and working in Brazil, to complement the Tucano mine site team in improving all aspects of operational performance and growing the resource base. I am pleased to announce that I have accepted an invitation to join the Board of Directors of Great Panther on completion of the transaction. This will give me the opportunity to continue to lend guidance and support to extract the full potential of Tucano and the highly prospective mineral tenure.”
Scheme Summary
Under the terms of the Scheme, Beadell shareholders will receive 0.0619 common shares of Great Panther (each whole common share, a “Great Panther Share”) for each ordinary share of Beadell (a “Beadell Share”) (the “Exchange Ratio”) resulting in the issuance of approximately 103.6 million Great Panther Shares, exclusive of shares that may be issued in connection with Beadell’s outstanding options and performance rights.2 There will be concurrent arrangements in relation to Beadell’s issued warrants.
The Exchange Ratio implies consideration of A$0.0863 per Beadell Share (the “Consideration”). The implied equity value for Beadell based on the Consideration is approximately A$144 million (approx. US$105 million), based on the closing price of a Great Panther Share on the NYSE American on September 21, 2018. The Consideration to be received by Beadell shareholders represents a 51% premium over Beadell’s closing share price on the ASX on September 21, 2018, and a 69% premium to Beadell’s volume-weighted average share prices for the 20 trading days up to and including September 21, 2018. Upon completion of the transaction, existing Beadell and Great Panther shareholders are expected to own approximately 38% and 62%, respectively, of the combined company.
A joint conference call is scheduled for September 24, 2018 beginning at 9 a.m. Eastern Time (6 a.m. Pacific Time, 9 p.m.Australian Western Time) (details provided below).
Transaction Highlights
Creation of a New Emerging Intermediate Precious Metals Producer focused on the Americas: The transaction will result in significant pro forma gold and silver production, with Great Panther contributing 4.0 million silver-equivalent ounces of production in 20184, and Beadell contributing 130,000 gold ounces in 2018 and a further 163,000 ounces in 20195, with potential for further increase upon a positive decision to restart Coricancha. Coricancha has the potential to generate average annual production of 3.1 million ounces silver-equivalent based on the results of a preliminary economic assessment (“PEA”) completed in May 20186. The combined company will also have an increased public float and broadened shareholder base, providing stronger liquidity …read more
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