Americas silver and Pershing gold to merge
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 Mexicoand 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 Pershingshareholder 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 Pershingcommon 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 Honigwho 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 …read more
From:: Mining.com