Silver Seeker Report: This Week in Mining Issue #11: Earnings Season and M&A

Silvercorp Metals: The company may have made a transformational acquisition (bid, that will likely go through) as it announced it entered into a definitive agreement whereby Silvercorp will acquire all of the issued and outstanding shares of Guyana Goldfields. This will create a diversified mid-tier, multi-metal producer with operations in China and Guyana. Per the terms of the transaction, each holder of Guyana Goldfields shares will have the option to receive, for each Guyana Goldfields share held, C$0.60 in cash or 0.1195 of a Silvercorp common share, subject to a maximum cash consideration of C$33.2 million. If all Guyana Goldfields shareholders elect to receive cash, consideration for each share will consist of C$0.20 in cash and 0.0796 of a Silvercorp common share. Assuming the maximum cash consideration, existing Guyana Goldfields shareholders will own 7.1% of Silvercorp’s pro forma basic shares outstanding following the Transaction. This deal implied an equity value of C$105m or approx. US$75m. If Silvercorp can turn operations around at the Aurora mine, this will create very significant shareholder value.