Shareholders of ASX-listed OreCorp have expressed their support for the takeover offer made by TSX- and NYSE-listed Silvercorp Metals. The positive sentiment from the shareholders was revealed by OreCorp MD and CEO Henk Diederichs during the Diggers & Dealers conference. Under the binding agreement, Silvercorp will acquire all the remaining shares of OreCorp for 15c in cash and 0.0967 of a Silvercorp share for each OreCorp share held. This represents a premium of 41.7% over OreCorp’s 20-day volume weighted average share price and a 31.5% premium over the company’s last share trade on August 4.
Apart from the acquisition, Silvercorp will also provide OreCorp with A$28 million in funding through an equity placement. This funding will be used to advance the development of OreCorp’s Nyanzaga gold project in Tanzania. The placement will involve the issuance of 70.4 million shares to Silvercorp at a price of 40c per share. Diederichs mentioned that one of OreCorp’s major shareholders, Rollason, which holds a 12.3% stake in the company, has already backed the deal and intends to vote in favor of the transaction, unless a superior offer comes along.
Following the announcement of the proposed acquisition, the share price of OreCorp has been on an upward trend and is currently trading at 51c per share. While discussing the funding discussions for the Nyanzaga gold project, Diederichs stated that they have been paused due to the Silvercorp offer. However, he expressed confidence in the DFS (definitive feasibility study) for the project, stating that the estimated capital cost of $474 million remains valid despite the rising cost environment. Diederichs cited improvements in manufacturing lead times, reduced global shipping times, and lower shipping costs as factors contributing to the cost estimation.
It is worth mentioning that the Nyanzaga gold project is expected to produce approximately 295,000 ounces of gold annually at its peak. The average annual gold production for the first eight years of the mine life is estimated at 250,000 ounces, with a life-of-mine average production of 234,000 ounces per year. The all-in sustaining costs for the project are estimated at $954 per ounce.
The news of the shareholders supporting Silvercorp’s takeover offer bodes well for OreCorp’s future. The company will not only benefit from the premium price offered but also from the additional funding it will receive to advance its Nyanzaga gold project. With the backing of major shareholders and positive market sentiment, OreCorp is poised for growth and success in the coming years.
