Silvercorp Metals sweetens offer for OreCorp

The improved offer follows rumours of that influential shareholders in the takeover target — which include major Western Australian mining actors — were growing unhappy increasingly dissatisfied with the proposed buyout deal.

Silvercorp’s revised bid values OreCorp at A$260 million and the higher A54.3c per share offer represents a 12% premium on Tuesday’s closing price.

The Vancouver-based precious metals producer in August had announced a nearly A$240 million ($157m) bid in cash and scrip for OreCorp. It also said it would provide OreCorp with A$28 million ($18m) in funding through an equity placement to advance the development of the Nyanzaga gold project located in Tanzania.   

The sweetened offer boosts the cash consideration part of the deal by 27% from A$0.15 per share to A$0.19. The scrip consideration of 0.0967 Silvercorp shares for every OreCorp share remains unchanged, the African company said.

While no reason was given for the move, the revised offer represents a win for OreCorp key shareholders that were not keen to accept the original bid. Liontown Resources chair Tim Goyder, who holds a 5.14% interest in the target company, will pocket $704,000 for stakes valued at $19 million and $9.5 million respectively.

Mining veteran Nick Giorgetta, which through its Rollason Pty business owns 10.47% of OreCorp, will received an an extra $1.4 million cash.

Predictably, OreCorp board directors are unanimously recommending shareholders to vote in favour of the revised scheme.

Eyes on Tanzania
OreCorp believes that Silvercorp has the balance sheet strength to fund construction and exploration of the Nyanzaga gold project. A definitive feasibility study for the asset, announced in August 2022, estimated that the Tanzanian mine could deliver 242,000 ounces of gold per annum over the first 10 years of operations, peaking at 295,000 ounces per year, at life-of-mine of 10.7 years minimum.

Nyanzaga is located approximately 40 km north east of the Bulyanhulu mine, one of Barrick Gold’s two gold mines in the Lake Victoria Goldfields, which together with the North Mara mine produced approximately 547,000 ounces of gold in 2022.

OreCorp’s shareholders are expected to vote on the deal on December 8. The transaction would create a globally diversified precious metals producer to be listed on Australian, Toronto and New York exchanges.