First Majestic announces friendly acquisition of
Silvercrest Mines (TSX: SVL) (NYSE MKT: SVLC)
NYSE MKT: SVLC TSX: SVL FrankFurt: CW5
NYSE: AG TSX: FR Frankfurt: FMV Mexico: AG
Vancouver, BC - July 27, 2015 (Investorideas.com
Mining Stocks Newswire) First Majestic Silver Corp. ("First
Majestic") and SilverCrest Mines Inc. (TSX:SVL) (NYSE MKT: SVLC) (the “Company” or “SilverCrest”) are pleased to announce that the
companies have entered into a definitive agreement (the "Arrangement
Agreement") pursuant to which First Majestic has agreed to acquire all of
the issued and outstanding common shares of SilverCrest for consideration of
0.2769 of a common share of First Majestic (the "Exchange Ratio")
plus C$0.0001 in cash per SilverCrest common share. The offer implies a value
of C$1.30 per SilverCrest share based on the closing price of First Majestic's
common shares on the Toronto Stock Exchange ("TSX") on July 24, 2015.
The offer represents a premium of approximately 37% to SilverCrest's 30-day
volume-weighted average price ("VWAP") on the TSX for the period
ending July 24, 2015 and a 35% premium to SilverCrest's previous closing price.
The transaction will be implemented by way of a plan of arrangement (the
"Arrangement") under the Business Corporations Act (British
Columbia). In addition, shareholders of SilverCrest will receive shares in a
newly formed company ("New SilverCrest") which will hold certain
exploration assets currently held by SilverCrest and First Majestic.
BENEFITS TO FIRST MAJESTIC SHAREHOLDERS
·
Enhances First Majestic's leading position in
Mexico, one of the world's most prolific silver and gold regions
·
Accretive to First Majestic's net asset value per
share, reserves and total resources per share and production per share
·
SilverCrest's Santa Elena Mine will be First
Majestic's sixth producing silver mine adding further growth potential to First
Majestic's portfolio of Mexican projects
·
Strengthens First Majestic's balance sheet by
adding approximately C$30 million in cash and further enhances the working
capital position
·
Provides operational and production synergies with
the potential for additional cost cutting
·
Further diversifies production and cash flow across
a robust portfolio of producing mines
BENEFITS TO SILVERCREST SHAREHOLDERS
·
Provides SilverCrest shareholders with a highly
attractive premium to current market price
·
Opportunity to participate in a leading silver
producer through an all-share transaction
·
Gain access to First Majestic's operational and
underground mining expertise
·
Diversifies SilverCrest's single asset risk profile
and provides exposure to First Majestic's broad portfolio of Mexican assets
·
Increased leverage to silver with First Majestic's
primarily silver resource base
·
Enhances capital markets presence with a pro forma
market capitalization in excess of C$700 million based on current share prices
including increased analyst coverage, trading liquidity and a broader
institutional investor base
·
Provides SilverCrest shareholders with ownership in
New SilverCrest, a well-capitalized exploration company created to leverage
SilverCrest management's exploration expertise
Keith Neumeyer, President & CEO of First
Majestic, stated: "We believe this transaction provides an excellent
opportunity for the shareholders of both First Majestic and SilverCrest.
Shareholders stand to gain significant upside in the combined company with
production of well over 20 million silver equivalent ounces per year while
maintaining one of the lowest production costs and highest purity to silver in
the industry."
J. Scott Drever, CEO of SilverCrest, stated:
"We believe the inclusion of SilverCrest's Santa Elena mine into First
Majestic's portfolio of operating mines provides the combined company greater
flexibility in the current difficult metals market and creates a strong
platform from which First Majestic can continue its corporate growth to the
benefit of both sets of shareholders. SilverCrest shareholders will benefit
from First Majestic's liquidity in the market place, the diversity provided by
six mines and Management's long history of successful operations in Mexico.
First Majestic shareholders will benefit from SilverCrest's strong balance
sheet, free cash flow and low cost silver production. "
TRANSACTION SUMMARY
Under the terms of the Arrangement Agreement, on
closing, each SilverCrest shareholder will receive 0.2769 common shares of
First Majestic plus C$0.0001 in cash for each SilverCrest common share held.
Pursuant to the transaction, First Majestic will issue approximately 32.8
million common shares (assuming no exercise of existing SilverCrest options),
valuing SilverCrest's equity at approximately C$154 million, based on current
closing prices. Following the completion of the transaction, the current
shareholders of SilverCrest will hold approximately 21% of the issued and
outstanding shares of First Majestic. The transaction will be carried out by
way of a court-approved plan of arrangement and will require the approval of at
least 66 2/3% of the votes cast by the shareholders of SilverCrest, and
approval by the "majority of the minority", being a majority of the
votes cast by SilverCrest shareholders other than J. Scott Drever, N. Eric Fier
and Barney Magnusson, whose votes will not be included in determining minority
approval pursuant to Multilateral Instrument 61-101 - Protection of Minority
Security Holders in Special Transactions. The transaction will also require the
approval of a simple majority of the shareholders of First Majestic in
accordance with the rules of the TSX and the NYSE. The special meetings of
shareholders of SilverCrest and First Majestic are expected to take place in
late September 2015.
The Arrangement will also provide for the issuance
by First Majestic of an aggregate of approximately 2.9 million replacement
stock options (the "Replacement Options") (assuming no exercise of
existing SilverCrest options) to SilverCrest option holders who do not exercise
such options prior to the effective time of the Arrangement, at exercise prices
adjusted by the Exchange Ratio. All other terms and conditions of the Replacement
Options will be the same as the SilverCrest option for which they were
exchanged, except that the terms and conditions of the First Majestic stock
option plan relating to accelerated expiry of First Majestic options on account
of early termination after ceasing to hold office or ceasing to be an employee
or consultant will not apply to the Replacement Options.
In connection with the Arrangement, each
SilverCrest shareholder will also receive 0.1667 common shares of New
SilverCrest for each SilverCrest common share held. As part of the Arrangement,
SilverCrest will transfer the Las Chispas, Cruz de Mayo, Angel de Plata,
Huasabas and Estacion Llano exploration properties located in northern Mexico,
as well as C$5.25 million in cash and certain other assets currently owned by
SilverCrest to New SilverCrest. First Majestic will also transfer its Guadalupe
exploration property located in Durango, Mexico to New SilverCrest, and First
Majestic will own approximately 9.9% of the shares of New SilverCrest following
completion of the transaction. SilverCrest's La Joya project will be retained
by First Majestic following closing of the transaction, however First Majestic
does not have any immediate plans to advance the La Joya project. N. Eric Fier,
SilverCrest's Chief Operating Officer, will be the CEO and President of New
SilverCrest along with other members of SilverCrest's current board and
management team. New SilverCrest intends to make application to list its shares
on the TSX Venture Exchange.
In addition to shareholder, court and creditor
approvals, the transaction is subject to applicable regulatory approvals and
the satisfaction of certain other closing conditions customary in transactions
of this nature.
The Arrangement Agreement includes customary
provisions, including non-solicitation of alternative transactions, right to
match superior proposals and fiduciary-out provisions. In addition, SilverCrest
has agreed to pay a termination fee to First Majestic of C$8 million upon the
occurrence of certain events. First Majestic and SilverCrest have each agreed
to pay a C$1 million expense reimbursement fee to the other party upon
termination of the Arrangement Agreement due to the occurrence of certain other
events.
The Board of Directors of SilverCrest has unanimously
approved the transaction and will provide a written recommendation that
SilverCrest shareholders vote in favour of the transaction which will be
included in the Information Circular to be mailed to shareholders in connection
with the Arrangement. Each of the directors and senior officers of SilverCrest,
who hold in the aggregate approximately 3.9% of the issued and outstanding
SilverCrest shares (assuming no exercise of existing SilverCrest stock options)
have entered into a voting agreement with First Majestic and have agreed to
vote in favour of the transaction at the special meeting of SilverCrest
shareholders to be held to consider the Arrangement.
Full details of the Arrangement will be included in
a joint Management Information Circular to be filed with the regulatory
authorities and mailed to SilverCrest and First Majestic shareholders in
accordance with applicable securities laws. SilverCrest and First Majestic
expect to mail the joint Management Information Circular in early September
2015.
ADVISORS AND COUNSEL
Cormark Securities Inc. ("Cormark") acted
as exclusive financial advisor and McCullough O'Connor Irwin LLP acted as legal
counsel to First Majestic. Cormark has provided an opinion to the First
Majestic Board of Directors that, based upon and subject to the assumptions,
limitations and qualifications in the opinion, the consideration being offered
by First Majestic to SilverCrest pursuant to the transaction is fair, from a
financial point of view, to First Majestic.
National Bank Financial Inc. ("National
Bank") acted as exclusive financial advisor and Koffman Kalef LLP acted as
legal advisor to SilverCrest. National Bank has provided an opinion to the
Board of Directors of SilverCrest that, based upon and subject to the
assumptions, limitations, and qualifications in the opinions, the consideration
to be received is fair, from a financial point of view, to the shareholders of
SilverCrest.
CONFERENCE CALL
First Majestic and SilverCrest will host a joint
conference call and webcast on July 27, 2015 at 2:00 pm Eastern time / 11:00 am
Pacific time for members of the investment community to discuss the proposed
transaction. The callin details are as follows:
Toll Free Canada & USA: 1-800-319-4610
Outside of Canada & USA: 1-604-638-5340
Toll Free Germany: 0800 180 1954
Toll Free UK: 0808 101 2791
Click on WEBCAST on the First Majestic homepage as
a simultaneous audio webcast of the conference call at www.firstmajestic.com.
The Conference call will be recorded and you can
listen to an archive of the conference by calling:
Toll Free Canada & USA:1-800-319-6413
Outside of Canada & USA:
1-604-638-9010
Pin Code: 3928
ABOUT FIRST MAJESTIC
First Majestic is a mining company focused on
silver production in Mexico and is aggressively pursuing the development of its
existing mineral property assets and the pursuit through acquisition of
additional mineral assets which contribute to the Company achieving its
corporate growth objectives.
ABOUT SILVERCREST
SilverCrest is a Canadian precious metals producer
headquartered in Vancouver, BC. SilverCrest's flagship property is the
100%owned Santa Elena Mine, located in the State of Sonora, Mexico. The
operation comprises a highgrade, epithermal silver and gold deposit, along with
a 3,000 tpd conventional milling facility. Santa Elena is projected to produce
in a range of 4.7 to 5.1 million silver equivalent ounces in 2015.
ON BEHALF OF THE BOARD OF
FIRST MAJESTIC SILVER CORP.
"Keith Neumeyer"
Keith Neumeyer
President & CEO
ON BEHALF OF THE BOARD OF
SILVERCREST MINES INC.
"J. Scott Drever"
J. Scott Drever
CEO
SPECIAL NOTE REGARDING FORWARD LOOKING STATEMENTS
This news release includes certain
"Forward-Looking Statements" within the meaning of the United States
Private Securities Litigation Reform Act of 1995 and "forward-looking
information" under applicable Canadian securities laws. When used in this
news release, the words "anticipate", "believe",
"estimate", "expect", "target", "plan",
"forecast", "may", "schedule" and similar words
or expressions, identify forward-looking statements or information. These
forward-looking statements or information relate to, among other things:
anticipated benefits of the Arrangement to First Majestic, SilverCrest and
their respective shareholders; the timing and receipt of required shareholder,
court, stock exchange, creditor and regulatory approvals for the Arrangement;
the ability of First Majestic and SilverCrest to satisfy the other conditions
to, and to complete, the Arrangement; the anticipated timing of the mailing of
the joint information circular regarding the Arrangement; the closing of the
Arrangement; the listing of the New SilverCrest shares on the TSX Venture
Exchange; the development of the Santa Elena Mine; future silver production;
analyst coverage, liquidity and institutional shareholdings of First Majestic
shares; future growth potential for First Majestic, SilverCrest and their
respective businesses; future plans for the La Joya property; future mine
development plans; estimates regarding the life of and recovery of minerals at
the Santa Elena mine; and estimates of production costs.
In respect of the forward-looking statements and
information concerning the anticipated completion of the proposed Arrangement
and the anticipated timing for completion of the Arrangement, the parties have
provided them in reliance on certain assumptions that they believe are reasonable
at this time, including assumptions as to the time required to prepare and mail
shareholder meeting materials, including the required joint management
information circular; the ability of the parties to receive, in a timely
manner, the necessary shareholder, court, stock exchange, creditor and
regulatory approvals; and the ability of the parties to satisfy, in a timely
manner, the other conditions to the closing of the Arrangement. These dates may
change for a number of reasons, including unforeseen delays in preparing
meeting material; inability to secure necessary shareholder, court, stock
exchange, creditor and regulatory approvals in the time assumed or the need for
additional time to satisfy the other conditions to the completion of the
Arrangement. Accordingly, readers should not place undue reliance on the
forward-looking statements and information contained in this news release
concerning these times.
Forward-looking information relating to future
silver production, analyst coverage, liquidity and institutional shareholdings
of First Majestic shares, future growth potential for First Majestic,
SilverCrest and their respective businesses, future mine development plans,
estimates regarding the life of and recovery of minerals at the Santa Elena mine,
and estimates of production costs is based on management of the applicable
parties' reasonable assumptions, estimates, expectations, analyses and
opinions, which are based on such management's experience and perception of
trends, current conditions and expected developments, and other factors that
management believes are relevant and reasonable in the circumstances, but which
may prove to be incorrect. Assumptions have been made regarding, among other
things, the price of silver, gold, and other metals; costs of development and
production; estimated production rates for silver and other metals produced by
the parties; the estimated costs of development of development projects; First
Majestic and/or SilverCrest's ability to operate in a safe and effective manner
and their ability to obtain financing on reasonable terms.
These statements reflect the parties' respective
current views with respect to future events and are necessarily based upon a
number of assumptions and estimates that, while considered reasonable by the
respective parties, are inherently subject to significant business, economic,
competitive, political and social uncertainties and contingencies. Many
factors, both known and unknown, could cause actual results, performance or
achievements to be materially different from the results, performance or
achievements that are or may be expressed or implied by such forward-looking
statements or information and the parties have made assumptions and estimates
based on or related to many of these factors. Such factors include, without
limitation: satisfaction or waiver of all applicable conditions to closing of
the Arrangement including, without limitation, receipt of all necessary
shareholder, court, stock exchange, creditor and regulatory approvals or
consents and lack of material changes with respect to First Majestic and
SilverCrest and their respective businesses, all as more particularly set forth
in the Arrangement Agreement; the synergies expected from the Arrangement not
being realized; business integration risks; fluctuations in general
macro-economic conditions; fluctuations in securities markets and the market
price of First Majestic's shares; fluctuations in the spot and forward price of
silver, gold, base metals or certain other commodities (such as natural gas,
fuel oil and electricity); fluctuations in the currency markets (such as the
Canadian dollar and Mexican peso versus the U.S. dollar); changes in national
and local government, legislation, taxation, controls, regulations and
political or economic developments in Canada or Mexico; operating or technical
difficulties in connection with mining or development activities; risks and
hazards associated with the business of mineral exploration, development and
mining (including environmental hazards, industrial accidents, unusual or
unexpected formations, pressures, cave-ins and flooding); risks relating to the
credit worthiness or financial condition of suppliers, refiners and other
parties with whom the parties do business; inability to obtain adequate
insurance to cover risks and hazards; and the presence of laws and regulations
that may impose restrictions on mining, including those currently enacted in
Mexico; employee relations; relationships with and claims by local communities
and indigenous populations; availability and increasing costs associated with mining
inputs and labour; the speculative nature of mineral exploration and
development, including the risks of obtaining necessary licenses, permits and
approvals from government authorities; diminishing quantities or grades of
mineral reserves as properties are mined; title to properties; and the factors
identified under the caption "Risk Factors" in First Majestic's
Annual Information Form, and under the caption "Risk Factors" in
SilverCrest's Annual Information Form. In addition, the failure of a party to
comply with the terms of the Arrangement Agreement may result in that party
being required to pay a non-completion or other fee to the other party, the
result of which could have a material adverse effect on the paying party's
financial position and results of operations and its ability to fund growth
prospects and current operations.
Readers are cautioned against attributing undue
certainty to forward-looking statements or information. Although the parties
have attempted to identify important factors that could cause actual results to
differ materially, there may be other factors that cause results not to be
anticipated, estimated or intended. The parties do not intend, and do not
assume any obligation, to update these forward-looking statements or information
to reflect changes in assumptions or changes in circumstances or any other
events affecting such statements or information, other than as required by
applicable law.
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