Silvercorp Metals makes bid to acquire Klondex Mines for C$70m
Tuesday, 9 June 2009
VANCOUVER, BC, June 8: Silvercorp Metals Inc. (TSX:SVM), a Vancouver-based silver producer with operations in China, says it intends to make a C$70 million bid to acquire Klondex Mines Limited. (TSX:KDX) after failing to negotiate a friendly deal to buy the company, according to The Canadian Press.
Silvercorp said early Monday it will offer half a share for ech Klondex share outstanding, a bid worth about C$2.18 for each Klondex common share. The Chinese silver miner said the offer represents a premium of 59 per cent to Klondex's closing share price Friday on the Toronto Stock Exchange.
The offer values Klondex at about C$70 million fully diluted.
Silvercorp said the deal provides Klondex shareholders with a significant premium and enhanced trading liquidity and can help speed up development of the Fire Creek property in Nevada.
Klondex's principal asset is the Fire Creek property, which is strategically located between the past producing Mule Canyon Mine to the north and the Pipeline and Cortez gold deposits to the south.
The property is estimated to contain more than 1.6 million ounces of gold-equivalent metal at a cutoff grade of five grams per tonne.
"We view Fire Creek as an attractive complement to our growth pipeline given its size, existing resource and the additional resource potential we believe exists at the property," Silvercorp chairman and chief executive Rui Feng said in a release before stock markets opened.
"It fits perfectly with our strategy of focusing on growth via the development and operation of high-grade, narrow-vein deposits offering reasonable development capital profiles and the potential for attractive margins, financed with internal cash flows."
Feng said the Vancouver company decided to take its offer directly to shareholders after failing to negotiate a friendly deal with Klondex management and board.
"We believe our offer reflects the fair value of Klondex and offers an attractive premium to Klondex shareholders. We intend to rapidly progress the development of Fire Creek to maximize the benefit for all post-transaction Silvercorp shareholders."
Silvercorp said it has formally requested a list of Klondex shareholders and expects to launch its offer next week, keeping it open for at least 35 days.
Silvercorp said early Monday it will offer half a share for ech Klondex share outstanding, a bid worth about C$2.18 for each Klondex common share. The Chinese silver miner said the offer represents a premium of 59 per cent to Klondex's closing share price Friday on the Toronto Stock Exchange.
The offer values Klondex at about C$70 million fully diluted.
Silvercorp said the deal provides Klondex shareholders with a significant premium and enhanced trading liquidity and can help speed up development of the Fire Creek property in Nevada.
Klondex's principal asset is the Fire Creek property, which is strategically located between the past producing Mule Canyon Mine to the north and the Pipeline and Cortez gold deposits to the south.
The property is estimated to contain more than 1.6 million ounces of gold-equivalent metal at a cutoff grade of five grams per tonne.
"We view Fire Creek as an attractive complement to our growth pipeline given its size, existing resource and the additional resource potential we believe exists at the property," Silvercorp chairman and chief executive Rui Feng said in a release before stock markets opened.
"It fits perfectly with our strategy of focusing on growth via the development and operation of high-grade, narrow-vein deposits offering reasonable development capital profiles and the potential for attractive margins, financed with internal cash flows."
Feng said the Vancouver company decided to take its offer directly to shareholders after failing to negotiate a friendly deal with Klondex management and board.
"We believe our offer reflects the fair value of Klondex and offers an attractive premium to Klondex shareholders. We intend to rapidly progress the development of Fire Creek to maximize the benefit for all post-transaction Silvercorp shareholders."
Silvercorp said it has formally requested a list of Klondex shareholders and expects to launch its offer next week, keeping it open for at least 35 days.