In a strategic move to enhance its precious metals portfolio, Silvercorp Metals (TSX/NYSE: SVM), the Canadian mining company, has initiated a takeover deal for OreCorp (ASX: ORR), an Australian gold developer.
Under the terms of the agreement, Silvercorp will acquire all outstanding shares of OreCorp for A15c in cash and 0.0967 of a Silvercorp share for each OreCorp share held. This arrangement implies a value of A60c per OreCorp share.
Additionally, Silvercorp has pledged to provide OreCorp with $28 million in funding through an equity placement. The financial injection is intended to accelerate the development of the Nyanzaga gold project in Tanzania.
OreCorp presently holds an 84% stake in the Nyanzaga gold project, a partnership with the Government of Tanzania. The project is on track to commence production in the second half of 2025.
The primary objective of the takeover deal is to create a diversified and profitable precious metals company with a pro forma market capitalization of $630 million. The combined entity will boast a robust growth pipeline and exposure to a highly prospective emerging mining jurisdiction, according to Silvercorp.
The Nyanzaga gold project’s definitive feasibility study, unveiled in August 2022, revealed its potential to yield 2.5 million ounces of gold over a ten-year lifespan. The project’s strategic location is approximately 40 km northeast of the Bulyanhulu mine, one of Barrick Gold Corporation’s two gold mines in the Lake Victoria Goldfields. In 2022, the Bulyanhulu and North Mara mines together produced around 547,000 ounces of gold.
Dr. Rui Feng, Chairman, and CEO of Silvercorp Metals expressed optimism about the transaction, emphasizing that it will establish a new globally diversified precious metals producer.
Following the announcement, OreCorp’s shares experienced a significant surge, increasing by 10.3% by 1:31 p.m. on the ASX. The gold developer’s market capitalization currently stands at A$189 million ($124 million). The deal is anticipated to be a major milestone for both companies as they seek to capitalize on the opportunities in the precious metals market.
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