NYSE MKT: SVLC TSX: SVL FrankFurt: CW5
NYSE: AG TSX: FR Frankfurt: FMV Mexico: AG
VANCOUVER, July 27, 2015 /PRNewswire/ - First Majestic
Silver Corp. ("First Majestic") and SilverCrest Mines Inc.
("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
|
An archived webcast of the conference call will also be
available at www.firstmajestic.com.
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.
For further information, contact info@firstmajestic.com, visit
our website at www.firstmajestic.com or contact Todd Anthony, Investor Relations at
1.866.529.2807.
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.
For further information, contact SilverCrest at 1.866.691.1730
or via our website online at www.silvercrestmines.com.
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.
SOURCE SilverCrest Mines Inc.