Great Panther adds Brazil mine to portfolio with $105m Beadell buy
TSX-listed Great Panther Silver has announced that it will acquire ASX-listed Beadell Resources, which owns the Tucano gold mine in Brazil, in an all-scrip deal.
The transaction will create a new “growth-oriented precious metals producer” focused on the Americas, with a portfolio of three producing mines, an advanced stage project and exploration potential in Mexico, Peru and Brazil.
Announcing the transaction on Monday, Great Panther CEO James Bannantine described the deal as transformational for the shareholders of both companies, stating that his company had the capital required to deliver on Tucano’s near and long-term growth potential.
“The combination of assets, capital and management provides a unique opportunity to unlock a significant re-rating potential for the benefit of both existing shareholders and Beadell's shareholders who will gain a meaningful interest in Great Panther," he said.
Beadell has undertaken a number of key initiatives to more fully optimise Tucano, in Amapá state, northern Brazil. These include the execution of the life-of-mine (LoM) contract with U&M Mineração e Construção, which is expected to deliver improved efficiencies resulting in an expected $100-million in cost savings over the LoM.
Further, the company remains on track for completion of the Tucano plant upgrade by early November, which should result in greater ore type processing flexibility allowing a greater focus on mining for grade rather than ore type.
Beadell CEO and MD Nicole Adshead-Bell said that shareholders would benefit from Great Panther’s balance sheet, steady cash flow, experienced management team and improved liquidity through its TSX and NYSE American listings.
Beadell has previously made attempts to list its shares in Toronto and earlier this year proposed a merger with TSX-listed Golden Harp Resources.
In terms of the Great Panther transaction, Beadell shareholders will receive 0.0619 common shares of Great Panther for each ordinary share of Beadell, implying a consideration of A$0.086 a Beadell share, valuing the takeover target at about A$144-million (about $105-million).
The directors of Beadell have recommend that shareholders vote in favour of the scheme in the absence of a superior proposal and subject to the independent expert opinion.
Shareholders holding in aggregate 18.06% of Beadell shares agreed to vote in favour of the scheme, including funds associated with Equinox Partners holding 9.84%, Donald Smith & Co. holding 7.15%, other smaller shareholders, directors and management.
INTERMEDIATE PRODUCER
The transaction will result in significant pro forma gold and silver production, with Great Panther contributing four-million silver-equivalent ounces of production in 2018, and Beadell contributing 130 000 oz of gold in 2018 and a further 163 000 oz in 2019, with potential for further increase upon a positive decision to restart Coricancha.
Coricancha, in Peru, has the potential to generate average production of 3.1-million ounces silver-equivalent a year, based on the results of a May 2018 preliminary economic assessment.
The combined company is anticipated to have attributable proven and probable reserves of about 1.5-million ounces of gold. Beadell will also contribute measured and indicated resources of about 0.8-million ounces of gold and inferred resources of about 1.5-million ounces of gold, supplementing Great Panther's measured and indicated resources of 49.4-million ounces silver-equivalent and inferred resources of 48.5-million ounces silver-equivalent.
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