TORONTO (miningweekly.com) - Vancouver-based Silvercorp Metals plans to make an unsolicited all-share offer for TSX-listed Klondex Mines, valuing the exploration company at around C$70-million on a fully diluted basis.
Silvercorp, which mines silver in China, will offer 0,5 of its owns shares for each Klondex share held.
The company said that it tried to negotiate a transaction with Klondex, but was unsuccessful and is now presenting its offer directly to shareholders.
The ratio values Klondex shares at about C$2,18 apiece, based on Silvercorp's closing price on Friday, and represents a premium of 59% to Klondex's closing price on June 5, and a premium of 63% to Klondex's 20-day volume weighted average price.
Klondex's main asset is the Fire Creek property, in Nevada, where it has identified an indicated mineral resource of 5-million tons, containing 1,64-million ounces of gold, as well as 1,8-million tons containing 0,51-million ounces of gold in the inferred category.
"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," said Silvercorp CEO Rui Feng.
"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."
Silvercorp expects to launch the offer formally next week, and will keep it open for at least 35 days.
Klondex shares surged 40% on Monday morning, to C$1,93 apiece by 9:52 in Toronto.
Silvercorp fell 9,4%, to C$3,95 a share.