TORONTO (miningweekly.com) – TSX-V-listed Kootenay Silver and Northair Silver have signed a binding letter of agreement under which Kootenay will acquire all the outstanding shares of Northair, to create a Mexico-focused silver exploration and development company.
With project consolidation also one of the stated objectives of the combined company, Kootenay’s portfolio of projects will comprise its Promontorio and La Negra projects and Northair's La Cigarra project.
The combined company would have exposure to a series of grass-roots pipeline exploration projects, royalty interests and joint ventures, as well as a strong balance sheet providing the combined company with a stable platform for future consolidation in the sector.
"The strategic acquisition of Northair and its La Cigarra silver project is a milestone development for both companies that immediately positions Kootenay as a leading consolidator of emerging silver and precious metals assets in Mexico,” commented Kootenay president and CEO James McDonald.
Under terms of the agreement, Northair shareholders would receive 0.35 of a Kootenay common share, as well as 0.15 of a warrant to buy a Kootenay share at a strike price of $0.55 each, for a period of five years from closing.
Including the warrants, Northair common shares were valued at an implied value of $0.076 each, representing a premium of 58% to Northair's shareholders based on both companies' trailing 20-day volume-weighted average price, respectively, as on Tuesday.
“The transaction provides Northair shareholders with an attractive premium on its capital stock, while Kootenay will enjoy the benefits of a substantially increased silver asset base and corporate balance sheet, setting the stage for the future development of its assets, additional potential revenue streams and further consolidation in the sector,” said McDonald.
Upon closing the deal, Northair would become a wholly-owned subsidiary of Kootenay and former shareholders of Northair would hold about 40% of Kootenay shares on an outstanding shares basis.