U.S. Silver and RX Gold & Silver announce proposed business combination to create a growth-oriented U.S. precious metals produc
04 June 2012 - 2:29PM
PR Newswire (Canada)
/NOT FOR DISTRIBUTION TO UNITED STATES NEWSWIRE SERVICES OR FOR
DISSEMINATION IN THE UNITED STATES./ - Conference Call Friday, June
8, 2012 at 11am EST (8am PST) - TORONTO, June 7, 2012 /CNW/ - U.S.
Silver Corporation (USOTC:USSIF) ("U.S. Silver") and RX Gold &
Silver Inc. (OTCQX:RXEXF) ("RX Gold") are pleased to announce the
signing of a definitive agreement to combine the two companies (the
"Transaction") by way of a plan of arrangement. The resulting
company, to be called U.S. Silver & Gold Inc. ("U.S. Silver
& Gold"), will be a well-funded, growth-oriented precious
metals producer with U.S. Silver's producing Galena mine in Idaho,
RX Gold's producing Drumlummon mine in Montana and U.S. Silver's
Coeur re-development projects in Idaho. Highlights of the
Transaction -- U.S. Silver shareholders to receive 0.670 U.S.
Silver & Gold shares per U.S. Silver share, resulting in their
effective ownership of approximately 70% of the combined company.
-- RX Gold shareholders to receive 0.109 U.S. Silver & Gold
shares per RX Gold share, resulting in their effective ownership of
approximately 30% of the combined company. -- Two - 100% owned U.S.
based precious metal operations that deliver immediate cash and one
silver re-development asset: o Combined production base of 2.7
million1 ounces of silver and 26,5001 ounces of gold o
Opportunities for significant resource growth, brownfield
development and operational and head office synergies o Meaningful
organic exploration potential at Drumlummon and Silver Valley areas
o Geographic concentration of assets that allows for near term
focus on improving mine planning and execution of cost reduction
strategies. -- Proven board of directors and management team with
significant executive experience in senior precious metals
companies and the capability to deliver results in tough market
conditions. -- Improved liquidity and capital markets profile,
US$25 million in cash and capital markets relationships that
position the larger, combined company for further growth through
opportunistic and accretive acquisitions. -- Unanimous
recommendations from the boards of both companies that shareholders
vote for the Transaction. The board and senior management of each
company have agreed to vote in favour of the Transaction. In
addition, Sprott Asset Management LP ("Sprott") has signed a
lock-up agreement supporting the Transaction. Sprott is the largest
shareholder of both companies and currently holds approximately 14%
of U.S. Silver shares and 8% of RX Gold shares. -- A key objective
of the combined company will be to exceed 5.0 million ounces of
silver production at significantly lower cash costs by 2014. Upon
completion of the Transaction, the combined company will have
approximately 60 million basic common shares issued and
outstanding, and there will be options and warrants outstanding to
acquire an additional 6.3 million shares. The warrants of
both companies will become exercisable for common shares of U.S.
Silver & Gold based on the applicable exchange ratio and the
options of both companies will be exchanged for options of U.S.
Silver & Gold based on the applicable exchange ratio.
Leadership Team Upon completion of the Transaction, the board of
directors of U.S. Silver & Gold will be comprised of four
current U.S. Silver board members and four current RX Gold board
members (see appendix for full U.S. Silver & Gold board of
directors) and the management team will be comprised of the
combined best talent from U.S. Silver and RX Gold. Gordon Pridham,
Executive Chairman and Interim CEO of U.S. Silver will serve as
Chairman of the board of the combined company. Mr. Pridham
has over 30 years of experience as a global finance executive and
serves on a number of public boards of directors and has been a
director of U.S. Silver since November 2008. Darren Blasutti,
currently President and CEO of RX Gold, will assume the same role
for the combined company. A chartered accountant, Mr.
Blasutti was previously Senior Vice President, Corporate
Development at Barrick Gold, where he reported to the CEO, led
strategic development, and executed more than 25 M&A
transactions over his 13 year tenure. Robert Taylor, RX Gold's
current Chief Operating Officer will assume the role of COO of the
combined company and with Steve Long, Senior Vice President of
Operations, will lead an impressive group of operating
professionals in Idaho and Montana. Mr. Taylor has close to 40
years of mining experience and was previously with Kinross Gold,
where he served as Vice President of North American Operations
until 2009. Gord Pridham, U.S. Silver Interim CEO and Executive
Chairman, commented, "The combination of U.S. Silver and RX Gold
will create a strong North American-focused precious metals
producer with a solid portfolio of production and development
assets. The proposed management team and board have proven
capability to optimize existing operations, drive significant cost
savings through synergies and pursue aggressive growth thereby,
creating meaningful value for shareholders." Darren Blasutti,
President & CEO RX Gold, stated, "The Galena mine and Coeur
re-development project will enhance RX Gold shareholders' exposure
to precious metals production and cash flow. With a rapid
production ramp-up and aggressive consolidation strategy,
underpinned by a much larger and well-funded company, the RX Gold
board and management—all of whom are significant
shareholders—believe the strategic and financial rationale of this
transaction will benefit all shareholders, employees and other
stakeholders. I am confident we will have the financial,
human and capital markets wherewithal to achieve our goal of
exceeding 5 million ounces of silver production by 2014." Benefits
to Shareholders of U.S. Silver -- U.S. Silver shareholders will own
approximately 70% of a combined growth-oriented, larger, producing
precious metals company. -- In addition to key U.S. Silver board
and management, the combined company gains solid and proven
expertise among RX Gold's management, particularly as it pertains
to acquiring, exploring, developing and operating mining projects,
as well as significant capital markets expertise. -- Participation
in the 100% owned high grade gold and silver Drumlummon mine, which
has historically produced more than 1 million ounces of gold and 12
million ounces of silver: o The mine produced 6,625 ounces of gold
and 117,635 ounces of silver in Q1 2012 o Excellent exploration
potential for future resource expansion at Drumlummon and the
recently acquired Belmont mine. -- As a result of the effective
ownership split, U.S. Silver shareholders will receive an implied
premium of approximately 45% based on the closing price of C$1.46
on June 6, 2012. -- Participation in the potential re-rating of
U.S. Silver & Gold resulting from the increased size,
synergies, liquidity, research analyst coverage and market
visibility of the combined company. Benefits to Shareholders of RX
Gold -- Participation in the Galena mine, which provides high
grade, narrow vein copper-silver and lead-silver with over 200
million ounces of silver produced historically and no historic
environmental liabilities: o The mine produced 559,027 ounces of
silver in Q1 2012 o NI-43-101 compliant silver reserves of 23.2
million2 ounces and M& I silver resources of 35.1 million3
ounces (inclusive of reserves). -- Participation in the Coeur mine,
which is fully funded and under re-development with expected
production by year-end: o Historical production of 39 million
ounces of silver and targeted production rate of 500,000 ounces of
silver per year by end of 2013 o NI-43-101 compliant M& I
resources of 3.3 million ounces of silver (included in Galena
resources noted above). -- Increased cash flow and excellent
exploration potential with a dominant land position in the Silver
Valley. -- Strong balance sheet with roughly US$25 million in cash.
Further Transaction Details Sprott, the largest shareholder of both
RX Gold and U.S. Silver, has entered into a lock-up agreement in
support of the Transaction in respect of its approximate 14%
ownership of U.S. Silver and its approximate 8% ownership of RX
Gold. This represents approximately 12% of the issued and
outstanding common shares of the combined company. Eric Sprott, CEO
& CIO of Sprott, "As a major shareholder of both U.S. Silver
and RX Gold, we are very supportive of this transaction. We believe
it will unlock significant value for shareholders as the newly
formed company will have the production base, management team,
balance sheet and capital markets profile to pursue its growth
strategy." The board of directors of each of U.S. Silver and RX
Gold has received a fairness opinion with respect to the
Transaction consideration. Both boards have unanimously
approved the Transaction and are recommending approval by their
respective shareholders. All management and board members have
agreed to vote their respective shares in favour of the
Transaction. U.S. Silver and RX Gold have agreed to not solicit
alternative transactions to the proposed Transaction, subject to
the right to respond to superior proposals. In the event that
a party enters into an agreement to effect a superior proposal,
then such party is obligated to pay to the other party a
termination payment that is outlined in the definitive agreement.
The Transaction is conditional upon the receipt of all necessary
regulatory approvals, the absence of material adverse changes, and
holders of at least 66 2/3% of the total votes cast by shareholders
of each of U.S. Silver and RX Gold, as applicable, approving the
Transaction at a meeting of each of U.S. Silver and RX Gold
shareholders. Full details of the Transaction will be included in
the information circulars of U.S. Silver and RX Gold, which are
expected to be filed with securities regulatory authorities and
mailed to U.S. Silver and RX Gold shareholders in early July. It is
anticipated that the shareholders meeting of both U.S. Silver and
RX Gold to approve the Transaction will occur by early August.
Closing of the Transaction is anticipated shortly after the
shareholders meetings. Advisors and Counsel U.S. Silver's financial
advisor is Cormark Securities Inc. and its legal counsel is
Stikeman Elliott LLP. Cormark has provided an opinion to the board
of directors of U.S. Silver that, as of the date thereof, the
consideration to be paid under the Transaction is fair, from a
financial point of view, to the shareholders of U.S. Silver. RX
Gold has engaged Davies Ward Phillips & Vineberg LLP as its
legal counsel. Macquarie Capital Markets Canada Ltd. has
provided an opinion to the board of directors of RX Gold that, as
of the date thereof, the consideration to be paid under the
Transaction is fair, from a financial point of view, to the
shareholders of RX Gold. Conference Call Information A conference
call for the investment community will take place to discuss the
Transaction on Friday, June 8, 2012, at 11am Eastern time (8am
Pacific time). Investors, analysts, media and other interested
parties are invited to attend. Webcast/Conference Call Live Dial-In
Information: Toronto and International: 647-427-7450 North
America (Toll Free): 1-888-231-8191 Participant Audio
Webcast:
http://www.newswire.ca/en/webcast/detail/989105/1066033 The
presentation referenced on the conference call will be made
available for download on the U.S. Silver website at
www.us-silver.com and the RX Gold website at www.rxgold.com. A
replay of the call will be available by dialing
1-855-859-2056 and entering reference number 89952475 or by
accessing the link to the recording that will be posted to the U.S.
Silver and RX Gold websites shortly after the conference call.
About U.S. Silver U.S. Silver, through its wholly owned
subsidiaries, owns and/or operates the Galena, Coeur, Caladay and
Dayrock silver-lead-copper mines in Shoshone County, Idaho, with
the Galena mine being the second most prolific silver mine in U.S.
history. Total silver production from U.S. Silver's mining complex
has exceeded 217 million ounces of silver production since 1953.
U.S. Silver controls a land package now totalling approximately
14,000 acres in the heart of the Coeur d'Alene Mining District.
U.S. Silver is focused on expanding the production from existing
operations as well as exploring and developing its extensive Silver
Valley holdings in the Coeur d'Alene Mining District.
www.us-silver.com About RX Gold RX Gold is a gold and silver mining
company focused on growth in North America. Currently RX Gold is
concentrating on continuing test mining and expanding development
at its 100% owned Drumlummon Mine. The Drumlummon Mine is a bonanza
style low sulphidation epithermal gold and silver deposit with
historic production of approximately one million ounces of gold
equivalent. The mine has never been fully exploited or explored and
material that was once considered waste is now potentially
economic. In addition, RX Gold has discovered a series of entirely
new high-grade gold and silver veins that remain open for expansion
in three directions. www.rxgold.com Certain information in
this press release may contain forward-looking statements. This
information is based on current expectations that are subject to
significant risks, assumptions and uncertainties that are difficult
to predict and the risk that regulatory approvals may not be
obtained or that conditions of closing will not be satisfied or
waved within the timeframe contemplated. Additional potential risks
include: that U.S. Silver & Gold may not achieve anticipated
synergies; loss of key personnel; reduction in the anticipated cash
levels; and, not achieving production goals stated. Actual results
might differ materially from results suggested in any
forward-looking statements. U.S. Silver and RX Gold assume no
obligation to update the forward-looking statements, or to update
the reasons why actual results could differ from those reflected in
the forward looking-statements unless and until required by
securities laws applicable to the U.S. Silver and RX Gold.
Additional information identifying risks and uncertainties is
contained in filings by the U.S. Silver and RX Gold with the
Canadian securities regulators, which filings are available at
www.sedar.com. Appendix: Proposed U.S. Silver & Gold Board of
Directors
_____________________________________________________________________
|Gordon Pridham |• Over 30 years of experience | |Chairman |as a
global finance executive | | |• Extensive special committee | |
|and public board experience with a track | | |record of creating
value for shareholders| | |• Serves on the public company | |
|boards of Newalta Corporation, NorRock | | |Realty Finance
Corporation and Titanium | | |Corporation, where he is Chairman of
the | | |Board |
|___________________________|_________________________________________|
|Darren Blasutti |• Former SVP Corporate | |President and CEO,
Director|Development and Investor Relations for | | |Barrick Gold,
reported to President and | | |CEO | | |• Led Barrick's strategic |
| |development for over 13 years executing | | |over 25 gold mining
transactions - Sutton| | |Resources, Homestake Mining, Placer
Dome,| | |consolidation of the Cortez property from| | |Rio Tinto
and responsible for creation of| | |Barrick Energy to hedge
exposure to | | |energy prices |
|___________________________|_________________________________________|
|Hugh Agro |• Former EVP Strategic | |Director |Development at
Kinross Gold, where he | | |oversaw corporate development and | |
|exploration until his retirement in 2009 | | |• Held senior
positions with | | |Placer Dome Canada and Deustche Bank |
|___________________________|_________________________________________|
|John Brock |• Geologist with over 40 years | |Director |experience
as an executive for 20 public,| | |junior exploration companies | |
|• Participated in 12 major | | |mineral deposit discoveries in
north and | | |western Canada, Nevada, Mexico, and | | |Ecuador | |
|• Currently CEO of Pacific | | |Ridge Exploration and an advisor
to the | | |Manex Resources Group |
|___________________________|_________________________________________|
|Alex Davidson |• Retired in 2009 as EVP | |Director |Exploration
and Corporate Development at | | |Barrick Gold | | |• 2005 AO
Dufresue Award to | | |recognize exceptional achievement and | |
|distinguished contribution to mining | | |exploration in Canada |
| |• In 2003 was named Prospector | | |of the Year by PDAC for
discovery of Alto| | |Chicama in Peru |
|___________________________|_________________________________________|
|Louis Dionne |• Former Senior Vice President | |Director
|Underground Operations at Barrick Gold | | |• Currently a director
of | | |Detour Gold Corporation and Aurizon | | |Mining Ltd. |
|___________________________|_________________________________________|
|Alan Edwards |• Board of directors for AuRico| |Director |Gold
Inc., Entrée Gold Inc., Copper One | | |Inc., Oracle Mining Corp.
and AQM Copper | | |Inc., where he is Chairman of the Board | | |•
Senior management positions | | |with Frontera Copper, Apex Silver
Mines, | | |Kinross, Cyprus Amax and Phelps Dodge |
|___________________________|_________________________________________|
|Tom Ryley |• Board of directors for | |Director |Newalta
Corporation, Tribute Resources | | |and Benefuel Inc., where he is
Chairman | | |of the Board | | |• Former Executive Vice | |
|President of Suncor Energy, where he | | |worked for 25 years in a
variety of roles|
|___________________________|_________________________________________|
|Lorie Waisberg |• Former Senior Partner at | |Director |Goodmans
LLP, and EVP of Finance and | | |Administration of Co-Steel Inc. |
| |• Accredited with Institute of | | |Corporate Directors and sits
on Boards of| | |Tembec and Chemtrade Logistics Inc. |
|___________________________|_________________________________________|
(__________________________) (1) Q1, 2012 production results,
annualized. (2) 1.47 million tonnes at 490.3 g/t Ag from the
Technical Report Shoshone County, Idaho prepared for U.S. Silver
(dated March 19, 2012) (the "U.S. Silver Report") (3) 2.26 million
tonnes at 571.6 g/t Ag from the U.S. Silver Report
U.S. Silver Corporation CONTACT: U.S. Silver:Chris Hopkins, CFOOr,
Heather Foster, IR Manager416-907-5501info@us-silver.com
(www.us-silver.com)RX Gold:Darren Blasutti, President and CEOOr,
Nicole Richard, Investor Relations416-848-9503inbox@rxgold.com
(www.rxgold.com)
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