- Proceeds from the Business Combination Expected to
Accelerate Sio’s Entrance into the High-Purity Crystalline Quartz
Market and Its Mission Toward Becoming an Environmentally Friendly,
Low Cost, Canadian-Based Producer of High-Purity Quartz
Silica
- Sio's High-Purity Quartz Silica is an Essential Element for
Photovoltaics, Solar Panels, Semiconductors, Batteries and Other
Green Technologies Expected to Help Achieve Global Net Zero
Targets
- Sio’s Sustainable Operations, Cutting-Edge Technologies and
Low-Cost Advantage are Expected to Make Considerable Inroads to
Contribute to a Decarbonized Future
- Approximately $150 Million of Gross Capital, Comprised of
Equity, Debt, Royalties and Sio’s Cash on Hand, has been Secured
from a Variety of Institutional and Individual Accredited
Investors, including Riverstone Credit Partners, HITE Hedge Asset
Management and a Large Canadian Pension Fund, and an Additional $10
Million Is Expected to be Secured Through Flow-Through Equity from
a Variety of Individual Accredited Investors, to Support the
Construction of the First Phase of its Extraction and Processing
Facility.
- Terms of the Business Combination Imply an Enterprise Value
of $708 Million and Equity Value of $758 Million for the Combined
Company
- Valuation Represents an ~80% Discount to a ~$3.9 Billion Net
Present Value Estimated by Stantec Inc. (TSX, NYSE: STN)
(“Stantec”) Based on a Portion of the ~146 Million Tonnes of
High-Purity Quartz Silica Measured & Indicated Resources and
~345 Million Tonnes of High-Purity Quartz Silica Inferred
Resources
Sio Silica Corporation (“Sio” or the “Company”), a
Canadian-based company that seeks to become a global leader in the
production and supply of environmentally and ethically produced
high-purity quartz silica, and Pyrophyte Acquisition Corp.
(“Pyrophyte”) (NYSE: PHYT), a special purpose acquisition company,
announced today that they have entered into a definitive agreement
(the “Business Combination Agreement”) for a business combination
(the “Business Combination”). The terms of the Business Combination
reflect an implied enterprise value of $708 million and equity
value of $758 million for the combined company, an approximate 80%
discount to the net present value described above and includes
approximately $150 million of gross capital including equity, debt,
royalties and Sio’s cash on hand and additional $10 million
expected flow-through equity from a variety of institutional and
individual accredited investors. Following the closing (the
“Closing”) of the Business Combination, such proceeds are expected
to be used to fully fund the construction of the first phase of
Sio’s extraction and processing facility in Winnipeg, Manitoba.
Upon Closing, the name of the combined company will be Sio Silica
Incorporated, and its common shares and warrants are expected to be
listed on the New York Stock Exchange under the tickers “SIOS” and
“SIOS WS,” respectively. Unless otherwise specified, all amounts in
this press release are in U.S. dollars.
Company Overview
Sio has approximately 15.2 billion tonnes of in situ high-purity
silica including an estimated ~146 million tonne measured and
indicated resource and an estimated ~345 million tonne inferred
resource and intends to initiate a mining plan that ensures a
comprehensive and active environmental stewardship over the years
to come. Once the processing facility becomes operational, Sio
expects to become a leading environmentally friendly producer of
high-purity quartz silica, a unique natural resource and critical
mineral. Sio plans to leverage its patent-pending extraction
process using proven technology to extract and process silica that
exceeds 99.9% purity, providing a significant cost advantage within
its industry. Sio’s extraction method will not require truck
traffic, surface mining, tunneling, dust generation, or chemical
cleansing. In combination with its extraction and processing
facility using renewable electricity, natural gas, and efficient
processing, Sio expects to make considerable inroads to contribute
to a low carbon future. Anticipated applications for Sio’s
high-purity quartz silica include photovoltaics, solar panels,
semiconductors, electronics and batteries.
Global decarbonization drivers, regulatory changes, energy
transition, and major anticipated semiconductor investments in
North America are all expected to be significant catalysts driving
demand and creating a robust long-term growth outlook for Sio’s
high-purity quartz silica products. Sio intends to use proceeds
from the transaction to complete the construction of Phase 1 of its
facility in Winnipeg, Manitoba, which it expects to complete less
than 18 months after Closing. Based on signed and pending customer
agreements, all production at Phase 1 is expected to be fully
contracted.
Sio Investment Highlights:
- Expects to become a leader in the rapidly expanding high-purity
quartz silica industry with no current plans to rely on government
subsidies.
- High-purity quartz silica currently represents a $30 billion
total addressable market by 2030 for photovoltaics, solar panels,
semiconductors and batteries.
- With 146 million tonne measured and indicated resource and 345
million tonne inferred resource, Sio’s development plan has a
multi-generational resource life.
- Net Present Value of ~$3.9 billion according to engineering
estimates from Stantec, based on sustainable mining practices and
only a portion of available resources being mined over a 25-year
mine life.
- With approximately $150 million of gross capital and additional
$10 million expected flow-through equity, Sio anticipates to be
fully funded and fully permitted by government authorities at
Closing to complete Phase 1 of its production facility.
- Strong demand for high-purity quartz silica with 100% of Phase
1 of its production facility fully allocated under signed and
pending offtake agreements/MOUs and marketing agreements.
- Significant cost advantage through efficient mining,
extraction, processing and energy utilization to achieve quartz
silica purity that exceeds 99.9%.
- Location of production facility creates logistical and rail
advantages with easy access to ports on both coasts and closer than
competitors to several important markets within North America.
- Low capital intensity and robust operating economics are
expected to deliver attractive returns to all stakeholders.
- As published in its annual sustainability reports, Sio strives
to be an ESG leader in the industry with what is expected to be one
of the world’s most environmentally friendly silica mining
operations, given no harmful chemical wash process, no tailings
pond, no open pit and no silica dust concerns from mining
operations.
- Highly experienced leadership team and a board of directors
with a proven record of creating shareholder value.
Commentary
“We are excited to partner with Pyrophyte to become a leading
producer of high-purity quartz silica,” said Feisal Somji, Chief
Executive Officer of Sio. “Our streamlined approach to creating
environmentally responsible solutions has attracted high profile
strategic alliances, which puts us at an important inflection point
in our growth trajectory. These solutions follow the Manitoba Clean
Environment Commission’s recommendations, and the Company is
working with the Province of Manitoba to finalize an extraction
license that will exemplify the commitment and practices of the
Company to be a leader in environmental protection. We will
continue to work with the Province of Manitoba and its stakeholders
to put the Province on the global stage as a major contributor to
achieving global net zero targets through decarbonization
initiatives that require high-purity silica. The combination of
being fully funded and fully permitted is expected to fuel the next
phase of our expansion in high-purity quartz silica extraction and
processing. We believe that our combination with Pyrophyte will
allow us to scale our production to meet strong customer demand and
expand our high-purity quartz silica products to a wide range of
applications, such as solar panels, semiconductors, and
lithium-silicon batteries, with a long runway for profitable growth
in the years ahead. We believe that this Business Combination will
put Sio in a position to execute further on our strategic
priorities and to support our growth over the long-term.”
Chairman of Pyrophyte, Dr. Bernard J. Duroc-Danner, said, “Sio’s
extensive high-purity quartz silica deposit just south of Winnipeg
Manitoba is a remarkable gift of nature. Based on Stantec’s report,
the deposit is very large and exceptionally consistent throughout.
The silica ore comes out at naturally occurring high-purity levels
with very low levels of contaminants. The deposit is very shallow
allowing for a production process which is exceptionally simple,
very low cost and environmentally low impact. The beneficiation
needs are minimal, consisting of just a magnetic separation process
and washing. No chemicals are required in the entire extraction and
beneficiation processes while reclamation postproduction is
immediate. We believe that Sio’s supply of high-purity quartz
silica will benefit from very strong secular demand growth trends
in North America and worldwide. Located next to extensive railroad
infrastructure, the deposit is ideally located for ease of railway
transportation to the West, South and East. Once operational, we
expect Sio’s facility to combine an ideal transportation location,
very low ore production costs, strong secular growth trends in
demand and low-impact environmental footprint. We searched long and
hard for the right candidate to combine with Pyrophyte and its
energy transition mission. Sio fulfilled all our criteria. We are
proud to join Sio on its journey to supply what is becoming in many
countries around the world one of the most important strategic
minerals for the world’s energy transition.”
Christopher Abbate, Co-Head of Riverstone Credit Partners,
noted, “We are excited to support Sio in its mission to deliver
this critical mineral that is required by a number of key growth
areas, from semiconductors to several key industries driving
decarbonization, among others. As we evaluated the opportunity, we
were particularly drawn to its vast, high-quality resource, with
its low-cost development, guided by a high-quality management team
that can draw upon the considerable experience from the Pyrophyte
team in growing companies. We look forward to the bright future
ahead.”
Transaction Summary
The terms of the Business Combination imply an enterprise value
of $708 million and equity value of $758 million for the combined
company. Approximately $150 million of gross capital, comprised of
equity, debt, royalties and Sio’s cash on hand, has been secured
from a variety of institutional and individual accredited
investors, including a credit facility provided by Riverstone
Credit Partners, and other financing from HITE Hedge Asset
Management and a large Canadian pension fund, and an additional $10
million is expected to be secured from flow-through equity from a
variety of individual accredited investors, to support the
construction of the first phase of its extraction and processing
facility. Availability under the credit facility with Riverstone
Credit Partners is subject to certain conditions. In an effort to
further strengthen its capital base and reduce debt levels, Sio and
Pyrophyte may raise additional equity capital through incremental
PIPE investments along with the potential contribution of up to
approximately $97 million of cash currently held in Pyrophyte’s
trust account, subject to redemptions by Pyrophyte shareholders
that have not entered into non-redemption agreements.
The Business Combination, which has been unanimously approved by
the Boards of Directors of Sio and Pyrophyte, is subject to
approval by Pyrophyte's and Sio’s shareholders and other customary
closing conditions. CEO Feisal Somji will continue to lead Sio,
supported by a team of experienced operators. Pyrophyte’s
leadership team will actively introduce key relationships to help
accelerate Sio’s growth.
Advisors
BMO Nesbitt Burns Inc. is acting as exclusive Financial Advisor
to Sio. UBS Securities LLC is acting as capital markets advisor to
Pyrophyte. Integral Wealth Securities Limited acted as Sio’s
exclusive financial advisor in procuring and negotiating royalty
financing, and, as an advisor to Sio in respect of the business
combination agreement. BMO Capital Markets Corp., UBS Securities
LLC and Integral Wealth Securities Limited are acting as joint
placement agents on the PIPE. DLA Piper (Canada) LLP and DLA Piper
(US) are acting as legal advisors to Sio. White & Case LLP is
acting as legal advisor to Pyrophyte. Skadden, Arps, Slate, Meagher
& Flom LLP is acting as legal advisor to BMO Capital Markets
Corp. and UBS Securities LLC.
About Sio Silica
Sio Silica is a Canadian-based high-purity quartz silica
producer committed to offering superior products and practicing
sustainable development. The Company’s extraction of silica will
not require truck traffic, surface mining, tunneling, dust
generation or chemical cleansing. Combined with its facility using
renewable electricity, natural gas, and efficient processing, Sio
Silica expects to contribute to a low-carbon future.
About Pyrophyte Acquisition Corp.
Pyrophyte Acquisition Corp. is a blank check company whose
business purpose is to effect a merger, share exchange, asset
acquisition, share purchase, reorganization or similar business
combination with one or more businesses or entities. Pyrophyte is
primarily focused on target companies that serve the growing
segments in the energy transition ecosystem. For more information,
please visit https://www.pyrophytespac.com
Additional Information about the Business Combination and
Where to Find It
In connection with the Business Combination, Sio Silica
Incorporated, a newly-formed Alberta corporation formed solely for
the purpose of engaging in the Business Combination (“Pubco”)
intends to file a registration statement on Form F-4 (the
“Registration Statement”) with the U.S. Securities and Exchange
Commission (the “SEC”), which will include a preliminary proxy
statement of Pyrophyte and a preliminary prospectus of Pubco, and
after the Registration Statement is declared effective, Pyrophyte
will mail the definitive proxy statement/prospectus relating to the
Business Combination to Pyrophyte’s shareholders as of a record
date to be established for voting on the Business Combination. The
Registration Statement, including the proxy statement/prospectus
contained therein, will contain important information about the
Business Combination and the other matters to be voted upon at
Pyrophyte’s meeting of shareholders convened to approve the
Business Combination (the “Pyrophyte Shareholders Meeting”). This
communication does not contain all the information that should be
considered concerning the Business Combination and other matters
and is not intended to provide the basis for any investment
decision or any other decision in respect of such matters.
Pyrophyte and Pubco may also file other documents with the SEC
regarding the Business Combination. Pyrophyte’s shareholders and
other interested persons are advised to read, when available, the
Registration Statement, including the preliminary proxy
statement/prospectus contained therein, and the amendments thereto
and the definitive proxy statement/prospectus and other documents
filed in connection with the Business Combination, as these
materials will contain important information about Pyrophyte, Sio,
Pubco and the Business Combination.
Pyrophyte’s shareholders and other interested persons will be
able to obtain copies of the Registration Statement, including the
preliminary proxy statement/prospectus contained therein, the
definitive proxy statement/prospectus and other documents filed or
that will be filed with the SEC, free of charge, by Pyrophyte and
Pubco through the website maintained by the SEC at www.sec.gov.
Technical Information
Keith Wilson, P. Eng., a consulting engineer, is a Qualified
Person as defined by S-K 1300 and NI 43-101 and has reviewed,
approved and verified the scientific and technical information in
this press release.
The technical report summaries for the Company’s BRU and DEN
Properties, supporting the mineral resources included in this
release, are expected to be filed under Sio’s profile on SEDAR+,
which is available through the website maintained by the Canadian
Securities Administrators at www.sedar.com, as well as by Sio and
Pyrophyte on the SEC’s EDGAR system, which is available through the
website maintained by the SEC at www.sec.gov. The technical report
summaries, authored by Stantec Consulting Ltd., have been prepared
in accordance with the requirements of the SEC S-K 1300 Regulation.
The qualified persons involved in the preparation of the technical
and scientific disclosure included in this press release, and the
related technical report summaries, have followed industry accepted
practices for verifying that the data used is suitable for the
purposes used. For readers to fully understand the technical
information in this press release they should read these technical
reports in their entirety when they are available on SEDAR+ and
EDGAR, including all qualifications, assumptions, exclusions, and
risks that relate to the technical and scientific information set
out in the summaries. The technical report summaries are intended
to be read as a whole and sections should not be read or relied
upon out of context.
Forward-Looking Statements
Certain statements made in this press release are
“forward-looking statements” within the meaning of Section 27A of
the Securities Act of 1933, as amended (the “Securities Act”), and
Section 21E of the Securities Exchange Act of 1934, as amended.
Forward-looking statements include, but are not limited to,
statements that refer to projections, forecasts or other
characterizations of future events or circumstances, including any
underlying assumptions. The words “anticipate,” “believe,”
“continue,” “could,” “estimate,” “expect,” “intends,” “may,”
“might,” “plan,” “possible,” “potential,” “predict,” “project,”
“seek,” “should,” “target,” “would” and similar expressions may
identify forward-looking statements, but the absence of these words
does not mean that a statement is not forward-looking.
Forward-looking statements may include, for example, statements
about the Pyrophyte or Sio’s ability to effectuate the Business
Combination discussed in this document; the benefits of the
Business Combination; the future financial performance of Pubco
following the Business Combination; changes in Sio’s strategy,
future operations, financial position, estimated revenues and
losses, projected costs, prospects, plans and objectives of
management. These forward-looking statements are based on
information available as of the date of this document, and current
expectations, forecasts and assumptions, and involve a number of
judgments, risks and uncertainties. Accordingly, forward-looking
statements should not be relied upon as representing Pyrophyte, Sio
or Pubco’s views as of any subsequent date, and none of Pyrophyte,
Sio or Pubco undertakes any obligation to update forward-looking
statements to reflect events or circumstances after the date they
were made, whether as a result of new information, future events or
otherwise, except as may be required under applicable securities
laws. Neither Pubco nor Pyrophyte gives any assurance that either
Pubco or Pyrophyte will achieve its expectations. You should not
place undue reliance on these forward-looking statements. As a
result of a number of known and unknown risks and uncertainties,
Pubco’s actual results or performance may be materially different
from those expressed or implied by these forward-looking
statements. Some factors that could cause actual results to differ
include: (i) the timing to complete the Business Combination by
Pyrophyte’s business combination deadline and the potential failure
to obtain an extension of the business combination deadline if
sought by Pyrophyte; (ii) the occurrence of any event, change or
other circumstances that could give rise to the termination of the
definitive agreements relating to the Business Combination; (iii)
the outcome of any legal, regulatory or governmental proceedings
that may be instituted against Pubco, Pyrophyte, Sio or any
investigation or inquiry following announcement of the Business
Combination, including in connection with the Business Combination;
(iv) the inability to complete the Business Combination due to the
failure to obtain approval of Pyrophyte’s or Sio’s shareholders;
(v) Sio’s and Pubco’s success in retaining or recruiting, or
changes required in, its officers, key employees or directors
following the Business Combination; (vi) the ability of the parties
to obtain the listing of Pubco’s common shares and warrants on a
national securities exchange upon the Closing; (vii) the risk that
the Business Combination disrupts current plans and operations of
Sio; (viii) the ability to recognize the anticipated benefits of
the Business Combination; (ix) unexpected costs related to the
Business Combination; (x) the amount of redemptions by Pyrophyte’s
public shareholders at the Pyrophyte Shareholders Meeting being
greater than expected; (xi) the management and board composition of
Pubco following completion of the Business Combination; (xii)
limited liquidity and trading of Pubco’s securities; (xiii)
geopolitical risk and changes in applicable laws or regulations;
(xiv) the possibility that Sio or Pyrophyte may be adversely
affected by other economic, business, and/or competitive factors;
(xv) changes in mineral resource estimates and operational risks;
(xvi) litigation and regulatory enforcement risks, including the
diversion of management time and attention and the additional costs
and demands on Sio’s resources; (xvii) the risk that the
consummation of the Business Combination is substantially delayed
or does not occur; and (xix) other risks and uncertainties
indicated from time to time in the Registration Statement to be
filed by Pubco, including those under “Risk Factors” therein, and
in Pyrophyte’s filings with the SEC.
Participants in Solicitation
Pyrophyte, Sio, Pubco and their respective directors and
officers may be deemed participants in the solicitation of proxies
of Pyrophyte’s shareholders in connection with the Business
Combination. More detailed information regarding the directors and
officers of Pyrophyte, and a description of their interests in
Pyrophyte, is contained in Pyrophyte’s filings with the SEC,
including its Annual Report on Form 10-K for the fiscal year ended
December 31, 2022, which was filed with the SEC on April 12, 2023,
and is available free of charge at the SEC’s website at
www.sec.gov. Information regarding the persons who may, under SEC
rules, be deemed participants in the solicitation of proxies of
Pyrophyte’s shareholders in connection with the proposed Business
Combination and other matters to be voted upon at Pyrophyte
Shareholders Meeting will be set forth in the Registration
Statement when available.
INVESTMENT IN ANY SECURITIES DESCRIBED HEREIN HAS NOT BEEN
APPROVED OR DISAPPROVED BY THE SEC OR ANY OTHER REGULATORY
AUTHORITY NOR HAS ANY AUTHORITY PASSED UPON OR ENDORSED THE MERITS
OF THE OFFERING THEREOF OR THE ACCURACY OR ADEQUACY OF THE
INFORMATION CONTAINED HEREIN. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
No Offer or Solicitation
This communication relates to the Business Combination between
Sio and Pyrophyte. This document does not constitute a solicitation
of a proxy, consent or authorization with respect to any securities
or in respect of the Business Combination. This document does not
constitute an offer to sell or exchange, or the solicitation of an
offer to buy or exchange, any securities, nor shall there be any
offer, sale or exchange of securities in any state or jurisdiction
in which such offer, solicitation, sale or exchange would be
unlawful prior to registration or qualification under the
securities laws of any such jurisdiction. No offering of securities
will be made except by means of a prospectus meeting the
requirements of Section 10 of the Securities Act or an exemption
therefrom.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20231112122825/en/
Investor and Media Rodny Nacier / Brad Cray, ICR Inc.
(825) 540-5469 investors@siosilica.com
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