TORONTO, April 18, 2016 /CNW/ - Pan American Silver Corp.
("Pan American") and MacMillan Minerals Inc. (TSX-V:MMX)
("MacMillan") are pleased to announce that they have entered
into an arrangement agreement dated April
18, 2016 (the "Arrangement") with Maverix Metals Inc.
("Maverix"), which when completed, will launch Maverix as a
new publicly traded royalty and streaming company.
Under the terms of the Arrangement, MacMillan will acquire all
of the issued and outstanding securities of Maverix (the
"Reverse Takeover", or "RTO"). Concurrently MacMillan
will purchase a package of thirteen royalties and precious metal
streams from Pan American (collectively, the "Portfolio", as
described below).
On the closing of the Arrangement, MacMillan will be renamed
Maverix Metals Inc. and will continue to trade as MMX on the TSX
Venture Exchange. Mr. Geoff Burns,
the former CEO of Pan American, will be appointed as the Chairman
of the combined company and Mr. Daniel
O'Flaherty will be appointed as Maverix's Chief Executive
Officer.
Transaction Highlights
- Surfacing Value: This is an opportune time in the
precious metals cycle for Pan American to consolidate and expose to
the market a portfolio of royalties and metal streams, previously
widely dispersed throughout Pan American and its subsidiaries;
- Cash Flow Positive: With immediate cash flow from
existing streams and royalties and a healthy balance sheet
(CAD$5.5 million in cash, after
transactions expenses) Maverix will be well positioned to pursue
further opportunities in the precious metals sector;
- Significant Price Leverage and Growth Potential: The
Portfolio contains attractive leverage to both gold and silver
prices from operating mines, and includes royalties and a metal
stream on several potential near-term development assets;
- Assets Located In Preferred Mining Jurisdictions: The
Portfolio provides geographic diversification in mining friendly
jurisdictions, predominantly Mexico, Canada, and Peru;
- Highly Experienced Management: Maverix will have a
financially disciplined and conservative leadership group, with an
established reputation for being straightforward and transparent;
and
- Major Shareholder: Pan American will have a 54% majority
ownership position (63% fully-diluted) in the combined company
which will provide Pan American's shareholders with meaningful
ongoing exposure to the Portfolio and Maverix's growth potential.
Further, Pan American will be in a position to identify
opportunities for Maverix thereby assisting in its growth for the
benefit of both Maverix and Pan American shareholders.
Mr. Michael Steinmann, President
and CEO of Pan American said, "This transaction represents an
attractive opportunity for Pan American to unlock value for a group
of its assets that have gone largely unrecognized by the market as
a number of them are not in production and are widely dispersed in
our company. As the majority shareholder, Pan American will
maintain meaningful upside exposure and leverage to these assets,
and to Maverix's ability to grow the portfolio, led by a trusted
and experienced management team."
Mr. Geoff Burns, Chairman of
Maverix commented, "I am truly excited about the future prospects
for Maverix. The portfolio of royalties and metal streams that has
been assembled provides a solid, cash generating foundation to
build upon. I look forward to working closely with a newly
configured and knowledgeable board, a lean, aggressive and
innovative management group and with the support of Pan American,
to prudently grow our portfolio and create value for all of
Maverix's shareholders." Burns continued, "The timing is
right, the vehicle is right and I firmly believe that bringing a
financially disciplined approach to growth in this sector will
handsomely reward Pan American for its confidence in supporting the
creation of Maverix."
Mr. Thomas Skimming, Chief
Executive Officer of MacMillan stated, "The Board of Directors and
the senior management of MacMillan are unanimously in favour of the
Arrangement and are recommending that all shareholders vote to
approve the transaction. We are extremely pleased to be able to
offer this significant transaction to our shareholders. The
addition of the new directors and management to MacMillan, the
acquisition of the royalties and streams, and the influx of
capital, ensures the long term viability of MacMillan, and provides
a tremendous opportunity for our shareholders to realize
value."
The Portfolio
Pursuant to the terms of the Arrangement, Maverix will have
acquired from Pan American thirteen royalties and precious metal
streams:
Key Assets:
- La Colorada Mine Gold Stream (Zacatecas, Mexico) –The economic
equivalent of one hundred percent (100%) of the gold produced from
Pan American's operating La
Colorada silver mine, less a fixed price of US$650 per ounce for the life of the mine.
La Colorada produced 2,630 ounces
of by-product gold in 2015, and has provided production guidance of
2,700-2,900 ounces for 2016. The mine is in the midst of a major
expansion which should significantly increase gold production over
the balance of its currently planned mine life.
- San José Mine Net Smelter Return Royalty (Oaxaca, Mexico) – Net smelter return
royalty ("NSR") of one and one-half percent (1½%) on all
metal sales from the Taviche Oeste concession at Fortuna Silver
Mines' operating San José silver and gold mine. The mine recently
began accessing ore from the Taviche Oeste concession, which hosts
the Trinidad North veins, and Fortuna expects to mine these high
grade resources over the next eight years. First production from
this concession began in 2015 with the first NSR payment being made
for the 3rd quarter of 2015.
- Moose River Project NSR (Nova
Scotia, Canada) – NSR of three percent (3%), subject to
an option to repurchase 2% of the NSR for CAD$2.5 million on
the Touquoy deposit at Atlantic Gold Corporation's Moose River open
pit gold project. Atlantic Gold has been moving Moose River through
the engineering and permitting processes and is guiding towards
first production in late 2017.
- Shalipayco Project NSR (Junin, Peru) – NSR of one percent (1%) on all
metal production from the Shalipayco zinc development project.
Shalipayco is an underground, pre-feasibility stage project that
has been advanced by a joint venture lead by Votorantim Metals,
Compañia Minera Milpo S.A., and Pan American.
Other Assets in the Portfolio
- La Bolsa Project Gold Stream (Sonora, Mexico) – Agreement to purchase
five percent (5%) of future gold production at a fixed price of
US$450 per ounce from the feasibility
stage La Bolsa project, an open
pit/heap leach gold/silver project, currently owned by Pan
American.
- Calcatreu Project NSR (Rio
Negro, Argentina) – NSR
of one and one-quarter percent (1¼%), or its equivalent, on all
metals produced from the pre-feasibility stage Calcatreu open
pit/milling gold/silver project, currently owned by Pan
American.
- Tres Cruces Project NSR (La
Libertad, Peru) – NSR
of one and one-half percent (1½%) on the Tres Cruces concessions held by New Oroperu
Resources Inc. Tres Cruces is
under option and is being explored by Barrick Gold Corporation as
potential feed for their nearby Lagunas Norte mine.
- Pico Machay Project NSR (Huancavelica, Peru) – NSR of one percent (1%) on the
scoping stage Pico Machay open
pit/heap leach gold project currently owned by Pan American.
- Taviche Este Project NSR (Oaxaca,
Mexico) – NSR of one and one-half percent (1½%) on Aura
Silver Resources Inc.'s early stage Taviche Este exploration
project. The Taviche Este concessions are located near Fortuna's
San José mine.
- Quiruvilca Mine NSR (La
Libertad, Peru) – A
right to receive 50% of all revenue received, including any sales
proceeds, from Pan American's two percent (2%) NSR on all metal
production from the historic Quiruvilca zinc/silver mine owned and
currently operated by Sociedad Minera Quiruvilca Inversiones
S.A.
- Jojoba Project NSR (Sonora,
Mexico) – NSR of two percent (2%) on the advanced
exploration stage Jojoba gold/silver deposit located near the
recently active Lluvia de Oro open pit/heap leach mine. The project
is currently held by GFM Minera S.A.P.I. de C.V., a private Mexican
company.
- Queylus Project NSR (Quebec,
Canada) – NSR of one and one-half percent (1½%) on
Copper One Inc.'s early stage Queylus copper/gold project.
- Maria Cecilia Project NSR (Peru) – NSR of one and one-half percent
(1½%) on Stellar Mining's early stage Maria
Cecilia gold/silver project.
Valuation of the Portfolio
Roscoe Postle Associates Inc. of Toronto ("RPA") was contracted by
MacMillan to review the valuation of the Portfolio prepared by
Maverix. RPA has provided its report to the Board of
Directors of MacMillan. As a review of valuation of the Portfolio,
RPA carried out preliminary valuations of each of the assets in the
portfolio individually, using either after-tax discounted cash flow
analysis or comparable transaction analysis and, subject to the
assumptions, limitations and qualifications as set out in the
report, estimated that the value of the Portfolio is in the range
of CAD$52 million to CAD$57 million
at consensus long term metal prices. Details from the RPA
report will be disclosed in the MacMillan management information
circular which is expected to be filed and mailed to MacMillan
shareholders within the next several weeks.
Maverix's Board of Directors, Special Advisor and Senior
Executive Team
In addition to Mr. Burns and Mr. O'Flaherty, Maverix will
welcome Mr. J.C. Stefan Spicer, Dr.
Christopher Barnes, and Pan American
representatives Mr. Rob Doyle and
Mr. Christopher Emerson to its Board
of Directors. In addition, Mr. George A.
Brown currently President and a Director of MacMillan will
remain as a Director of the combined company and Mr. David Scott has agreed to act as a Special
Advisor to the Board.
Mr. Geoff Burns previously served
as President and CEO of Pan American from May 2004 until his retirement on December 31st of 2015. During his
tenure, Pan American increased its silver production from 7.5
million ounces to over 26 million ounces annually, to become the
second largest primary silver producer in the world. Mr.
Burns holds a BSc degree in Geology and a M.B.A.
Mr. Daniel O'Flaherty has over
ten years of investment banking and Executive Officer experience.
Mr. O'Flaherty is currently an Executive and Director of Anthem
United, and prior to that an Executive Vice President of Corporate
Development of Esperanza Resources. Mr. O'Flaherty was a director
in the investment banking team of Scotia Capital in Vancouver focused exclusively on the metals
and mining sector and holds a BComm degree from UBC.
Mr. J.C. Stefan Spicer has over
30 years of investment industry experience and is the Chairman,
President and CEO of Central Fund of Canada Limited, which trades
on the NYSE (CEF) and TSX (CEF.A) and passively holds in excess of
US$3.3 billion in unencumbered,
allocated and physically segregated holdings of gold and silver
bullion held in Canada.
Dr. Christopher Barnes is a
medical professional and experienced businessman who after 22 years
of service, recently stepped down as Chief of Medicine for the
Blind River Hospital in Ontario.
Mr. Rob Doyle is the Chief
Financial Officer of Pan American, a role which he has held for the
past 12 years. Mr. Doyle holds professional designations as a CA
and a CFA with a BBSc (Honours) Finance degree from the University
of Cape Town.
Mr. Christopher Emerson is Vice
President of Business Development and Geology for Pan American. He
holds a BEng in Industrial Geology from the Camborne School of
Mines and an MSc in Mineral Exploration from Leicester
University.
Mr. George A. Brown is currently
the President and a Director of MacMillan. Mr. Brown holds a BBA
degree from Bishop's University. He has
over 34 years of experience with mining, exploration, and mining
supply companies, the past 8 years as an officer, director or
consultant with MacMillan.
Mr. David Scott is Vice Chairman
and Managing Director, CIBC Capital Markets. Mr. Scott has been
involved in the majority of significant mining mergers and
acquisitions and equity financing transactions completed in
Canada during the last 30 years
and has extensive contacts in the mining and banking industries
globally. Mr. Scott will act as Special Advisor to Maverix's Board
of Directors.
The Arrangement Agreement
The Arrangement Agreement sets out the terms of the RTO and the
Arrangement involving MacMillan, Maverix, the shareholders of
MacMillan and Maverix, and Pan American, including, among other
things:
- MacMillan consolidating its share capital on a two-for-one
basis (the "Consolidation") with corresponding adjustments
to its outstanding stock options;
- the exchange of common shares of MacMillan for the outstanding
common shares of Maverix at a ratio of one post-Consolidation
MacMillan common share for each one common share of Maverix,
representing a total aggregate issuance of 33.1 million
post-Consolidation common shares of MacMillan to Maverix;
- MacMillan increasing the number of its directors from four to
six and seeking the election of Mr. Geoff
Burns, Stefan Spicer, Dr.
Chris Barnes, Mr. Rob Doyle, and Mr. Christopher Emerson to the Board of Directors.
Mr. George Brown will remain as a
Director of the resulting issuer; and
- MacMillan acquiring the Portfolio from Pan American in exchange
for approximately 43 million post-Consolidation common shares of
MacMillan and 20 million post-Consolidation common share purchase
warrants to acquire common shares of MacMillan;
It is anticipated that at the MacMillan Special Meeting
(described below), MacMillan will also seek approval from its
shareholders to adopt or approve: new corporate by-laws; a change
in its year end to December
31st; and a new stock option plan and equity
based compensation plan (collectively, the "Additional
Matters").
It is also anticipated that the combined company will change its
name to "Maverix Metals Inc." upon completion of the RTO and
continue to trade on the TSX Venture Exchange under the symbol
"MMX".
The terms and conditions of the Arrangement Agreement will be
disclosed in detail in the MacMillan management information
circular which is expected to be filed and mailed to MacMillan
shareholders within the next several weeks.
Scotiabank acted as financial advisor to Pan American.
MacMillan Share Consolidation
MacMillan currently has 6,873,330 common shares outstanding and
stock options exercisable to acquire up to 415,000 common shares.
Assuming no exercise of the stock options, it is anticipated that
on a post-Consolidation basis, MacMillan will have issued and
outstanding 3,436,665 common shares and stock options exercisable
to acquire 207,500 common shares for an aggregate of 3,644,165
common shares on a fully-diluted and post-Consolidation basis.
Post Arrangement Capital Structure
Pursuant to the Arrangement MacMillan will issue approximately
43 million post-Consolidation common shares and approximately 33.1
million post-Consolidation common shares to Pan American and
Maverix, respectively.
Post the completion of the Arrangement and the renaming of
MacMillan to Maverix, Pan American will hold approximately 54% of
the issued and outstanding common shares of Maverix.
Maverix's current shareholders and Subscription Receipt
holders will hold approximately 41% of the issued and outstanding
common shares and MacMillan's current shareholders will hold the
remaining 5% of Maverix. It is expected that Maverix will have
a total of approximately 79.7 million shares issued and outstanding
following the Arrangement.
In addition, Pan American will receive 20,000,000 common share
purchase warrants of MacMillan post-Consolidation (the "PAS
Warrants"). The PAS Warrants are exercisable for five years
after closing of the Arrangement. One-half of the PAS Warrants are
exercisable for CAD$0.70 per share
and one-half are exercisable for CAD$1.00 per share.
Majority Shareholder Agreement
Pan American will enter into a shareholder agreement (the
"Shareholder Agreement") with Maverix, pursuant to which Pan
American and Maverix will agree that, among other things:
- provided that Pan American's shareholdings of Maverix are equal
to or exceed 50% of Maverix's outstanding common shares, Pan
American will be entitled to two nominees for election to the Board
of Directors. If Pan American's shareholdings of Maverix are
between 20% to 50% of Maverix's outstanding common shares, Pan
American will be entitled to one nominee for election to the Board
of Directors;
- Pan American will receive certain pre-emptive rights in respect
of equity financings of Maverix, including certain anti-dilution
rights;
- Pan American's shareholdings in Maverix will be subject to
certain restrictions, including a two year hold period, and
following that, certain rights of orderly disposition on it
shareholdings;
- Maverix granting to Pan American certain qualification rights
in respect of Pan American's shareholdings; and
- Pan American giving to Maverix advance notice and an
opportunity to make an offer to acquire any metal stream or metal
royalty transactions which Pan American contemplates granting.
MacMillan Special Shareholder Meeting
MacMillan will be calling an annual general and special meeting
of its shareholders (the "MacMillan Meeting") to seek
approval of the share Consolidation, the Arrangement, the RTO, the
increase in the number of directors as well as to nominate for
election the proposed new directors as set out above. In addition,
MacMillan will seek the approval of its shareholders for the
Additional Matters. MacMillan will issue a press release at the
time that it provides notice to its shareholders of the MacMillan
Meeting and the dissemination of MacMillan's management information
circular in respect of the MacMillan Meeting. Completion of the
Arrangement is subject to a favourable vote of at least two-thirds
(66 2/3%) of the MacMillan common shares
voted at the MacMillan Meeting.
Board Approval and Voting Support
The Directors of MacMillan have unanimously approved the
transaction and unanimously recommend that MacMillan shareholders
vote in favour of the Arrangement. The Directors and Officers of
MacMillan have entered into voting support agreements whereby the
Directors and Officers have agreed to vote their shares in favour
of the Arrangement at the MacMillan Meeting.
Related Party Disclosure
Certain insiders of Pan American, participated in private
placement financings of Maverix, each constituting a related party
transaction pursuant to Multilateral Instrument 61-101 --
Protection of Minority Security Holders in Special Transactions
("MI 61-101"). Pan American relied on section 5.5(a) of MI
61-101 for an exemption from the formal valuation requirement and
section 5.7(1)(a) of MI 61-101 for an exemption from the minority
shareholder approval requirement of MI 61-101 as the fair market
value of the Portfolio and the Reverse Takeover did not exceed 25%
of the Pan American's market capitalization.
Maverix Metals Inc.
Maverix, which is arm's length to MacMillan, is a private
company incorporated under the laws of British Columbia and founded by Mr.
Geoff Burns and Mr. Daniel O'Flaherty. Prior to signing the
Arrangement Agreement, Maverix undertook three private financings
to raise a total of CAD$5.9 million
through the issuance of common shares and Subscription Receipts.
The subscription receipts are exchangeable into common shares of
MacMillan on a one for one basis, post MacMillan's proposed share
consolidation and upon completion of the RTO transaction. Maverix
was formed with the sole purpose of becoming a mining royalty and
streaming company. Having attracted an experienced management team
and Board of Directors, its primary activity to date has been the
negotiation, financing and structuring for the acquisition of metal
royalties and streams from Pan American, and the related RTO
transaction with MacMillan.
Pan American Silver Corp.
Pan American's mission is to be the world's pre-eminent silver
producer, with a reputation for excellence in discovery,
engineering, innovation and sustainable development. Pan American
has seven operating mines in Mexico, Peru,
Argentina and Bolivia. Pan American also owns several
development projects in Mexico,
USA, Peru and Argentina.
MacMillan Minerals Inc.
MacMillan is an exploration company with a focus on gold and
silver exploration on numerous properties in Mexico. Additional information on the Company
can be viewed at www.sedar.com.
Completion of the transactions described above is subject to a
number of conditions, including the acceptance of the TSX Venture
Exchange and court and shareholder approval. The transaction cannot
close until all requisite approvals are obtained. There can be no
assurance that the transaction will be completed as proposed or at
all.
Investors are cautioned that, except as disclosed in the
management information circular to be prepared in connection with
the transaction, any information released or received with respect
to the RTO or the Arrangement may not be accurate or complete and
should not be relied upon. Trading in the securities of MacMillan
should be considered highly speculative.
The TSX Venture Exchange has in no way passed upon the merits of
the proposed transaction and has neither approved nor disapproved
the contents of this press release.
NEITHER THE TSX VENTURE EXCHANGE NOR ITS REGULATION SERVICES
PROVIDER (AS THAT TERM IS DEFINED IN THE POLICIES OF THE TSX
VENTURE EXCHANGE) ACCEPTS RESPONSIBILITY FOR THE ADEQUACY OR
ACCURACY OF THIS RELEASE.
This news release does not constitute an offer to sell or a
solicitation of an offer to buy any of MacMillan's securities in
the United States. None of the
securities have been and will not be registered under the United
States Securities Act of 1933, as amended (the "1933 Act"),
or any state securities laws and may not be offered or sold within
the United States or to U.S.
persons unless registered under the 1933 Act and applicable state
securities laws, or an exemption from such registration is
available. Any public offering of securities in the United States must be made by means of a
prospectus that contains detailed information about MacMillan and
its management, as well as financial statements.
Forward-Looking Statements
This release contains certain "forward looking statements" and
certain "forward-looking information" as defined under applicable
Canadian and U.S. securities laws. Forward-looking statements and
information can generally be identified by the use of
forward-looking terminology such as "may", "will", "expect",
"intend", "estimate", "anticipate", "believe", "continue", "plans"
or similar terminology. Forward-looking statements and information
include, but are not limited to, statements with respect to the
transactions contemplated under the Arrangement Agreement, the
Arrangement and the RTO, the requisite regulatory, court and
shareholder approvals in respect thereof and proposed future
transactions MacMillan may undertake and their expected timing.
Forward-looking statements and information are based on forecasts
of future results, estimates of amounts not yet determinable and
assumptions that, while believed by management to be reasonable,
are inherently subject to significant business, economic and
competitive uncertainties and contingencies. Forward-looking
statements and information are subject to various known and unknown
risks and uncertainties, many of which are beyond the ability of
MacMillan to control or predict, that may cause MacMillan's actual
results, performance or achievements may be materially different
from those expressed or implied thereby, and are developed based on
assumptions about such risks, uncertainties and other factors set
out here in, including but not limited to: the risk that the RTO
will not be approved by the TSX Venture Exchange, the court and the
shareholders of MacMillan, as applicable; risks and uncertainties
related to the Arrangement not being completed in the event that
the conditions precedent thereto are not satisfied; the inherent
risks involved in the exploration and development of mineral
properties; the uncertainties involved in interpreting exploration
data; the potential for delays in exploration or development
activities; the geology, grade and continuity of mineral deposits;
the possibility that future exploration, development or mining
results will not be consistent with MacMillan's expectations;
accidents, equipment breakdowns, title matters, labor disputes or
other unanticipated difficulties or interruptions in operations;
fluctuating metal prices; unanticipated costs and expenses;
uncertainties relating to the availability and costs of financing
needed in the future; the inherent uncertainty of production and
cost estimates and the potential for unexpected costs and expenses,
commodity price fluctuations; currency fluctuations; regulatory
restrictions, including environmental regulatory restrictions;
liability, competition, loss of key employees and other related
risks and uncertainties. MacMillan undertakes no obligation to
update forward-looking information except as required by applicable
law. Such forward-looking information represents management's best
judgment based on information currently available. No
forward-looking statement can be guaranteed and actual future
results may vary materially. Accordingly, readers are advised not
to place undue reliance on forward-looking statements or
information.
SOURCE Pan American Silver Corp.