Silvermet & Global Atomic Sign Definitive Merger Agreement
Silvermet & Global Atomic Sign Definitive Merger Agreement
TORONTO, Aug. 18, 2017 -- Silvermet Inc. (“ Silvermet ”) (TSX-V:SYI) is pleased to announce that it has entered into a
definitive agreement (the “Definitive Agreement ”) with Global Atomic Fuels Corporation (“Global Atomic ”) pursuant to which
Silvermet will acquire all of the outstanding common shares of Global Atomic by way of a “three-cornered amalgamation” and
subsequently complete a share consolidation and corporate name change (the “Transaction”) to create a high quality uranium
development company, Global Atomic Corporation.
Transaction Structure
In accordance with the terms of the Definitive Agreement, upon completion of the Transaction, shareholders of Global Atomic
(other than Silvermet) will receive 2.147 shares of Silvermet for each share of Global Atomic (the “ Exchange Ratio ”). The
shares of Global Atomic currently held by Silvermet will be cancelled as a result of the Transaction. Immediately following
completion of the Transaction, Silvermet will complete a 2.75:1 share consolidation, resulting in a combined company with
approximately 103 million shares on issue.
Upon completion of the Transaction, the former Global Atomic shareholders (other than Silvermet) will own 50% of the
combined company. The board of the combined company will be reduced to 5 directors, comprising 3 nominees of Silvermet
and 2 nominees of Global Atomic.
Highlights of the Transaction
• The creation of a new uranium development story with best in-class fundamentals, including near term production
• Positive cash flows from zinc operations will support continued project development
• Provides exposure to both uranium and zinc markets
• Creates a unique opportunity for new investors
• Unlocks value for both Global Atomic and Silvermet shareholders as a combined entity
• Proven development team combined under a single portfolio of assets
Benefits to Silvermet Shareholders
• Acquisition of a significant uranium asset at currently attractive valuations, with positive market expectations for
uranium
• One of the highest-grade uranium projects positioned to enter production in the near term
• Global Atomic assets are well understood by Silvermet management
• Near-term growth story with a pipeline of development opportunities within the Global Atomic portfolio
• Flexibility to fund development and expansion pipeline for both Global Atomic and Silvermet’s Iskenderun operations
with existing cash flows
• Access to a wider investor base following the merger, including the current, significant institutional shareholders of
Global Atomic
• Provides added liquidity for the Silvermet shareholders
Benefits to Global Atomic Shareholders
• Improved balance sheet with the addition of cash flow
• Opportunity to reset baseline value for Global Atomic’s assets as a public company
• Public market listing provides mark-to-market reference valuation and liquidity for Global Atomic shareholders
• Cash flow provides working capital for development of Global Atomic’s high-grade DASA uranium project in the Republic
of Niger and reduces the dependency on raising external public capital
• Production timing coincides with expected rise in uranium prices
Stephen G. Roman, Chairman, President and CEO of Silvermet, stated: “ The proposed merger will be transformative for
both companies, creating a uniquely positioned base metals and uranium producer with a diversified asset base.
We see tremendous value potential in the assets of both Silvermet and Global Atomic, and the combination should
allow us to realize this potential in an accelerated timeframe. ”
Board of Directors’ Recommendations
The board of directors of Silvermet (with the exclusion of certain directors that also serve as directors or officers of Global
Atomic), and with the abstention of one director, have determined that the Transaction is in the best interests of Silvermet
based on, among other factors, a fairness opinion delivered by Evans & Evans Inc., financial adviser to Silvermet, and the
benefits set forth above, and have consequently approved the Transaction. Certain directors and senior officers of Global
Atomic have entered into voting support agreements pursuant to which they have agreed to vote their Global Atomic shares in
favour of the Transaction. Such directors and senior officers hold Global Atomic shares representing approximately 12.2% of
Global Atomic’s issued and outstanding shares as at August 17, 2017.
The board of directors of Global Atomic (with the exclusion of certain directors that also serve as directors or officers of
Silvermet not participating) have determined that the Transaction is in the best interests of Global Atomic based on, among
other factors, the benefits set forth above, and have approved the Transaction. Certain directors and senior officers of Silvermet
have entered into voting support agreements pursuant to which they have agreed to vote their Silvermet shares in favour of the
Transaction. Such directors and senior officers hold Silvermet shares representing approximately 12.0% of Silvermet’s issued
and outstanding shares as at August 17, 2017.
Further Transaction Details
The Transaction will be carried out by way of a “three-cornered amalgamation” under the provisions of the Business
Corporations Act (Ontario). Pursuant to the amalgamation, shareholders of Global Atomic will receive shares in Silvermet
based on the Exchange Ratio. Upon completion of the Transaction, the outstanding options, warrants and convertible notes to
purchase common shares of Global Atomic will entitle the holders thereof to common shares of Silvermet with the number of
common shares and/or exercise price adjusted, as appropriate, to reflect the consideration to be received by shareholders of
Global Atomic pursuant to the Transaction.
A special meeting of the shareholders of Global Atomic will be held to consider the Transaction. The Transaction requires the
approval of not less than two-thirds of the votes cast by Global Atomic shareholders. The Transaction is also subject to the
receipt of customary regulatory approvals, including acceptance by the TSX Venture Exchange of the Transaction and the
listing of the Silvermet shares to be issued to Global Atomic shareholders pursuant to the Transaction.
Silvermet will also hold a special meeting of its shareholders to consider the Transaction. The Transaction requires the
approval of a simple majority of the votes cast by disinterested Silvermet shareholders. A total of 16.8 million Silvermet shares
held by those directors and officers of Silvermet who also hold board positions or offices with Global Atomic will not be counted
for the purposes of determining shareholder approval.
Each of Silvermet and Global Atomic has agreed not to solicit alternative proposals. The parties each have the right to
consider unsolicited superior proposals subject to other customary rights, including a right to match competing offers.
Full details of the proposed Transaction, a copy of the fairness opinion prepared by Evan & Evans Inc. for the board of directors
of Silvermet and other information relevant to the Transaction will be included in an information circular to be prepared in
connection with the Silvermet shareholders meeting, which Silvermet expects to mail to shareholders in September 2017.
It is expected that the meetings of shareholders of both Silvermet and Global Atomic to approve the Transaction will be held
near the end of September 2017, and, if approved at those meetings, the Transaction would close shortly thereafter.
Financing
In connection with the Transaction, Cantor Fitzgerald Canada Corporation (“Cantor Fitzgerald ”) has been retained by Global
Atomic to lead a “best efforts” marketed private placement equity financing. Securities issued under the financing will be
included in the Transaction and exchanged for securities of the combined company. Stikeman Elliott LLP is acting as legal
counsel to Cantor Fitzgerald in connection with such financing.
Advisory & Counsel
Evans & Evans Inc. has provided a fairness opinion to the board of directors of Silvermet and is acting as financial advisor to
the Silvermet board. Peterson McVicar LLP is acting as legal counsel to Silvermet.
Cantor Fitzgerald has also been engaged by Global Atomic to provide certain financial advisory services. WeirFoulds LLP is
acting as legal counsel to Global Atomic.
About Silvermet
Silvermet’s major investment is a 49% interest in the Befesa Silvermet Turkey, S.L. (“ BST”) joint venture, which operates a
Waelz kiln facility located in Iskenderun, Turkey through its wholly-owned subsidiary, Befesa Silvermet Iskenderun Celik Tozu
Geri Donusumu A.S. (“BSI”). BSI acquires electric arc furnace dust (“EAFD”) from steel mills and recycles the EAFD through
its Waelz kiln to produce a high-grade zinc oxide concentrate which is sold to zinc smelters throughout the world.
On a 100% basis, BST processed 28,400 tonnes EAFD in the first half (“ H1”) 2017 and 52,900 tonnes in the latest 12 months
(“LTM”). Revenues were C$19.7 million for H1 2017 and C$36.7 million for LTM. EBITDA was C$10.6 million for H1 2017 and
C$18.6 million for LTM.
Silvermet’s joint venture partner, Befesa Zinc S.A.U. (“ Befesa”), is the operator of BST. Befesa has facilities throughout
Europe and processes between 45% and 50% of European EAFD. It also has facilities in Korea as well as the Turkish
operation.
About Global Atomic
Global Atomic is a private Ontario corporation with six exploration permits in the Republic of Niger covering an area of
approximately 750 sq km. Uranium mineralization has been identified on each of the permits, with the most significant
discovery being the DASA deposit. In a technical report dated July 31, 2017, CSA Global Pty Ltd (“ CSA”) estimated the
mineral resources for the DASA deposit as of January 1, 2017, using a 1,200 ppm cutoff as follows:
Tonnes
(millions)
eU3O8
(ppm)
eU3O8
(million lbs)
Indicated 3.7 2,608 21.4
Inferred 7.7 2,954 49.8
CSA estimated the mineral resource based on a cutoff grade of 1,200 ppm
On July 17, 2017, Global Atomic and AREVA Mines S.A. (“ AREVA”) signed a Memorandum of Understanding to advance the
development of the DASA deposit, including the use of AREVA’s mill facilities in Arlit.
AREVA has been mining uranium in Niger at its mines located in Arlit, 80 km north of the DASA deposit, continuously since
1971. AREVA is one of the world’s largest uranium mining companies, with 11,186 tonnes of uranium produced in 2016, from
operations in Canada, Kazahkstan and Niger.
A photo accompanying this announcement is available at http://www.globenewswire.com/NewsRoom/AttachmentNg/6dce4037
-5725-46ba-8262-d3a705ac99fc
Since its inception in 2005, Global Atomic has raised $53 million in equity capital and has over 300 registered shareholders,
including major international institutions. There are presently 67,425,441 common shares of Global Atomic outstanding.
Further information about Global Atomic can be found on its website at www.globalatomicfuels.com.
There are currently 142,104,716 common shares of Silvermet outstanding. Excluding the impact off any fractional shares,
Silvermet will issue 142,078,672 common shares to the Global Atomic shareholders in accordance with the Exchange Ratio.
After consolidation of the Silvermet shares, the combined company will have 103,339,414 common shares outstanding.
Stephen G. Roman, Doug Scharf and Derek Rance are directors of both Silvermet and Global Atomic. Rein Lehari is a director
of Silvermet and an officer of Global Atomic. Tim Campbell is an officer of both Silvermet and Global Atomic. As a group, these
Non-Arms’ Length Parties hold 8.5% of the common shares of Global Atomic and 11.6% of the common shares of Silvermet.
For further information, please contact:
Stephen G. Roman
Chairman, President & CEO
QP Statement
Mr. George A. Flach, BSc., P.Geo., Vice President of Exploration of Global Atomic, has reviewed this press release as the
Qualified Person (QP) as defined in National Instrument 43-101.
THIS NEWS RELEASE IS INTENDED FOR DISTRIBUTION IN CANADA ONLY AND IS NOT AUTHORIZED FOR
DISTRIBUTION TO UNITED STATES NEWSWIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES.
“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. ”
Caution concerning forward-looking statements: The information in this release may contain forward-looking information under
applicable securities laws. Forward-looking statements in this news release include, but are not limited to, information relating
to the timing and completion of a transaction involving Silvermet. This forward-looking information is subject to known and
unknown risks, uncertainties and other factors that may cause actual results to differ materially from those implied by the
forward-looking information. Factors that may cause actual results to vary include, but are not limited to, inaccurate
assumptions concerning the exploration for and development of mineral deposits, political instability, currency fluctuations,
unanticipated operational or technical difficulties, changes in laws or regulations, the risks of obtaining necessary licenses
and permits, changes in general economic conditions or conditions in the financial markets and the inability to raise additional
financing. In particular, there can be no assurance that a transaction will be completed on terms satisfactory to Silvermet, if at
all. Readers are cautioned not to place undue reliance on this forward-looking information. Silvermet does not assume the
obligation to revise or update his forward-looking information after the date of this release or to revise such information to
reflect the occurrence of future unanticipated events except as may be required under applicable securities laws. The
information in this news release includes the following non-IFRS financial measure: EBITDA. These financial measures does
not have any standardized meaning prescribed by IFRS and are therefore unlikely to be comparable to similar measures
presented by other issuers.