First Majestic to Acquire Normabec Mining Resourcesadmin
First Majestic Silver Corp. and Normabec Mining Resources Ltd. have entered into a definitive agreement whereby First Majestic will acquire Normabec. The transaction will be an all-share transaction by way of plan of arrangement.
The Agreement, among other things provides that First Majestic will acquire Normabec in exchange for the issuance directly to Normabec’s shareholders of 0.060425 First Majestic shares for each Normabec common share outstanding (the “Exchange Ratio”). In addition to Normabec’s current shareholders receiving shares in First Majestic, they will also receive shares in a newly formed public company (“NEWCO”) which will hold Normabec’s interest in the Pitt Gold Property (and all other Quebec mineral interests currently held by Normabec) which will continue to be managed by the existing Normabec management. Subsequent to the completion of the Arrangement, First Majestic will invest, via a private placement, C$300,000 in this public company which will represent approximately 10% of NEWCO.
The Agreement implies a value for each Normabec share of C$0.1806 (C$0.1406 in First Majestic shares and C$0.04 in NEWCO shares) and represents a premium of 47.7% to Normabec shareholders based on the average prices of First Majestic’s and Normabec’s common shares for the 20 trading days ended September 11, 2009. Normabec has approximately 75.3 million shares issued and outstanding.
Normabec’s primary asset is the Real de Catorce Silver Project which is located in the northern portion of San Luis Potosi state, Mexico. The property consists of approximately 6326 hectares of mineral rights which contains a drilled NI 43-101 compliant resource of 33.69 million Measured & Indicated silver ounces plus 13.10 million Inferred silver ounces.
Keith Neumeyer, President & CEO of First Majestic, stated, “We are continually looking for ways to expand our business including potential acquisitions. Based on our due diligence we believe the Real de Catorce Silver Project is an excellent strategic fit and has the potential to become another important asset for our company. We believe this transaction will also substantially benefit Normabec shareholders by not only allowing them to participate in our future upside, but also allowing them to retain 100% of the growth potential of the Pitt Gold Project in Quebec.”
Robert Ayotte, CEO and President of Normabec, stated; “Our strategic approach has always been to speed-up the development of the tremendous Real de Catorce Silver District. By this agreement we feel that our shareholders will participate not only in the development of this key asset but also in other divisions of First Majestic in production. Their talented technical and mining team have been a key factor for this association.”
The proposed Arrangement has the unanimous support of the boards of directors of both Normabec and First Majestic and the Normabec board of directors has resolved to recommend that the Normabec shareholders vote in favour of the Arrangement at the special meeting. Lockup and support agreements have been signed by each officer and director and the largest shareholder of Normabec to support the Arrangement. An information circular is expected to be mailed to all shareholders by no later than mid-October and the proposed Arrangement is expected to close in early November. The Agreement includes representations, warranties and covenants typical of a transaction of this nature. The proposed Arrangement is subject to the approval of at least 66 2/3% of the votes of Normabec shareholders represented in person or by proxy at a special meeting of Normabec shareholders and the approvals of the Quebec Superior Court and other appropriate regulatory authorities and certain other conditions customary for transactions of this nature. A break-up fee of $350,000 is payable by either party in the event the Agreement is terminated in certain circumstances, including in connection with Normabec entering into a superior transaction.
First Majestic has engaged Gryphon Partners as its financial advisor and McCullough O’Connor Irwin LLP as its Canadian legal advisor. Normabec has engaged Haywood Securities Inc. as its financial advisor and Miller Thomson LLP as its Canadian legal advisor. Haywood Securities Inc. has provided an opinion to the board of directors of Normabec that, subject to Haywood Securities’ assumptions and limitations and its review and analysis of current market conditions, the consideration to be received by the shareholders of Normabec, other than First Majestic and its affiliates or associates, pursuant to the Agreement is fair, from a financial point of view.