Klondex Responds to Unsolicited Acquisition Offer from Silvercorp Metals
Klondex Mines Ltd. announced today Silvercorp Metals Inc. has launched an unsolicited offer to acquire all of the outstanding shares of Klondex for 0.5 of a common share of Silvercorp for each share of Klondex. Klondex was only made aware of Silvercorp’s intentions to make an offer late in the evening on Friday, June 5, 2009.
In its NI 43-101 update on March 31, 2009, Klondex defined an Indicated Mineral Resource estimated at 5,043,033 metric tons averaging 10.11 grams per metric ton (gpt) for 1,639,822 ounces of gold equivalent and an Inferred Mineral Resource Estimated at 1,833,423 metric tons grading 8.63 gpt for 508,799 ounces of gold equivalent.
For the past several months Klondex has been involved in a range of active discussions with prospective gold industry and financial partners regarding possible funding for the planned underground and bulk sampling program on its high-grade Fire Creek deposit in North Central Nevada. Consistent with these existing discussions as well as its obligation and focus on delivering shareholder value, Klondex’s Board plans to consider Silvercorp’s offer and its potential impact on the interests of Klondex’s shareholders and other stakeholders. Klondex’s Board of Directors remains committed to delivering value for shareholders over the long term and believes Klondex’s strategy, accomplishments and efficient use of capital clearly demonstrate this. The Klondex Board will convene promptly to continue its deliberations and review the Silvercorp offer.
William Solloway, President of Klondex, stated: “We are pleased that the industry has begun to recognize the substantial value that we have built at Fire Creek but are surprised by the haste of Silvercorp in making this unilateral bid for our prized assets. We have come too far in developing our high-grade resource at Fire Creek to make any hasty decisions regarding the best path forward. Securing the required capital to pursue our underground program is our primary focus, and we have been looking to achieve this goal on the best possible terms and with the least possible dilution to our shareholders.”
Klondex recommends that its shareholders defer making any decision until the Board has had an opportunity to fully review the offer and to make a formal recommendation on its merits. Shareholders will be notified by the Board through a news release and circular in accordance with applicable securities laws.
As of June 5, 2009, Klondex had 26,719,804 shares currently issued and outstanding.
