Silver Standard Resources has entered into an agreement with Claude Resources to purchase all of its outstanding common shares to create a high-quality intermediate precious metals producer with assets in the Americas.
All of Claude Resources’ issued and outstanding common shares will be exchanged on the basis of 0.185 of a Silver Standard common share and C$0.0001 in cash per Claude Resources share, representing total consideration of C$1.65 per share of Claude Resources based on the value of Silver Standard’s common shares as of the close of business on March 4. This implies an equity valuation of C$337 million for Claude Resources. The consideration represents a premium of approximately 25% based on the 20-day volume weighted average prices of Silver Standard and Claude Resources and 30% to Claude Resources’ closing price of C$1.27 per common share on March 4.
Upon completion of the transaction, existing shareholders of Silver Standard will own 68% of the combined company, and Claude Resources’ shareholders will own 32% of the combined company.
The deal would combine high-margin precious metals operations with scale and financial strength in attractive mineral belts and political regions, according to Silver Standard. In 2016, the combined company is expected to produce approximately 390,000 gold equivalent oz at cash costs of approximately $735 per equivalent ounce of gold sold.
“The addition of the Santoy and Seabee mine complexes to our operating portfolio demonstrates our disciplined acquisition strategy to deliver growth and value,” said Paul Benson, president and CEO of Silver Standard. “Through this transaction, we are adding a third high-quality, strong cash flowing operation located in Canada, one of the best places in the world to operate mines. We also acquire a large underexplored land position with significant exploration upside. With financial synergies and our strong balance sheet, the combined company is well positioned to maximize value from our assets and pursue further growth opportunities.”
Both companies’ boards of directors have determined that the transaction is in the best interests of their respective shareholders.