/NOT FOR DISTRIBUTION TO UNITED
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- Conference Call Friday, June 8,
2012 at 11am EST (8am PST) -
TORONTO, June 7, 2012 /CNW/ - U.S. Silver Corporation
(TSX:USA) (USOTC:USSIF) ("U.S. Silver") and RX Gold &
Silver Inc. (TSX-V:RXE) (OTCQX:RXEXF) ("RX Gold") are
pleased to announce the signing of a definitive agreement to
combine the two companies (the "Transaction") by way of a
plan of arrangement. The resulting company, to be called U.S.
Silver & Gold Inc. ("U.S. Silver & Gold"), will be a
well-funded, growth-oriented precious metals producer with U.S.
Silver's producing Galena mine in Idaho, RX Gold's producing Drumlummon mine in
Montana and U.S. Silver's Coeur
re-development projects in Idaho.
Highlights of the Transaction
- U.S. Silver shareholders to receive 0.670 U.S. Silver &
Gold shares per U.S. Silver share, resulting in their effective
ownership of approximately 70% of the combined company.
- RX Gold shareholders to receive 0.109 U.S. Silver & Gold
shares per RX Gold share, resulting in their effective ownership of
approximately 30% of the combined company.
- Two - 100% owned U.S. based precious metal operations that
deliver immediate cash and one silver re-development asset:
-
- Combined production base of 2.7 million1 ounces of
silver and 26,5001 ounces of gold
- Opportunities for significant resource growth, brownfield
development and operational and head office synergies
- Meaningful organic exploration potential at Drumlummon and
Silver Valley areas
- Geographic concentration of assets that allows for near term
focus on improving mine planning and execution of cost reduction
strategies.
- Proven board of directors and management team with significant
executive experience in senior precious metals companies and the
capability to deliver results in tough market conditions.
- Improved liquidity and capital markets profile, US$25 million in cash and capital markets
relationships that position the larger, combined company for
further growth through opportunistic and accretive
acquisitions.
- Unanimous recommendations from the boards of both companies
that shareholders vote for the Transaction. The board and
senior management of each company have agreed to vote in favour of
the Transaction. In addition, Sprott Asset Management LP
("Sprott") has signed a lock-up agreement supporting the
Transaction. Sprott is the largest shareholder of both companies
and currently holds approximately 14% of U.S. Silver shares and 8%
of RX Gold shares.
- A key objective of the combined company will be to exceed 5.0
million ounces of silver production at significantly lower cash
costs by 2014.
Upon completion of the Transaction, the combined
company will have approximately 60 million basic common shares
issued and outstanding, and there will be options and warrants
outstanding to acquire an additional 6.3 million shares. The
warrants of both companies will become exercisable for common
shares of U.S. Silver & Gold based on the applicable exchange
ratio and the options of both companies will be exchanged for
options of U.S. Silver & Gold based on the applicable exchange
ratio.
Leadership Team
Upon completion of the Transaction, the board of
directors of U.S. Silver & Gold will be comprised of four
current U.S. Silver board members and four current RX Gold board
members (see appendix for full U.S. Silver & Gold board of
directors) and the management team will be comprised of the
combined best talent from U.S. Silver and RX Gold.
Gordon Pridham,
Executive Chairman and Interim CEO of U.S. Silver will serve as
Chairman of the board of the combined company. Mr. Pridham
has over 30 years of experience as a global finance executive and
serves on a number of public boards of directors and has been a
director of U.S. Silver since November
2008.
Darren Blasutti,
currently President and CEO of RX Gold, will assume the same role
for the combined company. A chartered accountant, Mr.
Blasutti was previously Senior Vice President, Corporate
Development at Barrick Gold, where he reported to the CEO, led
strategic development, and executed more than 25 M&A
transactions over his 13 year tenure.
Robert Taylor, RX
Gold's current Chief Operating Officer will assume the role of COO
of the combined company and with Steve
Long, Senior Vice President of Operations, will lead an
impressive group of operating professionals in Idaho and Montana. Mr. Taylor has close to 40 years of
mining experience and was previously with Kinross Gold, where he served as Vice President
of North American Operations until 2009.
Gord Pridham, U.S. Silver Interim CEO and
Executive Chairman, commented, "The combination of U.S. Silver and
RX Gold will create a strong North American-focused precious metals
producer with a solid portfolio of production and development
assets. The proposed management team and board have proven
capability to optimize existing operations, drive significant cost
savings through synergies and pursue aggressive growth thereby,
creating meaningful value for shareholders."
Darren Blasutti,
President & CEO RX Gold, stated, "The Galena mine and Coeur
re-development project will enhance RX Gold shareholders' exposure
to precious metals production and cash flow. With a rapid
production ramp-up and aggressive consolidation strategy,
underpinned by a much larger and well-funded company, the RX Gold
board and management—all of whom are significant
shareholders—believe the strategic and financial rationale of this
transaction will benefit all shareholders, employees and other
stakeholders. I am confident we will have the financial,
human and capital markets wherewithal to achieve our goal of
exceeding 5 million ounces of silver production by 2014."
Benefits to Shareholders of U.S.
Silver
- U.S. Silver shareholders will own approximately 70% of a
combined growth-oriented, larger, producing precious metals
company.
- In addition to key U.S. Silver board and management, the
combined company gains solid and proven expertise among RX Gold's
management, particularly as it pertains to acquiring, exploring,
developing and operating mining projects, as well as significant
capital markets expertise.
- Participation in the 100% owned high grade gold and silver
Drumlummon mine, which has historically produced more than 1
million ounces of gold and 12 million ounces of silver:
-
- The mine produced 6,625 ounces of gold and 117,635 ounces of
silver in Q1 2012
- Excellent exploration potential for future resource expansion
at Drumlummon and the recently acquired Belmont mine.
- As a result of the effective ownership split, U.S. Silver
shareholders will receive an implied premium of approximately 45%
based on the closing price of C$1.46
on June 6, 2012.
- Participation in the potential re-rating of U.S. Silver
& Gold resulting from the increased size, synergies, liquidity,
research analyst coverage and market visibility of the combined
company.
Benefits to Shareholders of RX Gold
- Participation in the Galena mine, which provides high grade,
narrow vein copper-silver and lead-silver with over 200 million
ounces of silver produced historically and no historic
environmental liabilities:
-
- The mine produced 559,027 ounces of silver in Q1 2012
- NI-43-101 compliant silver reserves of 23.2 million2
ounces and M& I silver resources of 35.1 million3
ounces (inclusive of reserves).
- Participation in the Coeur mine, which is fully funded and
under re-development with expected production by year-end:
-
- Historical production of 39 million ounces of silver and
targeted production rate of 500,000 ounces of silver per year by
end of 2013
- NI-43-101 compliant M& I resources of 3.3 million ounces of
silver (included in Galena resources noted above).
- Increased cash flow and excellent exploration potential with a
dominant land position in the Silver Valley.
- Strong balance sheet with roughly US$25
million in cash.
Further Transaction Details
Sprott, the largest shareholder of both RX Gold
and U.S. Silver, has entered into a lock-up agreement in support of
the Transaction in respect of its approximate 14% ownership of U.S.
Silver and its approximate 8% ownership of RX Gold. This
represents approximately 12% of the issued and outstanding common
shares of the combined company.
Eric Sprott, CEO
& CIO of Sprott, "As a major shareholder of both U.S. Silver
and RX Gold, we are very supportive of this transaction. We believe
it will unlock significant value for shareholders as the newly
formed company will have the production base, management team,
balance sheet and capital markets profile to pursue its growth
strategy."
The board of directors of each of U.S. Silver
and RX Gold has received a fairness opinion with respect to the
Transaction consideration. Both boards have unanimously
approved the Transaction and are recommending approval by their
respective shareholders. All management and board members have
agreed to vote their respective shares in favour of the
Transaction.
U.S. Silver and RX Gold have agreed to not
solicit alternative transactions to the proposed Transaction,
subject to the right to respond to superior proposals. In the
event that a party enters into an agreement to effect a superior
proposal, then such party is obligated to pay to the other party a
termination payment that is outlined in the definitive
agreement.
The Transaction is conditional upon the receipt
of all necessary regulatory approvals, the absence of material
adverse changes, and holders of at least 66 2/3% of the total votes
cast by shareholders of each of U.S. Silver and RX Gold, as
applicable, approving the Transaction at a meeting of each of U.S.
Silver and RX Gold shareholders.
Full details of the Transaction will be included
in the information circulars of U.S. Silver and RX Gold, which are
expected to be filed with securities regulatory authorities and
mailed to U.S. Silver and RX Gold shareholders in early July. It is
anticipated that the shareholders meeting of both U.S. Silver and
RX Gold to approve the Transaction will occur by early August.
Closing of the Transaction is anticipated shortly after the
shareholders meetings.
Advisors and Counsel
U.S. Silver's financial advisor is Cormark
Securities Inc. and its legal counsel is Stikeman Elliott LLP.
Cormark has provided an opinion to the board of directors of U.S.
Silver that, as of the date thereof, the consideration to be paid
under the Transaction is fair, from a financial point of view, to
the shareholders of U.S. Silver.
RX Gold has engaged Davies Ward Phillips &
Vineberg LLP as its legal counsel. Macquarie Capital Markets
Canada Ltd. has provided an opinion to the board of directors of RX
Gold that, as of the date thereof, the consideration to be paid
under the Transaction is fair, from a financial point of view, to
the shareholders of RX Gold.
Conference Call Information
A conference call for the investment community will take place
to discuss the Transaction on Friday, June
8, 2012, at 11am Eastern time
(8am Pacific time). Investors,
analysts, media and other interested parties are invited to
attend.
Webcast/Conference Call
Live Dial-In Information:
Toronto and International:
647-427-7450
North America (Toll Free):
1-888-231-8191
Participant Audio Webcast:
http://www.newswire.ca/en/webcast/detail/989105/1066033
The presentation referenced on the conference
call will be made available for download on the U.S. Silver website
at www.us-silver.com and the RX Gold website at www.rxgold.com. A
replay of the call will be available by dialing
1-855-859-2056 and entering reference number 89952475 or by
accessing the link to the recording that will be posted to the U.S.
Silver and RX Gold websites shortly after the conference call.
About U.S. Silver
U.S. Silver, through its wholly owned
subsidiaries, owns and/or operates the Galena, Coeur, Caladay and
Dayrock silver-lead-copper mines in Shoshone County, Idaho, with the Galena mine
being the second most prolific silver mine in U.S. history. Total
silver production from U.S. Silver's mining complex has exceeded
217 million ounces of silver production since 1953. U.S. Silver
controls a land package now totalling approximately 14,000 acres in
the heart of the Coeur d'Alene Mining District. U.S. Silver is
focused on expanding the production from existing operations as
well as exploring and developing its extensive Silver Valley holdings in the Coeur d'Alene
Mining District. www.us-silver.com
About RX Gold
RX Gold is a gold and silver mining company
focused on growth in North
America. Currently RX Gold is concentrating on continuing
test mining and expanding development at its 100% owned Drumlummon
Mine. The Drumlummon Mine is a bonanza style low sulphidation
epithermal gold and silver deposit with historic production of
approximately one million ounces of gold equivalent. The mine has
never been fully exploited or explored and material that was once
considered waste is now potentially economic. In addition, RX Gold
has discovered a series of entirely new high-grade gold and silver
veins that remain open for expansion in three directions.
www.rxgold.com
Certain information in this press release may
contain forward-looking statements. This information is based on
current expectations that are subject to significant risks,
assumptions and uncertainties that are difficult to predict and the
risk that regulatory approvals may not be obtained or that
conditions of closing will not be satisfied or waved within the
timeframe contemplated. Additional potential risks include: that
U.S. Silver & Gold may not achieve anticipated synergies; loss
of key personnel; reduction in the anticipated cash levels; and,
not achieving production goals stated. Actual results might differ
materially from results suggested in any forward-looking
statements. U.S. Silver and RX Gold assume no obligation to update
the forward-looking statements, or to update the reasons why actual
results could differ from those reflected in the forward
looking-statements unless and until required by securities laws
applicable to the U.S. Silver and RX Gold. Additional information
identifying risks and uncertainties is contained in filings by the
U.S. Silver and RX Gold with the Canadian securities regulators,
which filings are available at www.sedar.com.
Appendix: Proposed U.S. Silver & Gold Board of
Directors
Gordon Pridham
Chairman |
• Over
30 years of experience as a global finance executive
• Extensive special committee and
public board experience with a track record of creating value for
shareholders
• Serves on the public company boards
of Newalta Corporation, NorRock Realty Finance Corporation and
Titanium Corporation, where he is Chairman of the Board |
Darren Blasutti
President and CEO, Director |
• Former
SVP Corporate Development and Investor Relations for Barrick Gold,
reported to President and CEO
• Led Barrick's strategic development
for over 13 years executing over 25 gold mining transactions -
Sutton Resources, Homestake Mining, Placer Dome, consolidation of
the Cortez property from Rio Tinto and responsible for creation of
Barrick Energy to hedge exposure to energy prices |
Hugh Agro
Director |
• Former
EVP Strategic Development at Kinross Gold, where he oversaw
corporate development and exploration until his retirement in
2009
• Held senior positions with Placer
Dome Canada and Deustche Bank |
John Brock
Director |
• Geologist with over 40 years
experience as an executive for 20 public, junior exploration
companies
• Participated in 12 major mineral
deposit discoveries in north and western Canada, Nevada, Mexico,
and Ecuador
• Currently CEO of Pacific Ridge
Exploration and an advisor to the Manex Resources Group |
Alex Davidson
Director |
• Retired in 2009 as EVP Exploration
and Corporate Development at Barrick Gold
• 2005 AO Dufresue Award to recognize
exceptional achievement and distinguished contribution to mining
exploration in Canada
• In 2003 was named Prospector of the
Year by PDAC for discovery of Alto Chicama in Peru |
Louis Dionne
Director |
• Former
Senior Vice President Underground Operations at Barrick Gold
• Currently a director of Detour Gold
Corporation and Aurizon Mining Ltd. |
Alan Edwards
Director |
• Board
of directors for AuRico Gold Inc., Entrée Gold Inc., Copper One
Inc., Oracle Mining Corp. and AQM Copper Inc., where he is Chairman
of the Board
• Senior management positions with
Frontera Copper, Apex Silver Mines, Kinross, Cyprus Amax and Phelps
Dodge |
Tom Ryley
Director |
• Board
of directors for Newalta Corporation, Tribute Resources and
Benefuel Inc., where he is Chairman of the Board
• Former Executive Vice President of
Suncor Energy, where he worked for 25 years in a variety of
roles |
Lorie Waisberg
Director |
• Former
Senior Partner at Goodmans LLP, and EVP of Finance and
Administration of Co-Steel Inc.
• Accredited with Institute of
Corporate Directors and sits on Boards of Tembec and Chemtrade
Logistics Inc. |
__________________________
1 Q1, 2012 production results, annualized.
2 1.47 million tonnes at 490.3 g/t Ag from the Technical
Report Shoshone County, Idaho
prepared for U.S. Silver (dated March 19,
2012) (the "U.S. Silver Report")
3 2.26 million tonnes at 571.6 g/t Ag from the U.S.
Silver Report
SOURCE U.S. Silver Corporation