PERTH (miningweekly.com) – The shareholders of ASX-listed OreCorp have come out in support of the takeover offer from TSX- and NYSE-listed Silvercorp Metals.

Speaking on the sidelines of Diggers & Dealers, OreCorp MD and CEO Henk Diederichs said sentiment from shareholders have been very positive so far.

Under a binding implementation deed signed earlier this week, Silvercorp would acquire all of the shares in OreCorp not already held for 15c in cash and 0.0967 of a Silvercorp share for every OreCorp share held, representing an implied value of 60c for each OreCorp share.

The offer presented a 41.7% premium to OreCorp’s 20-day volume weighted average share price, and a 31.5% premium to the company’s last share trade on August 4.

Silvercorp would also provide OreCorp with some A$28-million in funding through an equity placement to advance the development of its Nyanzaga gold project, in Tanzania. Under the placement, some 70.4-million share would be issued to Silvercorp at a price of 40c a share.

Diederichs on Wednesday pointed out that one of OreCorp’s major shareholders had already backed the deal. Rollason, which holds a 12.3% share in the takeover target, had provided a signed voting intention statement indicating its intention to vote in favour of the transaction, in the absence of a superior offer.

Since the transaction was announced at the start of the week, OreCorp shares have been trending upward, with the company now trading at 51c a share at the time of writing.

Meanwhile, Diederichs noted that funding discussions regarding the Nyanzaga gold project, in Tanzania, has been paused while the Silvercorp offer was on the table.

“Funding discussions have been progressing very well, as we have said previously, and we were envisioning a combination of debt and potentially a commodity-based finance instrument. Those discussions are well advanced, but as a result of this offer, of course, they will not progress in the interim.”

OreCorp was not expecting any cost blow-outs at Nyanzaga from its 2022 definitive feasibility study (DFS), which estimated a capital cost of $474-million. The study estimated that the combined openpit and underground mine would produce some 295 000 oz/y of gold at peak, averaging 250 000 oz/y for the first eight years of the mine life, and 242 000 oz/y for the first ten years.

Life-of-mine average gold production is estimated at 234 000 oz/y over the nearly eleven-year-mine life.

All-in sustaining costs for the life of the operation is estimated at $954/oz.

“We remain very confident that we costed the DFS in this escalating cost environment. We've seen various improvements in cost over the past 12 months or so since completion of the DFS. Examples of that would be manufacturing lead time starting to improve, global shipping times reduced significantly, and shipping costs reduced significantly.

“We haven’t seen the same escalation of costs on the African continent that we have seen in Western Australia, so we remain very confident in the capital cost,” Diederichs said.