SSR Mining agrees to buy Roxmore Resources for US$464M plus spinout
Roxmore shareholders would receive C$6.75 a share and 85.01 per cent of a new explorer holding three exploration interests.
Theo Marchetti
Nevada's Converse gold project is the subject of a cash acquisition agreement announced Tuesday, offering C$6.75 for each target share. SSR Mining Inc. TSESSRM NASDAQSSRM agreed to acquire the project's owner at an estimated US$464 million equity value, excluding an exploration spinout.
A wholly owned SSR affiliate would acquire all outstanding shares of Roxmore Resources Inc. TSERM through a plan of arrangement under British Columbia's Business Corporations Act. Under the terms SSR announced, former Roxmore shareholders would own 85.01 per cent of the new explorer, while SSR would hold 14.99 per cent.
SSR closed at US$35.44 on Nasdaq at 4 p.m. EDT Monday, according to Google Finance's NASDAQSSRM page. Roxmore's TSX quote showed C$5.32 at 4 p.m. EDT on Oct. 9 on Google Finance's TSERM page. Both prices predate Tuesday's announcement.
SSR's proposed development approach targets initial Converse production in 2033. The company estimates the project could add approximately 150,000 to 170,000 ounces of gold annually over a mine life exceeding 10 years.
Shareholders Would Retain Three Exploration Interests
The new company, called SpinCo, would hold interests in the Rattlesnake Hills Project, Shabu River Project and Newton Property. Tuesday's release says it would be funded with US$10 million in cash and led by key members of Roxmore's current management team.
The arrangement would therefore give selling shareholders cash for their Roxmore shares and continued exposure to exploration through SpinCo. SSR would acquire Converse while retaining a minority interest in the separate explorer.
SSR said the cash consideration represents a 27 per cent premium to Roxmore's TSX closing price on Oct. 9. The company put the premium to the 20-day volume-weighted average price at 47 per cent, also excluding SpinCo's value.
Tuesday's announcement estimated the transaction's enterprise value at US$392 million. The quoted equity and enterprise values exclude the value of the exploration spinout.
"SSR Mining will fund the cash component of the consideration from the Company's current balance sheet," the company said in Tuesday's release.
Marigold Would Anchor Development In Nevada
Converse lies six kilometres west of SSR's Marigold Complex on Nevada's Battle Mountain to Eureka Trend. SSR proposes developing it as a contiguous asset to the existing operation.
In Tuesday's release, SSR estimated at least US$200 million in undiscounted savings over the mine's life compared with developing Converse separately. These would come from eliminating duplicate site and corporate administration costs and improving procurement and supply chains.
Shared maintenance facilities, mining fleet optimization and shared water rights are additional opportunities the company said it would evaluate in future technical work. They are separate from the savings already included in its estimate.
SSR estimated initial construction costs at US$800 million to US$900 million in Tuesday's announcement, with no material capital spending expected until the early 2030s. Its proposed approach uses Marigold's operating experience and recent engineering work to inform Converse's cost assumptions.
Roxmore's own Sept. 17 news notice reported exploration results and expanded resource potential at Converse. SSR said further drilling could expand resources and support their conversion.
Read more: Silver One Resources identifies 13 exploration targets at Candelaria
SSR's near-term work would focus on environmental baseline studies, permitting, flowsheet optimization and reducing technical risks. The development timetable targets initial Converse production in 2033.
