Wednesday, 19 December 2012

First Majestic buys Orko Silver in $387 mln friendly deal

First Majestic Silver Corp. (TSE:FR)(NYSE:AG) is strengthening its presence in Mexico by acquiring Orko SilverCorp. (CVE:OK) for $387 million.
The friendly deal gives First Majestic access to Orko's large silver deposits in the state of Durango.
The offer values each Orko share at $2.72, a premium of more than 70 per cent over its closing price of $1.58 on Friday. Both companies say the transaction would be attractive to their respective shareholders.
"We believe this transaction provides an exceptional opportunity for the shareholders of both companies," First Majestic president & CEO Keith Neumeyer said.
"Orko is an excellent strategic fit within First Majestic, further strengthening our presence in Mexico by providing another high quality development project to our existing asset portfolio in an area that we are already very familiar with. Orko shareholders stand to realize a substantial premium and to capitalize on the track record of value creation that First Majestic brings."
Orko's president & CEO Gary Cope added: "We believe this transaction is highly attractive to Orko shareholders and is the culmination of many years of success Orko has had in growing and advancing one of the largest undeveloped primary silver deposits in the world. 
"We are very pleased to join forces with First Majestic in a transaction which brings the necessary capital and mine building expertise that is required to advance La Preciosa to production."
Orko's board of directors has unanimously approved the transaction and will provide a written recommendation that Orko security holders vote in favour of Monday's deal, which still requires shareholder and regulatory approvals.
Orko owns a 100% interest La Preciosa Project that covers 80,000 acres of contiguous mining claims while First Majestic owns three producing silver mines and two development projects in Mexico: La Encantada, La Parrilla, Del Toro, San Martin and La Luz.
In terms of benefits to Orko shareholders, the deal provides them the opportunity to participate in a leading silver producer through an all-share transaction and diversifies Orko's single asset risk profile and provides exposure to First Majestic's diversified portfolio of producing and development assets in Mexico.
Monday's deal also enhances Orko's capital markets presence with a pro forma market capitalization in excess of $3 billion based on current share prices including increased analyst coverage, trading liquidity and a broader institutional investor base.
Monday's deal adds La Preciosa, one of the largest undeveloped primary silver resources globally, to First Majestic's already robust portfolio of Mexican assets and further enhances First Majestic's land position in the Sierra Madre Belt, which is one of the world's most prolific silver and gold regions.
First Majestic said that La Preciosa's planned development timeline blends well with First Majestic's existing organic growth strategy, with anticipated start up timed after the ramp up of Del Toro and La Guitarra.
La Preciosa is in close proximity to First Majestic's existing La Parrilla and Del Toro mines, allowing First Majestic to strengthen its position in the area, employ its in-country expertise in mine development and realize potential operational synergies.
The transaction is accretive to First Majestic's net asset value per share, resources per share and longer-term production and cash flow per share, the company said.
In October, Orko Silver attended Proactive Investors' One2One forum in Toronto. The event provides investors direct access to top executives of some of the nation’s most dynamic growth companies. One2One forums also take place in the U.K., Ireland and Australia.

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