/FOR DISTRIBUTION IN THE UNITED STATES/
TORONTO, Oct. 9, 2024
/PRNewswire/ - Americas Gold and Silver Corporation (TSX:
USA) (NYSE American: USAS)
("Americas" or the "Company") is pleased to announce that it has
entered into a binding agreement (the "Definitive Agreement") with
an affiliate of Eric Sprott
("Sprott") and Paul Andre Huet under
which Americas will acquire the remaining 40% interest in the
Galena Complex ("Galena") in Idaho,
USA to consolidate the current Galena joint venture (the
"Acquisition").
Upon the closing of the Acquisition, Paul Andre Huet will be appointed Chairman and
Chief Executive Officer of the Company. Darren Blasutti will remain as President.
The Company also announces that it has entered into an agreement
to complete a bought deal private placement financing of
subscription receipts of the Company (the "Subscription Receipts")
to raise gross proceeds of approximately C$40 million at an
issue price of C$0.40 per
Subscription Receipt (the "Concurrent Financing").
The Company is also in advanced discussions with numerous
lenders with respect to a debt financing to restructure Americas
balance sheet and is in the process of evaluating indicative terms
received. It is anticipated that the Company will enter into
exclusive negotiations in the near-term with the intention of
replacing existing debt facilities.
Key Transaction Highlights:
- Consolidation of Galena: Galena is located within the
prolific Silver Valley in
Idaho and is one of the largest
underground, high-grade, operating silver mines in North America, having produced over 240
million ounces of silver with peak production in excess of five
million ounces of silver per annum in the early 2000s.
Consolidation of the joint venture will streamline operational and
financial decision making, providing for a focused vision at Galena
centered around optimizing and expanding the operation through the
utilization of existing infrastructure. Galena is expected to be a
long-term cornerstone asset supported by a robust reserve and
resource base, excess mill capacity, and opportunity to grow
through future exploration success both underground and potentially
at surface where limited exploration drilling has been
completed.
- Improved balance sheet: Proceeds from the Concurrent
Financing and anticipated debt refinancing are expected to be
utilized to deleverage the Company's balance sheet, replace higher
cost debt instruments, improve the Company's overall cost of
capital, cover transaction expenses, and importantly, advance a
fully-funded plan to optimize and expand the Galena mining
operations.
- Expanded leadership: Paul Andre
Huet will be appointed Chief Executive Officer and Chairman
of the Company following the close of the Acquisition. Mr. Huet has
a proven track record, particularly in optimizing underground
mines, and was most recently Chair and Chief Executive Officer of
Karora Resources Inc. ("Karora") prior to its business combination
with Westgold Resources Limited, which valued Karora at over
A$1.3 billion. Prior to Karora, he
transformed Klondex Mines Ltd. ("Klondex") from a single asset
producer with no milling infrastructure to a multi-mine, multi-mill
producer which was eventually sold to Hecla Mining Company for over
C$600 million.
- Enhanced leverage to silver: With the recently announced
project funding for the EC120 Project at the Cosalá Operations in
Mexico and the consolidation of
Galena, the Company's production, operating margins and near-term
growth potential are expected to steadily increase. Americas
anticipates that approximately 80% of its revenue will be generated
from silver starting in the second half of 2025, providing
investors with an attractive North American-focused silver
investment vehicle with leading exposure to silver.
- Eric Sprott to become
cornerstone investor: Eric
Sprott will become the largest shareholder of the Company,
continuing his long-term support and endorsement of the substantial
value potential of Galena. Eric
Sprott was a cornerstone investor in Karora during the
successful turnaround of operations by Mr. Huet through to the
eventual sale of the Company.
- Attractive value proposition: Future execution related
to the operational improvement and expansion at Galena as well as
the development of EC120 at the Cosalá Operations are expected to
enhance the value proposition of the Company and support a future
re-rating of its shares.
"I am excited to consolidate the Galena Complex and want to
thank Mr. Eric Sprott for his
partnership in growing Galena to one of the largest, high-grade,
silver mines in North America,"
stated Darren Blasutti, Americas'
President and CEO. "I believe Paul
Huet is the perfect executive to lead the Company during the
exciting phase of growth. Mr. Huet has a proven track record as a
mining executive having successfully delivered considerable
shareholder value in his previous roles at both Karora and
Klondex."
"Americas represents a tremendous opportunity based on its
impressive portfolio of assets in North
America and I am excited for the opportunity to optimize
these assets and deliver meaningful value to Americas
shareholders," stated Paul Andre
Huet. "For the past nine months, I have acted as
Sprott's technical representative for the Galena JV and have
witnessed firsthand both a tremendous team and resource base that
has been undercapitalized due to a difficult silver price
environment. I am confident that based on my team's track record of
unlocking the full potential of mining operations, we can
accomplish this again and deliver significant value to Americas'
shareholders. I look forward to working with the Americas team to
continue to build the Company into a leading North American-focused
primary silver producer."
"I remain confident in the value of the Galena Complex and look
forward to continued exposure to this tremendous asset through my
equity ownership in Americas Gold and Silver," stated Eric Sprott. "I see substantial potential
at the Galena Complex, particularly given the robust reserve and
resource base, established infrastructure, and embedded growth
potential. I have a long-standing respect and high regard for Paul,
who has represented my interests in the Galena JV for the previous
nine months. I believe Mr. Huet's mining acumen and expertise in
underground operations makes him the perfect leader to surface the
inherent value of the Galena Complex, Cosalá Operations and other
assets for the shareholders of Americas."
Transaction Details
Under the terms of the Definitive Agreement, the owners of
Sprott will receive 170 million common shares of Americas (the
"Americas Shares") (the "Share Consideration") and US$10 million in cash (the "Cash Consideration")
on closing of the Acquisition. Based on the price of the
Subscription Receipts (as defined below) of C$0.40, the Share Consideration represents
C$68 million. In addition,
Americas will provide owners of Sprott with monthly silver
deliveries of 18,500 ounces for a period of 36 months starting in
or around January 2026.
Americas also intends to issue up to C$4,000,000 of Americas Shares at a price of
C$0.40 per Americas Share, on a
non-brokered private placement basis, to one or more of the vendors
in the Acquisition in conjunction with the Concurrent Financing and
the Acquisition for bridge financing purposes (the "Concurrent
Private Placement"). Closing of the Concurrent Private Placement is
not conditional on closing of the Concurrent Financing or the
Acquisition and closing of the Concurrent Financing or the
Acquisition is not conditional on closing of the Concurrent Private
Placement.
The Acquisition and the Concurrent Financing will be subject to
the approval by a simple majority of the votes cast by shareholders
of the Company. The Acquisition and the Concurrent Financing will
also be subject to applicable regulatory approvals, including
approvals from the Toronto Stock Exchange and NYSE American
Exchange.
Upon completion of the Acquisition and the Concurrent Financing,
existing Americas shareholders will own approximately 53% of the
shares outstanding, Eric Sprott will
own approximately 22%, Concurrent Financing participants will own
approximately 19% and management and directors will own
approximately 6%.
The Company expects to call a shareholder meeting in
October/November for a meeting in December 2024.
Closing of the Acquisition is currently expected to occur prior
to the end of the year.
Leadership and Governance
Capabilities of the key senior management team and Board of
Directors of Americas will be enhanced by the addition of new
members from the previous Karora senior executive team and Board of
Directors, who have significant capabilities in underground mining
operations and a proven track record of shareholder value creation.
The new Board of Directors of the Company will consist of 50% new
directors and 50% existing directors of Americas.
Board of Directors' Recommendation and Voting Support
The Acquisition has been unanimously approved by the Board of
Directors of Americas upon the recommendation of special committee
of independent directors. The Board of Directors of Americas has
recommended that shareholders of the Company vote in favour of the
Acquisition. TD Securities Inc. ("TD Securities") has provided an
opinion to the Board of Directors of Americas, stating that, as of
the date of its opinion, and based upon and subject to the
assumptions, limitations and qualifications stated in such opinion,
the consideration to be paid under the Acquisition is fair, from a
financial point of view, to Americas.
Directors and senior officers of Americas have entered into
voting support agreements pursuant to which they have agreed, among
other things, to vote their Americas Shares in favour of the
Acquisition. Voting support agreements have also been received from
several key Americas shareholders. These support agreements
represent over 13% of the outstanding shares of the Company.
Concurrent Financing
Americas has entered into an agreement with a syndicate of
underwriters (collectively, the "Underwriters"), in connection with
a bought deal private placement offering of 100,000,000
Subscription Receipts at a price of C$0.40 per Subscription Receipt (the "Issue
Price") for gross proceeds to the Company of C$40 million. Americas has also granted the
Underwriters an option to purchase up to an additional 10,000,000
Subscription Receipts at the Issue Price for additional gross
proceeds of up to C$4 million (the
"Option") which will be exercisable, in whole or in part, at any
time prior to closing of the Concurrent Financing. If the Option is
exercised in full, the total gross proceeds of the Concurrent
Financing will be C$44 million.
Each Subscription Receipt shall entitle the holder thereof to
receive, upon satisfaction or waiver of the Escrow Release
Conditions (as defined below), without payment of additional
consideration, one Americas Share, subject to adjustments and in
accordance with the terms and conditions of a subscription receipt
agreement to be entered into upon closing of the Concurrent
Financing (the "Subscription Receipt Agreement"). For the purposes
of the Concurrent Financing and pursuant to the Subscription
Receipt Agreement, the escrow release conditions include: (a) the
satisfaction or waiver of all conditions precedent to the
completion of the Acquisition in accordance with the Definitive
Agreement, other than the issuance of the Share Consideration and
the Cash Consideration; and (b) the receipt of all required board,
shareholder, regulatory and exchange approvals in connection with
the Concurrent Financing and Acquisition (the "Escrow Release
Conditions").
The gross proceeds from the sale of the Subscription Receipts,
less certain expenses and fees of the Underwriters, will be
deposited and held in escrow pending the satisfaction or waiver of
the Escrow Release Conditions by the Company's escrow agent, as
subscription receipt and escrow agent under the Subscription
Receipt Agreement.
If a Termination Event (as defined below) occurs, the escrowed
proceeds of the Concurrent Financing will be returned on
a pro rata basis to the holders of Subscription
Receipts, together with the interest earned thereon, and the
Subscription Receipts will be cancelled and have no further force
and effect, all in accordance with the terms of the Subscription
Receipt Agreement. For the purposes of the Concurrent Financing and
pursuant to the Subscription Receipt Agreement, a "Termination
Event" includes: (a) the Escrow Release Conditions having not been
satisfied or waived prior to 5:00
p.m. (Toronto time) on
February 27, 2025; and (b) the
termination of the Definitive Agreement in accordance with its
terms.
The Concurrent Financing is currently expected to close on or
about October 30, 2024 and is subject
to TSX, NYSE American and other necessary regulatory approvals.
Following completion of the Acquisition, the net proceeds from the
Concurrent Financing are expected to be used for growth initiatives
at the Galena Complex, the payment of the Cash Consideration to
Sprott, the repayment of certain of the Company's existing
indebtedness, the payment of transaction expenses and for working
capital and general corporate purposes.
The Subscription Receipts will be offered by way of: (a) private
placement in each of the provinces of Canada pursuant to applicable prospectus
exemptions under applicable Canadian securities laws; (b) in
the United States or to, or for
the account or benefit of U.S. persons, by way of private placement
pursuant to the exemptions from registration provided for under
Rule 506(b) and/or Section 4(a)(2) of the U.S. Securities Act; and
(c) in jurisdictions outside of Canada and the United States as are
agreed to by Americas and the Underwriters on a private placement
or equivalent basis.
This news release does not constitute an offer to sell or a
solicitation of an offer to buy any of the securities in
the United States, Canada or in any other jurisdiction where such
offer, solicitation or sale is unlawful. The securities have
not been and will not be registered under the United States
Securities Act of 1933, as amended (the "U.S. Securities Act"), or
under any securities laws of any state of the United States, and may not be offered or
sold, directly or indirectly, or delivered within the United States or to, or for the account or
benefit of, a U.S. person or person in the United States, except in certain
transactions exempt from the registration requirements of the U.S.
Securities Act and any applicable securities laws of any state of
the United States. "United States"
and "U.S. person" are as defined in Regulation S under the U.S.
Securities Act.
Advisors
Edgehill Advisory Ltd. and TD Securities Inc. are acting as
financial advisors to Americas, and Torys LLP is acting as legal
counsel to Americas in connection with the Acquisition.
Cormark Securities Inc. is acting as financial advisor to
Sprott, and Bennett Jones LLP is acting as legal counsel to Sprott
in connection with the Acquisition.
Conference Call and Webcast
Americas will host a conference call and webcast on Wednesday October 9, 2024 at 10:00 am EDT.
Conference Dail-in:
- Toll-Free: 1-888-788-0099;
- International: +1 (647) 374-4685
- Meeting ID: 889 7906 0120
Audio webcast:
-
https://us02web.zoom.us/webinar/register/WN_8E6MYENAQlO5N7V6u1De_g
About Americas Gold and Silver Corporation
Americas Gold and Silver Corporation is a high-growth precious
metals mining company with multiple assets in North
America. The Company owns and operates the Cosalá Operations
in Sinaloa, Mexico, manages the
60%-owned Galena Complex in Idaho,
USA, and is re-evaluating the Relief Canyon mine in
Nevada, USA. The
Company also owns the San Felipe
development project in Sonora,
Mexico. For further information, please see SEDAR+ or
www.americas-gold.com.
Technical Information and Qualified Persons
The scientific and technical information relating to the
Company's material mining properties contained herein has been
reviewed and approved by Chris
McCann, P.Eng., Vice President, Technical Services of the
Company. The Company's current Annual Information Form and
the NI 43-101 Technical Reports for its mineral properties, all of
which are available on SEDAR+ at www.sedarplus.ca, and EDGAR at
www.sec.gov, contain further details regarding mineral reserve and
mineral resource estimates, classification and reporting
parameters, key assumptions and associated risks for each of the
Company's material mineral properties, including a breakdown by
category.
All mining terms used herein have the meanings set forth in
National Instrument 43-101 – Standards of Disclosure for Mineral
Projects ("NI 43-101"), as required by Canadian securities
regulatory authorities. These standards differ from the
requirements of the SEC that are applicable to domestic
United States reporting
companies. Any mineral reserves and mineral resources
reported by the Company in accordance with NI 43-101 may not
qualify as such under SEC standards. Accordingly, information
contained in this news release may not be comparable to similar
information made public by companies subject to the SEC's reporting
and disclosure requirements.
Cautionary Statement on Forward-Looking Information:
This news release contains "forward-looking information" within
the meaning of applicable securities laws. Often, but not
always, forward-looking information can be identified by
forward-looking words such as "anticipate", "believe", "expect",
"goal", "plan", "intend", "potential', "estimate", "may", "assume"
and "will" or similar words suggesting future outcomes, or other
expectations, beliefs, plans, objectives, assumptions, intentions,
or statements about future events or performance. Forward-looking
information includes, but is not limited to, the terms and expected
timing of the Acquisition, Concurrent Financing, Concurrent Private
Placement, and the Debt Financing; Americas' expectations,
intentions, plans, assumptions and beliefs with respect to, among
other things, estimated and targeted production rates and results
for gold, silver and other metals, the expected prices of gold,
silver and other metals, as well as the related costs, expenses and
capital expenditures; production from the Galena Complex and Cosalá
Operations, including the expected number of producing stopes and
production levels; the expected timing and completion of required
development and the expected operational and production
results therefrom, including the anticipated improvements to
production rates and cash costs per silver ounce and all-in
sustaining costs per silver ounce; and statements relating to
Americas' EC120 Project, including expected approvals, execution
and timing and capital expenditures required to develop such
project and reach production thereat, and expectations regarding
its ability to rely in existing infrastructure, facilities, and
equipment. Guidance and outlook references contained in this
press release were prepared based on current mine plan assumptions
with respect to production, development, costs and capital
expenditures, the metal price assumptions disclosed herein, and
assumes no further adverse impacts to the Cosalá Operations from
blockades or work stoppages, and completion of the shaft repair and
shaft rehab work at the Galena Complex on its expected schedule and
budget, the realization of the anticipated benefits therefrom, and
is subject to the risks and uncertainties outlined below. The
ability to maintain cash flow positive production at the Cosalá
Operations, which includes the EC120 Project, through meeting
production targets and at the Galena Complex through implementing
the Galena Recapitalization Plan, including the completion of the
Galena shaft repair and shaft rehab work on its expected schedule
and budget, allowing the Company to generate sufficient operating
cash flows while facing market fluctuations in commodity prices and
inflationary pressures, are significant judgments in the
consolidated financial statements with respect to the Company's
liquidity. Should the Company experience negative operating cash
flows in future periods, the Company may need to raise additional
funds through the issuance of equity or debt securities.
Forward-looking information is based on the opinions and estimates
of Americas as of the date such information is provided and is
subject to known and unknown risks, uncertainties, and other
factors that may cause the actual results, level of activity,
performance, or achievements of Americas to be materially different
from those expressed or implied by such forward-looking
information. With respect to the business of Americas, these
risks and uncertainties include risks relating to widespread
epidemics or pandemic outbreak, actions that have been and may be
taken by governmental authorities to contain such epidemic or
pandemic or to treat its impact and/or the availability,
effectiveness and use of treatments and vaccines (including the
effectiveness of boosters); interpretations or reinterpretations of
geologic information; unfavorable exploration results; inability to
obtain permits required for future exploration, development or
production; general economic conditions and conditions affecting
the industries in which the Company operates; the uncertainty of
regulatory requirements and approvals; potential litigation;
fluctuating mineral and commodity prices; the ability to obtain
necessary future financing on acceptable terms or at all; the
ability to operate the Company's projects; risks associated with
the closing and implementation of the Acquisition, Concurrent
Financing, Concurrent Private Placement, and the Debt
Financing; and risks associated with the mining industry such
as economic factors (including future commodity prices, currency
fluctuations and energy prices), ground conditions, illegal
blockades and other factors limiting mine access or regular
operations without interruption, failure of plant, equipment,
processes and transportation services to operate as anticipated,
environmental risks, government regulation, actual results of
current exploration and production activities, possible variations
in ore grade or recovery rates, permitting timelines, capital and
construction expenditures, reclamation activities, labor relations
or disruptions, social and political developments, risks associated
with generally elevated inflation and inflationary pressures, risks
related to changing global economic conditions, and market
volatility, risks relating to geopolitical instability, political
unrest, war, and other global conflicts may result in adverse
effects on macroeconomic conditions including volatility in
financial markets, adverse changes in trade policies, inflation,
supply chain disruptions and other risks of the mining
industry. Although the Company has attempted to
identify important factors that could cause actual results to
differ materially from those contained in forward-looking
information, there may be other factors that cause results not to
be as anticipated, estimated, or intended. Readers are
cautioned not to place undue reliance on such information.
Additional information regarding the factors that may cause actual
results to differ materially from this forward‐looking information
is available in Americas' filings with the Canadian Securities
Administrators on SEDAR+ and with the SEC. Americas does not
undertake any obligation to update publicly or otherwise revise any
forward-looking information whether as a result of new information,
future events or other such factors which affect this information,
except as required by law. Americas does not give any
assurance (1) that Americas will achieve its expectations,
including regarding the closing and implementation of the
Acquisition, Concurrent Financing, Concurrent Private Placement,
and the Debt Financing, or (2) concerning the result or timing
thereof. All subsequent written and oral forward‐looking
information concerning Americas are expressly qualified in their
entirety by the cautionary statements above.
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SOURCE Americas Gold and Silver Corporation
