Celsius Resources Limited has entered into a non-binding term sheet and a binding subscription agreement with Silvercorp Metals Inc., a Canadian-based mining company engaged in the acquisition, exploration, development and mining of mineral properties.

Silvercorp proposes to acquire all of the outstanding shares of CLA at a fixed price of A$0.03 per share in exchange for consideration comprising 90 per cent Silvercorp shares as well as 10 per cent cash.

The consideration of A$0.030 per share represents a 76 per cent premium to the 20-day volume weighted average price of Celsius shares as of the close of trading on the ASX on 11 May 2023.

The implied value of the proposed acquisition (should it proceed) is approximately A$56 million.

Using Silvercorp’s current share price of CA$4.64 (A$5.14) as of the close of trading of Silvercorp shares on TSX on 12 May 2023, the proposed acquisition will result in Silvercorp issuing approximately 9.7 million Silvercorp shares and A$5.6 million to the shareholders of Celsius.

Concurrent to the proposed acquisition, should it proceed, it is anticipated that Celsius shareholders will, via an in specie distribution, receive shares in a new exploration company (SpinCo) which will hold all of Celsius’ rights and interests with respect to the Sagay (Philippines) and Opuwo Cobalt (Namibia) projects via a demerger, subject to Celsius obtaining the necessary shareholder and regulatory approvals.

Should the demerger proceed, the SpinCo shares are anticipated to be distributed on a 10 Celsius shares for 1 SpinCo share basis to Celsius shareholders, who taking into account the proposed investment into SpinCo referred to below, will hold approximately 87 per cent of SpinCo.

SpinCo will seek listing on the Australian Securities Exchange or on AIM, a market operated by the London Stock Exchange, via the demerger and concurrent initial public offering. Silvercorp has agreed, under the non-binding term sheet, to invest A$4 million in SpinCo, valued at a post-financed market capitalisation of A$30 million.

Additionally, Celsius and Silvercorp have executed a binding subscription agreement for A$5 million at a subscription price of A$0.015, to be primarily used as interim funding for its Maalinao-Caigutan-Biyog Copper-Gold Project in the Philippines.

Celsius and Silvercorp will now commence negotiations towards the execution of the necessary binding transaction documents and agreements which will implement the proposed acquisition.