First Majestic Silver Corp and Orko Silver Corp announced that the companies have entered into a definitive agreement (the "Arrangement Agreement") pursuant to which First Majestic has agreed to acquire all of the issued and outstanding common shares of Orko for consideration of 0.1202 of a common share of First Majestic (the "Exchange Ratio") plus USD 0.0001 in cash per Orko common share. The offer implies a value of CAD 2.72 per Orko share based on the closing prices of both First Majestic and Orko's common shares on the Toronto Stock Exchange and TSX Venture Exchange, respectively, on December 14, 2012. The offer represents a premium of approximately 69% to Orko's 30 day volume weighted average price for the period ending December 14th 2012. The transaction will be implemented by way of a plan of arrangement (the "Arrangement") under the Business Corporations Act (British Columbia).
Benefits to first Majestic shareholders
1. Adds La Preciosa, one of the largest undeveloped primary silver resources globally, to First Majestic's already robust growth portfolio of Mexican assets
2. Further enhances First Majestic's land position in the Sierra Madre Belt, one of the world's most prolific silver and gold regions
3. Increases leverage to silver with very large, predominantly silver, resource base
4. 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
5. La Preciosa, located in the State of Durango, 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
6. 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
benefits to Orko shareholders
1. Provides Orko shareholders with a significant premium to the current market price
2. Opportunity to participate in a leading silver producer through an all-share transaction
3. Diversifies Orko's single asset risk profile and provides exposure to First Majestic's diversified portfolio of producing and development assets in Mexico
4. Obtains access to First Majestic's mine building experience, operating expertise and financial strength reducing risk of the development of La Preciosa
5. Enhances 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
Mr Keith Neumeyer president & CEO of First Majestic stated that "We believe this transaction provides an exceptional opportunity for the shareholders of both companies. 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."
Mr Gary Cope president & CEO of Orko said that "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."
