Defiance Silver Corp. [DEF-TSXV], and ValOro Resources Inc. [VRO-TSXV] said Friday December 28 that they expect to complete a previously announced merger on December 31, 2018. This will result in the creation of a diversified explorer with an advanced portfolio of Mexican silver and gold projects, the companies said.
ValOro shares were active on the news, rising 28.6% or $0.03 to 13.5 cents. Defiance was up 17.50% or $0.035 to 23.5 cents.
Defiance is a silver explorer and developer with a focus on advancing the San Acacio deposit in the Zacatecas Silver District, central Mexico. The company is aiming to expand San Acacio to the point where it ranks as one of Mexico’s premier high-grade wide vein silver deposits. San Acacio contains an initial deposit with an inferred mineral resource estimated at 16.9 million ounces in 2.9 millon tonnes, grading 181.94 grams per tonne silver.
ValOro’s primary focus is on the 100%-owned Tepal gold/copper project in Michoacan state, Mexico. A 2017 preliminary economic assessment (PEA) is based on a measured and indicated resource of 4 million ounces of gold. The company continued exploration work on the Tepal Project during 2017 and 2018 and has designed a drill program to investigate the possible expansion of the resource and test new targets.
The combined company will continue as Defiance Silver Corp., trading under the symbol DEF. It will have 120.07 million common shares outstanding. Of that amount, 86% will be held by shareholders of Defiance, leaving the balance of 13.92% in the hands of former ValOro shareholders.
“We are pleased to complete the merger with ValOro and look forward with a shared common vision to unlock further exploration potential at the San Acacio silver project and Tepal gold project,” said Defiance President and CEO Peter Hawley, who will lead the combined management team.
“We are very excited to move forward and thank our shareholders for their support,” added ValOro President and CEO Craig Dunham.
In support of this transaction, Defiance’s principal lender has agreed to increase its loan facility from $700,000 to approximately $1.5 million on similar terms. As partial consideration for the increased loan facility, Defiance will issue 2.34 million bonus warrants to the lender.
Each warrant will entitle the lender to acquire one common share of Defiance at $0.18 until December 21, 2019. Issuance of the bonus warrants is subject to the approval of the TSX Venture Exchange.
Under the terms of the merger agreement, each ValOro share is receiving 0.71 common share of Defiance for each share of ValOro. This represents a 54.3% premium to the closing price of ValOro’s shares, based on the closing price of Defiance’s shares on the TSX Venture Exchange on the date that the letter of intent was signed.