Silvercorp to acquire Adventus for C$200 million

Silvercorp Metals (TSX: SVM) has entered into a definitive arrangement agreement to acquire Adventus Mining Corporation (TSXV: ADZN) by way of a plan of arrangement.

The implied equity value of the transaction is about C$200 million on a fully diluted in-the-money basis. The transaction is accretive on a net asset value per share, as well as on a mineral reserves and mineral resources basis.

Under the terms of the arrangement agreement, each holder of the common shares of Adventus will receive 0.1015 of one Silvercorp common share in exchange for each Adventus share.

The exchange ratio implies consideration of C$0.50 per Adventus share based on the 20-day volume-weighted average prices (VWAP) of Silvercorp shares on the Toronto Stock Exchange (TSX) on 25 April 2024.

This represents a premium of 31% based on the 20-day VWAP of Silvercorp on the TSX and Adventus on the TSX Venture Exchange (TSX-V), both as of 25 April 2024.

At closing, existing Silvercorp and Adventus shareholders will own approximately 81.6% and 18.4%, respectively, of Silvercorp shares outstanding on a fully diluted in-the-money basis.

Silvercorp says the strategic rationale for the acquisition includes it providing immediate asset, geographic, and metal diversification. Pro forma asset portfolio consists of exposure to China and Ecuador, increased gold exposure, as well as metals (silver, copper, lead, and zinc) that are key for a low-carbon future.

The company says the addition of the high margin and advanced El Domo project should also significantly enhance Silvercorp’s near-term production profile.

Silvercorp says it has the technical capabilities to bring El Domo into production on an accelerated basis, having built eight mines in its current operations, along with three flotation mills of similar size to El Domo (with a new 1,500tpd flotation mill under construction at Ying), and three tailings storage facilities.

The company adds that Adventus’ PEA stage Condor asset provides further optionality and upside, including 2021 PEA for Condor North highlighted a 12-year mine life with average annual payable production of 187,000 ounces of gold and 758,000oz of silver at a by-product AISC of US$839/oz over the life of the mine.

Silvercorp Chairman and CEO Dr Rui Feng says the transaction will create a new globally diversified green metals producer.

“It presents the opportunity for us to leverage our technical expertise and strong balance sheet to unlock value for all shareholders by constructing the El Domo project,” he says.

“We look forward to working with the Government of Ecuador and local communities, as well as leveraging the existing Adventus and Curimining teams, to grow our business in Ecuador which will generate sustainable economic, social, and environmental value for all stakeholders.

We would also like to acknowledge the hard work and contributions to the El Domo project by our future partners at Salazar Resources. Silvercorp will continue to work collaboratively with Salazar as El Domo is advanced into construction and ultimately operations.” 

Adventus President, CEO, and Director Christian Kargl-Simard says he believes that Silvercorp strongly shares Adventus’ values, in addition to bringing financial strength and experience from global operations.

“Combining the companies positions us well to deliver on El Domo and our other projects in collaboration with the government, local communities, and all stakeholders,” he adds.

The advanced high-grade copper-gold El Domo project, 75% owned by Adventus, covers about 17ha with a buffer of 118ha (2.9km2 in total). El Domo is located in central Ecuador, some 150km northeast of the major port city of Guayaquil about a 3-hour drive. The project spans low-lying hills and plains between 300 to 900m above sea level.

Concurrent with entering into the arrangement agreement, Silvercorp and Adventus entered into an investment agreement in which Silvercorp will subscribe for just over 67.441 million Adventus shares at an issue price of C$0.38 per share, or C$25.627 million in the aggregate.

The completion of the Placement has been conditionally approved by the TSX-V and remains subject to final acceptance by the TSX-V on behalf of Adventus for the listing of the Adventus shares to be issued to Silvercorp.

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Written By Adam Orlando Editor-in-Chief Adam Orlando has more than 20 years’ experience in the media having held senior roles at various publications, including as Asia-Pacific Sector Head (Mining) at global newswire Acuris (formerly Mergermarket). Orlando has worked in newsrooms around the world including Hong Kong, Singapore, London, and Sydney.