TORONTO, ONTARIO--(Marketwired - Oct. 24, 2016) -
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Silvermet Inc. ("Silvermet") (TSX VENTURE:SYI) announced today that it has cancelled its loan facility with the European Bank for Reconstruction and Development ("EBRD") and has begun discussions with Global Atomic Fuels Corporation ("Global Atomic") regarding a potential combination.
Silvermet's major investment is a 49% interest in the Befesa Silvermet Turkey, S.L. ("BST") joint venture, which operates a Waelz kiln facility located in Iskenderun, Turkey through its wholly-owned subsidiary, Befesa Silvermet Iskenderun Celik Tozu Geri Donusumu A.S. ("BSI"). BSI acquires electric arc furnace dust ("EAFD") from steel mills and recycles the EAFD through its Waelz kiln to produce a high grade zinc oxide concentrate which is sold to zinc smelters throughout the world.
On December 17, 2015, BSI entered into a US $20 million loan agreement with EBRD, which amount represents 80% of the US $25 million cost for the expansion and modernization of the Iskenderun Waelz kiln facility ("Expansion Project"). The EBRD loan was available for drawdown until December 17, 2016. BSI deferred plans to proceed with the Expansion Project, pending improvements in steel market conditions. In particular, BSI has been waiting for either an improvement in the capacity utilization of Turkish electric arc furnace mills from the current 50% levels or the issuance of EAFD import permits to source EAFD supply from other countries to augment Turkish supply.
With worsening steel market conditions and no positive development in the issuance of import permits, the Board of BSI has decided not to proceed with the Expansion Project at this time. The loan agreement with EBRD has therefore been cancelled, effective October 21, 2016. The Expansion Project will be reconsidered when the availability of EAFD improves. As a result of the cancellation of the EBRD loan facility, the put/call arrangement between Silvermet and Befesa Zinc S.A.U. is no longer in effect.
Global Atomic is a private Ontario corporation founded in January, 2005 by executives with extensive experience in the mining and marketing of uranium. Global Atomic has exploration agreements covering six uranium permits in the Republic of Niger covering an area of approximately 750 km2 that include several uranium deposits. The most significant of these uranium deposits is the DASA deposit. SRK Consulting Canada Inc. prepared an initial technical report on the DASA deposit dated December 3, 2013 and they are engaged to update this technical report to include all recent core drilling, assays and an updated geological model. It is Global Atomics' intention to also complete a Pre-Feasibility Study ("PFS") in 2017/18. Niger is the fourth largest uranium producing country in the world and has a long history of uranium mining, making it a desirable location for accelerated project development. The DASA deposit offers the potential for significant resource expansion, with additional exploration activity planned for 2017. Further information about Global Atomic can be found on its website at www.globalatomicfuels.com.
The Board of Silvermet has given management the mandate to study various options to increase value and liquidity for the Silvermet shareholders. Based on initial discussions between Silvermet and Global Atomic, the Board of Silvermet has decided to pursue the potential combination of Silvermet and Global Atomic. Any proposed transaction will be subject to the Boards of both companies reaching agreement on relative values and entering a definitive agreement. The Silvermet Board will also obtain a fairness opinion in respect of any proposed transaction, and will provide such fairness opinion, along with other disclosure materials, to the Silvermet shareholders in connection with a shareholders' meeting to approve any proposed transaction.
The transaction under consideration would propose Silvermet acquiring the shares of Global Atomic in exchange for shares of Silvermet. It is expected that a transaction with Global Atomic will significantly increase the market capitalization and liquidity of Silvermet shares and improve the ability of the combined entity to raise equity for on-going project development and exploration.
Since its inception in 2005, Global Atomic has raised $53 million in equity capital and has over 300 registered shareholders, including major institutions. The proposed transaction between Silvermet and Global Atomic is expected to benefit all the shareholders of each company. If the parties are able to reach an agreement, it is anticipated that a transaction could be completed by the end of April, 2017. There is currently no agreement between the parties regarding any transaction.
Shares Outstanding: 142,104,716
Mr. George A. Flach, BSc., P.Geo., Vice President of Exploration of Global Atomic, has reviewed this press release as the Qualified Person (QP) as defined in National Instrument 43-101.
"Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release."
Caution concerning forward-looking statements: The information in this release may contain forward-looking information under applicable securities laws. This forward-looking information is subject to known and unknown risks, uncertainties and other factors that may cause actual results to differ materially from those implied by the forward-looking information. Factors that may cause actual results to vary include, but are not limited to, inaccurate assumptions concerning the exploration for and development of mineral deposits, political instability, currency fluctuations, unanticipated operational or technical difficulties, changes in laws or regulations, the risks of obtaining necessary licenses and permits, changes in general economic conditions or conditions in the financial markets and the inability to raise additional financing. Readers are cautioned not to place undue reliance on this forward-looking information. The Company does not assume the obligation to revise or update his forward-looking information after the date of this release or to revise such information to reflect the occurrence of future unanticipated events except as may be required under applicable securities laws.