Silvercorp Acquires 70% Stake in Chaarat Gold for $162M

Silvercorp Metals has signed a share purchase agreement with Chaarat Gold and a cooperation agreement with the National Investment Agency under the President of the Kyrgyz Republic pursuant to which the company will acquire a 70% interest in Chaarat ZAAV, which holds a 100% interest in the mining license hosting the fully-permitted Tulkubash/Kyzyltash gold projects as well as surrounding exploration licenses hosting the Karator and Ishakuld gold zones in the Tian Shan area of the Kyrgyz Republic for cash consideration of $162M. Additionally, the company entered into a share purchase and shareholders agreement with Kyrgyzaltyn, a wholly-owned subsidiary of the Kyrgyz Republic. This agreement states that upon completion of the acquisition of ZAAV, it will be converted into a joint venture company between Silvercorp and Kyrgyzaltyn. Silvercorp will hold a 70% interest and be the operator of the JVC and Kyrgyzaltyn will hold a 30% free-carried interest. NIA will receive $70M cash in two staged payments. Chaarat will receive a $92M cash payment from Silvercorp conditional upon receipt of the Kyrgyz Government waiver. As the Kyrgyz Government has issued a Waiver for its pre-emptive right, Silvercorp will proceed to make the payment to Chaarat for closing. The JV envisages a two-phase development plan: in Phase 1, Silvercorp will commit to invest $150M for construction of a 4 million tons of ore per year open-pit mine/heap leach operation for the oxidized gold ore from the Tulkubash field. Once in production in 2027-2028, the Tulkubash field is expected to produce approximately 110,000 oz of gold annually for 3-4 years. Phase 2 of the development of Kyzyltash, 2028-2031, includes approximately $400M in investment to develop the Kyzyltash sulfide deposit into a 3 to 4 million tons per year open pit/underground mine. Once in production, the Kyzyltash sulfide deposit could produce approximately 190K-230K oz of gold annually for over 18 years, starting from 2031. Upon completion of the acquisition, the Company will engage the independent engineering firm to update the 2021 feasibility study report and obtain necessary permits for construction based on the most recent designs. Meanwhile, Silvercorp will engage independent engineering firms to work on a preliminary economic assessment study for Kyzyltash and to carry out more definitive drilling in preparation for a feasibility study.