Silver47 Exploration (TSX.V: AGA, FSE: QPE, WKN: A408EQ) and Summa Silver have completed their court-approved merger, and the combined company will now operate under the name Silver47 Exploration. The merger has created a leading U.S.-focused exploration and development company with an attractive portfolio of silver-rich projects in the U.S. states of Alaska, Nevada, and New Mexico.
According to the terms of the transaction, Summa Silver shareholders received 0.452 common shares of Silver47 Exploration for each common share of Summa Silver. Legally, Summa Silver has become a wholly-owned subsidiary of Silver47 through the transaction. However, its stock market listing will be discontinued, and Summa shares will be delisted from the TSX Venture Exchange by August 5.
By combining the previously separate resources, the new Silver47 Exploration now holds a mineral resource of approximately ten million ounces of silver equivalent with an average grade of 333 g/t silver equivalent in the indicated category, and an additional 236 million ounces of silver equivalent with an average of 334 g/t silver equivalent in the inferred category.
At least as important as the already delineated resource is the future potential offered by the projects. While no one can guarantee attractive new silver discoveries in the future, the chances of realizing them in the coming months and years are very high given the size and attractiveness of the projects.
Strategic Reasons for the Transaction
A key reason for the merger was the creation of a leading U.S.-focused exploration and development company for high-grade silver deposits. By combining Silver47’s Red Mountain project in Alaska with Summa’s Hughes project in Nevada and the Mogollon project in New Mexico, a first-class portfolio of high-grade silver deposits in the United States is created, increasing the combined company’s size, silver leverage, and attractiveness to investors.
Not only is the current resource expected to be continuously expanded over time, but there is also significant upside potential on the stock market. The merged company is undervalued with an EV/oz value of US$0.33/ounce silver equivalent, considering its reported resource.
Easier Capital Raising
As a combined company, the new Silver47 Exploration will gain greater attention from investors. Over time, this should lead to the market recognizing the current undervaluation and correcting it through higher stock prices. In addition, there is organic growth potential through new silver discoveries. If both factors come together and the price of silver possibly continues to rise towards US$50 per troy ounce, the share price and market valuation could be at a completely different level in twelve months than they are today.
It is expected that not only will the stock’s liquidity increase on the stock exchange, but also that access to the capital market will become better and easier. This point will become important if the combined Silver47 Exploration needs to conduct capital increases to finance its exploration activities in the future or negotiates financing with banks and other capital providers.
Continuous Growth and High Value Creation are Targeted
Silver47 can grow not only organically by expanding the existing resource through successful drilling. The management can also well imagine further acquisitions if they contribute to making the company even stronger and more attractive. The focus is on acquiring projects that are attractive and undervalued and located in legally secure areas.
Shareholders of the merged company are likely to benefit from reduced administrative and overhead costs, cost savings, and prioritized work programs and assets that could drive a potential revaluation of the merged company.
Compared to the previous situation, where the development of silver projects was carried out in two independent companies, the merger offers the opportunity to pay costs that would otherwise be incurred twice, such as accounting or listing fees, only once.
Gary R. Thompson, Executive Chairman of Silver47 Exploration, is therefore very optimistic about the future. He stated on the successful completion of the merger: “We are very pleased to have reached this transformative milestone, which marks the beginning of our rapid growth phase into a large, U.S.-focused silver company. I look forward to unlocking the value of these assets.”
