A-Mark Closes Previously Announced Investment in Silver Gold Bull

Rhea-AI Summary

A-Mark Precious Metals, Inc. (NASDAQ: AMRK) has finalized its acquisition of an additional 40% equity interest in Silver Gold Bull Inc. (SGB), valued at approximately $110 million. The deal involved $34 million in cash and 253,928 shares of A-Mark stock, increasing A-Mark's ownership in SGB to 47.4%. This acquisition is coupled with a four-year extension on the supplier agreement until December 2026. A-Mark has the option to further increase its share to 75% in SGB within 18-27 months following the closing.

Positive

• Acquisition of an additional 40% interest in Silver Gold Bull Inc., increasing ownership to 47.4%.
• Valuation of SGB at approximately $110 million strengthens A-Mark's market position.
• Four-year extension of the supplier agreement until December 2026.

Negative

• Potential challenges related to obtaining Canadian Competition law approval for further equity acquisition.

EL SEGUNDO, Calif., June 27, 2022 (GLOBE NEWSWIRE) -- A-Mark Precious Metals, Inc. (NASDAQ: AMRK), a leading fully integrated precious metals platform, has closed its previously announced purchase of an additional 40% of the outstanding equity interest in Calgary-based Silver Gold Bull Inc. (SGB), a leading e-commerce precious metals retailer in Canada.

SGB Transaction Terms
As previously disclosed, at the time of the signing of the definitive agreement, the SGB business was valued at approximately $110.0 million.  In accordance with the definitive agreement, the total consideration paid at the closing consisted of $34 million in cash and 253,928 shares of A-Mark common stock. As a result of this transaction, A-Mark now owns 47.4% of the outstanding equity of SGB.

In connection with the closing, A-Mark and SGB entered into a four-year extension to the current supplier agreement, extending its expiration to December 2026. A-Mark will also have the right, subject to further review under applicable Canadian Competition laws, to purchase an additional 27.7% of the outstanding equity of SGB to bring its ownership interest to 75%. The option is exercisable between months 18 and 27 following closing.

SGB Board of Director Appointment
In connection with the increased investment in SGB, A-Mark’s Chief Financial Officer, Kathleen Simpson-Taylor, was appointed to SGB’s board of directors, joining A-Mark’s Chief Executive Officer, Greg Roberts.

Transaction Advisors
D.A. Davidson & Co. acted as financial advisor to A-Mark, and Kramer Levin Naftalis & Frankel LLP, Frye & Hsieh LLP and Fasken Martineau DuMoulin LLP acted as legal advisors to A-Mark. MLT Aikins LLP (M&A and Corporate) and Blake, Cassels & Graydon LLP​ (Competition Matters) acted as legal advisors to SGB.

About A-Mark Precious Metals
Founded in 1965, A-Mark Precious Metals, Inc. (NASDAQ: AMRK) is a leading fully integrated precious metals platform that offers an array of gold, silver, platinum, palladium, and copper bullion, numismatic coins and related products to wholesale and retail customers via a portfolio of channels. The company conducts its operations through three complementary segments: Wholesale Sales & Ancillary Services, Direct-to-Consumer, and Secured Lending. The company’s global customer base spans sovereign and private mints, manufacturers and fabricators, refiners, dealers, financial institutions, industrial users, investors, collectors, and e-commerce and other retail customers.

A-Mark’s Wholesale Sales & Ancillary Services segment distributes and purchases precious metal products from sovereign and private mints. As a U.S. Mint-authorized purchaser of gold, silver, and platinum coins since 1986, A-Mark purchases bullion products directly from the U.S. Mint for sale to customers. A-Mark also has longstanding distributorships with other sovereign mints, including Australia, Austria, Canada, China, Mexico, South Africa and the United Kingdom. The company sells more than 200 different products to e-commerce retailers, coin and bullion dealers, financial institutions, brokerages and collectors. In addition, A-Mark sells precious metal products to industrial users, including metal refiners, manufacturers and electronic fabricators.

Through its A-M Global Logistics subsidiary, A-Mark provides its customers with a range of complementary services, including managed storage options for precious metals as well as receiving, handling, inventorying, processing, packaging, and shipping of precious metals and coins on a secure basis. A-Mark’s mint operations, which are conducted through its wholly owned subsidiary Silver Towne Mint, enable the company to offer customers a wide range of proprietary coin and bar offerings and, during periods of market volatility when the availability of silver bullion from sovereign mints is often product constrained, preferred product access.

A-Mark’s Direct-to-Consumer segment operates as an omni-channel retailer of precious metals, providing access to a multitude of products through its wholly owned subsidiaries, JM Bullion and Goldline. JM Bullion is a leading e-commerce retailer of precious metals and operates five separately branded, company-owned websites targeting specific niches within the precious metals market: JMBullion.com, ProvidentMetals.com, Silver.com, GoldPrice.org, SilverPrice.org. JMB also owns CyberMetals, an online platform where customers can purchase and sell fractional shares of digital gold, silver and platinum bars in a range of denominations. Goldline markets precious metals directly to the investor community through various channels, including television, radio and telephonic sales efforts. A-Mark also holds minority ownership interests in two additional Direct-to-Consumer brands.

The company operates its Secured Lending segment through its wholly owned subsidiaries, Collateral Finance Corporation (CFC) and AM Capital Funding. Founded in 2005, CFC is a California licensed finance lender that originates and acquires loans secured by bullion and numismatic coins. Its customers include coin and precious metal dealers, investors and collectors. AM Capital Funding was formed in 2018 for the purpose of securitizing eligible secured loans of CFC.

A-Mark is headquartered in El Segundo, CA and has additional offices and facilities in the neighboring Los Angeles area as well as in Dallas, TX, Las Vegas, NV, Winchester, IN, and Vienna, Austria. For more information, visit www.amark.com.

Important Cautions Regarding Forward-Looking Statements
Statements in this press release that relate to future plans, objectives, expectations, performance, events and the like are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995 and the Securities Exchange Act of 1934. These include statements regarding future macroeconomic conditions and demand for precious metal products, and the Company’s ability to effectively respond to changing economic conditions. Future events, risks and uncertainties, individually or in the aggregate, could cause actual results or circumstances to differ materially from those expressed or implied in these statements. Factors that could cause actual results to differ include the following: the failure to execute the Company’s growth strategy as planned; greater than anticipated costs incurred to execute this strategy; changes in the current international political climate which has favorably contributed to demand and volatility in the precious metals markets; increased competition for the Company’s higher margin services, which could depress pricing; the failure of the Company’s business model to respond to changes in the market environment as anticipated; changes in consumer demand and preferences for precious metal products generally; the failure of Silver Gold Bull to maintain its unique customer base or changes in the buying preferences of this customer base; the failure otherwise to achieve anticipated benefits of the investment; general risks of doing business in the commodity markets; the effects of the COVID-19 pandemic and the eventual return to normalized business and economic conditions; and the strategic, business, economic, financial, political and governmental risks described in in the Company’s public filings with the Securities and Exchange Commission. The words "should," "believe," "estimate," "expect," "intend," "anticipate," "foresee," "plan" and similar expressions and variations thereof identify certain of such forward-looking statements, which speak only as of the dates on which they were made. Additionally, any statements related to future improved performance and estimates of revenues and earnings per share are forward-looking statements. The Company undertakes no obligation to publicly update or revise any forward-looking statements. Readers are cautioned not to place undue reliance on these forward-looking statements.

Company Contact:
Steve Reiner, Executive Vice President, Capital Markets & Investor Relations
A-Mark Precious Metals, Inc.
1-310-587-1410
sreiner@amark.com

Investor Relations Contact:
Matt Glover or Jeff Grampp, CFA
Gateway Investor Relations
1-949-574-3860
AMRK@gatewayIR.com

FAQ

What is the significance of A-Mark's acquisition of Silver Gold Bull Inc. in 2022?

A-Mark's acquisition of an additional 40% interest in Silver Gold Bull Inc. in 2022 strengthens its position in the precious metals market by increasing ownership to 47.4%.

How much did A-Mark pay for the additional equity in Silver Gold Bull Inc.?

A-Mark paid $34 million in cash and 253,928 shares of its stock for the additional equity in Silver Gold Bull Inc.

What is the future ownership potential for A-Mark in Silver Gold Bull Inc.?

A-Mark has the option to increase its ownership in Silver Gold Bull Inc. to 75% within 18-27 months after the closing of the current acquisition.

What is the current valuation of Silver Gold Bull Inc.?

Silver Gold Bull Inc. was valued at approximately $110 million at the time of the acquisition.

When does the supplier agreement between A-Mark and Silver Gold Bull Inc. expire?

The supplier agreement between A-Mark and Silver Gold Bull Inc. has been extended to expire in December 2026.