SILVERCORP UPDATE ON ACQUISITION OF ADVENTUS

Rhea-AI Summary

Silvercorp Metals Inc. (TSX/NYSE AMERICAN: SVM) has announced it will proceed to close the acquisition of Adventus Mining on July 31, 2024. This decision comes after a positive development in a litigation that had previously been considered a Material Adverse Effect. On July 24, 2024, a local court in Ecuador rejected the litigation that sought to void the environmental license of the Curipamba-El Domo project.

The court ruled that the Ecuadorean government correctly discharged its environmental consultation obligations. Although the plaintiffs have given notice of their intention to appeal, Silvercorp believes that all conditions to closing are now satisfied. This acquisition, originally announced on April 26, 2024, will involve Silvercorp acquiring all issued and outstanding common shares of Adventus through a plan of arrangement.

Positive

• Court ruling in favor of Adventus, rejecting litigation against the Curipamba-El Domo project's environmental license
• Silvercorp proceeding with the acquisition of Adventus Mining as planned
• All conditions for closing the transaction are believed to be satisfied

Negative

• Plaintiffs have given notice of intention to appeal the court's decision
• Written reasons for the court's judgment have not yet been released

Legal Expert

The recent court ruling in favor of Adventus Mining marks a significant development in the acquisition process. As a legal expert, I see this as a positive step for Silvercorp, but it's important to note that the battle isn't over yet.

The rejection of the litigation by the local court in Las Naves Canton is a strong indicator that the environmental consultation process for the Curipamba-El Domo project was conducted properly. This ruling effectively removes a major obstacle to the acquisition, allowing Silvercorp to proceed with the closing.

However, the plaintiffs' notice of intention to appeal introduces an element of uncertainty. While the initial ruling is favorable, appellate courts can sometimes overturn lower court decisions. The lack of written reasons for the judgement at this point also leaves room for potential challenges.

From a legal standpoint, Silvercorp's decision to proceed with the closing on July 31, 2024, despite the pending appeal, suggests confidence in the strength of the local court's decision. This move could be seen as a calculated risk, balancing the potential benefits of swift action against the possibility of future legal complications.

Investors should be aware that while this development significantly de-risks the acquisition, it doesn't eliminate all legal risks. The outcome of the appeal process will be important to watch in the coming months.

Financial Analyst

The decision to proceed with the acquisition of Adventus Mining represents a significant strategic move for Silvercorp Metals. This transaction could substantially expand Silvercorp's portfolio and potentially enhance its market position.

The Curipamba-El Domo project, which is at the center of this acquisition, is a key asset. Its development could significantly boost Silvercorp's production capacity and revenue streams in the medium to long term. However, the ongoing legal challenges, even if currently in Silvercorp's favor, introduce an element of risk that investors should carefully consider.

From a financial perspective, the immediate impact on Silvercorp's balance sheet and cash flow will depend on the terms of the acquisition, which are not detailed in this announcement. Investors should look out for subsequent disclosures about the transaction's structure and financing.

The market's reaction to this news will be telling. If investors perceive the legal risks as manageable and the acquisition as value-accretive, we could see a positive impact on Silvercorp's stock price. Conversely, any concerns about potential legal complications or the acquisition cost could lead to short-term volatility.

Long-term investors should focus on how this acquisition fits into Silvercorp's broader growth strategy and its potential to generate returns over time, while keeping an eye on the ongoing legal proceedings and their potential impact on the project's development timeline.

Trading Symbols:    TSX/NYSE AMERICAN: SVM

VANCOUVER, BC, July 31, 2024 /PRNewswire/ - Silvercorp Metals Inc. ("Silvercorp" or the "Company") (TSX: SVM) (NYSE American: SVM) is pleased to announce that it will proceed to close the acquisition of Adventus Mining Corporation ("Adventus") pursuant to the arrangement agreement (the "Arrangement Agreement") under which the Company agreed to acquire all of the issued and outstanding common shares of Adventus by way of a plan of arrangement (the "Transaction") as announced on April 26, 2024.

On July 5, 2024, Silvercorp announced it considered the litigation referred to in the Adventus news release of June 17, 2024, which sought to void the environmental licence of the Curipamba-El Domo project (the "Project"), a Material Adverse Effect, as defined in the Arrangement Agreement, in respect of Adventus. The litigation was brought by a group of plaintiffs concerning the environmental consultation process for the Project.

A positive development has occurred with respect to this litigation. Adventus announced on July 25, 2024, the local court in Las Naves Canton, Bolívar Province, Ecuador rejected the litigation on July 24, 2024. The Court ruled that the Ecuadorean government correctly discharged its environmental consultation obligations prior to issuing an environmental licence for the Project. The Court has not yet released written reasons for its judgement, and the plaintiffs have given notice of their intention to appeal (the "Appeal") to the relevant provincial court. 

With this local court ruling in favour of Adventus, Silvercorp believes that all conditions to closing are satisfied and will proceed to close the Transaction on July 31, 2024.

For further information

Silvercorp Metals Inc.
Lon Shaver
President
Phone: (604) 669-9397
Toll Free 1(888) 224-1881
Email: investor@Silvercorp.ca 
Website: www.Silvercorp.ca 

CAUTIONARY DISCLAIMER - FORWARD LOOKING STATEMENTS

This news release includes "forward-looking statements" within the meaning of the United States Private Securities Litigation Reform Act of 1995 and "forward-looking information" within the meaning of applicable securities laws relating to, among other things, the anticipated benefits of the Transaction, the strategic rationale for the Transaction, the anticipated use of the proceeds of the Placement, the timing and anticipated receipt of required shareholder, regulatory court, stock exchange or other approvals, the ability of the parties to satisfy the other conditions to the closing of the Transaction and the anticipated timing for closing of the transaction. Forward-looking information may in some cases be identified by words such as "will", "anticipates", "expects", "intends" and similar expressions suggesting future events or future performance.

We caution that all forward-looking information is inherently subject to change and uncertainty and that actual results may differ materially from those expressed or implied by the forward-looking information. A number of risks, uncertainties and other factors, including the Appeal or subsequent developments in the litigation and potential impacts of the Appeal or such subsequent litigation developments on the Project, could cause actual results and events to differ materially from those expressed or implied in the forward-looking information or could cause our current objectives, strategies and intentions to change. Accordingly, we warn investors to exercise caution when considering statements containing forward-looking information and that it would be unreasonable to rely on such statements as creating legal rights regarding our future results or plans. We cannot guarantee that any forward-looking information will materialize and you are cautioned not to place undue reliance on this forward-looking information. Any forward-looking information contained in this news release represent expectations as of the date of this news release and are subject to change after such date. However, we are under no obligation (and we expressly disclaim any such obligation) to update or alter any statements containing forward-looking information, the factors or assumptions underlying them, whether as a result of new information, future events or otherwise, except as required by law. All of the forward-looking information in this news release is qualified by the cautionary statements herein.

Forward-looking information is provided herein for the purpose of giving information about the Transaction referred and its expected impact. Readers are cautioned that such information may not be appropriate for other purposes. Completion of the Transaction is subject to customary closing conditions, termination rights and other risks and uncertainties including court and shareholder approval. Accordingly, there can be no assurance that the Transaction will occur, or that it will occur on the terms and conditions contemplated in this news release. The Transaction could be modified, restructured or terminated. There can also be no assurance that the strategic benefits expected to result from the Transaction will be fully realized. In addition, if the transaction is not completed, and each of the parties continues as an independent entity, there are risks that the announcement of the Transaction and the dedication of substantial resources of each party to the completion of the Transaction could have an impact on such party's current business relationships (including with future and prospective employees, customers, distributors, suppliers and partners) and could have a material adverse effect on the current and future operations, financial condition and prospects of such party.

A comprehensive discussion of other risks that impact Silvercorp can also be found in their public reports and filings which are available under its profile at www.sedarplus.ca.

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SOURCE Silvercorp Metals Inc

FAQ

When will Silvercorp (SVM) close the acquisition of Adventus Mining ?

Silvercorp (SVM) plans to close the acquisition of Adventus Mining on July 31, 2024.

What was the recent court ruling regarding the Curipamba-El Domo project?

On July 24, 2024, a local court in Ecuador rejected the litigation that sought to void the environmental license of the Curipamba-El Domo project, ruling in favor of Adventus.

Is there any pending legal action regarding the Curipamba-El Domo project after the court ruling?

Yes, the plaintiffs have given notice of their intention to appeal the court's decision to the relevant provincial court.

When did Silvercorp (SVM) initially announce the acquisition of Adventus Mining ?

Silvercorp (SVM) initially announced the acquisition of Adventus Mining on April 26, 2024.