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OTTAWA, ONTARIO--(Marketwire - July
24, 2009) - Paramount Gold and Silver Corp. (NYSE:PZG)(TSX:PZG)(FRANKFURT:P6G)(WKN:A0HGKQ)
("Paramount")
announces that Silvercorp Metals Inc. ("Silvercorp") has
terminated its unsolicited offer to acquire all the outstanding shares
of Klondex Mines Ltd. (TSX:KDX)(OTCBB:KLNDF) ("Klondex").
Paramount and
Klondex have signed a binding letter agreement (the "Letter
Agreement") to combine the two companies under a plan of
arrangement, in a transaction valued at approximately C$80 million (the
"Transaction"). Pursuant to the Letter Agreement, each
Klondex share will be exchanged for 1.45 Paramount
shares, implying a purchase price of C$2.32 per Klondex share and
representing a premium of 33.3% using closing share prices on the TSX
on July 17, 2009.
The termination of the Silvercorp unsolicited proposal clears the way
for the creation of powerful North American gold and silver exploration
platform that offers substantial value to both Klondex shareholders and
Paramount stockholders:
- Strong financial position with a combined cash position of over C$10
million and an additional C$32 million upon the exercise of currently
outstanding options and warrants on a fully-diluted basis;
- Expanded and diversified operations with the potential for
significant reserve/resource upside at two flagship projects in North
America, San Miguel (Mexico) and Fire Creek (Nevada);
- Expanded resource base of 1.69 million ounces (indicated) and 3.15
million ounces (inferred);
- Paramount's experienced personnel are poised to aggressively explore
and develop the combined company's flagship projects;
- Enhanced market presence with a current pro forma market
capitalization of approximately C$200 million; and
- Strategic position and management experience to enhance market
valuation of the combined entity under Paramount.
Both Paramount
and Klondex have agreed to obtain support agreements from each of their
respective directors and certain of their shareholders to vote any
shares which they control in favor of the Transaction, subject to
certain exceptions contained therein. The Transaction is subject to
customary approvals including shareholder approvals by both companies.
FCMI Financial Corp., a corporation controlled by Albert D. Friedberg
and Paramount's
largest stockholder, has committed to provide a minimum of $5 million
and up to a maximum of $15 million to fund future development at both
the San Miguel and Fire Creek Projects.
For further details of the Transaction, please see the
Paramount/Klondex joint news release dated July 20, 2009, Paramount's
filings with the United States Securities and Exchange Commission (the
"SEC") available on www.sec.gov and the applicable Canadian securities regulators available on www.sedar.com and Klondex's filings with the applicable Canadian securities
regulators available on www.sedar.com.
About Paramount Gold and Silver Corp.
Paramount Gold and Silver Corp. is a precious metals exploration
company listed on the Toronto Stock Exchange and the NYSE Amex under
the symbol "PZG", and listed on the Deutsche Borse under the
symbol (WKN:A0HGKQ).
Paramount holds
a 100% interest in the San Miguel Project and has completed 47,560
meters of diamond drilling on 213 holes and 3,743 meters of exploration
trenching at San Miguel since the summer of 2006. Paramount has recently expanded its
land holdings by acquiring a 100% interest in the Temoris Project from
Garibaldi Resources; a land package of over 54,000 hectares. Paramount's land package now includes most of the
ground surrounding Coeur
d'Alene Mines (NYSE:CDE) Palmarejo Mine
project and is in excess of 140,000 hectares. For more information,
visit www.paramountgold.com. The information on Paramount's website is not, and shall not
be deemed to be, a part of this release or incorporated into any
filings with the SEC or Canadian securities regulatory authorities.
Additional Information About the Transaction and Where to Find It
In connection with the Transaction, Paramount expects to file with the
SEC a proxy statement which will be sent to the shareholders of
Paramount seeking their approval of the merger. In addition, Paramount
may file other relevant documents concerning the Transaction with the
SEC. Security holders are urged to read the proxy statement and other
relevant documents when they become available because they will contain
important information about the Transaction.
Security holders of Paramount may obtain free copies of these documents
through the website maintained by the SEC at http://www.sec.gov. Security holders of Paramount may also obtain free copies of
these documents by directing a request by telephone or mail to
Paramount Gold and Silver Corp., 346 Waverley Street, Suite 100,
Ottawa, Ontario Canada K2P OW5 (telephone: (613) 226-9881) or by
accessing these documents at Paramount's website: www.paramountgold.com under "Investors". The information on Paramount's
website is not, and shall not be deemed to be, a part of this release
or incorporated into other filings made with the SEC or Canadian
securities regulatory authorities.
Paramount and its directors, executive officers and members of
management may be deemed to be participants in the solicitation of
proxies from the stockholders of Paramount in connection with the
Transaction. Information about the directors and executive officers of
Paramount is set forth in the proxy statement for its 2009 annual
meeting of shareholders filed with the SEC on January 8, 2009 and in
its Form 8-K filed with the SEC on March 23, 2009. Information
regarding the interests of these participants and other persons who may
be deemed participants in the Transaction may be obtained by reading
the proxy statement regarding the Transaction when it becomes
available.
Cautionary Note to U.S. Investors Concerning Estimates of Indicated and
Inferred Resources: This press release uses the terms "indicated
resources" and "inferred resources". We advise U.S.
investors that while these terms are defined in and permitted by
Canadian regulations, these terms are not defined terms under SEC
Industry Guide 7 and are normally not permitted to be used in reports
and registration statements filed with the SEC. "Inferred
resources" have a great amount of uncertainty as to their
existence, and great uncertainty as to their economic and legal
feasibility. It cannot be assumed that all or any part of an inferred
mineral resource will ever be upgraded to a higher category. Under
Canadian rules, estimates of inferred mineral resources may not form
the basis of a feasibility study or prefeasibility studies, except in
rare cases. The SEC normally only permits issuers to report
mineralization that does not constitute SEC Industry Guide 7 compliant
"reserves" as in-place tonnage and grade, without reference
to unit measures. U.S. investors are cautioned not to assume that any
part or all of mineral deposits in this category will ever be converted
into reserves. U.S. investors are cautioned not to assume that any part
or all of an inferred resource exists or is economically or legally
minable.
SAFE HARBOR FOR FORWARD-LOOKING STATEMENTS
Statements in this document regarding the Transaction, the expected
timetable for completing the Transaction, benefits and synergies of the
Transaction, future opportunities for the combined company,
expectations regarding the value and benefits of the Transaction and
any other statements about Paramount or Klondex managements' future expectations,
beliefs, goals, plans or prospects constitute forward-looking
statements within the meaning of the United States Private Securities
Litigation Reform Act of 1995 and statements containing the words
"believes," "plans," "anticipates,"
"expects," estimates and similar expressions) should also be
considered to be forward-looking statements. There are a number of
important factors that could cause actual results or events to differ
materially from those indicated by such forward-looking statements, including,
but not limited to: the ability of the parties to consummate the
Transaction and satisfy the conditions thereunder; the ability to
obtain, and the timing of, the necessary exchange, regulatory and
shareholder or stockholder approvals for the Transaction; the impact of
any actions taken by Silvercorp. or any other party to complicate,
delay or prevent the Transaction; the ability to realize the
anticipated synergies and benefits from the Transaction and the
combined company; and the other factors described in Paramount's Annual
Report and Annual Information Form on Form 10-K for the year ended June
30, 2008 and its most recent quarterly reports filed with the SEC
available on www.sec.gov and applicable Canadian securities regulators available on www.sedar.com and Klondex's filings with the applicable Canadian securities
regulators available on www.sedar.com. Except as required by applicable law, each of Paramount and
Klondex disclaim any intention or obligation to update any
forward-looking statements as a result of developments occurring after
the date of this document.
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