OreCorp to Merge with Silvercorp, Accelerating Development of Nyanzaga Gold Project

• Silvercorp made an offer to acquire 100% of OreCorp's shares, providing $28 million in funding through a private placement, which is crucial for the implementation of OreCorp's resettlement action plan.
• The transaction benefits both OreCorp and Silvercorp shareholders, bringing value forward at a premium and introducing trading liquidity.
• Post-transaction, Silvercorp will have 219 million shares, an indicative market capitalization of $630 million, and a net cash position of $170 million, positioning them well for developing the Nyanzaga gold project.
• The Nyanzaga project in Tanzania is a world-class gold resource with strong infrastructure support, and it is expected to produce significant amounts of gold, making it a valuable asset for Silvercorp.

Australian miner OreCorp has entered an agreement to merge with Canadian silver producer Silvercorp Metals. The C$0.27 per share offer from Silvercorp represents a significant premium for OreCorp shareholders. The deal will also provide critical funding to advance OreCorp's flagship Nyanzaga gold project in northwest Tanzania. If approved, the merger aims to complete by year-end 2022. For investors, the Silvercorp deal unlocks value in Nyanzaga and allows continued exposure to the project's upside potential.

The Transaction

In early August, Silvercorp made an all-cash offer to acquire 100% of OreCorp's shares by a Plan of Arrangement. The C$0.27 offer price is a 37% premium to OreCorp's last closing price. It values the company at C$224 million. Silvercorp will also provide US$28 million to OreCorp through a private placement, ensuring funds are available to progress Nyanzaga's development. The placement shares will convert to Silvercorp shares when the deal completes.

The merger will expand Silvercorp's portfolio with a large-scale gold development asset. For OreCorp shareholders, the deal crystallizes Nyanzaga's value today at an attractive premium. It also provides ongoing leverage to the project through Silvercorp's shares, traded on the TSX and NYSE American.

Deal Progress

The scheme booklet with the terms of the deal will be distributed to OreCorp shareholders in October 2022. An independent expert report is also expected this month. Regulatory consent has been sought, with completion targeted by year-end.

First compensation payments to local communities commenced this month, signaling Silvercorp's intent to advance Nyanzaga per OreCorp's timeline. Development could start in 2023.

Introducing Nyanzaga

Nyanzaga is located in Tanzania's prolific Lake Victoria Goldfields region. The region has historically produced over 25 million ounces of gold. Modern mines like Geita and Bulyanhulu attest to the prospective geology.

OreCorp completed a Definitive Feasibility Study in August 2022. This defined a conventional open pit and underground operation, with industry-standard CIL processing to produce gold doré on site. Nyanzaga has a mineral reserve of 4.03 million ounces of gold from 40 million tonnes at 3.0 g/t gold. The DFS outlined average annual production of 234,000 ounces over an 11-year life of mine.

The project demonstrates robust economics at a US$1,500/oz gold price, with:

• Pre-tax NPV5% of US$1.1 billion and 36% IRR
• Post-tax NPV5% of US$661 million and 28% IRR
• Low all-in sustaining costs of US$954/oz
• Capex of US$431 million
• < 3 year payback period

The reserves and scale support an initial 12-month ramp-up to 200,000 oz annual production. Output peaks between 275,000 - 300,000 oz in years 5-7. Upside potential remains through resource growth and higher gold prices. At US$2,000/oz gold, Nyanzaga's NPV rises to US$900 million with a 32% IRR.

Advancing Nyanzaga

Silvercorp's development plan aligns with OreCorp's DFS schedule. The resettlement process commenced this month ahead of construction in 2023.

The existing access road, proximity to water, and grid power provide a head start on infrastructure and facilities. A strong history of gold mining by majors further derisks execution. Silvercorp will target a larger open pit given higher gold prices. They also envision phasing the underground after the open pit. Their team has extensive project development experience to drive this effectively.

Creating a Leading Precious Metals Producer

The merger will create a globally relevant gold and silver producer. Silvercorp produced 5.7 million ounces of silver in FY2022. Nyanzaga will transform its gold portfolio.

On completion, the combined entity will have:

• Gold reserves of 2.6 million ounces (Nyanzaga)
• Silver reserves of 116 million ounces (Silvercorp)
• Market capitalization of ~US$630 million
• Working capital of US$170 million to fund growth

Silvercorp has ramped up two mines in China to 5 million oz Ag/year over the past 17 years. Its Ying mining district remains in expansion mode despite mature operations. This demonstrates technical experience to unlock Nyanzaga's potential.

OreCorp shareholders gain access to Silvercorp's diversified asset base and strong balance sheet. This provides exposures beyond a single-asset, single-jurisdiction company. For Silvercorp, Nyanzaga offers scale, longevity and immediate gold diversification.

Silvercorp's Offering

Silvercorp Metals is a Canadian company dual-listed on the TSX and NYSE American. It operates profitable silver mines in China and holds a 28% stake in exploration company New Pacific Metals.

It has delivered positive net income for 12 consecutive years. The company had over US$200 million in cash and equivalents on hand at the end of Q1 FY2023.

Silvercorp's flagship Ying mining district in Henan Province consists of multiple underground silver/lead/zinc mines and two process plants. It accounts for 95% of revenue. The GC project in Guangdong Province is a small but growing mine. OreCorp conducted extensive due diligence on Silvercorp's operations and development track record. Its high safety standards, close community engagement, and environmental stewardship provide confidence that Nyanzaga is in good hands.

The proposed OreCorp-Silvercorp merger offers benefits to both sets of shareholders. For OreCorp investors, it crystallizes Nyanzaga's value while retaining exposure to further upside. For Silvercorp, it provides project scale, diversity and gold leverage. The deal also accelerates investment and development of a significant new gold mine in Tanzania. With experienced management, strong cash resources, and supportive communities, the timeline to production at Nyanzaga looks positive.

A merger between OreCorp and Silvercorp opportunity:

Upside Exposure to a Large Gold Project

• Nyanzaga is a 4+ million ounce gold reserve project with significant potential to grow resources and production further. It will become a core asset in Silvercorp's portfolio.
• As a single-asset company, OreCorp shares already reflect Nyanzaga's value. By merging with the larger Silvercorp, Nyanzaga can benefit from exposure to a wider investor base and funding ability.
• For existing OreCorp shareholders, the merger crystallizes Nyanzaga's value today while retaining upside exposure as Silvercorp shareholders.

Diversification and Scale

• Silvercorp offers immediate diversification from a single gold asset into silver production and cash flow. Its existing mines provide a buffer against development risks.
• The combined company will have greater scale and liquidity. This could lead to rerating potential as Nyanzaga gets de-risked and funded.
• Silvercorp has the balance sheet strength to fully fund Nyanzaga's development without dilution. OreCorp shareholders gain this advantage.

Strong Track Record

• Silvercorp has an excellent track record of technical delivery, having built up two silver districts over 17 years.
• Its experience in mine construction and optimization provides confidence that Nyanzaga can be executed successfully.
• OreCorp's due diligence gives assurance that Silvercorp are responsible operators and developers.

Roadmap to Production

• An aggressive development timeline is planned for Nyanzaga, with first production potentially in 2024.
• The existing infrastructure and regional mining history help fast-track schedule.
• Investors can track clear milestones like construction progress as value gets crystallized.

In summary, the merger combines OreCorp's attractive gold asset with Silvercorp's development expertise, diversified portfolio, and balance sheet strength. This can potentially drive rerating as Nyanzaga gets de-risked on the path to production. For investors, it provides an exciting gold growth opportunity.