Kootenay Silver Inc. (TSXV:KTN) and Northair Silver Corp. (TSXV:INM) announced the execution of a binding letter agreement under which Kootenay will acquire all of Northair\’s issued and outstanding common shares.

According to the companies, the combination “will create a leading Mexican silver exploration and development company and consolidator,” with assets including the Promontorio, La Negra and La Cigarra projects.

As quoted in the press release:

Under the terms of the Binding Letter Agreement, Northair shareholders will receive, for each common share of Northair held, 0.35 common shares of Kootenay, plus 0.15 of a warrant to purchase Kootenay common shares at an exercise price of $0.55 for a period of five years from closing (the “Warrants“). Kootenay will apply to list the Warrants on the TSX Venture Exchange. Including the Warrants(1), the total consideration represents an implied value of $0.076 per Northair common share and a premium of 45% to Northair\’s shareholders based on both companies\’ trailing 20-day volume-weighted average price, respectively, as of the close on January 12, 2016, and an implied value of $0.071 per Northair common share and a premium of 58% to Northair\’s shareholders based on both companies\’ closing share prices, respectively, as of the same date. Upon completion of the Transaction, Northair will become a wholly-owned subsidiary of Kootenay, and former shareholders of Northair will hold approximately 40% of the shares of Kootenay on an outstanding shares basis.

James McDonald, president and CEO of Kootenay, commented:

The strategic acquisition of Northair and its La Cigarra silver project is a milestone development for both companies that immediately positions Kootenay as a leading consolidator of emerging silver and precious metals assets in Mexico. The transaction provides Northair shareholders with an attractive premium on its capital stock, while Kootenay will enjoy the benefits of a substantially increased silver asset base and corporate balance sheet, setting the stage for the future development of its assets, additional potential revenue streams, and further consolidation in the sector.

Andrea Zaradic, president, CEO and director of Northair, said:

La Negra and La Cigarra represent two of the highest profile new silver discoveries amongst non-majors in Mexico. The continued exploration successes at our flagship projects put the combined company in a strong position, distinguishing us from our peers. We are confident that our shareholders will benefit from the value creation opportunities that will be realized through an expanded and more diversified silver consolidation company.

Click here to read the full Kootenay Silver Inc. (TSXV:KTN) and Northair Silver Corp. (TSXV:INM) press release.


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