Silver Mines Limited (ASX:SVL), an Australian precious metals exploration and development company, has announced a significant move to enhance the long-term economics of its wholly owned Bowdens Silver Project. The company, whose primary asset is described as Australia’s largest undeveloped silver deposit in central New South Wales, will acquire and extinguish two private royalties over the project. This strategic initiative aims to simplify the project’s royalty structure and provide Silver Mines with greater exposure to the economic benefits of future production by eliminating ongoing royalty payments.
The total consideration for these Royalty Buy-Backs amounts to A$18 million in cash and A$8 million in Silver Mines shares. The share component will be issued at the same deemed price as the company’s upcoming placement, set at $0.145 per SVL share. Managing Director Jo Battershill commented that the acquisition and extinguishment of these royalties signify Silver Mines’ strong confidence in the long-term value and development potential of Bowdens, especially with its recently expanded 26-year potential operational mine life. He highlighted that removing these private royalties further simplifies the commercial structure and maximises value for shareholders.
Specifically, Silver Mines’ subsidiary, Bowdens Silver Pty Ltd, has agreed to buy back a 2% net smelter royalty (reducing to 1% after the first US$5 million revenue) from Royalco Resources Pty Ltd for A$10 million cash and A$7.5 million in SVL shares. Additionally, it will acquire 100% of Asia Metals 4 Pty Ltd, which holds a 1% gross revenue royalty (commencing after the first 20 million ounces of silver produced), for A$8 million cash and A$0.5 million in SVL shares. The completion of both buy-backs is contingent on Silver Mines securing firm commitments for a placement of at least A$50 million, with the Fitzroy Royalty buy-back also subject to further ASX or shareholder approvals for Fitzroy.
The company anticipates that these buy-backs will provide greater certainty as it progresses the approvals pathway for the Bowdens Silver Project, moving it closer to development as a significant long-life Australian silver operation.
