Equity Silver Mines has agreed to sell Placer Development or a subsidiary 6.6 million special voting shares at a price of $5.62 per share. The value of the transaction is approximately $37 million.
Equity currently has 25.5 million shares outstanding of which 68% are owned by Placer Development. This would rise to 32.1 million after the proposed issue and give Placer a 74.5% interest.
Proceeds from the sale will be used to purchase and deliver to Placer approximately five million oz silver under an earlier sales agreement. That amount excludes the 750,000-oz minimum to be delivered this year. Subject to the share sale to Placer, Equity says it has arranged the purchase of the silver at $7.40 per oz.
The sale will create a fund of $37.1 million out of which dividends can be paid when cash is available, says Equity. This will allow payment of dividends on preferred shares and increase the likelihood of dividends on common shares, says the company.
Dividends are normally paid out of retained earnings which for Equity were $2.3 million at year- end. The total amount of each quarterly dividend payable on the company’s preferred shares is $619,000.
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