| Source: Electrum Silver US LLC
This press release is issued pursuant to Multilateral Instrument 62-104 – Take-Over Bids and Issuer Bids and National Instrument 62-103 – The Early Warning System and Related Take-Over Bid and Insider Reporting Issues.
NEW YORK, July 19, 2021 (GLOBE NEWSWIRE) — Electrum Silver US LLC (“ESUS”) and Electrum Silver US II LLC (“ESUS II” and, together with ESUS, “Electrum”) announced today the completion of a sale of shares of common stock (the “Shares”) of Gatos Silver, Inc. (“Gatos Silver”) pursuant to an underwritten public offering in the United States and Canada (the “Offering”) at a price of U.S. $14.00 per Share, or Cdn. $17.50 per Share. The Offering consisted of a primary offering of 8,930,000 newly-issued Shares by Gatos Silver and a secondary offering of 2,500,000 Shares by Electrum, of which 2,033,081 Shares were sold by ESUS and 466,919 Shares were sold by ESUS II. Electrum received gross proceeds of U.S. $35,000,000, or Cdn. $43,739,500. Gatos Silver and Electrum have also granted an over-allotment option to the underwriters of the Offering (the “Over-Allotment Option”) which, if exercised in full, would result in the sale of an additional 1,339,500 Shares by Gatos Silver and an additional 375,000 Shares by Electrum, at the same price per Share. If the Over-Allotment Option is exercised in full, Electrum will receive additional gross proceeds of U.S. $5,250,000 or Cdn. $6,560,925 based on the current exchange rate, for total gross proceeds of U.S. $40,250,000 or Cdn. $50,300,425.
Following the completion of the Offering but without giving effect to the exercise of the Over-Allotment Option, Electrum now owns 22,084,713 of the 68,704,201 Shares currently outstanding, of which 17,960,005 Shares are owned by ESUS and 4,124,708 are owned by ESUS II, representing 32.14% of the Shares outstanding (of which 26.14% are owned by ESUS and 6% are owned by ESUS II). This is a decrease of 11.78% from the 43.92% ownership of Shares last reported by Electrum on October 30, 2020.
If the Over-Allotment Option is exercised in full, after giving effect to the issuance of an additional 1,339,500 Shares by Gatos Silver and the sale of an additional 375,000 Shares by Electrum, Electrum would own 21,709,713 of the 70,043,701 Shares then outstanding, or 30.99%, representing a decrease of 12.93% from the 43.92% ownership percentage last reported by Electrum on October 30, 2020.
Electrum has entered into a customary lock-up agreement with the underwriters of the Offering pursuant to which it has agreed not to dispose of any additional Shares for a period of 90 days. The Shares were originally acquired by Electrum, and Electrum continues to hold its remaining Shares, for investment purposes, and has disposed of Shares in the Offering for investment purposes. Although Electrum currently has no plans or intentions to do so, Electrum and/or one or more of its affiliates may, depending on market and other conditions, increase or decrease its beneficial ownership of Shares or other securities of Gatos Silver whether in the open market, by privately negotiated agreement or otherwise.
Additional information relating to Electrum’s relationship with Gatos Silver can be found in the prospectus supplement dated July 15, 2021 to Gatos Silver’s short form base shelf prospectus dated July 12, 2021, filed on SEDAR with the securities regulatory authorities in each of the provinces of Canada except Québec.
Gatos Silver is located at 8400 E. Crescent Pkwy, Suite 600, Greenwood Village, Colorado, USA 80111. Electrum is located at 535 Madison Avenue, 12th Floor, New York, NY, USA 10022. A copy of the early warning report to which this news release relates can be obtained from Michael Williams (646-365-1600) or on the SEDAR profile of Gatos Silver at www.sedar.com.