Silvercorp Metals Inc. has entered into agreements to acquire a 70% interest in Chaarat ZAAV CJSC, which holds the fully permitted Tulkubash and Kyzyltash gold projects in the Kyrgyz Republic. The total cash consideration for the transaction is $162 million.
The deal involves a Share Purchase Agreement with Chaarat Gold Holdings Limited and a Cooperation Agreement with the National Investment Agency under the President of the Kyrgyz Republic. Upon closing, ZAAV will be converted into a joint venture company with Kyrgyzaltyn, where Silvercorp will hold a 70% operating interest and Kyrgyzaltyn will hold a 30% free-carried interest.
Under the agreements, the National Investment Agency will receive $70 million in staged payments tied to government waivers and license extensions. Chaarat will receive $92 million conditional on receipt of the Kyrgyz Government waiver, which has now been issued, allowing Silvercorp to proceed toward closing the transaction.
The Tulkubash and Kyzyltash projects are located in the Tian Shan region of the Kyrgyz Republic, a significant gold-producing area. This acquisition represents a strategic expansion for Silvercorp beyond its traditional focus on silver, gold, lead, and zinc production in other regions.
For business leaders and investors, this transaction demonstrates Silvercorp's execution of its stated strategy to create shareholder value through ongoing merger and acquisition efforts to unlock value. The company's approach focuses on generating free cash flow from long-life mines while maintaining a commitment to responsible mining and ESG principles.
The joint venture structure with Kyrgyzaltyn, the Kyrgyz state mining company, provides Silvercorp with local partnership advantages in navigating the regulatory environment and community relations. This model could serve as a template for other international mining companies seeking to enter resource-rich regions with strong state participation in the mining sector.
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This acquisition positions Silvercorp to potentially increase its gold production profile while diversifying its geographic footprint. The Tian Shan region's established gold mining infrastructure and geological potential offer opportunities for operational synergies and resource expansion through exploration of the surrounding licenses included in the transaction.
