Dr. Rui Feng reports

SILVERCORP TO ACQUIRE ORECORP, CREATING A DIVERSIFIED, HIGH GROWTH PRECIOUS METALS COMPANY

Silvercorp Metals Inc. and OreCorp Ltd. have signed a binding scheme implementation deed whereby Silvercorp will acquire all fully paid ordinary shares of OreCorp not held by Silvercorp or its associates pursuant to an Australian scheme of arrangement under Part 5.1 of the Corporations Act 2001 (Cth) subject to the satisfaction of various conditions.

Transaction highlights:

• OreCorp shareholders to receive 15 Australian cents in cash and 0.0967 of a Silvercorp common share (valued at 45 Australian cents) for each OreCorp share held, representing total consideration with an implied value of 60 Australian cents per OreCorp share (1);
• OreCorp's board unanimously recommends OreCorp shareholders vote in favour of the scheme, subject to no superior proposal (2) emerging for OreCorp and an independent expert concluding, and continuing to conclude, that the scheme is in the best interests of OreCorp shareholders;
• Silvercorp to provide OreCorp with approximately $28-million (Australian) in financing through an equity placement (more fully described below) to immediately advance development of its Nyanzaga gold project in Tanzania, including progressing resettlement activities and early project works;
• The agreement aims to:
  • Create a diversified, highly profitable precious metal company with a pro forma market cap of $630-million (U.S.) (3), a robust growth pipeline and exposure to a highly prospective emerging mining jurisdiction;
  • Provide a rerating opportunity on the successful development of Nyanzaga, which is expected to commence commercial gold production in second half 2025; and
  • Enable OreCorp and Silvercorp shareholders to participate in a larger company with greater access to capital, higher liquidity, increased scale and enhanced capital market relevance;
• Silvercorp has the balance sheet strength to finance construction and aggressive exploration of Nyanzaga, as well as pursue regional merger-and-acquisition opportunities;
• Silvercorp's best-in-class technical team has the record and expertise to build Nyanzaga and pursue opportunities for optimization;
• Consideration mix preserves Silvercorp's strong balance sheet, allowing funds to be deployed for development of Nyanzaga, managing risk and optimizing future opportunities;
• Existing OreCorp shareholders will own 17.8 per cent of Silvercorp's common shares outstanding on a fully diluted in-the-money basis following implementation of the scheme;
• The scheme is subject to various customary closing conditions, including OreCorp shareholder approval and court approval;
• Silvercorp has agreed to use reasonable endeavours to apply for admission of Silvercorp to the official list of the Australian Securities Exchange;
• Proposed development of Nyanzaga by Silvercorp supported by Tanzania government authorities.

(1) Value attributed to Silvercorp share and implied value attributed to OreCorp share calculated based on the 20-day volume-weighted average price of Silvercorp's common shares on the NYSE American for the period ended Aug. 3, 2023, converted to Australian dollars using a U.S.-dollar-to-Australian-dollar foreign exchange rate of 1.526.

(2) As defined in the agreement.

(3) The pro forma financial information is for illustrative purposes only and is not intended to represent the future financial position of the combined entity.

Nyanzaga highlights

OreCorp holds an 84-per-cent interest in the Nyanzaga gold project located in the Mwanza region, Tanzania, in partnership with the government of Tanzania. Key permits are in place to develop Nyanzaga for first gold in second half 2025. A definitive feasibility study, announced in August, 2022, estimated that Nyanzaga could deliver 2.5 million ounces of gold over a 10.7-year life (4). As reported in OreCorp's June, 2023, quarterly activities report released on July 21, 2023, Nyanzaga's posttax net present value at a 5-per-cent discount rate is $905-million (U.S.), and the internal rate of return is 32 per cent, using a recent spot gold price of $2,000 (U.S.) per oz (5).

Nyanzaga is located approximately 40 kilometres northeast of the Bulyanhulu mine, one of Barrick Gold Corp.'s two gold mines in the Lake Victoria goldfields, which together with the North Mara mine produced approximately 547,000 ounces of gold in 2022 (6). The Geita gold mine, one of AngloGold Ashanti Ltd.'s flagship mines, located 80 km west of Nyanzaga, produced 521,000 ounces of gold in 2022 (7).

Silvercorp chairman and chief executive officer Dr. Rui Feng said: "This transaction will create a new globally diversified precious metals producer. We believe this is a rare opportunity to leverage our technical expertise and strong balance sheet to unlock value for all shareholders by bringing Nyanzaga into commercial production by second half 2025. Under the leadership of Her Excellency, President Samia Suluhu Hassan, Tanzania is becoming an attractive place for foreign investment. We look forward to partnering with the government of Tanzania and leveraging OreCorp's existing team and relationships to ensure a successful development that benefits all stakeholders."

OreCorp managing director and CEO Henk Diederichs said: "This transaction provides our shareholders with an immediate and significant upfront premium and exposure to a geographically diverse mid-tier precious metals company. With a strong operating history, solid balance sheet, and significant mine building and operational experience, Silvercorp's management team is well positioned to fund and advance Nyanzaga into commercial production."

Honorable Minister of Minerals Dr. Doto Mashaka Biteko said, "The Tanzanian government is supportive of the proposed partnership between OreCorp and Silvercorp and looks forward to working together to develop Nyanzaga as a robust project delivering beneficial outcomes to the people of Tanzania and other stakeholders."

(4) Cautionary statement: based on a gold price of $1,750 (U.S.) per ounce. Refer to OreCorp Australian Securities Exchange announcement dated Aug. 22, 2022. The production target referred to in the definitive feasibility study and this announcement comprises 92 per cent probable ore reserves and 8 per cent inferred mineral resources. There is a low level of geological confidence associated with inferred mineral resources, and there is no certainty that further exploration work will result in the determination of indicated mineral resources or that the production target itself will be realized.

(5) Refer to OreCorp ASX announcement dated July 21, 2023.

(6) Barrick Gold Corp. (2022) annual report 2022.

(7) AngloGold Ashanti (2022) mineral resource and mineral reserve report as at Dec. 31, 2022.

Benefits for OreCorp shareholders:

• Total implied consideration of 60 Australian cents per OreCorp share (being 15 Australian cents in cash and 0.0967 of a Silvercorp common share valued at 45 Australian cents) (8) representing:
  • A 41.7-per-cent premium to the 20-day volume-weighted average price (VWAP) of OreCorp's shares on the ASX for the period ended Aug. 4, 2023 (9);
  • A 31.5-per-cent premium to OreCorp's closing share price of 43.5 Australian cents on the ASX on Aug. 4, 2023 (10);
• Share consideration provides enhanced trading liquidity, rerating potential and opportunity to participate in further upside from Nyanzaga and Silvercorp's existing portfolio;
• Significantly reduces development and operational risk at Nyanzaga by leveraging Silvercorp's technical expertise and environmental, social and governance record;
• Strong pro forma balance sheet removes immediate financing uncertainty and mitigates risk of significant dilution;
• Enhanced capital market profile with a pro forma market capitalization of $630-million (U.S.) (11) and listings on the Toronto Stock Exchange, the New York Stock Exchange, and, subject to successful admission and quotation, the ASX.

Benefits for Silvercorp shareholders:

• Accretive transaction on a net asset value basis;
• Provides immediate geographic and metal diversification;
• Addition of a largely derisked, low-cost gold project that has key permits in place and is on track for first gold in second half 2025;
• Rerating opportunity due to enhanced scale, asset diversification, and production and exploration upside, as well as a foothold in an emerging, mining-friendly jurisdiction;
• Meaningfully increases Silvercorp's mineral reserve and resource profile.

(8) Based on the 20-day volume-weighted average price of Silvercorp's common shares on the NYSE American for the period ended Aug. 3, 2023, converted to Australian dollars using a U.S.-dollar-to-Australian-dollar foreign exchange rate of 1.526.

(9) Based on the 20-day volume-weighted average price of Silvercorp's common shares on the NYSE and OreCorp's ordinary shares on the ASX for the period ended Aug. 4, 2023.

(10) Based on the closing price of Silvercorp's common shares on the NYSE and OreCorp's ordinary shares on the ASX as of Aug. 4, 2023.

(11) The pro forma financial information is for illustrative purposes only and is not intended to represent the future financial position of the combined entity.

Transaction summary

Under the terms of the agreement, Silvercorp or a wholly owned subsidiary will, subject to the satisfaction of various conditions, acquire the OreCorp shares by means of a court-sanctioned scheme of arrangement under Part 5.1 of the Corporations Act 2001 (Cth), whereby each holder of OreCorp shares will receive, for each OreCorp share held, 15 Australian cents in cash and 0.0967 of a Silvercorp common share valued at 45 Australian cents for total implied consideration of 60 Australian cents per OreCorp share (12).

The implied consideration of 60 Australian cents per OreCorp share represents a 41.7-per-cent premium to the 20-day VWAP of OreCorp's shares on the ASX for the period ended Aug. 4, 2023, and values OreCorp at approximately $242-million (Australian) on a fully diluted in-the-money basis. Existing OreCorp shareholders will own 17.8 per cent of Silvercorp's common shares outstanding on a fully diluted in-the-money basis following implementation of the scheme.

Concurrent with entering into the agreement, Silvercorp and OreCorp have also entered into a placement agreement, whereby 70,411,334 new fully paid ordinary shares of OreCorp will be issued to Silvercorp at a price of 40 Australian cents per OreCorp share for aggregate proceeds of approximately $28-million (Australian). The placement will occur in two tranches, with the first tranche (for aggregate proceeds of $18-million (Australian)) to complete on the third business day after execution of the agreement and the second tranche (for aggregate proceeds of approximately $10-million (Australian)) to complete 10 business days thereafter. Upon completion of the placement, Silvercorp will hold approximately 15 per cent of the total outstanding ordinary shares of OreCorp. Proceeds from the placement will be used to immediately commence resettlement activities as contemplated in the relocation action plan, facilitating the prompt development of Nyanzaga.

Boards approvals and recommendations

The OreCorp board has unanimously approved the transaction and recommends that all OreCorp shareholders vote in favour of the scheme at the meeting of the shareholders of OreCorp in the absence of a superior proposal and subject to the independent expert to be appointed by OreCorp concluding (and continuing to conclude) that the scheme is in the best interests of OreCorp shareholders. Subject to those same qualifications, each director of OreCorp intends to vote, or cause to be voted, all OreCorp shares held or controlled by them (representing 4.6 per cent of OreCorp's issued shares as at the date of this announcement) in favour of the scheme at the scheme meeting (13).

The Silvercorp board has also unanimously approved the transaction.

(12) Based on the 20-day volume-weighted average price of Silvercorp's common shares on the NYSE American for the period ended Aug. 3, 2023, converted to Australian dollars using a U.S.-dollar-to-Australian-dollar foreign exchange rate of 1.526.

(13) OreCorp directors hold an aggregate of 18,487,960 OreCorp shares, representing 4.6 per cent of shares on issue as at the date of this announcement, which, together with 1,864,482 performance rights held by OreCorp directors, represent 5.1 per cent on a fully diluted basis as at the date of the announcement (calculations exclude options which will be cancelled if the scheme proceeds).

Key shareholder support

Rollason Pty. Ltd., which controls 49,136,589 OreCorp shares (representing approximately 12.3 per cent of the OreCorp shares as at the date of this announcement), has provided a signed voting intention statement to OreCorp (voting intention statement) indicating that Rollason intends to vote, or cause to be voted, all OreCorp shares held or controlled by it or its associates at the time of the scheme meeting in favour of the scheme, in the absence of a superior proposal and subject to the independent expert concluding (and continuing to conclude) that the scheme is in the best interests of OreCorp shareholders. Rollason has consented to OreCorp publicly announcing its voting intention.

Tanzanian government support

OreCorp and Silvercorp met with key Tanzanian government stakeholders including the Treasury Registrar and the Minister of Minerals. The government is supportive of the transaction, underpinning Ms. Hassan's mantra that Tanzania is open for international investment. The companies are looking forward to the continued support from key government stakeholders.

Transaction structure and certain terms of the agreement

The scheme is subject to customary closing conditions for a transaction of this nature, including:

• OreCorp shareholders approving the scheme at the scheme meeting;
• Approval of the Federal Court of Australia;
• Completion of the placement;
• The independent expert issuing an independent expert's report, which concludes (and continues to conclude) that the scheme is in the best interests of OreCorp shareholders;
• Tanzanian Fair Competition Commission and any other applicable approvals;
• Foreign Investment Review Board approval in Australia, if required;
• OreCorp performance rights and OreCorp options being dealt with such that none will remain in existence on completion of the scheme;
• No material adverse change and no prescribed occurrence in relation to either Silvercorp or OreCorp;
• Approval for quotation on TSX and NYSE of the Silvercorp common shares to be issued to OreCorp shareholders as the scrip component of the consideration;
• Other customary conditions.

Under the agreement, Silvercorp has agreed to use reasonable endeavours to apply for admission of Silvercorp to the official list of Australian Securities Exchange. If ASX has provided Silvercorp with conditional approval for admission to the official list of ASX by the business day before the date of the second court hearing, OreCorp shareholders (other than ineligible shareholders) may elect to receive the scrip component of the consideration in the form of Chess depositary interests (which may be traded on ASX) instead of in the form of Silvercorp common shares. If conditional approval is not provided by ASX by the business day before the date of the second court hearing, all OreCorp shareholders (other than ineligible shareholders) would receive the scrip component of the consideration in the form of Silvercorp shares, tradable on the TSX and NYSE.

The agreement also contains customary deal protection mechanisms, including no talk and no due diligence provisions (subject to a fiduciary-out exception) and no shop, as well as notification and matching rights for Silvercorp in the event of a competing proposal (14). The transaction may incur a capital gain tax payable under Tanzanian legislation. A break fee of approximately $2.8-million (Australian) shall be payable by OreCorp to Silvercorp if the agreement is terminated as a result of certain specified circumstances.

A copy of the agreement, which sets out the terms and conditions of the scheme and associated matters, will be filed on Silvercorp's profile on SEDAR+.

Timetable and next steps

OreCorp shareholders do not need to take any action in relation to the scheme at this stage.

A scheme booklet setting out the key terms of the transaction, including the scheme, independent expert's report, investigating accountant's report and the reasons for the recommendation of the OreCorp board will be sent to all OreCorp shareholders in due course. The scheme meeting to consider the scheme is expected to be held in November, 2023, and the scheme is expected to be implemented before the end of 2023 subject to satisfaction of all conditions and receipt of all necessary approvals. The scheme is conditional on, among other things, approval by a majority in number of OreCorp shareholders who vote at the scheme meeting and at least 75 per cent of all votes cast at the scheme meeting. Silvercorp is excluded from voting at the scheme meeting.

(14) As defined in the agreement.

An indicative timetable is set out herein.

                                INDICATIVE TIMETABLE

Action                                                                Estimated date

First court date                                             Early-mid-October, 2023
Dispatch scheme booklet to OreCorp shareholders              Early-mid-October, 2023
Scheme meeting                                                    Mid-November, 2023
Second court date                                                 Mid-November, 2023
Effective date                                  End of November/early December, 2023
Record date                                     End of November/early December, 2023
Implementation date                             End of November/early December, 2023

Advisers and counsel

Canaccord Genuity Corp. is acting as financial adviser to Silvercorp. King & Wood Mallesons, Australia and A&K Tanzania are acting as Silvercorp's Australian and Tanzanian legal advisers, respectively.

CIBC Capital Markets is acting as financial adviser to OreCorp. Allen & Overy and REX Attorneys are acting as OreCorp's Australian and Tanzanian legal advisers, respectively.

Conference call/webinar details

Silvercorp and OreCorp will host a joint conference call today at 10 a.m. Australian Eastern Standard Time/8 a.m. Australian Western Standard Time/8 p.m. North American Eastern Standard Time/5 p.m. North American Pacific Standard Time to discuss the transaction. Participants are advised to dial in five minutes prior to the scheduled start time of the call. A presentation will be made available on both companies' websites prior to the webcast.

Webinar details

Presenters:  OreCorp executive chairman Matthew Yates and managing director and chief executive officer Henk Diederichs, with Silvercorp vice-president Lon Shaver

Date/time:  Monday, Aug. 7, at 8 a.m. AWST (10 a.m. AEST) or Sunday, Aug. 6, at 5 p.m. PST (8 p.m. EST)

Register to join on Zoom.

Dial in by telephone

Please use one of the following numbers and, when prompted, enter the webinar ID 868 9291 7099.

Australia:

• 61-3-7018-2005;
• 61-7-3185-3730;
• 61-8-6119-3900;
• 61-8-7150-1149;
• 61-2-8015-6011.

Canada:

• 1-780-666-0144;
• 1-204-272-7920;
• 1-438-809-7799;
• 1-587-328-1099.

A recording of the conference call will be available on both companies' websites following the call.

About Silvercorp Metals Inc.

Silvercorp is a Canadian mining company producing silver, gold, lead and zinc with a long history of profitability and growth potential. Silvercorp's strategy is to create shareholder value by: (1) focusing on generating free cash flow from long-life mines; (2) organic growth through extensive drilling for discovery; (3) continuing merger-and-acquisition efforts to unlock value; and (4) long-term commitment to responsible mining and ESG.

About OreCorp Ltd.

OreCorp is a Western Australian based mining exploration company listed on the Australian Securities Exchange under the code ORR. OreCorp's key project is the Nyanzaga gold project in northwest Tanzania.

We seek Safe Harbor.