By James Hyland, MiningIR
In a major step towards disrupting the high-purity quartz silica market, Sio Silica Corporation, a ESG Canadian-based innovator in environmentally friendly mineral production, has announced a definitive business combination with Pyrophyte Acquisition Corp., a special purpose acquisition company listed on the NYSE. This groundbreaking move signals a significant leap forward in Sio’s mission to become a leading producer of high-purity quartz silica, a vital mineral in the global shift towards net zero emissions.
The Strategic Combination
The agreement values the merged entity at an enterprise value of $708 million and an equity value of $758 million, remarkably at an ~80% discount to the ~$3.9 billion net present value estimated by Stantec Inc. This merger brings together Sio’s cutting-edge technology and Pyrophyte’s financial acumen, setting the stage for a dynamic entry into the high-purity crystalline quartz market.
“We are excited to partner with Pyrophyte to become a leading producer of high-purity quartz silica,” said Feisal Somji, Chief Executive Officer of Sio. “Our streamlined approach to creating environmentally responsible solutions has attracted high profile strategic alliances, which puts us at an important inflection point in our growth trajectory. These solutions follow the Manitoba Clean Environment Commission’s recommendations, and the Company is working with the Province of Manitoba to finalize an extraction license that will exemplify the commitment and practices of the Company to be a leader in environmental protection. We will continue to work with the Province of Manitoba and its stakeholders to put the Province on the global stage as a major contributor to achieving global net zero targets through decarbonization initiatives that require high-purity silica. The combination of being fully funded and fully permitted is expected to fuel the next phase of our expansion in high-purity quartz silica extraction and processing. We believe that our combination with Pyrophyte will allow us to scale our production to meet strong customer demand and expand our high-purity quartz silica products to a wide range of applications, such as solar panels, semiconductors, and lithium-silicon batteries, with a long runway for profitable growth in the years ahead. We believe that this Business Combination will put Sio in a position to execute further on our strategic priorities and to support our growth over the long-term.”
Feisal Somji, Chief Executive Officer, SIO Silica Corporation
The business combination is bolstered by approximately $150 million in gross capital, sourced from equity, debt, and royalties, including significant investments from Riverstone Credit Partners, HITE Hedge Asset Management, and a major Canadian pension fund. Additionally, an expected $10 million through flow-through equity will support the construction of Sio’s first extraction and processing facility in Winnipeg, Manitoba.
Sio Silica’s Impactful Vision: Sio is set to revolutionize the quartz silica market with its sustainable operations and advanced technologies. Their high-purity quartz silica, exceeding 99.9% purity, is pivotal for photovoltaics, solar panels, semiconductors, and batteries, contributing significantly to global net zero targets. The company’s patent-pending extraction process eliminates the need for harmful practices like surface mining and chemical cleansing, embodying their commitment to eco-friendly production methods.
The company’s strategic positioning and innovative approach position it to play a crucial role in the energy transition and semiconductor sectors, driving strong demand for its products. Sio’s resource base, encompassing about 146 million tonnes of measured and indicated resources and 345 million tonnes of inferred resources, ensures a sustainable, long-term supply for a growing market.
With the closing of the business combination, Sio anticipates fully funding the construction of its Winnipeg facility’s first phase within 18 months. This facility will leverage renewable electricity, natural gas, and efficient processing techniques, further cementing Sio’s status as a leader in environmentally responsible mineral production.
Market and Investment Highlights:
- Sio’s high-purity quartz silica market is projected to be a $30 billion opportunity by 2030.
- The company’s development plan boasts a multi-generational resource life.
- Phase 1 of its production facility is expected to be fully contracted, reflecting strong market demand.
- Sio’s unique extraction and processing methods offer significant cost advantages and operational efficiencies.
- The company’s strategic location provides logistical benefits, including access to major North American markets and ports.
- Sio’s commitment to ESG principles positions it as an industry leader in sustainable mining practices.
Leadership and Vision: Sio’s leadership team and board of directors bring a wealth of experience, ensuring the company’s path to creating shareholder value while maintaining high environmental and social governance standards. As Sio Silica moves forward, it stands as a testament to the potential of innovative, sustainable practices in reshaping critical industries and advancing the global transition to a low-carbon future.
Transaction Summary: The business combination, expected to close within the stipulated financial timelines, will see the creation of Sio Silica Incorporated, with its shares and warrants listed on the NYSE under “SIOS” and “SIOS WS,” respectively. This strategic move not only positions Sio Silica as a frontrunner in the high-purity quartz silica market but also exemplifies the company’s unwavering commitment to sustainable development and its role in the global pursuit of a decarbonized future.
Technical Information
Keith Wilson, P. Eng., a consulting engineer, is a Qualified Person as defined by S-K 1300 and NI 43-101 and has reviewed, approved and verified the scientific and technical information in this press release.
