Friday June 12, 2020 12:42
(Kitco News) - Zijin Mining Group Co., Ltd. has agreed to acquire Guyana Goldfields Inc. (TSX: GUY) in a deal valued at C$323 million, the companies announced Friday.
Silvercorp Metals Inc. tried to acquire Guyana Goldfields this spring. The latter announced on June 3 that it got a superior offer from a "foreign-based multinational mining company," which Silvercorp declined to match this week.
Under the deal announced Friday, Zijin will acquire all outstanding shares of Guyana Goldfields for C$1.85 each in an all-cash transaction. Based on the closing price of the Silvercorp shares on the Toronto Stock Exchange on June 3, the Zijin deal represents a premium of approximately 35% to the implied value of the Silvercorp offer, the companies said. Zijin has also agreed to provide Guyana Goldfields with a $30 million loan facility to finance ongoing operations of the Aurora gold mine and to fund other liquidity needs.
"The all-cash offer from Zijin represents a significant premium to the amended Silvercorp offer price and is an excellent outcome for Guyana Goldfields' shareholders," said Alan Pangbourne, president and chief executive officer of Guyana Goldfields. "Zijin is a highly regarded mining company with an impressive track record of successful international acquisitions and operations."
Chen Jinghe, chairman of Zijin, said his company looks forward to "advancing and developing the next phase" of the Aurora mine, which reached commercial production at the beginning of 2016.
The Zijin agreement was unanimously approved by the board of directors of Guyana Goldfields, which recommended that its shareholders vote in favor of deal. A special meeting is expected to occur by July 31, the company said.
The Zijin agreement provides for a termination fee of C$11.3 million that would be payable by Guyana Goldfields in certain specified circumstances, as well as reimbursement of Zijin's expenses up to C$500,000. The agreement also includes a reverse termination fee in the amount of C$11.3 million, payable by Zijin to Guyana Goldfields in the event of certain circumstances.
By Allen Sykora