Aurora gold mine in Guyana. (Photo: Guyana Goldfields)

Chinese firm to acquire Guyana Goldfields Inc for CN$323 million

Aurora gold mine in Guyana. (Photo: Guyana Goldfields)

The Chinese-owned  Zijin Mining Group Co, Ltd and the Guyana Goldfields Inc (GGI) today announced they had entered into a binding arrangement agreement that will allow the Chinese company to acquire all of the outstanding common shares of GGI for approximately CN$323 million.

In a joint statement, Zijin said it was making a cash consideration of CN$1.85 for each GGI common share.

The statement said that prior to entering into the Zijin Arrangement, GGI had terminated its arrangement agreement with Silvercorp Metals Inc on May 16 this year.

Employees and guests of Silvercorp Metals attend the opening bell at the New York Stock Exchange, Monday, March 8, 2010. On May 16,2020, Guyana Goldfields Inc terminated a sale agreement it had arranged with Silvercorp Metals for the acquisition of its operation in the South American country. (Photo:THE CANADIAN PRESS/AP-Mark Lennihan)

“As noted in its press release on June 3, 2020, Guyana Goldfields received a binding proposal from Zijin to acquire all of the issued and outstanding Guyana common shares and notified Silvercorp that this offer constituted a “Superior Proposal” in accordance with the terms of the Silvercorp Arrangement Agreement.

“Silvercorp elected not to exercise its right to match and, as a result, Guyana Goldfields terminated the Silvercorp Arrangement Agreement in accordance with its terms and entered into the Zijin Arrangement ,” the statement said, adding that based on the closing price of the Silvercorp common shares on the Toronto Stock Exchange as of June 3, the Zijin Arrangement “represents a premium of approximately 35 per cent to the implied value of the consideration offered pursuant to the Silvercorp Arrangement Agreement”.

“We believe that the Aurora mine is a high-quality gold asset with significant upside potential which we believe will be highly complementary to Zijin’s existing mining asset portfolio.”

— Alan Pangbourne, president and chief executive officer, Guyana Goldfields Inc
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Zijin has also agreed to provide GGI with a US$30-million secured loan facility to finance ongoing operations of the Aurora gold mine and to fund its 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 Goldfield’s shareholders,” said Alan Pangbourne, the GGI president and chief executive officer.

Alan Pangbourne, president and chief executive officer of Guyana Goldfields Inc. (File photo)

“Zijin is a highly regarded mining company with an impressive track record of successful international acquisitions and operations. We look forward to working with Zijin over the coming weeks to close this transaction and transition to the new team,” he added.

Zijin chairman, Chen Jinghe, said he was pleased with the sale and that “Guyana Goldfields’ management team has dedicated tremendous effort and made significant contributions in progressing the Aurora Gold Mine and we look forward to advancing and developing the next phase of the mine.

“We believe that the Aurora mine is a high-quality gold asset with significant upside potential which we believe will be highly complementary to Zijin’s existing mining asset portfolio.”

Aurora gold mine in Guyana. (Photo: Guyana Goldfields)

He said Zijin strongly believes in the support and contribution to local communities in which it operates, as well as maintaining cooperative relationships with all stakeholders.

“These values are a critical part of Zijin’s long-term goals. We are committed to continuing to operate in a safe, sustainable and responsible manner and look forward to working closely with the Government of Guyana, the local communities, and all other stakeholders to deliver a first-class operation that will significantly benefit the regional economy.”

According to the statement, the Zijin Arrangement will be effected by way of a court-approved plan of arrangement under the Canada Business Corporations Act and will be subject to the approval of 66⅔ per cent of votes cast by shareholders of Guyana Goldfields at an annual and special meeting of Guyana Goldfields shareholders expected to be held by July 31, this year.

In addition to shareholder approval, the Zijin Arrangement is also subject to the receipt of certain regulatory and court approvals, including approval by relevant authorities in China, and other closing conditions customary in transactions of this nature, the statement noted.