Chinese Co outbids Canadians in ‘all cash’ buyout of Guyana Goldfields

Months after an agreement between Canadian mining company Silvercorp and Guyana Goldfields for the Canadian company to acquire Guyana Goldfields was announced, a Chinese company has managed to acquire the large-scale gold mining company for some Cdn$323 million in what turned out to be the better offer.
The development comes after the Chinese company – Zijin Mining Group Co, a leading global mining company specialising in gold, copper, zinc, and other mineral resource exploration and development –bettered the purchasing price and conditions that were made by the Canadian company.

Just over a month ago, it was announced that Silvercorp had entered into an agreement to acquire Guyana Goldfields for some Cdn$105 million.
The Guyanese company received a rival offer from Gran Columbia Gold soon after and Silvercorp revised the agreement and increased the offer to Cdn$227 million.
A week later, Guyana Goldfields announced that another company has topped that second offer by 35 per cent.
Silvercorp was then given five business days to match or improve the Cdn$1.85 cash-per-share new bid.
On Friday, a public statement from the two companies published by the Chinese company and Guyana Goldfields confirmed “they have entered into a binding arrangement agreement,” where Zijin will acquire all of the outstanding common shares of Guyana Goldfields by way of a plan of arrangements for cash consideration of Cdn$1.85 for each Guyana Common Share, valuing Guyana Goldfields at approximately Cdn$323 million.
Prior to entering into the Zijin Arrangement Agreement, Guyana Goldfields terminated its arrangement agreement with Silvercorp Metals Inc (“Silvercorp”) dated April 26, 2020, as amended on May 16, 2020 (the “Silvercorp Arrangement Agreement”), in accordance with its terms.
“Zijin has also agreed to provide Guyana Goldfields 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 public missive stated.
According to Alan Pangbourne, President and Chief Executive Officer (CEO) of Guyana Goldfields, “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. 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.”
Meanwhile, Zijin Chairman Chen Jinghe expressed optimism at the prospects that the acquisition of the Aurora mining operations presents.
“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,” he said.
The Chinese company has committed to “continuing to operate in a safe, sustainable, and responsible manner” ,and says that it looks 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”.
It was noted that the agreement will be subject to the approval of 66.66 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, 2020. 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.