Chinese mining firm, Zijin Mining Group Ltd, has entered into a binding arrangement agreement with Guyana Goldfields, which will see the former acquiring all of the outstanding common shares the Canadian firm.
The value of the shares lies in the vicinity of CDN$323 million, Guyana Goldfields noted on Friday morning.

The move is another twist in the future of Guyana Goldfields which has been experiencing turbulent relations with its shareholders, as regards its management of operations here.
Prior to entering into the Zijin Arrangement Agreement, Guyana Goldfields terminated its arrangement agreement with Silvercorp Metals Inc which the two signed on April 26, 2020 and which was later amended in accordance with its terms.

As noted in its press release on June 3, 2020, Guyana Goldfields said it 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.

According to the release, 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 Agreement.

Based on the closing price of the Silvercorp common shares on the Toronto Stock Exchange as of June 3, 2020, the Zijin Arrangement represents a premium of approximately 35% to the implied value of the consideration offered pursuant to the Silvercorp Arrangement Agreement.

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.

According to Alan Pangbourne, President and 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.”

Chen Jinghe, Chairman of Zijin, stated:”On behalf of Zijin, I would like to thank the board of directors, Mr. Pangbourne, President and CEO of Guyana Goldfields, as well as the senior management team of Guyana Goldfields for their support and recognition of Zijin on this transaction. 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.

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.”

Guyana Goldfields stated that there are several benefits from the new agreement. These include significant premium of approximately 35% to the offer under the Silvercorp Arrangement Agreement ; all-cash offer, providing value certainty and Zijin’s strong balance sheet and access to capital provides the funding needed for the transaction (no financing condition) and for the development of the next phase of the Aurora mine.