TWO leading investment advisory firms have recommended that Guyana Goldfields shareholder vote for the proposed acquisition of all of the outstanding common shares the Canadian firm by the Chinese company Zijin Mining Group Ltd.

The registered shareholders have a proxy deadline of Thursday, July 23, 2020 at 10:30 hours (Toronto time) to vote their proxies; beneficial shareholders also have to vote their proxies or voting instruction forms prior to the deadline set out therein.

Guyana Goldfields (GG) is the parent company of the Aurora Gold Mines (AGM), with gold mining operations in Aurora, Region Seven. The company started commercial production in January 2016, but has been facing issues over the years including disputes among shareholders, and financial constraints.

In a statement released last Wednesday, GG noted that Institutional Shareholder Services (ISS) and Glass Lewis & Co. (Glass Lewis), which provide “voting recommendations to some of the largest institutional investors” has validated the CDN$323M (US$238M) deal.

It was in earlier June, that Guyana Goldfields had revealed the all-cash offer by Zijin, and terminated a formerly announced arrangement agreement with Silvercorp Metals Inc., which had took place in April, 2020.

The Zijn offer had constituted a “Superior Proposal” in accordance with the terms of the Silvercorp Arrangement Agreement, and Silvercorp had elected not to exercise its right to match resulting in GG terminating the Silvercorp Agreement and entering the new agreement with Zijin.

The Silvercorp deal had been for CDN$105M. The Zijin Arrangement represented a premium of approximately 35 per cent to the implied value of the consideration offered pursuant to the Silvercorp Arrangement Agreement, based on the closing price of the Silvercorp common shares on the Toronto Stock Exchange as of June 3, 2020,

Guyana Goldfields President and CEO, Alan Pangbourne, said the company is pleased with the council of the two firms, in support of the new acquisition arrangement.
“We are pleased that ISS and Glass Lewis have both recommended in favour of the proposed transaction with Zijin and unanimously recommend that our shareholders support this transaction,” Pangbourne is quoted as stating.

According to the statement ISS is quoted as saying that: “…shareholders will cash out of their investment at a significant premium…with certainty of value and immediate liquidity.”

In their recommendation, Glass Lewis is quoted as having said: “…the proposed transaction appears to be the result of a robust and competitive process and we see no reason to doubt that it likely represents the most favourable offer available at the present time.”
The move for the Zijin acquisition was another twist in the future of Guyana Goldfields which has been experiencing turbulent relations with its shareholders, as regards its management of operations here, at AGM.

Zijin has agreed to provide Guyana Goldfields with a US$30M secured loan facility to finance ongoing operations of the AGM and to fund its other liquidity needs.
Earlier this year, the company’s stock took a major hit following the release of a report on February 25, where the company’s production results showed that 2019 fourth quarter gold production declined by 28 per cent, when compared to that of the 2018 fourth quarter.

In March, a class action lawsuit was filed against the company and its former President and Chief Executive Officer (CEO), Scott Caldwell, at the Ontario Superior Court of Justice, seeking unspecified amount of damages for alleged misrepresentations.

The company has been facing challenges as it transitions from an open pit operation into an underground mine. In the February 2020 report the company said that it was exploring financing and strategic alternatives to fund additional waste stripping at its open pit and for underground development.