Continental Gold Inc. [CNL-TSX; CGOF-OTCQX] said two independent proxy advisory firm are recommending that its shareholders vote in favour of a plan of arrangement that will see Continental being taken over by Chinese firm Zijin Mining Group Co. Ltd.
The $1.3 billion offer made by Zijin in December, 2019, is aimed at taking control of Continental Gold’s flagship Buritica gold project in Colombia. Independent proxy advisory firms ISS and Glass Lewis have urged shareholders to vote in favour of the offer.
Under the plan of arrangement, Zijin will acquire all of the outstanding common shares of Continental for a cash payment of $5.50 per common share.
Shareholders of Continental are scheduled to vote on the plan of arrangement at a meeting on January 28, 2020, in Toronto. Zijin Mining is a Chinese gold, copper and non-ferrous metals producer and refiner with headquarters in mainland China.
On Wednesday, Continental shares were virtually unchanged, falling 0.09% or $0.005 to $5.42 on volume of 522,413. The shares are currently trading in a 52-week range of $1.76 and $5.47.
A 19.9%-owned affiliate of Newmont Goldcorp Corp. [NGT-TSX, NEM-NYSE], Continental Gold is an advanced-stage exploration and development company with an extensive portfolio of wholly-owned gold projects in Colombia.
The 75,023-hectare Buritica property is Continental’s flagship asset. It contains several known areas of high-grade gold and silver mineralization, of base metal carbonate-style variably overprinted by texturally and chemically distinctive high-grade mineralization.
Mineral reserves on the property currently stand at 3.7 million ounces of gold, grading 8.4 g/t and 10.7 million ounces of silver, grading 243 g/t.
That material is expected to support an average annual production rate in the first five years of 282,000 ounces of gold at a life-of-mine and all-in sustaining and construction cost of US $604/oz. Production is scheduled to commence in early 2020, the company has said.
According to a February, 2016, feasibility study, initial capital costs are pegged at US $389.2 million. Total project costs were estimated at between US $475 million and US $515 million.
In a January November, 2019 press release, Continental said mill facilities construction was almost 90% complete as of October 31, 2019.
The project remains on schedule for mechanical completion in the first quarter of 2020, the company said. Ramp-up to commercial production is anticipated approximately six months thereafter.
Continental recently closed a US $100 million gold and silver streaming transaction with Triple Flag Mining Finance Bermuda Ltd.
The gold and silver stream is part of a US $175 million financing package that will be used in part to fund the advancement of Continental’s Buritica Project, the company said.