Canada’s Silvercorp Metals (TSX, NYSE: SVM) is buying Guyana Goldfields (TSX: GUY) in a C$105 million ($75m) cash and stock deal that creates a diversified precious metals producer with two silver mines in China and a gold operation in Guyana.
The Vancouver-based miner will give Guyana’s shareholders the option to receive C$0.60 per share in cash or 0.1195 of a share in the company, to a maximum cash consideration of C$33.2 million ($24m).
The C$0.60/share price represents a
71% premium to the 20-day volume weighted average price of the target company
as of Friday’s close.
Guyana has been under investor pressure
due to the poor performance of its flagship and only operating mine, Aurora,
following a resources review.
The mid-tier gold producer shocked
the market in March last year by announcing the amount of gold
in proven and probable reserves at Aurora had declined by almost 1.7
million ounces, compared to estimates published in 2018.
The news triggered a bitter battle for control of the company led by founder and former chairman Patrick Sheridan, which was settled in April 2019. The deal included the appointment of an interim director and chief executive, who was replaced in January by Alan Pangbourne, Guyana’s current president and CEO.
More to come…