Region Seven-based Guyana Goldfields Inc (GGI) yesterday announced that it has received notice from fellow Canadian miner Silvercorp Metals Inc that Silvercorp will not exercise its right to match the offer received from a foreign-based multinational mining company announced on June 3, 2020 to acquire all of the issued and outstanding common shares of GGI not already owned by the New Offeror at a cash price of C$1.85 for each Common Share by way of a plan of arrangement.
The name of the New Offeror was not provided by GGI yesterday.
On June 3rd, GGI said it was mulling acceptance of a new buyout offer from a foreign-based company. In a release, GGI said its board of directors had “unanimously determined, after consultation with its financial and legal advisors’ that the new offer on the table constitutes what it terms as a “superior proposal” compared to the terms of the arrangement agreement between the Company and Silvercorp Metals Inc dated April 26, and amended on May 16.
According to the terms of the new offer, the Company’s shareholders would receive cash consideration of C$1.85 for each common share, valuing Guyana Goldfields at approximately C$323 million. The new buyer has also agreed to provide the Company with a US$30 million secured loan facility to finance ongoing operations of the Aurora gold mine and to fund other liquidity needs of the Company. Except for the amount of the new loan facility, GGI says that the loan agreement proposed to be entered into between it and the new buyer is substantially similar to the loan agreement between the Company and Silvercorp dated April 26.
GGI disclosed that based on the closing price of the Silvercorp common shares on the Toronto Stock Exchange as of June 3, the new offer represents a premium of approximately 35% to the implied value of the consideration offered pursuant to the Silvercorp Arrangement Agreement. It further explained that except for the consideration being offered, the arrangement agreement that would be entered into with the new buyer is substantially the same as the Silvercorp Arrangement Agreement. Commensurate with the increase in consideration, the proposed arrangement agreement with the unnamed buyer provides for an increase in the termination fee to C$11.3 million, which is payable by the Company to the new buyer “in certain circumstances”. The proposed arrangement agreement with the new buyer also includes a reverse termination fee in the amount of C$11.3 million, which is payable by the new buyer to the Company “in certain other circumstances”.
On May 17, the Company announced it had entered into an amending agreement with Silvercorp to alter the arrangement agreement dated April 26, 2020 such that the consideration offered to shareholders of the Company was C$0.25 in cash and 0.1849 of a Silvercorp common share. This alteration came after the rejection of an unsolicited all-cash proposal from mining company Gran Colombia to acquire GGI.
GGI has since stopped mining operations at its Aurora mine site in Cuyuni/Mazaruni as it transitions to underground mining from open pit mining. Hundreds of its workers have been laid off as a result.
