The Board of Directors of Guyana Goldfields Inc. (TSX: GUY) have unanimously approved a move by Silvercorp Metals Inc. (TSXSVM) to acquire the African miner.
Silvercorp and Guyana Goldfields have entered into a definitive agreement whereby Silvercorp will acquire all of the issued and outstanding shares of the latter by way of a plan of arrangement under the Canada Business Corporations Act.
Concurrently with entering into the Arrangement Agreement, Silvercorp and Guyana Goldfields have also entered into a loan agreement, whereby Silvercorp will lend Guyana Goldfields up to US$15 million with a defined use of proceeds related to ongoing operations at the Aurora Underground Project, as well as for certain working capital and general corporate purposes.
Silvercorp Chairman and CEO, Rui Feng, said the Transaction will create a diversified precious metals producer with two profitable underground silver mining operations in China and a gold mining operation in Guyana with a strong balance sheet to fund growth opportunities.
“This transaction will create a new globally diversified precious metals producer with the addition of Aurora to our growing asset portfolio,” Mr Feng said.
“We believe this is a rare opportunity to leverage our underground mining expertise and strong balance sheet to unlock value for all shareholders through the development of the Aurora Underground Project as well as aggressive exploration programs in a proven gold district.
“We look forward to partnering with the Government of Guyana to make a successful entry into the region, leveraging Guyana Goldfield’s existing team and relationships to ensure a smooth transition and continued development that benefits all stakeholders.”
Alan Pangbourne, President and CEO of Guyana Goldfields, said the transaction provides his company’s shareholders with an immediate and significant upfront premium and exposure to a geographically diverse mid-tier precious metal company.
“With a strong operating history, solid balance sheet and significant underground experience, Silvercorp’s management team is well-positioned to fund and continue to advance the underground project at Aurora.”