VANCOUVER — Silvercorp Metals Inc. says it has struck a deal to buy Guyana Goldfields Inc. in a cash-and-shares transaction worth about $105 million.
The two Canadian miners say the transaction will create a diversified company by combining Silvercorp's two underground silver mining operations in China with Guyana Goldfields' Aurora gold mining operation in Guyana.
Guyana Goldfields shareholders will have the option to receive 60 cents in cash or 0.1195 of a Silvercorp common share for each Guyana Goldfields share they hold, subject to maximum cash consideration of $33.2 million.
Assuming the maximum cash payout, existing Guyana Goldfields shareholders would own 7.1 per cent of Silvercorp’s shares. They will be asked to approve the deal at a special meeting to be held before the end of June.
Silvercorp says it has also agreed to lend Guyana Goldfields up to US$15 million to be used for ongoing operations at the Aurora underground project and other purposes.
Vancouver-based Silvercorp's shares fell by as much as 26 cents or about five per cent to $4.81 in early trading on the Toronto Stock Exchange on Monday, while Toronto-based Guyana Goldfields rose by as much as 45 per cent or 18 cents to match the 60 cent offer.
"This transaction will create a new globally diversified precious metals producer with the addition of Aurora to our growing asset portfolio," said Silvercorp CEO Rui Feng.
"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."
This report by The Canadian Press was first published April 27, 2020.
Companies in this story: (TSX:SVM, TSX:GUY)
The Canadian Press