- Silvercorp Metals Inc (TSX:SVM) is acquiring Guyana Goldfields Inc (TSX:GUY)
- The acquisition will add the Guyana gold mine to Silvercorp’s China-based silver operations
- Silvercorp Metals will acquire Guyana shares for C$0.60 per share or in exchange for 0.1195 of a Silvercorp common share
- This will total a maximum cash consideration of $33.2 million, but if all Guyana shareholders elect to receive cash, the per share price paid will drop to $0.20 and 0.076 of a Silvercrop share.
- Silvercrop Metals Inc (SVM) is down 3 per cent, with shares trading at $4.99 and a market cap of $1.2 billion
Silvercorp Metals Inc (TSX:SVM) has purchased all outstanding shares of Guyana Goldfields Inc (TSX:GUY) in a deal valued at C$33.2 million plus shares.
The new acquisition will give Silvercorp an available, producing gold mine in Guyana to add to its two producing silver mines in China.
The option share/cash agreement has a number of options for Guyana Goldfields shareholders to look at.
The first option is a $0.60 per share price payment to Guyana shareholders in cash or 0.1195 of a Silvercorp common share, subject to a maximum cash spend of $33.2 million.
If all Guyana shareholders elect to receive their payouts in cash, then the consideration will drop to $0.20 per share and 0.076 of a Silvercorp common share. This will leave Guyana shareholders with a 7.1 per cent ownership stake in Silvercorp.
The $0.60 share valuation represents a substantial premium for Guyana shareholders, as the company has been trading at approximately 70 per cent below that figure for the past 20 days.
The total implied equity spend on the transaction will hit approximately $105 million.
Furthermore, Silvercorp and Guyana have also entered into a loan agreement where Silvercorp will lend Guyana up to $21 million to cover operational costs at the company’s Aurora underground project.
The CEO and Chairman of Silvercorp, Rui Fend said the transaction would create a new globally diversified previous metals producer with the additional of Aurora to the company’s growing asset portfolio.
“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,” he said.
On his part, the CEO of Guyana Goldfields Alan Pangbourne said the transaction would give shareholders an immediate and upfront premium, along with exposure to geographically diverse mid-tier previous metals company.
“With a strong operating history, sold balance sheet and significant underground experience, Silvercorp’s management team is well-positioned to fund and continue to advance the underground project at Aurora,” he said.
Silvercrop Metals Inc (SVM) is down 3 per cent, with shares trading at $4.99 and a market cap of $1.2 billion