Takeover target Guyana Goldfields (TSX: GUY) said it has received a proposal from a “foreign-based multinational miner” valuing the company at $323 million (US$240 million), which is 35% higher than a previous offer from Silvercorp Metals (TSX: SVM; NYSE: SVM).
The Canadian miner was first approached in April by Silvercorp, which put forward a C$105 million (US$75 million) cash and share deal. That transaction would create a diversified precious metals producer with two silver mines in China and a gold operation in Guyana.
A couple of weeks later, Guyana Goldfields received a rival bid from Gran Colombia Gold (TSX: GCM), which prompted Silvercorp to sweeten its offer. (Guyana Goldfields rejected Gran Colombia’s offer.)
Guyana Goldfields says the unnamed mining company has agreed to provide a US$30 million secured-loan facility to finance operations at its flagship Aurora gold mine and for other liquidity needs. Otherwise, it said the fresh offer was “substantially similar” to the agreement with Silvercorp.
Silvercorp has five business days to match or improve the $1.85 cash-per-share new bid.
“At this time, there can be no assurance that the new offer will lead to a termination of the Silvercorp arrangement agreement and the execution of a definitive agreement with the new offeror and, accordingly, the board has not changed its recommendation regarding the offer under the Silvercorp arrangement agreement,” Guyana said in a statement.
Guyana has been under investor pressure due to the poor performance of its only operating mine, Aurora, following a resources review.
The mid-tier gold producer shocked the market in March 2019 by announcing the amount of gold in proven and probable reserves at Aurora had declined by almost 1.7 million oz. 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 Goldfields’ current president and CEO.
Shares in the company fell to the lowest since 2008 in October, after the embattled Canadian miner revealed Aurora would fail to meet production guidance. The company told shareholders that a mine plan review was underway.
At press time in Toronto, Guyana Goldfields was trading at $1.47 per share within a 52-week range of 25¢ and $1.49 per share.
The company has about 175 million common shares outstanding for a $257-million market capitalization.