Takeover target Guyana Goldfields (TSX:GUY) said it has received a proposal from a “foreign-based multinational miner” valuing the company at C$323 million ($240m), which is 35% higher than Silvercorp Metals’ offer.
The Canadian firm was first approached by Silvercorp (TSX, NYSE: SVM) in April, which put forward a C$105 million (C$75m) cash and stock deal. The transaction would create a diversified precious metals producer with two silver mines in China and a gold operation in Guyana.
Guyana says the unnamed mining company has agreed to provide a $30 million secured-loan facility to finance ongoing 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.
Guyana said 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 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.
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 last year by announcing the amount of gold in proven and probable reserves at Aurora had declined by almost 1.7 million ounces, 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’s 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 added that a mine plan review was underway.
Guyana Goldfields’ share price steadily declined since then. It began the year at 69 Canadian cents, but was trading at C1.47 a share, as of Wednesday’s close.