Guyana Goldfields Inc. (TSX: GUY) announced that its board of directors, after careful consideration and consultation with its financial and legal advisors, has unanimously determined to reject the unsolicited proposal announced by Gran Colombia Gold Corp. (TSX: GCM) on May 11, 2020 to acquire all of the issued and outstanding common shares of the Company for consideration consisting entirely of Gran Colombia shares. The Board reaffirms its unanimous support for the transaction previously entered into with Silvercorp Metals Inc (TSX/NYSE American: SVM) and announced on April 27, 2020.
The Board has determined that the Gran Colombia Proposal is not in the best interests of the Company or its shareholders since, among other things, the Gran Colombia Proposal (i) is complex and highly conditional in nature as it is contingent on the concurrent completion of a separate acquisition by Gran Colombia of Gold X Mining Corp. (TSX-V: GLDX, OTCQX: SSPXF), the terms of which have not been disclosed to the Company; (ii) requires the approval of the shareholders of each of Gran Colombia, Gold X and the Company, each conditional on the other providing such approval, and (iii) fails to provide the Company with adequate short term liquidity, given the C$3.65 million break fee that would be payable to Silvercorp upon the entering into of a transaction agreement with Gran Colombia and the increased ongoing costs to the Company associated with a delayed closing date relative to the Silvercorp Transaction. The Board acknowledges that, based on current trading prices, the Gran Colombia Proposal represents a premium to the agreed price under the Silvercorp Transaction; however, the Board is of the view that such premium does not sufficiently compensate the Company’s shareholders for the increased risk associated with the Gran Colombia Proposal.
Guyana Goldfields is Committed to Completing the Transaction with Silvercorp
Under the terms of the arrangement agreement dated April 26, 2020 entered into with Silvercorp, Silvercorp has agreed to acquire all of the issued and outstanding shares of the Company by way of a plan of arrangement under the Canada Business Corporations Act. Pursuant to the terms of the Arrangement Agreement, each holder of Guyana Goldfields shares will have the option to receive, for each share held, C$0.60 in cash or 0.1195 of a Silvercorp common share, subject to a maximum cash consideration of C$33.2 million.
The Silvercorp Transaction will provide significant benefits to the Company’s shareholders including:
Full details of the Silvercorp Transaction will be included in the management information circular of Guyana Goldfields that is expected to be mailed to Guyana Goldfields’ shareholders in early June 2020.
Shareholder Meeting details
The shareholder meeting is scheduled for June 29th, 2020 with a Record Date for shareholders of May 20th, 2020. Full details of the Silvercorp Transaction will be included in the management information circular of Guyana Goldfields that is expected to be mailed to Guyana Goldfields’ shareholders in early June 2020.
Shareholders who have questions regarding the Silvercorp Transaction should contact the Company’s strategic shareholder advisor and proxy solicitation agent Kingsdale Advisors at 1-800-775-1986, or collect call outside North America at 416-867-2272, or by e-mail at contactus@kingsdaleadvisors.com.
Advisors and Counsel
RBC Capital Markets is acting as financial advisor to Guyana Goldfields and Fasken Martineau DuMoulin LLP is acting as Guyana Goldfields’ legal advisor. Kingsdale Advisors is acting as strategic shareholder and communications advisor and proxy solicitation agent.
About Guyana Goldfields Inc.
Guyana Goldfields Inc. is a Canadian based gold producer primarily focused on the exploration, development and operation of gold deposits in Guyana, South America.
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