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Gran Colombia Gold proposes to merge with Guyana Goldfields and Gold X

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Global Mining Review,

Gran Colombia Gold Corp. has recently announced that it has signed a definitive agreement to complete a business combination with Gold X Mining Corp. and that it has submitted a proposal to Guyana Goldfields Inc. to acquire all of its issued and outstanding common shares. The contemplated business combination between Gran Colombia and Gold X is conditional upon the successful concurrent acquisition of Guyana Goldfields, and the proposal to Guyana Goldfields is conditional on the concurrent acquisition of Gold X.

The combined entity will continue as Gran Colombia and will be managed by the current Gran Colombia executive team, with corporate headquarters remaining in Toronto. Shareholders of Gran Colombia will own ~60% of the combined company, with Guyana Goldfields and Gold X shareholders owning ~25% and ~15% respectively, on a basic shares outstanding basis.

Gran Colombia and Gold X welcome the opportunity to bring their expertise in Latin American mining projects to maximise the value of the combined assets and create a new Latin American intermediate gold producer. Gran Colombia and Gold X believe the immediate value creation afforded to Guyana Goldfields shareholders via the upfront offer premium and the ability to realise further value through the continued operations in the new larger, stronger entity represents an opportunity far superior, both strategically and financially, to the proposed transaction between Silvercorp Metals Inc. and Guyana Goldfields announced on 27 April 2020.

In support of the Proposal, Gran Colombia has purchased 8.7 million shares of Guyana Goldfields, representing ~5% of the basic shares outstanding.

Transaction Highlights

  • Creates a high-growth, Latin American-focused intermediate gold producer.
  • Unlocks realisable synergies in Guyana.
    • Toroparu is located ~50km from Aurora and Gran Colombia and Gold X have identified an opportunity to connect the two sites and use existing Aurora infrastructure to develop an optimised production plan for both Toroparu and Aurora gold resources that significantly reduces the upfront capital that would be required to start the Toroparu Opencast and Aurora Underground projects independently.
  • Enhanced balance sheet and access to capital.
  • Highly accretive transaction with strong re-rate potential proven Latin American operating and mine building experience.

Serafino Iacono, Executive Chairman of Gran Colombia, stated: “We are excited to present this opportunity to all the shareholders of Gran Colombia, Guyana Goldfields and Gold X. It is extremely rare to come across a transaction that can unlock significant tangible synergies outside of simply consolidating head offices. Not only does this transaction unlock meaningful value for all shareholders, but it creates a new Latin American gold champion with Latin American operators and mine builders. We will use our unique skillset to continue to grow Gran Colombia and create substantial value for all shareholders. We look forward in the coming weeks to present our vision to shareholders and demonstrate the superior value that our proposed merger possesses.”

Lombardo Paredes, CEO of Gran Colombia, commented: “We have studied the integration of Aurora and Toroparu and strongly believe in its potential. Based on our internal integration plan we have identified US$200 million of synergies as there are a number of different areas where Toroparu can benefit from the existing infrastructure at Aurora. This is truly a unique opportunity and I look forward to using Gran Colombia’s strong operating and mine-building team to unlock this substantial value for shareholders.”

Paul Matysek, CEO and Chairman of the Board of Directors of Gold X, added: “We envision that this business combination will release both short and long term value through the economies of scale and synergies inherent in two large deposits located within 50 km of each other. We are fortunate to have attracted such an experienced operator as Gran Colombia Gold. The management team’s success as an underground miner in Colombia as well as history developing assets within the Guiana Shield make them the ideal partner for development of the mining assets in Guyana.”

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