Zijin Mining Group (SEHK:2899) announced that they have entered into an agreement with Continental Gold (TSX:CNL; OTCQX:CGOOF) to acquire all of the outstanding shares of Continental at a price of C$5.50 per share in cash.
The offering price represents a 29% premium over Continental’s 20-day volume-weighted average price (VWAP) as at November 29, 2019 and values the Equity portion of the transaction at approximately C$1.4 billion and the Enterprise value of the transaction at C$1.9 billion.
Newmont Goldcorp Corporation (NYSE:NEM) and Continental’s directors & officers collectively hold approximately 21.5% of the outstanding Continental shares and have entered into agreements to support the transaction.
Continental is currently developing its 100%-owned Buriticá project in Antioquia, Colombia and expects production to start in 2020.
Buriticá is expected to produce over 300,000 gold ounces per year for the first five years and then decrease gradually and produce, on average, over 260,000 gold ounces per year over a 14-year mine life, with an All-in Sustaining Cost (AISC) of approximately US$600 per ounce.
From the Feasibility Study released in 2016, the Total Mineral Reserve Estimate was 13.7 million tonnes in the Proven & Probable category at a grade of 8.4 g/t gold and 24.3 g/t silver for a total of 3.7 million ounces of gold and 10.7 million ounces of silver. The 2016 Feasibility Study does not include the Mineral Resource Estimate that was updated in January 2019
Timing of the Close
The transaction will be subject to the approval of Continental shareholders at a special meeting expected to be held in January 2020 and the receipt of certain regulatory, court and stock exchange approvals.
Interim Financing
In connection with the transaction, Zijin has agreed to provide Continental with US$50 million by subscribing to a convertible debenture.
Continental has also terminated the recently announced private placement of shares and has given notice that it will redeem US$25 million of its currently outstanding convertible debentures.
Continental Gold (TSX:CNL)
- www.continentalgold.com
- Headquartered in Toronto, Canada, Continental Gold engages in the acquisition, exploration, evaluation, and development of gold resource properties in Colombia.
- The company is currently developing the 100%-owned Buriticá project, located to the northwest of Medellín in the Antioquia Department in north-western Colombia.
- Continental Gold is currently trading at $5.35 with a market cap of $1,087.0 million.
Zijin Mining (SEHK:2899)
- www.zijinmining.com
- Headquartered in Longyan, China, Zijin Mining is a global mining company and engages in the exploration, mining, and sale of mineral resources in China and internationally.
- Zijin Mining manages a portfolio of projects in China and internationally, primarily consisting of gold, copper, zinc, and other metals.
- Zijin Mining is currently trading at HKD3.14 with a market cap of HKD79,684.6 million.
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