Gran Colombia Gold (TSX: GCM) is acquiring Gold X Mining (TSXV: GLDX) in an all-share deal valued at $315 million, after a three-way merger proposal that included Guyana Goldfields was scuttled last year by China's Zijin Mining.
The combination of assets - Gran Colombia's producing Segovia operations and Gold X's Toroparu advanced gold project in Guyana - would create a new “Latin American-focused growth platform.”
Highlights of the transaction include an enhanced balance sheet and access to capital (the combined company would have $100 million in cash), and greater market visibility and interest. Both Segovia and Toroparu also have significant growth and exploration potential.
Gran Colombia already owns an 18% stake in Gold X. The offer implies a 39% premium based on the closing price of Gold X shares on Mar. 12.
“The contemplated acquisition will provide Gran Colombia with an opportunity to add a large-scale, long-life Latin American gold development project to its portfolio," said Gran Colombia's executive chairman, Serafino Iacono. “When this transaction is consummated, the Toroparu gold project will join our Segovia Operations as cornerstones of our long-term growth strategy.”
Gold X CEO Paul Matysek noted the offer provides Gold X shareholders with “an immediate and significant upfront premium, exposure to an established Latin American gold producer and re-rating potential. With a strong operating history, solid balance sheet and track-record of developing assets within the Guiana Shield, we believe that Gran Colombia is an ideal partner to bring Toroparu into production.”
Gold X will hold a shareholder vote on the merger in May.
Toroparu, in Western Guyana's Cuyuni-Mazaruni Region, holds measured and indicated resources of 7.4 million oz. gold in 252.6 million tonnes grading 0.91 g/t gold. The project lies in Gold X's 532.8-sq.-km Upper Puruni concession.
According to a 2019 preliminary economic assessment, the project would have a mine life of 24 years and an initial preproduction capex of $378 million, producing 1.5 million oz. gold in its first 10 years. A $232-million expansion in year 11 (to 8.4 million t/y from 4.2 million t/y) would be financed from cash flow and bring total production to 4.5 million oz. over the life of mine.
Gran Colombia's Segovia produced more than 220,000 oz. of gold last year.