This morning, international mining companies Continental Gold of Toronto, Canada (TSX:CNL; OTCQX:CGOOF) and Zijin Mining Group Co. of Fujian China (SSE:601899; SEHK:2899) have announced that Zijin is to acquire all outstanding shares of Continental at a price of $5.50 Canadian dollars per share in cash. The deal is announced at $1.4 billion Canadian Dollars, or approximately $1.052 billion US Dollars. The per-share price represents a premium of 29% over Continental’s 20 day volume weighted average price as of November 29, 2019 on the Toronto Stock Exchange (TSX).
Continental Gold, based in Toronto, is primarily engaged in the construction and development of their gold mine in Buriticá, Colombia.
“The all-cash offer at a significant premium to market is an excellent outcome for our shareholders and is a testament to the extraordinary effort of the Continental team and its stakeholders in pioneering a new and modern gold industry in Colombia. In the span of a decade, Continental has transformed the Buriticá project from a grassroots discovery into one of the world’s largest and highest-grade gold projects,” says Continental CEO Ari Sussman.
“With production on the horizon in 2020, the timing is right for Continental to sell to a more experienced mine operator and therefore Continental’s Board of Directors recommends that shareholders vote in favour of the Transaction. Zijin is one of the world’s fastest growing mining companies and boasts an impressive track record of successful international acquisitions and operations. Most importantly, Zijin shares common principles with Continental on what defines modern mining and, as a result, will continue to operate in a safe, transparent and inclusive manner with the employees of the Company and external stakeholders.”
Zijin is based in Fujian, China and is a leading global mining company specializing in gold, copper, zinc and other mineral resource exploration and development. It manages an extensive portfolio, primarily consisting of gold, copper, zinc, and other metals through investments in China and overseas across nine countries. Founded in 1993, it is listed on the Shanghai Stock Exchange and the Hong Kong Stock Exchange. As of November 29, 2019 Zijin has a current market capitalization of approximately US$12.13 billion.
Zijin intends to set up an Ontario acquisition entity for this transaction which will be held by a Hong Kong holding subsidiary of Zijin formed with certain strategic investors who are willing to jointly invest with Zijin in Continental.
Says Zijin Chairman Chen Jinghe: “We have been greatly impressed by Continental’s focus on safe, efficient and sustainable mining practices which closely align with Zijin’s approach to mining and development operations. Zijin is conscious of the demonstrated responsibility of Continental’s operation towards the well-being of the local communities and the responsible management of environmental aspects of its operation. Zijin commits to continuing with a similar approach, focus and investment in that regard. Zijin will practice in all its operations with the same commitment of Continental towards transparency and ethics and will continue to operate in a highly responsible manner in Buriticá, Antioquia and Colombia more broadly. We look forward to working closely with stakeholders and local communities in Colombia to deliver a world-class operation that will benefit the regional economy.”
The Transaction has been unanimously approved by the board of directors of Continental following the unanimous recommendation of a special committee of independent directors of Continental and significant shareholder Newmont GoldCorp. Maxit Capital LP has provided an opinion to the Continental board of directors and Cormark Securities Inc. has provided an opinion to the Special Committee, respectively, stating that the transaction is fair, from a financial point of view, to the Continental shareholders.
Credit Suisse is acting as financial advisor to Zijin and McCarthy Tétrault LLP is acting as Zijin’s legal counsel. Maxit Capital LP is acting as financial advisor to Continental. Cassels Brock & Blackwell LLP is acting as legal counsel to Continental and Fasken Martineau DuMoulin LLP is acting as legal counsel to the Special Committee. Cormark Securities Inc. is acting as financial advisor to the Special Committee.