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Guyana Goldfields - An M&A Opportunity

Philip MacKellar profile picture
Philip MacKellar


  • Guyana Goldfields is being acquired by Zijin Mining Group.
  • Deal terms look straightforward and risks appear low.
  • The proposed tie-up follows multiple bids for Guyana Goldfields.
  • The spread between today’s price of CAD $1.74 and CAD $1.85 is decent.
  • Investing (or speculating) in mergers is inherently risky.


Guyana Goldfields (OTCPK:GUYFF) is being acquired by Zijin Mining Group (OTCPK:ZIJMY or OTCPK:ZIJMF) for CAD $1.85 per share in cash. The deal appears straightforward and is subject to two-thirds shareholder approval and approval by Chinese and Canadian authorities.

I took a position in GUYFF at CAD $1.73 in mid-June. This position was taken because the spread is relatively wide but the deal appears clean. Though many issues can scupper deals, the odds of success seem high enough to justify a stake.

Deal Background and Terms

Guyana Goldfields and Zijin Mining announced this CAD $1.85 per share cash offer in June. Shareholders are expected to vote at a special meeting scheduled for the end of July. Two-thirds must vote for the transaction to proceed. The deal also needs to be cleared by Chinese authorities and receive court approval in Canada under the Investment Canada Act. Once it does, it should close shortly thereafter. The outside date is October 30, 2020, but these deadlines are often pushed out if needed.

Guyana Goldfield’s Board of Directors has approved the transaction. They recommend voting for it and have agreed to vote their shares in favor of the agreement. According to INK Research, insiders own 5.01% of shares outstanding. The Board has received third-party fairness opinions from RBC Capital Markets and Stifel GMP.

Source: INK Research

According to the Arrangement Agreement document, Guyana is bound by a non-solicitation clause. This means board members, executives, and employees cannot solicit rival offers. The board can, however, accept superior unsolicited bids. If such a bid does occur, the Arrangement Agreement gives Zijin the right to match.

Termination fees of $11.3 million and expense provisions are in place and cut both ways. This means that if the deal fails due to certain situations, Guyana Goldfields will pay Zijin (if, for example, Guyana takes a

This article was written by

Philip MacKellar profile picture
Philip MacKellar is an analyst, portfolio manager, and investor at Contra the Heard Investment Newsletter. He has been with the company since 2011 and has been investing since 2004. The newsletter’s primary focus is on contrarian and value-oriented investment opportunities traded in the United States and Canada. In addition, Philip sometimes engages in M&A, other special situations, and holds bonds, preferred shares, and convertible securities. Contra the Heard is a Toronto based company and was founded in 1995. Philip also blogs about personal finance topics on his own website called mymoneymoves.ca in his free time. You can also follow Philip at the Globe & Mail, on Twitter @Rallekcam, and catch him on YouTube at Contra the Heard.

Analyst’s Disclosure: I am/we are long GUYFF. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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