China’s Zijin Mining has emerged as the unnamed multinational that trumped Silvercorp Metals’ (TSX, NYSE: SVM) bid for Guyana Goldfields (TSX: GUY), with a deal that values the target miner at C$323 million ($238m).

The Fujian-based mining giant has offered Guyana C$1.85 in cash for each common share, which is 35% higher than Silvercorp’s proposal.

Prior to signing the agreement with Zijin, Guyana said it had officially cancelled its previous arrangement with Canada’s Silvercorp, which produces silver, lead and zinc from mines in China.

Based on the terms of that deal, Guyana will have to pay Silvercorp C$9 million ($6.7m) for terminating the agreement signed in April.

On top of the cash offer, Zijin Mining has committed to loan its takeover interest – $30 million – to finance ongoing operations of its Aurora gold mine in Guyana and other liquidity needs.

Zijin’s chairperson, Chen Jinghe, said the group believed the mine was a high-quality gold asset, with significant upside potential.

Guyana Goldfields is placing it on care and maintenance at the end of the month.

Bidding war

Silvercorp originally offered C$105 million (about $75m) for Guyana Goldfields. It later upped the offer to C$227 million, as Gran Colombia Gold (TSX: GCM) submitted a separate, rival proposal.

Guyana Goldfields said last week it had received a “superior proposal” from an unnamed “foreign-based multinational miner.” It gave Silvercorp five business days to match or improve the new bid.

The Vancouver-based company responded on June 11 that it was not matching the anonymous new offer.

Guyana has been under investor pressure due to the poor performance of its only operating mine, Aurora, following a resources review. 

Shocking news

The mid-tier gold producer shocked the market in March last year by announcing the amount of gold in proven and probable reserves at Aurora had declined by almost 1.7 million ounces, compared to estimates published in 2018. 

The news triggered a bitter battle for control of the company led by founder and former chairman Patrick Sheridan, which was settled in April 2019. The deal included the appointment of an interim director and chief executive, who was replaced in January by Alan Pangbourne, Guyana’s current president and CEO.

Shares in the company fell to their lowest since 2008 in October, after the embattled Canadian miner revealed Aurora would fail to meet production guidance. The company added that a mine plan review was underway.

Guyana Goldfields’ share price steadily declined after that. It began the year at 69 Canadian cents and closed at C1.73 a share on Thursday.