Guyana Goldfields to team up with Aranka Gold

As the global economy cools down, deal flow in the junior sector seems to be heating up.

Now Guyana Goldfields (GUY-T) wants to pool its assets with those of Aranka Gold (ARK-V).

The two companies signed a letter of agreement under which Aranka shareholders would receive one share of Guyana Goldfields in exchange for every 3.25 shares they hold in Aranka.

The deal represents a 15.8% premium over Aranka’s 20-day weighted average closing price to Dec. 2.

If the acquisition goes ahead, current shareholders of Guyana Goldfields will own 87% of the company and Aranka shareholders 13%. All 1.7 million Aranka options would be cancelled and the option plan would be terminated.

Guyana would bring about $14.9 million in cash and short-term bank guaranteed investment certificates to the combined company, while Aranka will bring about $5.7 million in cash and short-term bank guaranteed investment certificates. Neither company holds debt.

The deal has yet to be approved by Aranka shareholders.  

Guyana Goldfields, which has been operating in Guyana since 1996, holds a 50% interest in a package of properties owned by Aranka, northeast of its Aurora property.

Aurora is made up of a number of gold deposits on the eastern side of the Aurora zoned intrusion, and is found in the Cuyuni greenstone belt of the Guiana Shield in the northern part of the Amazon Craton, which covers parts of Guyana, Venezuela, Suriname, French Guyana and northern Brazil.

The news sent the share prices of both companies higher. Guyana closed up 9¢ per share, or 10.7%, at 93¢ apiece, while Aranka rose 25%, or 6¢ per share, to close at 30¢.

Guyana has a 52-week trading range of 61¢-$8.14 per share and has  51.1 million shares outstanding. Aranka has traded in the 15¢-$2.50 per share range and has 25.3 million shares outstanding.