China’s Jinchuan Group Ltd. has signed a letter of agreement to buy Vancouver-based Continental Minerals Corp. (TSX-V:KMK) for $432 million.
The deal, which was was announced Friday, comes two days after Continental issued a tight-lipped news release saying its management team was in “advanced discussions” with a third party to sell the company.
Continental’s board has recommended that shareholders approve the arrangement, which would see the company be acquired for $2.60 per share, representing a 13% premium on the September 14 closing price.
The deal gives Jinchuan, China’s largest nickel-cobalt producer, access to the Xietongmen copper-gold property in Tibet.
The project, if built, could produce 1.6 billion pounds of copper, 2.3 million ounces of gold and 24 million ounces of silver over a 14-year mine life.
Continental signed an agreement with Jinchuan in 2007 that saw the Chinese company agree to arrange a debt package for 60% of the cost of the mine and pay an additional 30% of the cost out of its own pocket either through debt or equity.
Continental had adopted a shareholders’ rights plan in May to stymie any takeover attempts.
Continental co-chairman Ron Thiessen told Business in Vancouver the rights plan protected the company while it struggled to negotiate a fair deal behind closed doors.
“I know people will say 'look at the premium its only [13%],' but from where we came [from] when the process started it’s more than 100%.”
The company’s shares were up 12.61% to $2.59 at midday trades.