China-focused silver producer Silvercorp Metals has entered into an agreement to acquire Guyana Goldfields in a deal valued at $0.60 per share for a total of $105 million.

The combination of those companies might seem odd. Silvercorp has seven operating mines located within the Henan and Guandong provinces of China, which produce primarily silver and zinc. Guyana Goldfields focuses primarily on their flagship Aurora gold mine across the ocean in the South American country of Guyana.

According to Silvercorp, the combined companies will lead to the creation of a leading precious metals producer and “greater diversification.” The acquisition of Guyana Goldfields would add to the company’s gold project portfolio, which is currently made up of the BYP gold mine in Hunan Province, which suspended operations in 2014.

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“This transaction will create a new globally diversified precious metals producer with the addition of Aurora to our growing asset portfolio,” Silvercorp chairman and CEO Rui Feng said. “We look forward to partnering with the government of Guyana to make a successful entry into the region, leveraging Guyana Goldfield’s existing team and relationships to ensure a smooth transition and continued development that benefits all stakeholders.”

Silvercorp’s pitch to Guyana’s shareholders included reduced development risk, thanks to the company’s lengthy track record of operation, as well as a US$15 million loan agreement to be used to proceed with the transition to underground operations at Aurora. The Aurora mine has had significant issues with production in the past, which Guyana’s former CEO Patrick Sheridan blamed on the operations “resource model.”

“This transaction provides our shareholders with an immediate and significant upfront premium and exposure to a geographically diverse mid-tier precious metal company,” Guyana Goldfields president and CEO Alan Pangbourne said. “With a strong operating history, solid balance sheet and significant underground experience, Silvercorp’s management team is well-positioned to fund and continue to advance the underground project at Aurora.”  

The purchase will be subject to a vote by Guyana Goldfield shareholders at their special meeting, expected to be held by the end of June.