What's Happening?
Chengtun Mining Group, through its subsidiary Chengtun Gold Ontario, has entered into an agreement to acquire Loncor Gold. The acquisition involves purchasing all outstanding common shares of Loncor for C$1.38 per share, reflecting a total equity value
of approximately C$261 million on a fully diluted basis. This transaction represents a significant investment by Chengtun in the Democratic Republic of Congo (DRC), where Loncor has been actively exploring the Ngayu greenstone belt. The deal offers a 33% premium over Loncor's 30-day volume-weighted average price and a 16% premium compared to its closing price on the Toronto Stock Exchange as of October 10. The acquisition includes a mutual reciprocal termination fee of C$10 million, payable under certain circumstances. Loncor's Imbo project, featuring the Adumbi deposit, has been central to its exploration initiatives, boasting an indicated resource of 1.88 million ounces of gold and an inferred resource of 2.09 million ounces.
Why It's Important?
The acquisition of Loncor Gold by Chengtun Mining marks a pivotal moment for gold exploration in the DRC. This transaction crystallizes the value built by Loncor over 15 years and mitigates future dilution and commodity risks for its shareholders. The deal is expected to deliver a strong outcome for stakeholders, including Resolute Mining and Arnold Kondrat, who hold significant shares in Loncor. The acquisition could enhance Chengtun's strategic position in the DRC's mining sector, potentially influencing gold production and exploration activities in the region. The transaction also underscores the growing interest of international companies in African mineral resources, which could lead to increased investment and development in the DRC's mining industry.
What's Next?
The transaction is subject to customary conditions, including shareholder, court, and regulatory approvals. Loncor shareholders, who collectively hold approximately 38% of the company's issued and outstanding shares, have agreed to support the deal through voting support agreements. A special meeting will be held for shareholders to cast their votes, requiring backing from two-thirds of the votes cast and a majority of minority shareholders. If approved, the transaction is expected to be finalized by the first quarter of 2026, after which Loncor will be delisted from the Toronto Stock Exchange and cease to be a reporting issuer in Canada and the US.
Beyond the Headlines
The acquisition of Loncor Gold by Chengtun Mining could have broader implications for the DRC's economic landscape. As international interest in the region's mineral resources grows, there may be increased scrutiny on environmental and social governance practices within the mining sector. This could lead to heightened regulatory oversight and demands for sustainable mining practices. Additionally, the deal may influence local employment and economic development, as increased investment in mining could create job opportunities and stimulate local economies.
