Loncor agrees on $261M sale to China’s Chengtun

[Redator]

Canadian explorer Loncor Gold (TSX: LN) agreed to be acquired by Chengtun Mining Group for about $261 million cash in a deal that will hand control of a major gold project in the Democratic Republic of Congo to a deep-pocketed Chinese operator.

Chengtun’s C$1.38 per share offer represents a 16% premium over Friday’s closing price on the Toronto Stock Exchange, and a one-third premium to the 30-day volume weighted average trading price, Loncor said Tuesday. The transaction is expected to close no later than in the first quarter of 2026. 

Toronto-based Loncor has been focusing on the Ngayu gold belt in the DRC’s northeast. Its main Imbo project includes the Adumbi deposit, which holds an indicated resource of about 28.2 million tonnes grading 2.08 grams gold per tonne for 1.9 million contained ounces.

“The sale delivers a strong outcome for shareholders,” executive chairman Arnold Kondrat said in the statement. It “crystallizes the inherent value we have built over 15 years and eliminates future dilution while mitigating commodity, political, and execution risks.”

Loncor shares jumped 9.2% to C$1.30 in Tuesday morning in Toronto, giving the company a market value of about C$229 million. The stock has traded between C$0.37 and C$1.31 in the past year.

Interested party

News of the deal follows Loncor’s July 14 announcement that it had received an “unsolicited, confidential non-binding offer” from an unidentified “interested party.” Loncor immediately set up a special board committee to review the proposed deal.

Selling to Chengtun, whose existing operations in the DRC include the Kalongwe copper-cobalt mine, will allow Loncor to leverage the Chinese miner’s “strong access to capital and depth of technical and in-country expertise to develop the Imbo project,” Loncor said. Chengtun’s other metals include nickel and gold.

Chengtun is to provide Loncor with $3 million in refundable advances within the next two months. These advances will be used for the exploration program at Adumbi and for general corporate purposes, Loncor said.

Adumbi is one of three main targets at Imbo, all of which are located within a 5-km radius of each other. Loncor acquired control of the project in 2019.

A preliminary economic assessment for Adumbi, completed in 2021, calculated an $879 million after-tax net present value using a 5% discount rate and a gold price of $1,760 per ounce. It envisioned annual gold production of 303,000 oz. at an all-in sustaining cost of $950 per oz. over a 10.3-year mine life.

Resolute backing

Chengtun will need two-thirds of votes cast by Loncor shareholders to back the deal at an upcoming meeting. The Toronto Stock Exchange and the Ontario Superior Court will also need to sign off on the deal.

Loncor shareholders representing about 38% of the issued and outstanding shares have agreed to vote in favour of the transaction. They include Australia’s Resolute Mining (ASX: RSG) and Kondrat, who respectively own 18% and 17% of the company.

Deal terms give Loncor the right to accept a superior proposal, which Chengtun would have the right to match.  A mutual reciprocal termination fee of $10 million, payable in certain circumstances, is also included in the agreement.