Core Gold makes no recommendation on Titan bid

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Core Gold Inc. [CGLD-TSVV; CGLDF-OTCQX] said Friday January 3 that its board of directors has elected to make no recommendation as to whether Core shareholders should accept or reject a sweetened takeover offer from Titan Minerals Ltd. [TTM-ASX].

The move comes after Titan amended its original offer by increasing the bid to 3.1 Titan shares for each share of Core Gold.

Core shares advanced on the news, rising 2.1% or $0.005 to 24 cents, leaving the company with a market cap of $32.8 million based on 166.9 million shares outstanding (all classes). The shares are trading in a 52-week range of 14 cents and 33 cents.

On Friday, Core said it has filed a supplemental directors’ circular in response to the increased amended offer set forth in a notice of change and variation dated December 17, 2019 from Titan Minerals for all the outstanding shares of Core Gold.

Core Gold is currently the largest gold producer in Ecuador. The company is currently focused on gold production at its wholly-owned Dynasty Goldfield mining unit and continued development at its underground Zaruma Mine, which includes the nearby Portovelo treatment plant.

The Dynasty Goldfield is a producing open pit gold mine with an estimated NI 43-101-compliant resource of 2.1 million ounces of gold. It is currently producing at a rate of 750 tonnes per day, grading 3.2 g/t gold. That material is being processed at the Portovelo plant.

Titan Minerals is a gold and copper explorer and owner and operator of a gold treatment business in southern Peru. Titan has said the merger would create a diversified Latin American-focused, ASX-listed gold company with a robust portfolio of exploration, development and production assets in both the emerging mining jurisdictions of Ecuador and the well-established mining jurisdiction of Peru.

However, the board of directors of Core Gold, after consultation with its independent legal advisers, by majority vote, has determined to make no recommendation as to whether holders of Core shares should accept or reject the Titan offer.

In offering the board’s reasoning, Core said Titan has entered into lock-up agreements with Core shareholders that own or control, directly or indirectly, approximately 81.6 million Core shares, or 51.7% of the Core shares, excluding any Core shares beneficially owned, or over which control or direction is exercised by Titan.

It means that in the absence of an event which would allow the locked-up shareholders not to tender to (or withdraw from) the Titan offer, the minimum tender condition required by law and the Titan offer is expected to be satisfied.

Assuming that all other conditions to the Titan offer are satisfied or waived, Titan will be in a position to acquire more than 50% of the outstanding Core shares under the Titan offer. The Core shareholders have already agreed to the lock-up in the absence of any recommendation from the board.

Core also said it has obtained an independent fairness opinion from Fort Capital Partners, which states that the consideration to be received in the Titan offer is fair from a financial point of view to Core shareholders.

Core also said its board considers that any decision it may make regarding a recommendation will be perceived as not being impartial or without conflict of interest.


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