SolGold [SOLG-TSX, LSE] said Thursday it is planning to make an offer to acquire all the outstanding shares of Cornerstone Capital Resources Inc. [CGP-TSX, CTNXF-OTC, GWN-F].
If the offer succeeds, holders of Cornerstone who tender their shares to the offer will receive 0.55 of a SolGold share in exchange for every Cornerstone share tendered, SolGold said.
However, readers of the SolGold press release are advised that the company has yet to launch a formal offer for Cornerstone.
Cornerstone responded by stating that owners of 50% of the company’s outstanding shares will not support the terms of the proposed offer.
“Given that the Canadian takeover rules require the majority of outstanding shares (excluding shares held by SolGold) be tendered to the formal offer before any shares can be taken up, SolGold’s proposed offer, if formalized, is incapable of being completed,’’ Cornerstone said in a release.
“We respect the views of our shareholders and given the underwhelming proposal made by SolGold, we are not surprised in the least that it has been rejected so swiftly by a majority of shareholders even before a formal offer is made,’’ said Cornerstone President and CEO Brooke Macdonald.
Macdonald’s response came as Cornerstone shares jumped 14% or $0.04 to 33 cents on volume of 1.08 million. The shares trade in a 52-week range of 14 cents and 39 cents.
“Cornerstone is open to discussing with SolGold and any other potential bidders any value- enhancing transaction that would garner support for our shareholders,’’ Macdonald said.
SolGold is a copper-gold exploration and development company with assets in Ecuador, Solomon Islands and Australia.
It said a key advantage of any takeover of Cornerstone would be the consolidation of ownership in SolGold’s flagship asset, the Cascabel project in Ecuador.
The Cascabel project is 100% owned by SolGold’s 85% owned Ecuador subsidiary Exploraciones Novomining S.A. The remaining 15% is held by Cornerstone.
Cascabel is a porphyry copper-gold deposit located in the Imbabura province of northwestern Ecuador. It lies just off the main road, a three-hour drive north of Ecuador’s capital city, Quito.
The tenement lies on the margin of the Eocene and Miocene metallogenic belts which are renowned for hosting some of the world’s largest porphyry copper and gold deposits, the like giant La Escondida Copper Mine in Chile, which is the world’s largest producer of copper and hosted within the same age host rocks as Cascabel.
To date, exploration activity has identified 15 potential porphyry centres at Cascabel, at Alpala Central, Alpala Northwest, Alpala Southeast, Hematite Hill, Alpala East, Alpala West, Alpala South, Moran, Trivinio, Carmen, Cristal, Aguinaga, Tandayama-America, and Parambas.
SolGold published a maiden mineral reserve estimate for Alpala in January, 2018. The estimate now stands at 430 million tonnes at 0.8% copper equivalent (at 0.3% copper equivalent cut off) in the indicated category and 650 million tonnes at 0.6% copper equivalent (at 0.3% copper equivalent cut off) in the inferred category.
On Thursday, SolGold shares were unchanged at 62 cents. They currently trade in a 52-week range of 71 cents and 31.5 cents.