Solgold agrees to acquire Cornerstone Capital
Solgold [SOLG-TSX, LSE] is set to acquire all the outstanding shares of Cornerstone Capital Resources Inc. [CGP-TSX, CTNXF-OTC, GWN-F] it does not already own by way of a court-approved plan of arrangement.
“The merger of Cornerstone and Solgold will significantly strengthen the ability of the combined group to create value for shareholders by consolidating ownership of the Cascabel Project along with a robust portfolio of other projects primarily across Equador.
Back in April, 2022, the company’s said results of a new pre-feasibility study indicates that the Cascabel joint venture in northern Ecuador is expected to be a top 20 South American copper gold mine.
It is a project that is expected to benefit from a high-grade core, advantageous infrastructure and an increasingly investor-friendly government. “The mine is expected to produce a clean copper-gold-silver concentrate that will be sold to Asian and European smelters,’’ the companies have said.
Under the terms of the agreement, Cornerstone shares will be exchanged for 15 Solgold ordinary shares for each Cornerstone common share held. Under the deal, Solgold may elect to pay up to 20% of the consideration in cash, in which case, the cash would be pro rated among all Cornerstone shareholders and the number of Solgold shares issuable to Cornerstone shareholders would be reduced.
Upon completion of the transaction, if Solgold elects not to pay any portion of the consideration in cash, existing Solgold and Cornerstone shareholders are expected to own approximately 80% and 20% of the combined entity respectively, on a fully-diluted in-the-money basis.
This would be consistent with the current effective exposure of approximately 80/20 to the Casabel project before the transaction was announced.
On October 6, 2022, Solgold shares closed at 24 cents and currently trade in a 52-week range of 67 cents and 19 cents. Cornerstone shares closed at $2.63. The shares trade in a 52-week range of $5.28 and $2.57.
The Cascabel Project is a porphyry copper-gold deposit located in the Imbabura province of northwestern Ecuador, which lies within the under-explored northern section of the richly endowed Andean Copper Belt.
Exploraciones Novomining S.A. (ENSA) an Ecuadorian company owned by SoldGold and Cornerstone, holds a 100% interest in the Casabel concession. Subject to the satisfaction of certain conditions, including SolGold’s commitment to fully fund the project through to feasibility, SolGold will own 85% of the equity of ENSA and Cornerstone will own the remaining 15%. SolGold is funding 100% of the exploration at Cascabel and is the operator of the project.
Cornerstone previously held 6.85% of the shares of SolGold, leaving Cornerstone with a total direct and indirect interest of 20.8%. The companies have said a definitive feasibility study is expected to be completed by the first half of 2023.