TIDMSOLG
RNS Number : 4754P
SolGold PLC
08 February 2019
8 February 2019
SolGold plc
("SolGold" or the "Company")
Response to Cornerstone
The Directors of SolGold (TSX, LSE:SOLG) have reviewed the
announcement by Cornerstone Capital Resources (TSX:CGP) in response
to SolGold's announced intention to bid for all of the issued and
outstanding shares and warrants of Cornerstone.
The Directors of SolGold are surprised and disappointed that
Cornerstone has so quickly dismissed SolGold's stated intention to
offer its shareholders and warrant holders 0.55 SolGold shares for
every Cornerstone share (and prescribed ratios for warrants). The
SolGold offer would represent a 20% premium over Cornerstone's
closing price before SolGold's statement, which SolGold believes is
a compelling offer to Cornerstone shareholders and warrant holders
and a premium that is in line with comparable recent transactions
in the sector.
SolGold notes the apparent lack of consideration given to its
announcement that it intends to make a premium offer for
Cornerstone securities. Cornerstone's announcement on 31 January
2019 was lodged with the TSX at 09.52 EST, less than three hours
after the announcement of the intention to make an offer by
SolGold. Was there time that early in the morning to actually make
contact with shareholders representing more than 50% of those
outstanding? Did Cornerstone have time to hold a board meeting to
consider the offer between the time board members woke up in the
morning and the time the press release was issued? Did the board of
Cornerstone form an independent committee of directors to consider,
on behalf of shareholders, the premium to be offered by SolGold?
Did Cornerstone receive advice from a financial advisor with
respect to the proposed offer before issuing its responding news
release dismissing the proposed offer? These are all questions that
SolGold believes holders of Cornerstone securities, specifically
minority holders, should be asking in light of the responding press
release issued by Cornerstone.
SolGold notes that the market reaction to its announced
intention to make an offer to holders of Cornerstone securities was
a marked increase in the price of common shares of Cornerstone.
SolGold believes this reflects the fact that the market understands
that the proposed offer from SolGold would:
1. Present all equity classes in Cornerstone with a significant
premium equal to the highest price Cornerstone has enjoyed in
2years;
2. Remove the financing risks to equity value imposed by the
current structure of Cornerstone's 15% interest in Cascabel;
3. Enhance the value of a SolGold control premium for
Cornerstone shareholders (which they currently do not enjoy);
4. Provide impressive pan Ecuadorean exploration value upside
from the multi target first mover copper gold project portfolio in
SolGold's four wholly owned subsidiaries covering the entire length
of the Ecuadorean sector of the Andean Copper belt.
5. Probably see the bid succeed, in contrast to the statements
by the Cornerstone Board in its release.
SolGold shareholders currently enjoy a value premium over
Cornerstone. SolGold expects that this premium exists for many
reasons, including, specifically, its ability to exercise
management and financial control over Cascabel, SolGold's
100%-owned, potentially tier one, pan-Ecuadorean copper gold
portfolio, including 11 major targets, SolGold's multi
award-winning skilled and experienced management team and the
strong backing of BHP, the world's largest mining company and
Newcrest Mining, Australia's largest gold miner and a block cave
expert.
SolGold rejects Cornerstone's misleading assertion in respect of
the Blanca vein project, as the relevant prospect is outside of the
Area of Mutual Interest pursuant to the governing agreements,
meaning that Cornerstone has no current interest or ability to earn
an interest in this project.
SolGold advises that Cornerstone's interpretation of the
agreements with SolGold is also misleading. In fact, SolGold owns
85% of the beneficial and registered title in the shares in ENSA,
which holds 100% of the Cascabel concession. Further, the interest
SolGold and Cornerstone hold in ENSA are in the nature of
shareholdings - the parties have not entered into a joint venture
and no fiduciary obligation by SolGold in favour of Cornerstone
exists.
SolGold believes that all Cornerstone shareholders and warrant
holders should be given the opportunity to make an informed
decision with regard to the merits of the SolGold proposal, and
that an independent review should be conducted by the Cornerstone
Board, properly advised by an independent committee thereof, before
making public statements about the proposed offer. SolGold also
recommends that Cornerstone shareholders take time to analyze the
rationale of a combination of Cornerstone and SolGold as outlined
in SolGold's announcement.
SolGold presently intends to proceed with its offer in
accordance with the terms announced.
Readers are cautioned that SolGold may determine not to make the
Offer if: (i) it identifies material adverse information concerning
the business, affairs, prospects or assets of Cornerstone not
previously disclosed by Cornerstone; (ii) Cornerstone implements or
attempts to implement or activate defensive tactics (such as a
material change in Cornerstone's capital structure or the grant of
an option (or similar right) to purchase material assets) in
relation to the Offer; (iii) Cornerstone determines to engage with
SolGold to negotiate the terms of a combination transaction and
SolGold and Cornerstone determine to undertake that transaction
utilizing a structure other than a takeover bid (such as a plan of
arrangement); (iv) a third party makes a competing offer for
Cornerstone; or (v) there is a change of control of Cornerstone or
any of its material subsidiaries. Accordingly, there can be no
assurance that the Offer will be made or that the final terms of
the Offer will be as set out in this news release.
ADVISORS
SolGold has retained Hannam & Partners and Cormark
Securities Inc. as its financial advisors in connection with the
Offer. Bennett Jones LLP is acting as Canadian legal advisor to
SolGold and HopgoodGanim is acting as Australian Legal Advisor to
SolGold
ADDITIONAL INFORMATION
Cautionary Statement Regarding Status of the Offer
SOLGOLD HAS NOT YET COMMENCED THE OFFER NOTED ABOVE IN THIS NEWS
RELEASE. UPON COMMENCEMENT OF THE OFFER, SOLGOLD WILL FILE A
TAKEOVER BID CIRCULAR WITH VARIOUS SECURITIES COMMISSIONS IN CANADA
AND, IF REQUIRED, WITH THE UNITED STATES SECURITIES AND EXCHANGE
COMMISSION. THE TAKEOVER BID CIRCULAR WILL CONTAIN IMPORTANT
INFORMATION ABOUT THE OFFER AND SHOULD BE READ IN ITS ENTIRETY BY
CORNERSTONE SHAREHOLDERS AND OTHERS TO WHOM THE OFFER IS ADDRESSED.
AFTER THE OFFER IS COMMENCED, CORNERSTONE SHAREHOLDERS (AND OTHERS)
WILL BE ABLE TO OBTAIN, AT NO CHARGE, A COPY OF THE OFFER TO
PURCHASE, TAKEOVER BID CIRCULAR AND VARIOUS ASSOCIATED DOCUMENTS
WHEN THEY BECOME AVAILABLE ON THE SYSTEM FOR ELECTRONIC DOCUMENT
ANALYSIS AND RETRIEVAL (SEDAR) AT WWW.SEDAR.COM (AND AT WWW.SEC.GOV
IF THOSE DOCUMENTS ARE REQUIRED TO BE FILED WITH THE UNITED STATES
SECURITIES AND EXCHANGE COMMISSION). THIS ANNOUNCEMENT IS FOR
INFORMATIONAL PURPOSES ONLY AND DOES NOT CONSTITUTE OR FORM PART OF
ANY OFFER OR INVITATION TO PURCHASE, OTHERWISE ACQUIRE, SUBSCRIBE
FOR, SELL, OTHERWISE DISPOSE OF OR ISSUE, OR ANY OTHER SOLICITATION
OF ANY OFFER TO SELL, OTHERWISE DISPOSE OF, ISSUE, PURCHASE,
OTHERWISE ACQUIRE OR SUBSCRIBE FOR ANY SECURITY. THE OFFER WILL NOT
BE MADE IN, NOR WILL DEPOSITS OF SECURITIES BE ACCEPTED FROM A
PERSON IN, ANY JURISDICTION IN WHICH THE MAKING OR ACCEPTANCE
THEREOF WOULD NOT BE IN COMPLIANCE WITH THE LAWS OF SUCH
JURISDICTION. HOWEVER, SOLGOLD MAY, IN ITS SOLE DISCRETION, TAKE
SUCH ACTION AS IT DEEMS NECESSARY TO EXT THE OFFER IN ANY SUCH
JURISDICTION.
Cautionary Statement Regarding Forward-Looking Information
This news release contains certain forward-looking information
(referred to herein as "forward-looking statements").
Forward-looking statements are often, but not always, identified by
the use of words such as "anticipate", "believe", "plan",
"scheduled", "intend", "objective", "continuous", "ongoing",
"estimate", "expect", "may", "will", "project", "should", or
similar words suggesting future events, circumstances or outcomes.
In particular, this news release contains forward-looking
information concerning:
(i) the Offer, various terms of the Offer and the anticipated
timing of commencement of the Offer;
(ii) expectations with respect to benefits that may be achieved
upon a combination of the businesses of SolGold and
Cornerstone;
(iii) reasons for holders of Cornerstone Shares to accept the
Offer; and
(iii) expectations with respect to the combined entity.
Forward-looking statements are based upon the opinions and
expectations of management of SolGold as at the effective date of
such statements and, in some cases, information supplied by third
parties. Although SolGold believes the expectations reflected in
such forward-looking statements are based upon reasonable
assumptions and that information received from third parties is
reliable, it can give no assurance that those expectations will
prove to have been correct.
Forward-looking statements are subject to certain risks and
uncertainties that could cause actual events or outcomes to differ
materially from those anticipated or implied by such
forward-looking statements.
In addition to any specific risk factors noted above in the body
of this news release, these risks and uncertainties include, but
are not limited to, such things as changes in general economic
conditions in Canada, the United States, Ecuador and elsewhere,
changes in operating conditions, the volatility of prices for
minerals, metals and other commodities, commodity supply and
demand, fluctuations in currency and interest rates, availability
of financial resources or third-party financing, availability of
equipment, materials and personnel, defaults by counterparties
under commercial arrangements to which SolGold (or any of its
subsidiaries) is a party, an inability to procure regulatory
approvals in a timely manner or on terms satisfactory to SolGold,
and new laws and regulations (domestic and foreign). Risks relating
specifically to SolGold's ability to realize perceived benefits
from the proposed combination of SolGold and Cornerstone include
SolGold's inability to successfully integrate the operations of
SolGold and Cornerstone following completion of the Offer and
SolGold's inability to negotiate early termination of redundant
Cornerstone contracts on terms reasonably satisfactory to SolGold
following completion of the Offer. Additional risks to which
SolGold is exposed in the conduct of its business are set out under
the heading "Risk Factors" of SolGold's Annual Information Form
(dated September 27, 2018) for the year ended June 30, 2018, and
under the heading "Financial Instruments and Related Risks" of
SolGold's Management's Discussion and Analysis (dated September 27,
2018) in respect of the year ended June 30, 2018, both of which
have been filed with various securities regulatory authorities in
Canada and are available (under SolGold's profile) through the
SEDAR website at www.SEDAR.com.
Accordingly, readers should not place undue reliance upon the
forward-looking statements contained in this news release and such
forward-looking statements should not be interpreted or regarded as
guarantees of future outcomes.
Forward-looking information respecting the Offer, various terms
of the Offer and the anticipated timing of commencement of the
Offer is based upon various assumptions and factors, including
publicly reported financial information concerning Cornerstone,
publicly reported information concerning the number of outstanding
common shares of Cornerstone and the number of options and other
convertible or exchangeable rights and securities granted by
Cornerstone (entitling holders thereof to acquire common shares of
Cornerstone), advice from professional advisors with respect to
statutorily mandated time frames for various applications and
steps/events associated with the Offer, that Cornerstone has made
full and accurate disclosure of all material information concerning
Cornerstone in accordance with applicable Canadian securities laws
(including disclosure of all material contracts and existing and
potential contingent liabilities) and that there have been no
material changes in the business, affairs, capital, prospects or
assets of Cornerstone since September 30, 2018. Forward-looking
information concerning possible synergies and efficiencies that may
be achieved upon a combination of the businesses of SolGold and
Cornerstone and other benefits of a combination of the businesses
of SolGold and Cornerstone is based upon various assumptions and
factors, including (in addition to assumptions and factors noted
above in the body of this news release), financial information of
Cornerstone available through publicly filed documents and
SolGold's general industry knowledge and experience.
The forward-looking statements contained in this news release
are made as of the date hereof and SolGold does not undertake any
obligation to update or to revise any of the included
forward-looking statements, except as required by applicable
securities laws in force in Canada. The forward-looking statements
contained in this news release are expressly qualified by this
cautionary statement.
Market Abuse Regulation (MAR) Disclosure
Certain information contained in this announcement would have
been deemed inside information for the purposes of Article 7 of the
Regulation (EU) No 596/2014 until the release of this
announcement.
Cautionary Statement Regarding Cornerstone Information
Cornerstone has not reviewed this news release and has not
confirmed the accuracy and completeness of the Cornerstone
information contained herein. Neither SolGold, nor any of the
officers or directors of SolGold, assumes any responsibility for
the accuracy or completeness of such Cornerstone information or any
failure by Cornerstone to disclose events or facts that may have
occurred, or which may affect the significance or accuracy of any
such Cornerstone information, but which are unknown to SolGold.
SolGold has no means of verifying the accuracy or completeness of
any of the Cornerstone information contained in this news release
or whether there has been a failure by Cornerstone to disclose
events or facts that may have occurred or may affect the
significance or accuracy of any such information.
About the Cascabel Project
The Cascabel Project's Alpala deposit is located in Northern
Ecuador, lying upon the northern section of the prolific Andean
Copper belt, renowned as the base for nearly half of the world's
copper production. The project area hosts mineralisation of Eocene
age, the same age as numerous Tier 1 deposits along the Andean
Copper Belt in Chile and Peru to the south. The project is a
three-hour drive north of Quito, close to water, power supply and
Pacific ports (Figure 1). SolGold holds an 85% registered and
beneficial interest in ENSA which holds 100% of the Cascabel
tenement.
Figure 1: Location of the Alpala resource in northern Ecuador,
highlighting the significant capital advantages held by the
project, with proximity to ports, road infrastructure,
hydro-electric power stations and the trans-continental power
grid.
By order of the Board
Karl Schlobohm
Company Secretary
The Toronto Stock Exchange has neither approved nor disapproved
of the information contained herein.
This news release shall not constitute an offer to sell or a
solicitation of an offer to buy, nor shall there be any sale of
these securities in any jurisdiction in which such an offer,
solicitation or sale would be unlawful prior to the registration or
qualification under the securities laws of any such
jurisdiction.
CONTACTS
Nicholas Mather Tel: +61 (0) 7 3303 0665
SolGold Plc (Chief Executive Officer) +61 (0) 417 880 448
nmather@solgold.com.au
Karl Schlobohm Tel: +61 (0) 7 3303 0661
SolGold Plc (Company Secretary) kschlobohm@solgold.com.au
Anna Legge Tel: +44 (0) 20 3823 2131
SolGold Plc (Corporate Communications)
alegge@solgold.com.au
Gordon Poole / Nick Hennis Camarco (Financial Tel: +44 (0) 20 3757 4997
PR / IR) solgold@camarco.co.uk
Andrew Chubb / Ingo Hofmaier Hannam Tel: +44 (0) 20 7907 8500
& Partners (Financial Advisor) solgold@hannam.partners
James Kofman / Darren Wallace Tel: +1 416 943 6411
Cormark Securities Inc. (Financial Advisor)
dwallace@cormark.com
Follow us on twitter @SolGold_plc
References to figures and tables relate to the version visible
in PDF format by clicking the link below:
http://www.rns-pdf.londonstockexchange.com/rns/4754P_1-2019-2-8.pdf
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END
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