Both SolGold and Cornerstone Capital are partners in the Alpala Project, a copper-gold porphyry deposit located in the Imbabura province in Ecuador
SolGold and Cornerstone Capital are partners in the Alpala Project in Ecuador. (Credit: SolGold)
SolGold, an Australian gold and copper mining company, has launched a fresh offer to acquire Canadian miner Cornerstone Capital Resources in an all-stock transaction.
Both the companies are partners in the Alpala Project, a copper-gold porphyry deposit located in the Imbabura province in Ecuador. The copper-gold deposit, which is yet to be developed, is owned by their joint venture Exploraciones Novomining.
SolGold holds an 85% stake in the joint venture, while the Canadian firm owns the remaining 15% stake.
The Australian firm has been looking to take full ownership of the Alpala Project to make it a single listed entity in order to simplify its structure. It also believes that by taking full ownership of the project, the risk of dilution and future development funding finance for Cornerstone Capital’s shareholders will be eliminated.
The Australian firm is offering to exchange 11 of its ordinary shares for each of Cornerstone Capital’s shares.
The Canadian mineral exploration company has projects in Ecuador and Chile. These include the Cascabel gold-copper porphyry joint venture in northwest Ecuador in which it has a 21.4% direct and indirect interest.
SolGold, on the other hand, has gold and copper mining-related operations in Ecuador, Australia, and Solomon Islands. The company’s major shareholders include BHP, Newcrest Mining, and Franco-Nevada.
SolGold CEO Nick Mather said: “This is an exciting value enhancing opportunity, providing Cornerstone shareholders with a premium over the current market price for their Cornerstone investment and continued participation in a consolidated and much more attractive ownership structure for the world-class copper-gold porphyry Alpala Project in northern Ecuador.
“In addition to this, Cornerstone shareholders will gain exposure to and the upside of SolGold’s extensive additional exploration tenure position throughout Ecuador.”
This is the second time that the Australian company is trying to take over the Canadian firm. The first one was attempted in early 2019, which was turned down by Cornerstone Capital on the basis that it was not in the best interests of the company’s shareholders as it undervalued its business.
Cornerstone Capital reaction to the latest offer from SolGold
The Canadian firm, on the latest offer from SolGold, stated: “Cornerstone believes that the timing of SolGold’s announcement is highly dubious given the deadline for Cornerstone shareholders to tender their shares is October 14, 2020.
“One can assume it is intended to pre-empt Cornerstone’s ability to enter into a value enhancing transaction with third parties, such as BHP that have an unusual standstill that does not expire until October 19, 2020.
“Cornerstone shareholders are advised to take no action in connection with the Hostile Bid until the Board of Directors has made a formal recommendation to shareholders.”
Earlier this year, SolGold revealed that it is in discussions for securing a funding package of about $2.85bn for the development of the Alpala project.