Gold explorer SolGold (LSE:SOLG) says it is ‘surprised and disappointed’ by Cornerstone’s (TSX:CGP) swift dismissive response to its stated intention to bid for the company. In an announcement made on Friday, the firm highlighted that Cornerstone had lodged its response less than three hours after the approach, raising questions on how well the potential offer had been considered.
SolGold owns an 85pc interest in Exploraciones Novomining S.A. (ENSA) an Ecuadorean company that in turn owns 100pc of the Cascabel Project. The project is located in the prolific Andean Copper belt of Northern Ecuador and Cornerstone also owns a 15pc interest via shares in ENSA.
On 31 january, SolGold proposed the conversion of each Cornerstone share into 0.55 of a SolGold share, equating to an immediate 20pc premium for current holders. SolGold believes the consolidatory move would significantly benefit Cornerstone shareholders, in particular, removing the ‘funding challenges’ the company will face in relation to the development of Cascabel. Current Cornerstone shareholders would also benefit from exposure to SolGold’s other assets across Ecuador and beyond.
In today’s response, SolGold raised a number of questions and notes ‘the apparent lack of consideration’ of the potential by Cornerstone’s board. The company goes on to say it ‘believes that all Cornerstone shareholders and warrant holders should be given the opportunity to make an informed decision” 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.’
The share price of Cornerstone has risen in response to the offer, which SolGold suggests is indicative of a market understanding the benefits of such a bid. SolGold intends to proceed with its offer.
Author: Stuart Langelaan
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