Columbus Gold Corp CGTFF

RE:RE:Six Mining Companies to Watch as M&A Heats Up

[123buyholdhope]

As a longer term shareholder of CBGDF this is my main concern; that Nordgold will go for a low ball price for the remaining 45% of the French Guyana project they don’t own after the BFS (4^th ¼ 2016)? While CBGDF has from its low doubled over the year the SP seems to now have become somewhat range bound (45 – 55 cents), often being sold down toward the end of the trading day. This is despite the rise of gold and the positive impact on other gold miners/explorers. Nordgold has already bought several of its smaller partners for 20 – 40% premiums to the SP. Clearly, such a purchase of CBGDF even with a spinoff of the Eastside and Nevada properties would I feel still seriously underestimate the FG goldfield value.
Completion of the BFS sees Nordgold pick up overall 55% of the FG gold ozs for less than $45 million. I don’t know what the BFS will show re ozs but we do know that CBGDF cites 3.9 mill ozs indicated and 1.1 mil ozs inferred. For companies buying gold ozs in the ground the price can go to $400 per oz or more depending on gold prices and quality etc (e.g. Goldcorp FG. bought Kaminak - 3 mill indicated - 2.2 mill inferred for $406 mill). At e.g., $100 per oz for FG 5 mill ozs = $500 mill (again, 55% of which Nordgold gains via BFS + purchase 5% + management fees for approx. $45 mill). Speculatively, CBGDF 2 mill ozs at $100 = $200 mill – around a $1.40 per share; Even at a 40% premium this means the SP would need to be in the $1 range (a long way to go).
As I speculated in an earlier entry (‘just speculation’), I am hoping that CBGDF CEO Guistra will get other companies involved. Maybe this is why CBGDF is bringing out its first resource for the Nevada gold project at about the same time as the FG BFS. Hopefully, it will come out before the BFS so ALL can see the potential of Eastside. My impression is the resource will contain less than 2% of the entire Eastside project with only one of seven identified gold areas actually included. Good initial results here might make a major jump for a JV in such a mining friendly state with a potential district scale project in Eastside. In fact, Guistra has said in a presentation that the main majors have already been to Eastside before the resource comes out (interestingly, he has also said in a presentation that CBGDF wants to go with Eastside development alone – no JV)
 Iamgold already has about 14% of CBGDF shares as well as an approx., 2 – 1% smelter royalty on the FG project ozs (through takeover of Euro Resources). As I have said in the past with a yet to be used $800 mill war chest Iamgold may be interested in getting 45% of the FG project. Likewise, Kinross with $2.2 bill in reserve has two mines close to Eastside. With several of its mines (abroad) coming off line in the next few years Kinross may be very interested in gaining ozs. I may be wrong but I believe they at one stage held about 5% of CBGDF shares. A very good initial resource for Eastside could really trigger interest in CBGDF as a whole, especially if it comes out before the BFS results. Nordgold is a very low cost producer and would make an excellent partner for a company who will pay to participate in Nordgold’s efficiency in FG (or NG might really pay up just to avoid such a situation).
In fact, Guistra if he plays things carefully could preside over a feeding frenzy if both the Eastside resource and BFS come out well. CBGDF really is two companies/projects that are available for purchase. CBGDF FG is available to any major out there (Iamgold has had two mines in that area).  Guistra also wants based on presentation statements to hold onto Eastside without even a JV. Maybe Guistra is playing coy here and does not want another 3 year JV. Without such an inroad a major may try a hostile takeover (just as Nordgold tried in the past to do I believe with Carlisle at the exact time Aurico Gold was forming a JV with the explorer) going direct to the shareholders of any new company spinoff from a FG sale.
I think Nordgold might want to be very careful re., any low bid for the remaining 45% of the FG project. A ‘little blood in the water’ can quickly bring in some very big sharks, especially if the BFS and Resource indicate a lot of gold available with the potential for much more. What might have been disappointment for long term CBGDF shareholders could turn out to be a very rewarding experience either longer term (ie., separate buyout of FG and Nevada spinoff with eventual JV in rising gold environment). Or short term buyout of both gold fields by companies eager to increase resources before anticipated long term gold price trend. JMO