Core Gold AGM 3) - CEO Address A - Titan MineralsFollowing the official AGM proceedings, Core Gold CEO and President Mark Bailey provided a brief and clear current overview covering three key matters. These comprise complex issues, and are seen here from the point of view of an attendee. Reliance should be made upon press releases, official meetings or the equivalent; corrections are welcome.
Mark began his address on the second bid formalized by Titan Minerals of Australia. On this occasion it is an unsolicited bid for the whole of Core - a takeover offer, unlike the previous merger solicited by the board. As well, this time no members of the board nor management pledged their shares. The board is throwing their full weight instead behind an open and competitive strategic process.
Titan’s intention to bid the second time round was announced September 16, and formalized September 30 (Australian dates). Core responded September 17 and October 1, recommending that shareholders take no action. That was logical, as Core outlined in the same Sept. 17 and Oct 1 releases the beginning of their strategic finance / bidding process. From those release, here in respective order:
“As previously announced, Core Gold is currently undertaking a strategic review process of alternatives available to the Company, including equity or debt financings, core and non-core asset sales, strategic investments and joint ventures, as well as a potential merger of Core Gold with another company.”
“... strategic review process of alternatives available to the Company, including equity or debt financings, core and non-core asset sales, strategic investments and joint ventures, as well as a potential merger of Core Gold with another company. “
https://www.coregoldinc.com/news-releases/2019/core-gold-comments-on-titan-minerals-announcement-of-its-intention-to-commence-a-take-over-offer-for-all-of-core-golds-common/
https://www.coregoldinc.com/news-releases/2019/core-gold-recommends-shareholders-take-no-immediate-action-in-response-to-unsolicited-takeover-bid-by-titan-minerals/
At the AGM October 8, Mark Bailey further informed shareholders: “The company’s position is the same as it’s been in our news releases: we advise shareholders to take no action until the company has had time to assess whether or not the transaction is in the company’s [interests], we’ll then make a recommendation.”
Seen below - the blending stockpile at Portovelo, first point of arrival of ore from the Celica surface mine. The grades of ore are combined here to provide a consistent head grade to the process circuit, resulting in higher recovery.
A vote meeting June 12 resulted in an anomalously low vote for Titan, and shareholder revolt. Essentially a few insiders voted "Yes", and hundreds of shareholders at large voted "No". The ensuing Fairness Hearing in late June, a contentious and hard fought legal process, produced a July 4 ruling by Justice Grove, deeming the Arrangement unfair, and dismissing the petition for merger. A key essence of that ruling was that the first Titan offer relied upon non-independent and insupportable valuations for Titan, such that shareholders would be unfairly compensated in Titan shares of insecure value.
Titan’s second offer of Sept. 30 values their takeover bid at a nominal Cdn $0.42 per share, notwithstanding their share and asset values remain doubted. Their share price has suffered precipitous drops, as seen on page 5 of their October 4 Acquisition Presentation:
https://www.investi.com.au/api/announcements/ttm/868a23f6-89f.pdf
Key among Titan’s justifications is their ability to raise cash, though not in evidence at present. Their first offer included Aus $20 million in cash to Core; in their second, current offer that is dispensed with - the takeover bid is made entirely in Titan paper. Titan’s second offer does provide value in defining a notional 42 cent price floor under the bid process.
Given the vigorous interest in Core Gold, the robust bid process in place, and even the difficulty in accommodating the many prospective bidders for site visits, taking no action on Titan’s offer seems a solid recommendation.
Image below - conveyor to the process ore stockpile at Portovelo.
Links for Titan’s key bid announcements are as follows:
1) February 25, 2019 (Australia) - Titan Minerals’s first bid for Core, via merger / Plan of Arrangement.
https://www.investi.com.au/api/announcements/ttm/ccb2c854-415.pdf
2) March 12 (Australia), Titan’s first bid is amended. It is later dismissed by the BC Supreme Court.
https://www.investi.com.au/api/announcements/ttm/83dbb98b-be7.pdf
3) August 16 (Australia), Titan’s second bid intention announced, bid via unsolicited takeover.
https://www.investi.com.au/api/announcements/ttm/ea4018b1-ca4.pdf
4) September 30 (Australia), Titan’s second bid formally tendered.
https://www.investi.com.au/api/announcements/ttm/1e3e2f55-e2e.pdf