President''s commentsWorth a read.
Tuesday January 29, 2008
Dear Shareholders and Friends,
During the last ten months, Evolving Gold Corp. (“Evolving”) has been working hard to fulfill our mission statement: to employ leading edge concepts and exploration tools in areas of known, world-class gold deposits with the objective of discovering new deposits for the benefit of our shareholders. Less than a year into our foray in Nevada’s great Carlin District, we are happy to report all of our proposed work programs have proceeded as promised. The results we are achieving are more than meeting our expectations.
As our understanding of the geology of this, the world’s most prolific gold-producing region, increased, we assembled a much larger than anticipated land package and entered into a lease agreement on four significant exploration landholdings with Newmont Mining Corporation, one of the largest gold producers in the world. We have begun drilling programs on our Malone, Fisher Canyon, Siesta, Sheep Creeks, and Boulder Valley projects. We have just recently signed a definitive agreement to take 100% control of the highly-potential Rattlesnake Hills gold prospect in Wyoming.
This year we will be announcing results from our drill programs on an ongoing basis, and with three, and possibly more, drills turning at any one time, a lot of exploration data will be generated for dissemination to our shareholders.
Evolving is very proud of the progress we have made in such a short time. That progress is reflected in our share price, which has increased seven times from its original $0.14 level to its current level above $1.00, despite the fact that a financing of approximately $9 million during 2007 substantially increased the number of shares outstanding. Evolving’s management views this as an expression of the market’s confidence in our team and, in particular, in our imaginative and very aggressive geological approach.
Our properties near the North Carlin Trend are showing significant potential. Our first drill hole at Sheep Creeks, which we recently reported to you (refer to Evolving’s press release dated January 23, 2007), gives us confidence our new geological model for the region, and our new exploration criteria, may well be correct. Only significantly more drilling will prove or disprove our model, and our preliminary results justify a very significant expenditure in drilling for the upcoming year.
In evaluating the early results of our Sheep Creeks property, a sophisticated analyst familiar with the geological characteristics of large gold deposits in this part of Nevada could recommend Evolving stock as an undervalued, early stage, target. Any group that would potentially take over the Company based on its current share price would not only receive the North Carlin area properties but would also the acquire potentially significant, as yet unrealized, value in our Rattlesnake Hills, Siesta, Fisher Canyon, and Malone properties.
Evolving is confident in the quality of our targets, and in the work we are doing to explore them. With indications that our Sheep Creeks drilling may be revealing the presence of a significant mineralized system nearby, the Board of Directors is concerned that a discovery there may trigger a takeover bid by producing gold companies, particularly those active in the region. Therefore the Board decided, at a meeting on January 24, 2008, that the best way to protect shareholder value in our entire portfolio of gold projects would be by segregating the most likely assets to be targeted. This would be achieved by “spinning out” our North Carlin area properties and incorporating them into a new company (“NewCo”) owned by all our Evolving shareholders on a pro-rata basis.
Complicated as this might sound, it is a straightforward transaction. Evolving shareholders currently own 100% of Evolving’s interest in our nine gold properties. When the “spinout” transaction is completed, Evolving shareholders will still own 100% of those properties. The difference will be that the North Carlin properties will be in a NewCo, while the others (Rattlesnake Hills, Siesta, Fisher Canyon, Alpha Butte and Malone) will remain in Evolving Gold Corp. In this way, the yet to be realized value in the latter projects (still in Evolving) will be protected in the event that a takeover bid is successful with NewCo (which now holds our North Carlin area properties, including Sheep Creeks). As part of the reorganization, the shares and warrants of NewCo will be publically listed for trading.
To be as efficient and fiscally responsible as possible, management and technical staff in both companies will remain the same. Our back office administration, investor relations and communications groups will also remain the same.
Our relationships with institutional investors and our supporters in the investment community will, if anything, be enhanced.
As an additional part of our overall effort to protect shareholder value, Evolving Gold Corp has announced a new Shareholders’ Rights Plan. This will be presented to Evolving’s shareholders at a Special Shareholder’s Meeting which will be held no later than March 20, 2008.
Even though we do not believe that Evolving is currently the target of a bid, we are aware that the combination of our prospective properties, our cash position and our early and very encouraging results may attract one or more bidders.
We also believe that, should a larger company wish to buy a control position in Evolving Gold, your Directors must be in a position to ensure that we can negotiate the best possible price for that position. Part of that negotiating process is to set minimum conditions which a buyer must meet. The Shareholders Rights plan does this by creating a “permitted bid” which requires a potential purchaser to:
Use a takeover bid circular
Leave the bid open for a minimum of 60 days
Sixty days is important. Regardless of how good a control bid is, your Directors need time to assess that bid and to allow the market to evaluate the bid. With sixty days in hand other bidders may emerge. As well, having time to evaluate a bid means that your Directors can make well informed recommendations as to its acceptance.
Evolving’s story is just beginning and part of that story is to make sure that our shareholders, when and if, a control bid is received have the best opportunity to maximize their return on investment. Our Shareholder Rights plan is part of creating that opportunity.
We are, as always, very happy to answer any questions you may have. Email, write, or give us a call; we are here to answer your questions.
Yours truly,
Lawrence Dick Robert Bick
President CEO