Hostile bid from ANX was 2 years ago... … and I wanted to see how both companies were doing since then. Here are the market cap and shares structure of both companies Now and 2 years ago.
MAE | | MC | Nbr of Shares | SP |
| June 29th 2020 | 27 041 873 $ | 245 835 211 | 0,110 |
| July 10th 2018 | 10 931 043 $ | 99 373 116 | 0,110 |
ANX | | MC | Nbr of Shares | SP |
| June 29th 2020 | 44 791 044 $ | 135 730 436 | 0,330 |
| July 10th 2018 | 40 948 614 $ | 118 691 635 | 0,345 |
We can see, as far as the market cap is concerned, that MAE increased it by 247% while ANX increased it only by 10% over this 2 years period of time. The share price is about the same for both companies but MAE diluted its shareholders by adding 145M shares, an increase of 247% of the share count, which is in line with the market cap increase. On their side, ANX added only 17M shares for an increase of 14,4%. As far as the share price goes, MAE shareholder holding shares for 2 years ago saw no profit, and the same goes for ANX, even a loss of 4,4%. During the 2 years, both shareholders got the chance to average down however.
The fundamentals Let’s compare the fundamentals of both companies during this period. Both companies increased their land package and changed their management. Both companies announced also some drill results (and bulk sampling for ANX). A PEA was also delivered by both companies.
During the period, MAE added 100 000 oz M+I to 574 200 oz and have 155 000 oz less in the Inferred category for 466 000 oz. The total resource increased by 20% to 1,3M oz for Hammerdown and Orion.
For ANX, an increase of 31% from 1,056M oz to 1,387M oz has been calculated for Goldboro only. There were some drilling done at Point Rousse also that provided good results, extended the deposits and will add to the approx 160 000 oz current resource and to the mine life.
What is coming Aside from publishing drilling results, both companies have some catalysts coming. MAE will test and evaluate the Nugget Pond Gold Plant and ANX will be publishing its Feasibility Study for Goldboro. The FS will use current POG and the 30% increase of the resource the 2019 drilling campaign brought to the table.
ANX management said that they are still looking at M&A in Atlantic Canada. I dream of a second “Atlantic Gold” story. There were important management changes since the last hostile bid so I’m wondering if MAE will now see a merge with ANX as a better avenue than 2 years ago? With investors returning to the Junior Gold sector, my opinion is that the synergy between both companies could create a fantastic hype by merging their activities. Eyes will pop for sure! But what would be the price ANX should pay for MAE?
In July 2018, ANX offered MAE shareholders 21 cents a share. It was a global offer of about $21M for a premium of 108% at that time. Now that MAE shareholders have been diluted by 247% since then, I do not think ANX could offer the same premium. That would represent a global amount of $51,6M with today’s shares’ structure and MAE’s deposits are still far away from production and need other money before producing dor bar.
MAE has 1,3 million oz. ANX has 160 000 in NFL, a tailing facility, the material, the experience and the work force to produce gold. They also have Goldboro in Nova Scotia with 1,3 million oz.
Together, they could be a 100 000+ gold producer which will allow them to be rerated as an intermediary producer. When Atlantic Gold was bought by St Barbara, they got C$800M for about the same number of ounces in the ground and annual production rate of near 100koz. Moreover, the offer was done when the market was in no love with gold… So, what do you think? Could ANX and MAE do better alone or by teaming up? If so, what would be the price/term of the M&A?