Can SGA put the "Kibosh" to this Deal???From time to time you have heard me mention another company here, which I have no financial interest in, called "Jinshan", (JIN on the TSX), as in my opinion their resources, production, and startup date are very similar to ours at SGA, and thus I used this company here from time to time as a twin sister comparison.
I have already posted here recently why I think they are almost the same as us, in many ways, and also that the only big difference I felt between them and us is that their Market Capital is ~ 437% greater than ours is right now.
It is then interesting to note then that they to are also in the midst of raising capital to build their mine in China. So when I saw this recent article, of how JIN just rejected the syndicate of agents underwriting offer, for their shares at a low price, I thought I would post that here to.
As the story goes, JIN said that at this current low prices offered for their common shares, they are now looking at alternate financing method as they feel this underwriting deal would dilute their shares too much.
Just like us, and almost exactly on the same day, they entered into an agreement with a syndicate of agents, namely Salman Partners, BMO Capital Markets, and Dundee Securities to raise C$22.5M. They also offered like us, one common share, and one half share warrant which theirs had a exercise price of 42.2% above the offering price of the shares.
Like us at PR time, on May 16, their share price offering, on May 17, was unknown to them to. The price per unit was to be determined by negotiations between Jinshan and the Agents, and in any case prior to the filing of the final prospectus for the offering of these units.
They don't go on to say what they were offered for their shares but they did say that the current pricing level of their stock, this was too low. At any rate they didn't like the deal they were offered so they gave the syndicate of agents the big "Kibosh" and said thank you, but no thank you. We will try to find another way.
Here is the LINK
Http://www.investor.reuters.com/KeyDevelopmentsInvInd.aspx?rn=A9D5A&industry=GLDSLV&target=%2findustries%2findhighlights%2findkeydev&development=2007-06-01T21%3a36%3a00
If this doesn't work they posted this on Kitco Gold, under "Latest Gold News" so here is that link.
LINK
https://www.kitco.com/
We have this option to folks! We are allowed to give them the big "Kibosh" to, if we don't like the financing deal. Or would it be more accurate to say if Resource Capital Fund lll, Golden China Resources, and 4 out of our 5 Board Members, who all have a huge private stake in this company, don't like this deal.
To be honest folks I am really trying to look at both sides of this coin here. It is just that I can't see one advantage for say Resource Capital Fund to want to sell our shares for $1.00 when they are already into this stock for that price. Although they did buy a few million at $1.37 on the IPO, this is so small compared to their overall share allotment that it is dwarfed.
Resource Capital Fund lll is allowed to spend up to US$75M so their is no doubt that if they wanted controlling interest in this company, which they basically have anyway right now, with their 40.62% ownership, they could have easily done this at the IPO, by spending only C$8M more.
Now they would have to spend C$39.5M more to get it, if our shares sell at C$1.00. This makes no sense to me at all. Besides that, they are bankers and investors, not gold miners. They already have 2 out of the 5 Board Members sitting on our Board of Directors, so what do they hope to gain from this?
Golden China Resources also owns around 24% of this company. I know they can not afford right now to purchase any more shares of SGA. I would venture to say that between them, and the other 3 of the Board of Directors, they probably hold as many shares as Resource Capital Fund does. So even if RCF was trying to do something sneaky, I see no point as they would be stopped right away in the Board Meeting.
When it comes to a vote, RCF would need at least 75% approval from the shareholders, and with GCX's 24% against them, they would have lost already even before they got started, plus look very bad to for trying. So again this is just not feasible to me.
So like I said all along folks, I can't see one reason where or why any of these larger shareholders would be better off selling our shares at a lower price. But that is not to say the won't.
They may be forced into this situation because of the present market conditions and demands, and see no other choice out of this. Either be forced to take it, or leave it, and postpone the building of this mine, which would be even worst on our current share price.
But then they do have the keys to the data room and know a lot more about the insides and out of this company then we do. Perhaps even with this potential share dilution they still see an easy 4 or 5 bagger here, in the coming year. I don't know. But as I said all along, what ever deal they can come up with, that satisfies them, satisfies me, for all the reasons I have already mentioned. If they stay, I will to!
Maybe it is just easier if Resource Capital Fund lll, and their big US$75M Dollar Wallet continues to stay quiet and continues to burn these Shorties here, with them buying 23,500 shares a day, to push our share price up $0.05 at a time. Al least until we are at a $1.37 or more.
Someone here hoped for a share price offering of at least C$1.25, a short while back. At the last close of C$1.23, it is beginning to look like he might get his wish after all.
Time will tell all, but judging how long it took JIN to get word back from the agents on their common share price offering, we should expect this news any day now to, since we started this even before them, so expect some news this week.
JMVOHO
GB