A hypothetical offer from a rivalWe all know about the low-ball offer drom ELD for ICG, let's speculate a rival offer that would be considered more superior.
Current ELD offer: Something like $544M in cash and ELD shares, using $1.12/s x 486Ms (not the widely used $590M with $1.21/s). As previously indicated this offer is somewhat similar to what G bought PRB Borden Lake deposit ($526M for ~4Moz). It's a greenfield deposit without any infrastructures, such as a permitted mill, tailings, development/production ramp and services such as roads, power, gas, communication, etc...
ELD offer for ICG were for the deposit of Lamaque Gold Project which would include Triangle and the satellite deposits including #4 Plugs, and the ramp (give ELD that)...but excluding anything in the northen part which would include Sigma, Lamaque mines, then it could be considered as a fair offer and would have a better chance for ICG shareholders' acceptance. The rest if ICG properties (Sigma, Lamaque and the Mill and tailings facilities), including the cash, would be spun off as a separate entity.
The above would set the scene for a rival offer. If G or AEM would come in with a package below.
Hypothetical offer from a rival (G or AEM):
- $600M (in shares) for the Lamaque Gold Project, plus
- shares of a spun off NewCo. This NewCo would hold all properties north of the Lamaque Gold Project, including the Mill and tailings facilities. The NewCo would keep the cash in the current ICG and will operate as an exploration company to continue drilling at Sigma and Lamaque (Deep) and some of the GRC targets.
- the rival company would provide $150M cash infusion for 15% of NewCo (or $200M for 20% of NewCo?). The rival company could give NewCo shares which could be sold gradually as required for cash to carry out its exploration requirement (G or AEM shares are quite liquid and can be sold readily for cash).
- A deal could be worked out for the mill to process the ores from Lamaque Gold Project, as JV operation, or NewCo could provide the service as a custom milling operation at reasonable costs, to make the deal more attractive.
This rival bid would be worth around 600+150 =$750M (or ~$1.54/s), but ICG shareholder would have a chance to participate in the exploration portion of the S-curve. It should be noted that Sigma RE has a potential to contain ~2.4MozAu, Lamaque Main Plug Extension has 1.6Moz (Deloitte report) and the West Plug has 0.22MozAu (Historical) for a total of over 4MozAu.
Currently, ELD offer does not give any credit to this potential RE. Deep drilling would cost lots of money, but $150M should be a reasonable sum to give the NewCo a fighting chance to prove up a sizable RE (over 4MozAu).
This hypothetical offer would easily trump the current ELD offer, imo.
GH