More DEALS, DEALS, DEALSToday I would like to look at what an offer from B2Gold might look like. And I choose B2 because I am very familiar with them, having bought shares in 2009 ,not long after they did there IPO . But also because there are some compelling reasons why B2 could be a good fit.
The good fit would be because B2 is getting alot of their production from W Africa at this time and, I am sure they think some geographic diversification would be good. Also they are just finishing up an expansion on their big Mali mine, and it looks like the next build they will do is in Columbia. But there are still many an i to dot and t to cross in Columbia, so it looks like the construction crew will soon be idle. And Columbia isn't far from Ecuador.
Now B2 could offer a deal like the Zhoajin one, but I doubt they would be interested in being involved with Titan, Vertex, BOD of Core, etc. as the Zhoajin deal would require. They would be more likely to do a buyout. Clear the slate so to speak.
So an all share offer of 40 million B2 shares for all of Core. This would be about a buck a share for Core shareholders. B2 has a billion shares out, so it is a drop in their bucket. And their shares are very liquid and rising. I would vote for it , and hold the B2 shares, because I am pretty sure they will double in the next couple years, and so I get my 2 bucks a share for Core.
And what B2 would do is kind of similar to the Zhoajin deal, but also different, and better for B2 than the Zhoajin deal is for Zhoajin. They would quickly expand the Portovelo Mill, develop the Zaruma mine, and DGF/Linderos as ore sources, and by 2021 be producing 100,000 oz from Portovelo. At the same time they would be looking closely at DGF to see what kind of operation they want to do there. With cleaning up all the debts and loose ends of Core this might cost $40 m. And then construction at DGF would start in 2021 but by that time the Portovelo Mill would be providing very nice cash flow, maybe enough to fund a good part of a DGF mill.
So they would put up $160 m in shares , and $40 m cash, and this could be close to enough to get them 100% of two 100,000 oz producing mills. And quickly. And they would finish the DGF mill by end of 2021, just in time to start construction in Columbia.
200,000 oz / yr production is 20% of their current production and in no way a trivial amount. And using the arguments from yesterdays Zhoajin analysis, be worth $ 800 m.
And then here is the real kicker that would boot this into one of the best deals anyone has ever made: by the end of 2024 ,when construction is done in Columbia, they have explored/permitted/ engineered/ etc. Copper Duke, which turned out to be a massive Copper/Gold find, and are ready to start construction on a massive mine/mill there.
All but the last are totally ready to happen, and make this a very good deal for B2. (And ok for me.) The last possibility would just be very very thick icing on the cake.