Core Gold DMMIF

Metals & Mining Industrial Metals & Minerals

Core Gold Inc is a gold mining company based in Canada with all operations in Southern Ecuador. The company primarily explores for gold and silver. Some of its projects includes Zaruma Mine & Portovelo Mill, Dynasty Goldfield and Copper Duke Project.

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Core Gold > Core Gold News Release .....

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Comment by Tadon Dec 17, 2019 9:36am

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Post# 30462910

RE:RE:Core Gold News Release .....

Questions;

What caused the changes in the final offer from the original offer that was submitted on September 2, 2019 ?

The September 2, 2019 offer appears to be very similar to the original Zhaojin Mining Company's offer that Keith Piggott made public in March 2019.

I would have to conclude that the "Interested Party" is indeed Zhaojin MIning Company.

This (Zhaojin Mining Company) offer from September was VASTLY SUPERIOR to what is now staring us in the face with the Titan MInerals confetti paper offer. As Previously posted, Titan MInerals shares have no more than about A$0.01 - A$0.02 per share in tangible net asset value.

ANYTHING, EVEN A JOINT VENTURE AGREEMENT OR TWO PROVIDING CASH UPFRONT WOULD BE BETTER THAN ALMOST 900 MILLION PIECES OF TITAN CONFETTI PAPER SHARES

What caused the interested party (Zhaojin Mining Company) to reduce its offer to Core Gold ?

I am forced to think that certain members of Core Gold's board of directorrs deliberately sabotaged the negotiation process. If this was the interested party's intiial offer, what type of games were certain Core Gold board members playing that would cause Zahojin Mining Companyt to reduce their bid, as opposed some improvements to their original offer in subsequent negotiations ?

There had to have been some other incident(s) during the negotiation process, besides the signing of lock-up agreements by Javier Reyes and Gregg Sedun to have caused Zhaojin MIning Company to reduce their bid and place more restrictive conditions on the final offer because Zhaojin MIning Company could not trust certain directors of Core Gold's board were bargaining in good faith.

The original September 2, 2019 non-binding proposal from the Interested Party had the following key terms (the "Original September Proposal"):

C$0.225 in cash per Core Gold common share.
Issuance by Core Gold of a convertible security prior to completion of the transaction for gross proceeds of C$5M which would automatically convert to Core Gold common shares at C$0.225 per share within 60 days of issuance.
The proceeds from the convertible security would have had a restricted use of proceeds, with C$1M being used for working capital and C$4M being available only for specific debt repayment.
Creation of a new company ("SpinCo") which would contain all of Core Gold's projects (Zaruma, Portovelo, Copper Duke and Linderos), other than the Dynasty Goldfield Project, and which would be spun-out to Core Gold shareholders but would be unlisted. The Interested Party would have been entitled to one (1) board seat on the board of directors of SpinCo.
The Interested Party would invest US$10M into the SpinCo for a 19.9% share ownership position.
Creation of a joint venture in respect of mining and processing oxide ore from the Dynasty Goldfield Project with 60% of the profit to SpinCo and 40% of the profit to the Interested Party.

Nine main conditions were also presented, including legal, financial and technical due diligence, as well as drafting definitive documentation. That documentation would have included a US$3M break fee. The Interested Party also sought 45 days of exclusivity, which the Board was not prepared to grant given it would have meant terminating the strategic process in its early stages and thus potentially excluding other parties interested in proposing a transaction to Core Gold. Nevertheless, the Board unanimously considered the Original September Proposal to have merit and be of interest, and instructed management to provide due diligence access, organize a site visit for the Interested Party, and commence negotiations to advance the Original September Proposal. On September 12, 2019, Core Gold and the Interested Party signed a confidentiality and standstill agreement, and due diligence commenced.

Through October and November, numerous discussions and negotiations were held with the Interested Party and its representatives. On November 25, 2019 Core Gold received a draft form of arrangement agreement from counsel to the Interested Party that reflected the non-binding proposal at that time. Subsequently, the proposal continued to evolve until the last and final non-binding proposal was received on December 12, 2019 from the Interested Party.

The last and final December 12, 2019 non-binding proposal from the Interested Party had the following key terms (the "Final December Proposal"):

C$0.33 in cash per Core Gold common share.
A private placement by Core Gold of common shares to the Interested Party of C$10M at C$0.25 per Core Gold common share, for 19.1% of the resulting Core Gold common shares.
Restricted use of funds, with US$2.5M (approximately C$3.3M) being used only to repay debt principal and interest owed to Titan (totaling approximately US$3.0M or C$4.0M) and C$5M being "restricted funds" that Core Gold could only use with the prior approval of the Interested Party and then only to be used to advance key projects approved by the Interested Party, which projects were not identified specifically. Assuming the full US$2.5M was used to repay debt principal and interest owed to Titan and assuming the full C$5M was used as restricted funds to advance key projects, only approximately C$1.0M (approximately US$0.75M) would remain as a balance to then be used by Core Gold for general working capital purposes or potentially transferred to SpinCo.
The creation of SpinCo, which would now only contain the Copper Duke and Linderos Projects and which would be spun-out to Core Gold shareholders, but be unlisted.
The Interested Party would make no cash investment into the SpinCo but would receive 19.1% of the SpinCo shares pro rata with other Core Gold shareholders (as a result of its up to C$10M private placement).
The Final December Proposal also included a break fee of C$7M which would be payable in circumstances not fully set out in the proposal, but also if a definitive arrangement agreement between Core Gold and the Interested Party was terminated. Importantly, the break fee was expressly set to also be immediately payable by Core Gold to the Interested Party if Titan took up any shares under the Titan Increased Offer.
The Final December Proposal was also conditional upon the Interested Party entering into voting support agreements with Core Gold shareholders holding an aggregate of 40M common shares (representing approximately 24% of Core Gold’s issued and outstanding common shares).