Number of Shares Outstanding: 559M
Current Market Cap: 1.15B
Fri. February 10 Close (last trading day before Feb. 13 takeout press release): 1.58
Fri. March 31 Close: 2.05
Current BTO Takeout Value of an SBB share: 0.3867 x 5.34 = 2.06
Share price gain in less than 2 months since the takeout announcement: 30%
Key portion of Bruce McLeod's statements on the takeover (Feb. 13 PR):
"The execution of the Goose project by Sabina did not come without risk to Sabina as a single asset, junior development company with capital constraints. With a two-year construction period until first gold production, we believe that additional value can be unlocked by participating as shareholders of a major gold producer with the northern experience and financial resources to optimize the Goose project and this prolific belt."
My views:
My interpretation of the above quote:
It appears McLeod's implying he's concerned the Goose Mine project might experience cost overruns and/or project delays that would leave SBB vulnerable given its small size and limited access to debt and the tremendous risks that go with it, such as:
- No more access to debt (or a very limited amount of new debt at higher interest rates as a best case scenario).
- More share dilution via further equity raises at significant discounts to whatever the share price is at the time. - Being forced to sell the company at a distressed price as a result of the above.
- etc.
If so, no doubt he and/or the CFO messed up in their estimates on total costs of the mine build, the risks associated with the potential severe weather conditions of Goose's location, and failure to include contingency funding at reasonable rates if such problems come to pass. Thus, it suggests incompetence at the very least. Criminal behaviour? That's a high bar and unlikely, but not impossible to imagine given how things went down.
Looks like Mr. McLeod stands to benefit handsomely from the takeout by BTO (perhaps along with other Management or Board members). Reasonable to suspect that this may have had some influence on his desire to accept BTO's offer. Also, if in fact there had been exclusive, private contact between BTO and SBB over the past few years, that is a terrible disservice to SBB shareholders IMO.
That having been said, again I ask, if the above is such a lowball offer and an outrage:
1) Where are the other bidders for the company with press releases asking SBB to hold a shareholder vote on higher takeover offers?
2) Why are the largest shareholders (Orion Resource Partners: 45M shares, Dundee Precious Metals: 31M shares, FMR LLC 30M shares) silent about the BTO offer and thus very likely to vote in favour of it?
Other points:
I doubt SBB's current share price would be anywhere close to where it is today had the BTO offer never existed as the offer was at a 45% premium to the to the 20-day volume-weighted average share price of a B2Gold ahare vs. a Sabina share on the TSX as of February 10, 2023 (the last trading day before the BTO takeout offer press release).
The main dispute I have with others on this BB is not whether this was a fair offer given the long-term potential of the Goose mine or SBB's land packages in general. Rather, it is the crazed outrage over the inclusion of the Hackett River Silver Royalty, especially BaldSilverHead's fantasys about how much this "asset" is worth. As I've elaborated on at length in previous posts, it's obvious to me that it has next to no real value if viewed objectively, and deluding oneself about the chances of a large payoff does not make it any more likely that such an outcome will ever come to fruition.