Marathon Gold Corp T.MOZ

Not a Great Deal

[Stowaway100]

If one wanted to give MOZ  management the benefit of the doubt they would put this deal down to a very dispirited gold share market. The fact that CXB fell, not insignificantly, on the deal, despite  the points  made below might make one think it was the best that could be accomplished.

However it seems to me that the participants in the deal were looking after an out come without the MOZ, so called in the deal info, non-interested shareholder. (Possibly required to give more than 50% approval within an overall 66% approval on the deal). This so called disinterested shareholder will be giving due consideration to rejecting the deal as it stands.  Further, it wouldn’t be surprising if a legal challenge materialized over the deal, and/or other interest will materialize. 
 
In what appears  to be a skewed agreement, with management seeming little concerned with the well being of the general shareholders:

1. In the October MOZ Investor presentation (p. 32), management compares MOZ valuation, on a $/resource ounce basis, to two recent sales, Kinross/Great Bear and Sabina/Back River. The implication being Marathon was trading at ½ what might be expected to be achieved in a buyout situation.  I don’t know how long it takes to put together a transaction like this however a month ago management was implying the value of MOZ,  in a transaction, should be double  to four times what it was then trading for.  At the same time it is likely they were negotiating a deal for more or less it’s  then current valuation.  
2. Under the terms of the transaction, based on the market price of CXB, prior to the market open, and decline of CXB share price, they state  a value for MOZ of $84.  At the same time CBX is able under the agreement to purchase MOZ shares for $.60, a 29% discount. This dilutes the present shareholders interest by 16%.  Why is MOZ  management diluting shareholder interest just prior to a sale, and why is it doing so at a close to 30% discount to the deal perceived value for MOZ, as stated in the terms?
3. Other than being able to purchase the shares at a significant discount, to initial deal implied value, CXB now has at least 14% of the shares to vote in favour of the deal. If other institutional and fund investors are in line with the deal this would give an edge to CXB in the vote on the offer.
4. Gold prices have held up relatively well over the past couple of years. Producers are doing realtively well on an operating basis, if not a share  price basis.   There is every reason to believe gold price will at a minimum hold firm and move to the upside, possibly dramatically.  Share prices should ultimately reflect this going forward.  MOZ seems currently capitalized to move  the project forward in the near to intermediate term so why vend the company at a significant discount at this point.        
5. The “Lasonde Curve” the analysts and letter writers like to promote seems to be a much degraded tool of late. Shareholder have a hard time realizing full value in the current investment climate, as projects advance.  Particularly where management seems keen on vending companies ahead of establishing that value. 

[Zibo510]

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[Ork]

stowaway - very good, outstanding . Would you minded if I was to cut and paste some of that to an official doc I'm putting together, no worry grammer & spell check will be in good use for my part, even a solicitor will think I'm one when they read it

[theCurse]

In my experience, it's only a fair deal when both sets of shareholders think it's a rotten deal.  Not a peep from CXB shareholders.  so there you go.  as far as these analysts...they just toe the line.  Under no logic can you do a PP for 60 cents while saying 84 is a fair value especially in light that the 60 cents is not dependant on the deal.  I cannot believe

[Stowaway100]

Fine by me

[Stowaway100]

Fine by me

[Ork]

thanks Stowaway - big thumbs up  IC that's what makes these deals interesting, yer never know what's going on in the back-ground, just maybe another player is slowly buying up 4.9 percent, one thing for sure we're going to see lots of gyrations in the moz share price as cxb attempts to force moz holders to bail at these crazy low prices. not bothered if the deal doesn't go