He writes that KGC has "just acquired" the Sumatran property, Beutong. However, it isn't obvious that the transaction has been completed. No announcement to that effect has yet been made by either KGC or Tigers Realm.
Not so sure about the "sizzle". KGC would, if the Beutong transaction is completed, be adding another estimated but as yet unproven resource with tenure and permit extensions unresolved, involving increased overheads and several millions more expenditure before any of the three properties (two in Kalimantan, one in Sumatra) could feature in completed bankable feasibility studies.
Says VIA Capital PAUL Renken. He recommends KLG to buy..?Kalimantan Gold Corp. (KLG:TSX.V) is one of our clients. It has a tiny market cap, just £2.5M. It just acquired a second copper porphyry project in Indonesia with a 2 million ounce (2 Moz) gold resource. The company's original copper project is on the island of Kalimantan. Both copper projects demonstrate 0.6% average copper grade in compliant resources from surface. It's the kind of story that has the sizzle that I talked about, which significantly improves the appearance and the solidity of the underlying portfolio of the junior explorer.
The transaction was announced on 26 November. Therefore, the "20 day due diligence period" should have finished yesterday. KGC's capital raising of a minimum of US$ 3 million was supposed to be completed "by mid December". "Applicable regulatory approvals" (what are they?) should already have been received. "Final approvals and closing of the transaction" are expected on 23 December (only four more working days). New shares are expected to be issued to trading on 24 December.
Trading volume in KGC shares has been subdued. The KGC share price has declined to GBP 0.0125 pence (CAD 0.0242 cents).
The target for KGC's capital raising is US$ 5 million. Does it really make sense for any of the parties (i.e. Tigers Realm Metal Pty Ltd. and KGC's existing shareholders) for KGC to issue 240+ million new KGC shares into such a weak market?
Shouldn't KGC shareholders be given a chance to vote on this in a General Meeting?
.. into selling Jelai? How well connected is the KGC board, who have they met with, how well has the case for ongoing exploration at KSK been presented, have the meager and dwindling cash resources in KGC been wisely allocated during the Freeport era, is it in KGC's favor to take this to the market at a time when so many tenure and permitting issues remain unresolved? So many questions. No one says it is easy. Far from it. The reverse takeover by Tigers just comes across as complicated and being pushed through without adequate opportunity for KGC shareholders to be presented with and to properly evaluate alternatives or even become involved in any sort of approval process. On the plus side, though, Tigers undoubtedly bring greater depth of management experience in developing mineral resources than currently exists within KGC. KGC needs a fully functioning geologist. But does KGC need to ingest Beutong just to accomplish that? Let's see how this develops.
The writing was on the wall from way back when KIC board members decided that MSF and YMS, the two largest institutional shareholders, should be denied a vote, something Mansur Geiger has since acknowledged was wrong. YMS controlled the Indonesian entity that had a carried interest in the KSK CoW and agreed to transfer that entity to KIC in exchange for shares being issued to MSF and YMS. Vote denial is as undemocratic as it gets. The agreement at that time (the 90s) required that voting rights would not subsequently be unreasonably denied. But vote denial continued right until KIC was dissolved. It enabled a tight circle of insiders to ensure that their positions on the KIC board would not be challenged. The KIC board in those days controlled appointments to the KGC board. That is all water under the bridge. Nevertheless, even if only symbolically, vote denial spelled "the beginning of the end" of the ability of original and founding shareholders to steer the endeavor. The subsequent dissolution of KIC more obviously signaled the eventual loss of control over the KSK CoW that the original and founding shareholders now face.
There must be a market share price below which this whole reverse takeover shouldn't make sense for Tigers. If Beutong is as valuable as has been suggested by Owen Hegarty why would Tigers give up so much equity by issuing KGC shares into such a weak market? Something about all of this doesn't add up.
Another matter. AIM Rule 14 requires that shareholder approval is required for a reverse takeover. The transaction has been structured so that KGC shares are spirited away to the shareholders in Tigers Realm Metal Pty Ltd. which include two substantial entities with names that include "Tigers" or "TR" and 50 individuals. This artificial looking move seems to be necessary to avoid the transaction being treated as a reverse takeover on the basis that the 50 individual shareholders and the two entities act independently of each other. Pretty remarkable isn't it that 50 individuals should suddenly of their own "independent" thinking suddenly decide to receive shares in KGC? Or am I misunderstanding something here?
Other ways to progress the KSK CoW? The whole reverse takeover transaction involving KGC ingesting Beutong, in the process taking on extra overheads and broadening its geographic scope hopes to bring in another +/- US$ 3 million to further exploration at the KSK CoW. But at what a cost to the existing KGC shareholders? Not nearly enough is known about Beutong. Nowhere has it yet been stated how much more has to be spent at Beutong to become entitled to 80%. Who are the Indonesian joint venture partners? Etc. The whole thing looks overcomplicated. Investors are not privy to details of KGC's discussions with so-called "interested parties" since Freeport McMoran departed. Perhaps the search for funding partners wasn't wide enough? Perhaps more effort could have gone
With the KGC share price heading towards CAD 2 cents if, as part of the capital raising, new KGC shares are to be issued at market value that would involve issuing 287,500,000 new shares to raise US$ 5 million (USD = CAD 1.15). Surely there are other ways to progress the KSK CoW? KGC shareholders have not been given any alternatives, nor are they being given a chance to vote on what amounts to a complete reshaping of their company in terms of geographic spread, management, overhead cost and shareholder control. The due diligence report on Beutong is not yet available. How are KGC shareholders expected to come to an informed opinion on Beutong? Ingesting Beutong is what creates all the changes KGC, yet KGC shareholders have been provided with scant information. For example, how many more millions of dollars have to be spent at Beutong to become entitled to 80%? Who are the Indonesian partners? What about the relationship with the Acehnese district and provincial authorities? Which of the genuinely independent KGC board members has travelled to Beutong, met with all the relevant parties to get to understand the situation at first hand? The whole process of evaluation and approval of this proposed reverse takeover comes across as rushed and in many ways as an artificial construct. Is this truly about "growth" or is it about something else?
AIM rule 14 requires shareholder approval in a general meeting for a reverse takeover in various specified circumstances including where there is a significant change in voting control. With 50% KGC shares going to Tigers Realm Group companies, subject to the capital raising, there is going to be a fundamental change in voting control. I am no securities law expert but at first blush it looks as if AIM Rule 14 would require the proposed arrangement with Tigers Realm to be put to a Meeting of KGC shareholders. Canadian rules also to be considered.
Thank you. Yes TRC has been up but mostly down but their difficulties are long dated. Indeed the Tiger Group structure look very ambitious. It comes from the very top and It is well served by their MD . Tony Manini probably took great satisfaction and enjoyment setting all that up and just like you said, with him in charge... there will be changes. I will let everyone however decide for themselves if he is really convincing.
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