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TBT, one more point re. strings or no strings attached to CGP SOLG shares going to BHP. They are a shareholder just like you and I. If BHP swoops in they will instantaneously see a 100% gain in the value of their asset and be offered it in cold hard cash. Cash-strapped CGP are going to turn that down and instead demand conditions?! When you add that to your argument that you think CGP would be happier to see BHP in control of SOLG's assets, then I can't see anything other than a quiet hallelujah from CGP if/when a bid comes in for SOLG.
BHP are on SOLGOLD doorstep
"BHP Billiton to enter Ecuador
BHP Billiton (AU:BHP), the world’s largest miner, will begin exploration in Ecuador having been awarded two concessions in Imbabura Province, close to where SolGold (LN:SOLG) is exploring the Cascabel copper-gold project. "
Correction to my last post.... not 100% sure BHP are operating in Ecuador.... they have tie ins with exploration companies, but don’t think they’re mining anywhere. Was confusing them with a Newcrest. Also, for balance.... everything I read suggests BHP are not too well regarded by the environmentalists there, unlike Solgold who seemingly have a much better and closer relationship.
Miagi, as I said earlier it's the difference not the total. Also this isn't just about achieving a majority holding. Different things occur at 75% and 90%. So it's extremely important. Let's agree to disagree, we will see in a few weeks time.
Ice... the Ecuadorean government will have no say whatsoever in whether or not one UK listed Aussie company takes over another UK listed Aussie company.
They will have say over whether or not they approve the construction of a mine by said company in Ecuador though. Don’t think they’ll have any qualms approving BHP though, who are already operating there. On the other hand, as has been pointed out on here, there may be an argument that Solgold have the environmental templates in place.... but buying Solgold also buys you these.
Iceberg that's an interesting point regarding the government.
But surely they have someone in mind for the job and are not interested in the way it gets there as long as its producing when they require it?
Quady, we're going round in circles here. CGP+BHP+Newcrest = 37% (for argument's sake). CGP swings over to SOLG, to the pie master or to the milkman (it matters not in the slightest) then you have BHP+Newcrest = 30%. The absolute change is 7% (not 14% - yes a get that the relative swing is 14%, but it just does not matter), and they are now 21% off a controlling stake (51%) whereas before they were 14% away.
The final nail in the coffin of a hostile is that it needs to be approved by the Ecuadorian govt. If solg can demonstrate conditional finance why would they approve a hostile transfer of solg and it's licenses to a major which would want to re evaluate the design delay everything not progress regionals at the speed of solg and likely not employe as many Ecuadorian s
I really can't see how a hostile would be possible with or without cgp.
Smickster, that's interesting. As you say it's a case of if he is to be believed primarily...he has interests to protect after all, and has shown he's not afraid of using dirty tactics.
If it is true, those 3 CGP shareholders will be stumping up an absolute mountain more cash than they actually paid for the CGP shares themselves...are they going to say stump up $100m to protect a $20m shareholding?! The terms that they could exact for said funding are likely to be highly punitive, just because they can be and it's good business sense. When you have someone over a barrel you extract your pound of flesh in the business world (unless there are extraneous factors whereby you want to maintain the relationship for future benefits whatever they might be).
If Mr Irwin is to be believed the funding for the mine would come from the 3 major Cgp shareholder directly or indirectly but at what cost/dilution is unknown.
Nothing material on this though.
Miagi your missing the point Newcrest, BHP and CGP together don't even have 40%, so if we acquire CGP, they don't even have 30%. It is very important.
're Nick's percentage it will be more than the bod % plus dgr plus tenstar plus warrants plus a few other friendlies that we don't know about.
TBT, hmm - at first I was going to agree with you point about PIs not voting, but as we are talking about a bid here (and the chance to make 100% on your money overnight - I would expect most PIs to take the time to vote!). Don't forget DGR hold about 10% and NM's in charge there. Agree, that it's perhaps unlikely that BHP would bid without knowing what stance Newcrest will take - then again, if you do sound them out, you are announcing your intentions to a competitor. In summary, 7% is without doubt a useful stake, but I don't think it's a dealbreaker and I seriously doubt BHP are going to need to do any deals with CGP to get it.
Quady, let's say BHP have 44% of the votes and SOLG 56%. Then CGP swings and says ah yes perhaps we will side with BP afterall...then you have BHP on 51% and SOLG down to 49%. The difference is uttely irrelevant - BHP now have 51% - the only question of importance is is that enough to secure victory? The percentage wins, in this case, of the losing party (or parties) is of neither here nor there.
This all highly irrelevant anyway..
For arguments sake solg could give 15-20% of ensa or solg to Franco or Barrick on the same condition as BHP invested in maybe a veg with board until 2022 and they can't increase their holdings etc. Such a move would really force any hostile bid to be approved by the boars.
There are many tactics available to Nick and the solg board as citi are certainly advising them on.
're the cgp the market has had time to respond and answer is that it believes the solg bid is about right, as laughable as it might be...if the market though the solg bid would lead to another one then the price would be much higher than it is now...The price isn't even at the solg bid level, which if anything indicates that it will be turned down and the cgp price will plummet to $2 or so...
TbTT.... think NM might also have the DGR Global stake/vote, so it’s way over 5% controlled by him and the board.
Miagi it was tongue in check, I would expect everyone on this site, to be conversant with percentages. The difference is not irrelevant, it's key, because it dictates, who has overall control. All the best.
First, I should say that I make it that SOLG is a decent investment either way - taken over or not. (Though a takeover would likely mean a quicker profit).
As regards a possible takeover vote:
1) Remember that many PIs won't vote. That's the way it always is. And also, that the PI vote will probably be split. It's the bloc votes of the institutional shareholders that are crucial.
2) The board only own 5% or so of the shares. That's not a great starting position for them.
3) You can be sure that Newcrest and BHP will do a deal BEFORE a bid is made. That means the bidder (either BHP alone or a BHP - Newcrest JV) will start from about 27% of the shares. Given not all shareholders will vote, the bidder then needs to get to around 40% of the total "electorate" to ensure success.
4) So, yes, 7% is a key stake. Any bidder will strike a deal with Cornerstone to buy the company to get their votes.
5) IMO, the risk for Cornerstone is in no bid emerging.
Still, in Cornerstone's shoes, I'd definitely turn down the current Solgold bid and wait for a better offer.
Quady, I'm pretty good at maths thanks. I believe for a bid to be successful it has to reach an absolute threshold (say 50% or 75% or whatever it is). The "difference" is utterly irrelevant.
between two total, not between to totals.
HAHAHAH Miagi365, mathematics is not your strong point. I talk about the difference between to totals.
So if Solgold own 50% and BHP 25% and Cornerstone 25%. then the difference between Solgold and BHP is 25%. However if Solgold acquire Cornerstones 25%, the difference between (BHP acquiring it and going to a Solgold 50% and BHP 50% ) is now Solgold own 75% and BHP still own 25%. so for acquiring 25% the difference is 50%, as we are talking about the difference, not the total percentage, so more than 100% cannot be achieved in total or difference.
TBT, I understand that every % is important in a takeover situation. The 7% comes into play only in a very tight situation I would have thought? Are things going to be that tight come bid time? Additionally, if it is as you say, and CGP thinks that they're going to get an easier ride with BHP in control, they will support the bid without any attachments.
Ref point 3 - I can only go on what SOLG have said, and they were quite explicit. I don't know what the laws on full data access are for minority share holders. I am a shareholder in SOLG - as a truly minor shareholder, does that then give me the right to mosy on down to the Alpala camp, nose around and have a meeting with NM asking him to spill all the beans.
I doubt Newcrest and CGP will call an EGM to sack the board unless they are pretty sure of success. At this point I'm of the mind that BHP are content with the way things are playing out and they would vote against it.
Quady, if you extropolate your argument about percentages to the limit you come up with 200%, so it can't hold.
Yes, if you like, Cornerstone is the all-important swing voter in this election.
7% or 8% voted one way or the other as a bloc would make a huge difference to the eventual outcome.
It's point 4 of my post that's the key consideration for me. And, yes, 7% would be a "kingmaker" stake in a potential hostile takeover situation like this one.
As regards ToS's reply to point 3, can I point out that ENSA is the holding company for Alpala, and denying information on it to Cornerstone and restricting site access would be a fundamental breach of their rights as 15% minority shareholders in ENSA. I don't know Ecuadorian law, but I think that is unlikely to stand up in court.
Don't rule out Newcrest and Cornerstone" calling an EGM with a "sack the board" agenda, either.
I still take Cornerstone's initial pushback to Solgold's offer ("there's no cure for stupid") at face value.
Good morning Miagi365, I thought CGP held 8%, not 7%. But your figure may be more recent. It's incredibly important, not just for BHP, as the difference is 14% or 16%, depending on which figure is correct above.
For example if BHP own it, then Solgold don't, and vica versa . So it's the difference that's important to aid a bid.
Hi TBT, you make some good points there.
1) One would hope that for such a straightforward clause or two that there was little room for interpretation, "fair-minded" or otherwise. If there is room for such interpretation then I would suggest that the lawyers that originally drafted need to go back to law school.
2) I am already 100% sure that this mine is going to be built - by whom is the question open to debate. I truly fail to see why CGP's stake becomes more valuable if BHP are in the driving seat - they are then in the position to squeeze CGP in any way that they can towards the $3.5m buyout - why wouldn't they? It's just good business sense.
3) I defer to ToS's response - that's convincing enough for me.
4) Cornerstone only have a ~7% stake in SOLG now (and it's mooted that they are continuing to sell some to keep their lights on). I cannot see that 7% being crucial to BHP's takeover bid, and it certainly wouldn't be worth them signing up to any binding conditions.