The Board of Directors of SolGold (LSE & TSX: SOLG) is pleased to announce that it has today, through its wholly-owned subsidiary SolGold Canadian ExchangeCo Corp. ("Offeror"), formally commenced an offer (the "Offer") to acquire all of the issued and outstanding common shares ("Cornerstone Shares") of Cornerstone Capital Resources Inc. ("Cornerstone") (TSX: CGP).
· All-stock transaction of 11 ordinary shares of SolGold (or at the election of certain shareholders subject to tax in Canada, 11 exchangeable shares) for each Cornerstone represents a premium of approximately 22% over Cornerstone's closing price on the TSX Venture Exchange on 29 June 2020 and a premium of 56% based on the volume weighted average trading price over the last 12 months
· Transaction eliminates disadvantages for Cornerstone shareholders arising from a minority position in Alpala and future financing and dilution risks at the project level
· Cornerstone shareholders also gain exposure to and upside from SolGold's 75 other wholly-owned and prospective concessions in four wholly owned subsidiaries covering 13 additional copper gold targets with similar to, or better potential than Alpala throughout Ecuador
The notice and advertisement of the Offer appear in the 30 June 2020 editions of The National Post and Le Devoir. The Offer to Purchase and Circular (the "Offer and Circular") and related documents will be filed with the Canadian securities regulators on SEDAR under Cornerstone's profile at www.sedar.com, with the United States Securities and Exchange Commission at www.sec.gov. and mailed to shareholders of Cornerstone in due course.
Commenting on the Offer for Cornerstone, SolGold CEO Nick Mather said:
"This is an exciting value enhancing opportunity, providing Cornerstone shareholders with a premium over the current market price for their Cornerstone investment and continued participation in a consolidated and much more attractive ownership structure for the world-class copper-gold porphyry Alpala Project in northern Ecuador.
In addition to this, Cornerstone shareholders will gain exposure to and the upside of SolGold's extensive additional exploration tenure position throughout Ecuador. We invite Cornerstone investors to be a part of SolGold's ultimate vision to become a major copper-gold mining company in Ecuador where SolGold's award-winning exploration teams have identified a number of priority copper gold targets with similar or better prospects than even Alpala, and are rapidly advancing these. You can be part of this exciting plan."
Other benefits for Cornerstone shareholders include:
· Continued participation in the Alpala Project through a simplified, 100% consolidated vehicle
· Elimination of disadvantages arising from a minority position in Alpala
· Exposure to the upside of SolGold's highly prospective additional concessions throughout Ecuador
· Increased trading liquidity and capital markets exposure
· An opportunity to benefit from a strong, experienced and invested management team with a track-record of value creation
Background to Offer:
The world class Alpala Project is currently wholly owned by Exploraciones Novomining S.A., an Ecuadorean company co-owned by SolGold and Cornerstone with legal and beneficial ownership interests of 85% and 15% respectively. Future ownership levels by Cornerstone may be reduced depending on whether Cornerstone contributes to certain expenditures following completion of a Feasibility Study by SolGold.
It has been the view of the Board of Directors and management of SolGold for some time, that the consolidation of 100% ownership of the Alpala Project into a single listed entity makes eminent sense and would simplify the structure of the project, whilst also removing the risk of dilution and future development funding finance for Cornerstone shareholders.
Consequently, on January 31, 2019, following SolGold's good faith efforts to negotiate a business combination transaction with Cornerstone (which efforts were fruitless), SolGold issued a press release (the "Initial Press Release") indicating its intent to make the Offer.
Subsequent to the Initial Press Release, SolGold announced, on November 25, 2019, a significant further investment from BHP Limited ("BHP"), the world's largest leading resources company, whereby BHP agreed to invest US$22 million into SolGold shares making BHP SolGold's largest shareholder.
On May 11, 2020, SolGold announced that it had entered into a US$100 million binding Net Smelter Returns ("NSR") Financing Agreement with Franco-Nevada Corporation, with an option to upsize the financing to an aggregate of US$150 million at SolGold's election, with reference to the Cascabel concession in Ecuador. And, on June 5 and 8, 2020, SolGold announced the results of a private placing to institutional and private investors and members of the Board of Directors raising US$40 million in gross proceeds.
The NSR Financing and private placing together raise up to US$190 million in gross proceeds and are expected to fund SolGold for the next 18 months, including through the anticipated Alpala Project Pre-Feasibility Study and Feasibility Study, all activities required to achieve the development decision (with the exception of capital development costs) in addition to regional exploration costs and all overhead costs. This compares favorably with Cornerstone's cash position of US$0.7million as of March 31, 2020. A merger prevents the risk of near-term dilution to Cornerstone shareholders.
With significant investments from Newcrest Mining, BHP as well as Franco-Nevada, it is clear that industry majors to date, elected to gain exposure to the Alpala Project through SolGold and not Cornerstone.
For more information about the benefits to Cornerstone shareholders and background to the Offer, shareholders are encouraged to visit www.solgoldofferforcornerstone.com, where the Offer and Circular are easily accessible for all free of charge.
For More Information and How to Tender Shares To The Offer:
Cornerstone shareholders who hold shares through a broker or intermediary should promptly contact them directly and provide their instructions to tender to the Offer. Taking no action and not accepting the Offer comes with significant risks of shareholder dilution and constrained share prices. The deadline for Cornerstone shareholders to tender their shares is October 14, 2020.
For assistance, Cornerstone shareholders should visit www.solgoldofferforcornerstone.com or contact Kingsdale Advisors (Information Co-Agent and Depositary for the Offer) and/or Gryphon Advisors (Information Co-Agent) for the Offer, at +1-888-823-4343 (North American Toll-Free Number) or +1-416-867-2272 (Outside North America) or via email at firstname.lastname@example.org.
SolGold has retained Hannam & Partners and Cormark Securities Inc. as its financial advisors in connection with the Offer, Bennett Jones LLP as Canadian legal advisor, White & Case LLP as United Kingdom legal advisor and HopgoodGanim as Australian legal advisor. SolGold has engaged Kingsdale Advisors as its strategic shareholder and communications advisor and depositary and Kingsdale Advisors and Gryphon Advisors as its co-information agents.
By order of the Board