SolGold (LSE:SOLG) and Cornerstone Capital Resources (TSXV:CGP) announced today plans to merge.
The two companies have had a contentious relationship with previous takeover attempts. Both had stakes in Cascabel, which the companies said would be a top 20 South American copper and gold mine if built. According to a prefeasibility study released in the spring, the Ecuador-based project's estimated after-tax NPV is US$2.9bn and IRR is 19.3%, with 4.7 year payback period from start of processing.
The party's described today's transaction as friendly. SolGold will acquire all of the issued and outstanding shares of Cornerstone. Cornerstone shares will be exchanged for 15 SolGold ordinary shares. Upon closing of the transaction, the SolGold board of directors will be comprised of up to ten individuals with Cornerstone entitled to nominate two directors.
Darryl Cuzzubbo, CEO and Managing Director of SolGold, stated that the two companies are better together.
“It has been my view from the start that SolGold and Cornerstone are more valuable together than apart," said Cuzzubbo. "This is an exciting value enhancing transaction for all stakeholders. This Transaction also sets the stage for a strategic review of the Combined Group as we methodically assess options that are in the best interest of our shareholders.”
