Australian gold mining company SolGold has signed an agreement to buy the remaining shares of the Canada-based Cornerstone Capital Resources.
The agreement will give SolGold sole ownership of the Cascabel copper-gold project in Ecuador.
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Under the agreed terms, SolGold will issue 15 of its ordinary shares for each Cornerstone common share held.
SolGold will have the option to pay up to 20% of the consideration in cash, which would be pro-rated among all Cornerstone shareholders and the number of SolGold shares issuable to shareholders of Cornerstone would be reduced.
If the company decides not to pay any portion of the cash consideration when the deal closes, the existing shareholders of SolGold and Cornerstone will own around 80% and 20% of the combined entity respectively.
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SolGold CEO and managing director Darryl Cuzzubbo said: “It has been my view from the start that SolGold and Cornerstone are more valuable together than apart.
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By GlobalData“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.”
The deal comes after Cornerstone rejected a second takeover offer from SolGold in July 2020.
SolGold said that the merger will combine ownership of the Cascabel Project with a portfolio of other projects primarily across Ecuador.
Following the deal’s completion, SolGold’s board of directors will include up to ten individuals, with Cornerstone allowed to nominate two directors.
As part of a strategic review, SolGold selected Citigroup Global Markets and Maxit Capital as financial advisers to help explore ‘value-creating alternatives for the merged business.
The strategic review process could include evaluating financing alternatives for the enlarged firm, as well as a spin-out of assets, excluding the Cascabel Project, to all shareholders of the combined group.
