Australia-based SolGold said on Tuesday that it was finalising bidding documents for TSX-V-listed Cornerstone Resources, which earlier criticised its suitor and project partner for a “consistent track record of delays”.
It has been two months since SolGold first announced a proposed takeover of its partner in the Cascabel copper and gold project, in Ecuador.
But the London- and Toronto-listed developer explained that the bidding documents had taken longer than anticipated to “allow for the complexity of taxation and other considerations to ensure the most advantageous treatment of Cornerstone shareholders”.
It also attributed a delay in presenting a formal offer to the requirement of translating the document into French.
SolGold is proposing an all-stock transaction of 0.55 a share for every Cornerstone share held, which it argues is a 20% premium to the takeover target’s share price. Cornerstone has snubbed the proposal and questioned the timing of the proposed bid in the lead-up to the release of the preliminary economic assessment (PEA) of the Cascabel project.
It argues that SolGold wants to exploit inside knowledge about Cascabel – a major copper discovery that has attracted international attention – prior to the release of the PEA and before material information was disseminated to the market.
The release of the PEA has also been delayed and SolGold confirmed that the study was at an “advanced stage”.
“SolGold has taken steps to ensure the PEA addresses all identifiable major areas of material upside, risks and returns, with a view to maximising the project's modelled returns and long run benefits to the Ecuadorian economy. Preliminary mine plan assessments and preliminary metallurgical data has been more complex than originally anticipated and the company's consultants have conducted a number of initiatives to ensure the identification of best mining and metallurgical practices and development alternatives. These delays have been unavoidable but necessary to deliver a high quality study,” the exploration and development firm stated.
Cornerstone previously said that it did not expect a hostile bid for the company to succeed, given Canadian takeover rules that require the majority of Cornerstone’s outstanding common shares to be tendered to a formal offer before any shares can be taken up.