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post #21 of 83
5/21/09 at 1:25pm
|ATW Gold Trumps Orvana In The Battle For Kinbauri, And Now Aims To Move Rapidly To Production Of 250,000 Ounces Per Year
By Alastair Ford
“We’re going for it. We just are. We think it’s a good acquisition”. So says Andrew Bowering, Vancouver-based director of ATW Gold, a company that’s just joined the growing ranks of Canadian-listed juniors that have set off down the consolidation trail. In this case ATW’s C$0.85 per share all-share bid for fellow Canadian Kinbauri Gold knocks another bidder out of the picture, as Orvana’s C$0.55 cash bid now looks dead in the water. That’s not the whole story, though, as it’s widely thought that Kinbauri also had another cash bid on the table at no less than C$0.70. Following the news Kinbauri’s shares jumped from the C$0.55 Orvana-inspired price to around C$0.68, indicating that the market liked the extra interest, but wasn’t entirely convinced that the deal will come off. Added into that mix was a general feeling that ATW might be bidding too high, and ATW’s own shares dropped by six per cent to C$0.59, taking some of the initial premium that had been on offer to Kinbauri shareholders off the table.
Still, even allowing for that drop, the deal comes in at just shy of C$0.80 per share. At that level it looks like a reasonable one for Kinbauri shareholders, who, on Andrew Bowering’s way of thinking at any rate, have been suffering from investor fatigue lately, but who nevertheless were looking for something with more upside than a cash bid when it came to contemplating an exit route. In actual fact, though, Kinbauri shareholders will retain just over 53 per cent of the enlarged company, so they’ll still, nominally, be in control. Two of their senior men, Brian McEwen and Brent Butler will run it as President and chief executive respectively, while ATW chief Graham Harris becomes executive chairman. And what do we read into the fact that on the international conference call that was organised shortly after the deal was announced, both Brian and Graham were speaking from Kinbauri’s El Valle/Carles site? Perhaps not too much, but on the future production numbers it’s clear that the Kinbauri asset will be the flagship.
But what’s perhaps more important to investors right now is that the ATW bid is coming in at a price 115 per cent higher than the level at which Kinbauri shares were trading before Orvana made its initial C$0.55 bid. And at their current C$0.66 Kinbauri shares are at their highest level since August of last year. So Kinbauri’s El Valle/Carles project in Spain is finally stirring up some interest - at last. With a 2010 production target of 145,000 ounces of gold equivalent per year, you might ask why wouldn’t it? But legal tussles with prospective funding partners do not go towards creating a strong rating in any market, and even when it looked as though Kinbauri was putting its legal problems behind it, the market was never clear how it would be funded. ATW’s attitude to fundraising is bullish, and in the meantime, ATW already has production, and as Graham Harris says, “the cheques are rolling in”.
If this deal is closed off, the recommencement of production at El Valle/Carles would qualify as ATW’s second producing mine, following on from the Burnakura mine in Western Australia which has now been in production for three months. ATW’s other Australian project, Gullewa, drops to third place in terms of timing, as it still requires drilling, a proper 43-101 resource calculation and a scoping study at the very least before a firm production decision can be made. Still taking them all together it looks as though the enlarged ATW would slide easily into the ranks of the 250,000 ounce producers. With El Valle/Carles showing a total cost per ounce of just under €255 per ounce on US$750 gold and US$2.50 copper there’ll be plenty of margin too.
It’s not done and dusted yet, of course. So far only a “binding letter agreement” is in place. The next step, according to Andrew Bowering, is an “arrangement agreement”. But for those not versed in the niceties of corporate takeover law – and it could get very intricate given that there are three major jurisdictions involved – the important statement is that ATW thinks the deal can be done. “We don’t have any issues with shareholder support”, says Andrew. “We think we can get that. We think they can get that”. What’s more, and what’s crucial to the future now, is his attitude to future funding. “We’re not afraid to raise money”, he says, which is good, because El Valle/Carles will require a bob or two – perhaps somewhere between €35 million and €50 million, according to Brian McEwen. Still, the market’s been looking up in Canada lately, and not only that, Andrew Bowering reckons there’s interest coming out of the US and London too. As far as a fundraising goes, “it’ll just come down to what structure it’ll be”, he says, in reasonably robust fashion. But before we get to all that, the shareholders will have to have their say.
|Kinbauri Shareholders Are Advised to Take No Action at This Time Regarding Orvana's Revised Offer
OTTAWA, ONTARIO, Jul 21, 2009 (MARKETWIRE via COMTEX News Network) --
Kinbauri Gold Corp. ("Kinbauri") (TSX VENTURE: KNB)(FRANKFURT: 3KG.DE) has been advised that Orvana Minerals Corp. ("Orvana") has raised its all-cash offer for Kinbauri to C$0.75 per share from C$0.55 (the "Orvana Offer") and that investors holding 23.6 percent of Kinbauri's outstanding shares have signed lockup agreements in support of the Orvana Offer. The Orvana Offer will expire at 11:59 pm (Vancouver time) on July 31, 2009, unless withdrawn or extended.
On July 12, 2009, Kinbauri announced that it had signed a binding letter agreement with ATW Gold Corp. (TSX VENTURE: ATW) ("ATW") to combine the two companies at the agreed exchange ratio of 1.35 ATW shares per Kinbauri share, which implies a purchase price of C$0.85 per Kinbauri share using closing share prices on July 10, 2009.
Kinbauri's Board of Directors recommends that shareholders do not take any action (including the tendering of shares) with respect to the Orvana Offer, until the Special Committee of the Board of Directors has completed its review and the Board of Directors has had an opportunity to fully evaluate the Orvana Offer and communicate its views to shareholders.
For assistance in withdrawing any shares already tendered, or other questions, please contact Laurel Hill Advisory Group, the Information Agent retained by Kinbauri in connection with the Orvana Offer, toll free at 1-888-812-9184 from anywhere in Canada or the United States and collect at 416-637-4661 from outside North America.
Hey agman, I would not worry too much about your ATW shares. They are way undervalued. The 3 reasons for the drop were:
1) seasonal slowdown
2) approx. 7M in financing shares at $0.62 that become free trading August 1
3) this deal with KNB, that has created some uncertainty regarding ATW's immediate future.
So as you can see, all 3 of these will be cleared up soon enough -but until then now is a good time to accumulate on the cheap. Remember, Sprott acquired 5.7M units at $0.62 in the financing back in March, and ATW is now PROFITABLE! We'll probably see that when quarterly results are released in August....
|July 27, 2009 - ATW Arranges Credit Facilities And Loan Agreements Exceeding $50 Million (USD)
|July 31, 2009 - ATW Terminates Letter Agreement With Kinbauri Gold Corp.
|August 4, 2009 - ATW Announces a Non-brokered Private Placement of $5,900,350
Mercator Minerals (ML.TO) ended the day at C$2.68, up 15%, meaning a gain of an incredible 103%sinceour report at july 1st! We think a top may be near and recommendto takeyour invested amount out, and letting your "free" shares ride!Or take again of 50%, and keep 25% of your shares for free!
Forsys Metals ended the day at C$ 6.59, up 25% since our June 18th alert! GFI confirmed its takeover offer of C$7, and is expected to close on August 17th.
In fact, ATW Gold is the only one struggling to find a wayup. At this point, we are around C$0.54, while we have an average ofC$0.64 on it. We are (again) a buyer in this region, as we firmly believe a market cap of 32M CAD forthis company is just ridiculous!
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Kindly yours, and have a great evening!
The Caesars Report Team.