Company and Investing News – Wed 22 Jul, 2020

Chris Temple – A discussion on the SolGold hostile takeover offer for Cornerstone Capital

Chris Temple has been covering the developments at the Cascabel Project and between the 2 Companies at play, SolGold (TSX:SOLG – AIM:SOLG – US:SLGGF) and Cornerstone Capital Resources (TSX.V:CGP – OTC:CTNXF).

On June 30th SolGold made a public, all share offer, for Cornerstone. The offer was rejected on July 14th. There are a lot of factors to consider for this offer, including the overall value of the offer, liquidity of SolGold shares, who could actually build the mine (due to high CapEx costs), and the other properties that both companies hold. Chris breaks down all of these factors in this extended interview.

Please send in any further questions you have on this deal – Fleck@kereport.com.

Here are a couple links to get up to speed on the news flow…

June 30 SOLG offer:  

http://ir.q4europe.com/Tools/newsArticleHTML.aspx?solutionID=3676&customerKey=Solgold&storyID=14740862

July 14 — Cornerstone public response, rejecting:

http://www.cornerstoneresources.com/s/NewsReleases.asp?ReportID=876996&_Type=News&_Title=20-17-Cornerstone-Board-Formally-Rejects-Hostile-Bid-by-SolGold-for-the-Sec…

July 14 — Cornerstone Directors’ Circular, rejecting offer:

http://www.cornerstoneresources.com/i/pdf/CORNERSTON_DirectorsCircularCA_20200714.pdf

SolGold’s dedicated web site to Cornerstone shareholders

https://solgoldofferforcornerstone.com/

SolGold’s recent webinar where CEO Nick Mather spoke primarily on the offer for CGP, and why people, in his opinion, should tender their shares:

https://event.webinarjam.com/t/click/q1vv6s3mtwrho3svpxcnvsvy7s7

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Comments:
  1. On July 22, 2020 at 10:30 am,
    bonzo says:

    AXU is down 1% whereas EXK is up 12%. Is AXU about to make a bid for EXK?

    • On July 22, 2020 at 11:23 am,
      Excelsior says:

      Hi Bonzo. Charles had a great post yesterday about AXU surging up yesterday to the 2012/2013 congestion zone of resistance and then pulling back down from that all day yesterday and today. Still, with Silver ratcheting up to $23 today, I would have expected to see more strength in many of the Silver stocks.

      As for EXK Endeavour Silver – they have been the highest cost Silver producer the last 2 years, with an AISC around $22 (Even higher than SCZ Santacruz Silver’s AISC around $20). Both of those companies have been running hard with massive leverage to the rising Silver metal prices since last week, as they have been moving from underwater to profitability and the rising price is having the biggest impact on their economic margins on a percentage basis.

      In addition Endeavour Silver just put out their PFS on Terronera, which we’ve been stating for over a year, is going to be their game changer once it is developed and put into production. This is only spiking the football at a time when Silver is off to the races. Haha!

      ________________________________________

      (EXK) (EDR) Endeavour Silver Announces Robust Economics in Final Pre-Feasibility Study on the Terronera Mine Project in Jalisco State, Mexico;

      Video Webcast and Q&A on July 14, 2020

      https://ceo.ca/@nasdaq/endeavour-silver-announces-robust-economics-in-final

    • On July 22, 2020 at 1:45 pm,
      RICHARD/DOC says:

      I just sold 2/3rds of my position in EXK and am waiting for AXU to pull back just a little further to add to that position.

      • On July 22, 2020 at 2:03 pm,
        Excelsior says:

        Doc I sold more than half of my EXK position today as well on the surge above 12%.

        It closed up higher then where I sold, and it is up again in afterhours trading, so that stings a bit, but I’ve had a great run in it and many Silver stocks and mentioned I’d be continuing to trim positions back into the strength as things continue to heat up.

        As for Alexco, I did another day trade on it, but still have a very large position for me in it as present, knowing it could still pull back further.

        May your investing be prosperous!

  2. On July 22, 2020 at 10:41 am,
    chris swenson says:

    Interesting for sure, something is going on……..I know not what! I happen to own both…..

    • On July 22, 2020 at 10:58 am,
      Canuckski says:

      I own both as well… holding more AXU than the other. School is out for me on whether or not it is better for a company we own to take over another company we already own or one we don’t. I tend to prefer the taking over of assets I don’t already have a finger in. The thinking is that it expands my portfolios sphere of influence. I guess it comes down to each deal individually and how favourable it is.

      • On July 22, 2020 at 11:31 am,
        Excelsior says:

        Hi Canuckski – It would be quite surprising to see Endeavour take over Alexco as (EXK) is lazer-focused on trying to optimize their 3 active mines and bring Terronera into construction and development.

        (AXU) is busy trying to get their mine at Keno Hill into production, and so I don’t see where the synergies would come from for Alexco, as their whole claim is about being the only Canadian Silver producer, so I can not see them taking over (EXK) who is operating in Mexico in Chile.

        If (AXU) Alexco were to takeover any company, then it would likely be (MMG) Metallic Minerals their neighbors at Keno Hill, also putting up bonanza-grade silver exploration results the last 2 years. I guess they may also have a go at Banyan Gold as 2nd option, but again Alexco is swamped right now trying to get their mine into production by the end of this year or beginning of next year.

        ______________________________________

        (MMG) (MMNGF) Metallic Minerals Corporate Presentation:

        https://www.metallic-minerals.com/site/assets/files/2291/2020-7-19_mmg_presentation_website.pdf

        • On July 22, 2020 at 2:28 pm,
          Canuckski says:

          Valid points and reasonable perspective Ex!

          • On July 22, 2020 at 2:32 pm,
            Excelsior says:

            Thanks Canuckski. Cheers!

  3. On July 22, 2020 at 11:00 am,
    cfs says:

    And Problem NUMBER 3 is nationalization possibility, which is non-zero.

    Sounds like incompetent management to me.

    • On July 22, 2020 at 11:37 am,
      Excelsior says:

      Agreed CFS about the incompetent management. The SolGold and Cornerstone teams and some of the key investment funds like Warren Irvin’s Rosseau Capital Mgmt, all have egos the size of Ecuador, and have been in a pissing war with each other in social media posts in blog forums and Twitter for some time, and both sides have been quite unreasonable and thwarting each other just for the sake of being ugly. I was in SOLG for a while but sold out for a small profit because I was done with the infighting between their 2 companies, and if I was currently a shareholder, I’d be very upset at the antics from both sides. A larger company needs to come in and poach both companies and put them out of their misery already.

      • On July 22, 2020 at 11:51 am,
        Excelsior says:

        BHP could just gobble them both up and then move Cascabel forward, as the asset is fantastic, it is the people and several key stakeholders in each company that derailing things.

        • On July 22, 2020 at 12:38 pm,
          Excelsior says:

          I do agree that the folks on the Solgold side have been the bigger issue, and their reluctance to at least try and attract US investors is as puzzling as it is near-sighted.

          Maybe another white night investor can help Cornerstone finance their 15% when the feasibility study is completed and they need to pony up the capital to proceed.

          • On July 22, 2020 at 12:40 pm,
            Excelsior says:

            Also SolGold’s decision to isolate Newcrest was just nuts. I’m glad I sold when I did until they figure out a more clear path forward on all this that all parties can agree to.

  4. On July 22, 2020 at 11:34 am,
    SilverDollar says:

    A couple thoughts. Gary Tanashian sees the break above 21.20 in Silver as putting his target higher to $24-26. The way things are going it may happen tomorrow or Friday (my thought).
    Avi Gilbert says GLD hit his target of 170-175 so “watch out below. First pullback to 161-165. Sustained break below 167-68 means pullback is in progress.
    This is where I begin to wonder what all those people who missed this whole rise are going to do. They can wait for another bottom and never know when it actually arrives or they can grab that last car and hope to get aboard. If this happens in numbers, there isn’t going to be much of a break.
    I considered on selling a tranche of Impact and Dollf this morning but hate the disappointment I will feel when Silver jumps to $26-27. That tranche my be hard to replace below what I’d have gotten today. I’m holding at least for one more surprise round of silver moving up and making up for it’s poor performance in the recent past. May be wrong but I’ll live with it. Luck to all!

    • On July 22, 2020 at 11:42 am,
      Excelsior says:

      Thanks for that post SilverDollar. Yeah, the way Silver has been climbing higher and higher this week has really been stunning, so maybe $24-$26 could be achievable in short order before correcting.

      I had mentioned a few times I felt there was considerable overhead resistance for Silver in in the $26 – $26.50 range from a number of prior peaks and troughs in 2011-2013, so that seems like a reasonable place for a knife-fight between bulls and bears.

      I had just mentioned that level on Friday:

      ______________________________________________

      >> On July 17, 2020 at 9:47 am,
      Excelsior says:

      “Agreed Ozibatla. There is significant resistance at about $26- $26.50 for Silver, so I’d be surprised to see Silver at $30 by year’s end, but if it really piled on caused a massive short squeeze then it is possible, just not as probable.”

      “Again, targets like that are getting way ahead of themselves, as Silver is still having the daily knife fight with last year’s high of $19.75. It would be technically very bullish to close today on the weekly candle above last year’s high, and earlier it got up to $19.78, and then currently is 2 ticks below it at $19.73.”

      “Let’s see Sllver close above $19.75 today, which sets up the next upside line in the sand – the 2016 surge high of $21.23. Once that level is cleared definitively on a closing basis, then the real fireworks can start, and a move to mid $20’s will be possible.”

    • On July 22, 2020 at 7:25 pm,
      Glenfidish says:

      Wise move silver! This is coming from the fidish and it tells me your one smart investor with conviction something I admire.

  5. On July 22, 2020 at 11:43 am,
    Excelsior says:

    (HIGH) (HGGOF) HighGold Mining Upsizes Drill Program to 15,000 Meters and Adds 3rd Drill Rig, Johnson Tract Gold Project, Southcentral Alaska, USA

    by @newsfile on 22 Jul 2020

    https://ceo.ca/@newsfile/highgold-mining-upsizes-drill-program-to-15000-meters

    • On July 22, 2020 at 11:44 am,
      Excelsior says:

      It’s encouraging when companies “Upsize” their drill campaigns, and add a 3rd rig. 🙂

  6. On July 22, 2020 at 11:46 am,
    bonzo says:

    You would think that nationalization is moely in Mexico than in Canada, but if Biden wins even mines in USA could be taken over as well as capital gains tax raised to 60%.
    Biden stinks.

    • On July 22, 2020 at 12:00 pm,
      Excelsior says:

      Good point bonzo.

      Luckily we just saw the Democrate sponsored bill fail that proposed hiking the mining tax in Nevada, and reducing their tax credits. There are likely more troubled democrat-bungled states that may attempt to do the same thing, if they aren’t as pro-mining as Nevada.

      ________________________________________
      Mining Tax Proposal Falls 1 Vote Short in Special Session
      By Associated Press, Wire Service Content July 17, 2020

      “After a week of mostly behind-the-scenes discussions, the Nevada Legislature’s emergency special session grew contentious Thursday during late night sparring over a proposal to cap tax deductions for mining businesses that stalled hours after it was introduced.”

      “It garnered enthusiasm from Democrats all the way up to Gov. Steve Sisolak, who put out a statement that he would sign the bill if it passed through the Legislature even before the Legislature published a bill draft.”

      “The proposal to reduce mining industry tax deductions to 60% of current levels won unanimous support from Democrats, who’ve long argued mining businesses should pay more in taxes.”

      “Even though it didn’t pass, by proposing the bill, Democrats satisfied members of their progressive base that have demanded lawmakers advance more ambitious proposals to tax mines…”

      https://www.usnews.com/news/best-states/nevada/articles/2020-07-17/mining-tax-proposal-falls-1-vote-short-in-special-session

  7. On July 22, 2020 at 11:52 am,
    bonzo says:

    I wrote “more likely” but that was changed to “moely.” Last time gold was at 1900, silver was at 50, so I won’t sell silver if it jumps to 26. Biden still stinks.

  8. On July 22, 2020 at 12:21 pm,
    Excelsior says:

    $USA – “This is one stock I’m not selling. It’s a long term hold. 1st chart suggests a shallow correction in progress – bull flag?? 2nd chart shows the bigger picture.”

    ~ Kevin Wadsworth /Northstar

    https://twitter.com/Northst18363337/status/1286000389393973250

    • On July 22, 2020 at 12:22 pm,
      Excelsior says:

      Here is a larger view of that bigger picture chart of Americas Silver that Northstar posted:

      https://pbs.twimg.com/media/EdjKiSLWAAAgwoO?format=png&name=large

      • On July 22, 2020 at 1:54 pm,
        RICHARD/DOC says:

        Ex, I agree about USAS. It’s one of my largest holdings. I won’t sell it anytime soon and almost added earlier today because the weekly and monthly technicals look good. The current price is just below the upper monthly BB and waiting to break out which will be significant. I mentioned above that I sold 2/3rds of my position in EXK today since some of the technicals are flashing red. I would like to purchase my shares back in the future again at lower prices. AXU has a little further to fall and then is another addition. Your very prescient in noting that you didn’t think the silver shares responded as well as they should have today based on the move today. I’m sniffing a potential short term pullback at the end of this month.

        • On July 22, 2020 at 2:15 pm,
          Excelsior says:

          Thanks for the feedback Doc, as it is appreciated.

          Yes, as for USAS it is a large position for me as well, and I like the smaller bearish consolidation chart that Kevin (Northstar) posted – but he was using a $4.30 target in USA, so roughly a $3.20 target for USAS as a buy zone. I trimmed some back yesterday at $3.48 and will be looking to buy back at around that $3.20 level if it presents itself.

          Yes, I responded back in a bit more detail to you up above, but I sold over half my EXK position today, and did another smaller trade in AXU this morning, and then bought back in during the afternoon pullback. I still have a hefty position in it, but if it pulls back I’m ready to buy more. I’m surprised in how weak it has been the last 2 days as Silver just surged both days, but Charles pointed out it tagged overhead resistance yesterday morning before pulling back down.

          Yes, I was really surprised that Silver miners were just bursting at their seams today with such a crazy move higher in Silver over $23, after the crazy move higher Monday and Tuesday. Either the miners don’t believe Silver will stay this elevated, or they are taking a while to digest the moves higher in the metals.

          Cheers!

  9. On July 22, 2020 at 2:21 pm,
    Excelsior says:

    Resource Investment Sector Is Very Frothy…Expect Near-term Pullback says Jamie Keech

    MiningStockEducation – July 22, 2020

    In this interview, Jamie Keech of Resource Insider offers his commentary on the current state of the junior mining finance market. He also discusses two investments his group of accredited investors have made. Furthermore, Jamie shares insights on how he approaches investing in the resource sector. Jamie is a Vancouver-based financier with a background in mining engineering. Having worked on mining projects across the world, he is focused on providing catalytic capital to high quality teams in the mining and natural resources sector, which he believes is on the cusp of reversing its multi-year trend of being an unloved market.

    0:00 Introduction
    1:28 Vizsla Resources commentary
    3:09 Northern Vertex commentary
    4:40 Private placements offered at steep discount to market price
    8:42 If a junior can’t finance now should they categorically be avoided?
    9:33 Management teams and deciding when/how to finance now
    10:53 Cons of investing in a company that is part of a resource sector investment group
    13:43 Discussing jurisdictional risk
    15:09 Easiest way for retail investors to make money in mining sector now?
    18:25 Bullish on copper
    20:11 Feedback from Resource Insider subscribers

    https://youtu.be/cZQ2xv0Mw0A

    • On July 22, 2020 at 2:26 pm,
      Excelsior says:

      I’ve been holding off doing it, but I did take some profits in my Northern Vertex mentioned in this interview today. I love the company and it has been doing great at a solid producer, but it was starting to get to large in my portfolio and I’ve had quite a great run in it already.

    • On July 22, 2020 at 2:31 pm,
      Excelsior says:

      Jamie Keech #01 – Retail Investors: Avoid Getting Screwed

      CRUX Investor – July 17, 2020 #VIDEO

      https://youtu.be/pd9h7Wd3uF4

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