Another change of plans at CB Gold (CBJ.V) which has announced it plans to raise up to C$3.5M in a private placement. That’s a surprising announcement as the company warned its shareholders it had to vote in favor of the asset sale to OM L Trading because CB Gold was on the verge of bankruptcy and was unable to raise additional funds.

No terms have been announced yet, and we wouldn’t be surprised if this move to raise C$3.5M would be a ‘poison pill in disguise’. Should CB Gold’s proposal tomorrow to sell the Vetas project be voted down by its shareholders (who would probably ask to be heard about the Red Eagle Mining (RD.V) proposal as well), we wouldn’t be surprised to see CB Gold issue a lot of new shares at a cheap price to friends and supporters of the company to vote the Red Eagle proposal down (should it come to a vote).

We still haven’t given up the hope to see both companies come to an amicable solution and agreement as we remain convinced an all-share merger between both companies would definitely create a stronger Colombia-focused mining company.

Finally, we need to make a correction in the report we released last Friday. In the report we used the numbers provided by CB Gold which said the shareholders of CB Gold would own 6.5% of the enlarged Red Eagle Mining. An attentive reader told us the number provided by CB Gold is incorrect and the current CB Gold shareholders would actually own 22.2% of Red Eagle Mining as Red Eagle would have to issue 27.14M new shares (0.162 times 167.5M) which would result in a new total share count of 119.54M shares. We apologize for this mistake, we just used the numbers provided by CB Gold without double-checking them.

> Click here to read our report on the Red Eagle Mining – CB Gold merger proposal

Disclosure: The author holds a long position in Red Eagle Mining. Red Eagle is a sponsor of the website. Please see our disclaimer for current positions.

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