Unsurprisingly, after being rebuffed by CB Gold’s (CBJ.V) management team, Red Eagle Mining (RD.V) has decided to take the matter in its own hands and will mail all CB Gold’s shareholders the takeover bid circular as well as the offer documents outlining the specifics of the potential transaction.

As we discussed before, Red Eagle will be offering 0.162 shares of RD for every share of CB Gold and based on Red Eagle’s most recent closing price of C$0.31, the offer has an implied value of C$0.05 per share of CB Gold, 40% higher than its most recent closing price. Red Eagle’s offer will be confirmed if 51% of the company’s shares will be tendered, and this doesn’t seem to be an unsurmountable hurdle as 66% of the disinterested shareholders voted against the sale of the Vetas project to OM L Trading.

Meanwhile, the British Columbia Securities Commission has scheduled a hearing to discuss CB Gold’s most recent C$3.5M private placement on Friday, as this share issue seems to be a move in an attempt to derail Red Eagle’s offer.

In absence of any better proposal, CB Gold shareholders should tender their shares into the offer made by Red Eagle Mining as we still think it provides a clear path towards creating more value. As the CB Gold share price is trading at a much lower price than the implied value of Red Eagle Mining’s offer, we are considering buying CB Gold shares to tender those to the Red Eagle offer to increase our position in the latter. If you’re able to buy CB Gold at 3.5 cents and the offer is successful, you’ll ultimately have bought shares of Red Eagle Mining at C$0.215 per share.

> Click here to go to Red Eagle’s website

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.

Leave a comment