On Sunday evening I wrote in reply to a subber and very nice person (yeah, you) who’d asked whether I was considering coverage on BTO (after he’d read the latest edition of The IKN Weekly). I replied that I’d been working on BTO pretty closely in the last few days and decided not to call buy on it at the current prices and for reasons why, here’s one sentence of the mail I sent him in reply:
“The bottom line to BTO is that I can’t see how to justify much more than the current PPS using the present and even a decently positive future. It’s weakness is the lack of cash at bank, because if it wants ot expand and buy out these other jrs, it’s going to have to do it via paper…”
VANCOUVER, BRITISH COLUMBIA–(Marketwire – Sep 19, 2012) – B2Gold Corp. (BTO.TO)(BGLPF)(BGLPF)(NAMIBIAN:B2G) (“B2Gold”) and CGA Mining Limited (CGA.TO)(CGX.AX) (“CGA”) are pleased to announce that they have entered into a definitive Merger Implementation Agreement (“Merger Agreement”) to combine the two companies at the agreed exchange ratio of 0.74 B2Gold common shares for each CGA share held, which represents a purchase price of approximately C$3.18 per CGA share and a premium of 22% using the 20 day volume weighted average share price of each respective company, and a 26% premium over the CGA closing share price on September 17, 2012 based on the closing price for the B2Gold shares as of such date. The transaction is valued at approximately C$1.1 billion.The merger will be implemented by way of a Scheme of Arrangement under the Australian Corporations Act 2001 (“Scheme”). Upon completion of the Scheme, existing B2Gold shareholders and CGA shareholders will own approximately 62% and 38%, respectively, of the issued common shares of the combined company.The combination of B2Gold and CGA will result in a merged entity operating the Masbate gold mine in the Philippines, in addition to B2Gold”s existing continues here
That’s a lot of paper, Mr Clive CEO sir. Now, maybe the market will like this deal in BTO share price terms (for the size and all that), maybe it’ll be kinda of neutral, maybe it’ll be slightly negative to the PPS in the short term (fwiw my best guess right now, 90 minutes before the open) and maybe it’ll hate it. But the call on BTO to be a paper printer was spot on, was it not, “J”?
Final thought: Why is it that the idiot mouthbreathers we know as gold bugs will rail and froth at the mouth about “fiat currency” and the way it gets printed into oblivion, but raise nary an eyebrow when the companies in which they invest do exactly the same to them? Just askin’…