Take physic, pomp

Cordoba Minerals (CDB.v): Right to reply

After posting the mail sent by Robert W. Allen regarding Cordoba Minerals (CDB.v) yesterday, as well as adding a second post with my personal opinion on the hole 63 delay, I received the following from CDB yesterday. It’s a mail that CDB CEO Mario Stifano sent to Robert Allen as a reply to his complaints. I’ve been given permission by Stifano to reproduce it here and that’s good for me, right of reply is something IKN has always appreciated. Read on:

behalf of Cordoba, its management and shareholders, it is necessary
that I respond to your patently false and libelous statements. As CEO of
Cordoba and one of Cordoba’s largest individual shareholders, I must
ensure that all shareholders
understand the transaction and do not rely on the libelous claims you
are making which are based on an inaccurate set of facts.

I will set the record straight in this response.

key point for all shareholders is that this transaction is neutral with
respect to HPX’s current San Matias ownership, and is not at all
negative to shareholders as you are stating. We have estimated that if
the sole focus of the joint
venture was to complete a feasibility study for the Alacran Deposit, it
could be completed for approximately C$10 million. Under the previous
joint venture structure, Cordoba’s existing shareholders would retain a
35% interest in San Matias upon HPX delivering
a feasibility study. The transaction and concurrent financing will
allow existing Cordoba shareholders to retain an effective 43% interest
in San Matias – approximately 20% more than the ownership under the
previous joint venture structure.  In fact, if Cordoba
had raised over USD$30 million it would still have a greater than 35%
interest in San Matias. 

have to state that the details of the HPX joint venture have been made
by Cordoba on numerous occasions. There is nothing new, or undisclosed,
in what I am stating.

entered into the joint venture with HPX in 2015. This has delivered
significant shareholder value to Cordoba as HPX spent over $30 million
on the project in less than 3 years, even though the option agreement
only required HPX to
earn a 51% interest at San Matias by spending $19 million over 7
years.  HPX has therefore been extremely supportive of the San Matias
project, and this has been reflected in share price growth that benefits
all shareholders.

joint venture does not, contrary to your assertion, require that HPX
carry the San Matias project to feasibility. HPX does not have a sole
funding commitment to feasibility. HPX holds an option, and in fact HPX
can require Cordoba to
fund its 49% interest in the project going forward.  If Cordoba had to
raise half of the cost of any exploration program, existing Cordoba
shareholders would indirectly be diluted down from their current 49%
economic interest in San Matias. As a result, your
concerns about future dilution are unfounded. HPX has the right under
the transaction, which is the same right that it currently holds, to
maintain its pro-rata ownership interest in Cordoba.  That has not

also currently owns approximately 36% of the Cordoba common shares. HPX
will exchange its current approximately 69% controlling economic
interest in San Matias (consisting of a 51% direct stake in San Matias
and its 36% direct share
ownership interest in Cordoba) for an approximate 67% share ownership
interest in Cordoba following completion of the concurrent financing. 
HPX is not increasing its economic benefit in San Matias as a result of
the transaction. Again, this transaction is
neutral to HPX.

will also correct your statements on Cordoba’s drilling results. Simply
put, there is no material fact or change that has not been publicly
disclosed and therefore your claim of illegal insider dealing has no
basis in fact or law. Cordoba
issued drill results on May 17, 2017 and not before PDAC as you have
claimed.  Cordoba will be issuing additional drill results when all the
assays are finalized for the remaining holes at Alacran and compiled and
appropriate for public dissemination.  

I will address your governance assertions and allegations of management
impropriety. The independent directors on the Board have positively
endorsed the transaction as it is in the best interest of shareholders.
 Haywood has also
provided a positive fairness opinion on its terms.  Cordoba has a very
strong independent Board.  Our independent board members include Tony
Makuch, who is CEO of Kirkland Lake Gold, Ignacio Rosado who is CEO of
Volcan, David Reading former CEO of European
Goldfields and Bill Orchow former CEO of Kennecott USA.  These are
highly experienced Board members, independent of HPX, and each of whom
recommended that the shareholders approve the transaction. 

addition, the renowned governance advisory firm, International
Shareholder Services, which makes recommendations for institutional
funds, has come out in support of the transaction. If it had concerns,
it would have stated so.

well, rather than receiving significant payouts in the transaction,
Cordoba management has agreed to waive their change of control
provisions under their contracts, which would otherwise have been
triggered as part of the transaction.
We as management are as committed as the Board and HPX to delivering
significant shareholder value, and by waiving our rights, have taken
steps to put the interests of the Company ahead of our own. That is
proper governance.

Why are all of these positive recommendations being made?

is because this is a transaction that stands up to scrutiny when
examined in a factually accurate manner as it is an independently
reviewed transaction that is in the best interests of shareholders.

the contrary, your request that shareholders vote against the
transaction is not founded in fact or any objective independent
assessment, and is more likely based on your personal grudges against
Cordoba for entering into a joint venture
you opposed, aggressively fought against and failed.   

partnership with HPX has delivered significant shareholder value, while
you decided to exit your shares at the lowest point of Cordoba’s share
price in 2015.  (The recipients of your email should know that you sold
the vast majority
of your Cordoba shares in 2015 at the lowest point in the market and
(amongst other things) as a result, you have not had board
representation since 2015.)  Fortunately, we have strong supportive
shareholders who recognize the potential of our San Matias Copper
Gold project and the benefit of having HPX as our largest shareholder.

I am also attaching a letter that I sent to shareholders explaining the benefits of the transaction.

Mario Stifano

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