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Friday, October 30, 2020

INTEGRA GOLD CORP COM STK CAD1 (OTCMKTS:ICGQF) Explodes Higher on Takeout Bid

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INTEGRA GOLD CORP COM STK CAD1 (OTCMKTS:ICGQF) is a micro-cap name in the gold space that launched higher on Monday in a monster move accompanied by record trading volume. The catalyst was the company’s announcement that on May 14, 2017 the Company entered into a definitive agreement with Eldorado Gold Corp (USA) (NYSE:EGO), “pursuant to which Eldorado has agreed to acquire all of the issued and outstanding common shares of Integra that it does not currently own, by way of a plan of arrangement under the Business Corporations Act.”

According to the release, under the Arrangement, all the non-EGO ICGQF shareholders should end up with C$1.21 per share if they vote to accept the takeout (which is about $0.89 in USD terms). They can take this in one of three forms: cash, about a quarter of share of EGO for each ICGQF share they owned, or just under a fifth of a share of EGO along with about $0.30. “Eldorado will issue an aggregate maximum of 77 million shares and pay an aggregate maximum of C$129 million in cash, equal to approximately 25% of the total consideration.”

INTEGRA GOLD CORP COM STK CAD1 (OTCMKTS:ICGQF) promulgates itself as a junior gold exploration company advancing projects in Val-d’Or, Quebec, one of the top mining jurisdictions in the world.

The Company’s primary focus is its high-grade Lamaque South project. In the fall of 2014, Integra completed the accretive acquisition of the Sigma Mill and Mine Complex, a fully permitted 2,200 ton per day mill and tailings facility.

With major federal and provincial permits in place, existing infrastructure and significant exploration potential, this acquisition removed major costs and shortened timelines typically associated with mine projects. Integra has raised over $125 million since 2013, at successively higher share prices, despite depressed gold prices.

In August 2015, Eldorado Gold Corporation completed a strategic investment in Integra, acquiring 15% of the outstanding common shares. Integra was named to the TSX Venture top 50 performers in 2015 and the OTCQX Best 50 award for 2015.

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The question still remains as to whether or not Integra’s shareholder base will vote to accept the bid. That’s why the stock only closed the trading day up at about $0.81/share at the highs. The move is effectively an arbitraging base camp for the drama surrounding the vote. Often times, we will see a move above the takeout price at this stage (above $0.89/share) if the market is expecting the potential for a competitive bid for the company. However, in this case, it looks like EGO had been working toward this move for some time, and idiosyncratic synergies likely make the case for the takeout, rather than

Often times, we will see a move above the takeout price at this stage (above $0.89/share) if the market is expecting the potential for a competitive bid for the company. However, in this case, it looks like EGO had been working toward this move for some time, and idiosyncratic synergies likely make the case for the takeout, rather than universal intrinsic value of the assets involved.

According to the release, “Integra’s Directors have unanimously recommended that Integra’s shareholders vote in favor of the Arrangement and each director of Integra intends to vote all of the Integra shares they own or control at the date of the Arrangement meeting in favor of the Arrangement, in the absence of a superior proposal.”

The chart shows 45% tacked on to share pricing for the company in the past week. This is emblematic of the stock. ICGQF has a history of dramatic rallies. In addition, the listing has seen an influx in interest of late, with the stock’s recent average trading volume running approaching 500% beyond what we have been seeing over the larger time frame.

Currently trading at a market capitalization of $278.8M, ICGQF has a significant war chest ($40.7M) of cash on the books, which compares with about $176K in total current liabilities. The company is pre-revenue at this point. We will update the story again soon as further details emerge. For continuing coverage on shares of $ICGQF stock, as well as our other hot stock picks, sign up for our free newsletter today and get our next hot stock pick!

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