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Wednesday, November 25, 2020

Leagold Mining Corp (OTCMKTS:LMCNF) Pops on M&A News

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Leagold Mining Corp (OTCMKTS:LMCNF) blasted higher to close out the week. The catalyst was pretty clear in this case. To wit: the company just announced that it has reached an agreement with Brio Gold Inc. (TSX:BRIO) under which the previously announced proposed take-over bid by Leagold will now be completed on a Brio Board-supported basis by way of a statutory plan of arrangement.

According to the release, “pursuant to the definitive arrangement agreement, for each Brio common share issued and outstanding, Leagold will issue 0.922 of a Leagold share and 0.4 of a Leagold share purchase warrant. With the addition of 0.4 of a Leagold Warrant, the aggregate consideration to be received by Brio shareholders represents an increase in the value of the implied consideration disclosed in Leagold’s press release of January 23, 2018 from C$2.80 per Brio share to C$2.90. Both the Leagold and Brio Boards of Directors have unanimously approved the terms of the Arrangement Agreement.”

Leagold Mining Corp (OTCMKTS:LMCNF) bills itself as a company building a new mid-tier gold producer with a focus on opportunities in Latin America. Leagold is based in Vancouver, Canada and is listed on the TSX under the trading symbol “LMC” and trades on the OTCQX market as “LMCNF”. The 2017 acquisition of the Los Filos mine, a low-cost gold producer in Mexico, provides, the company believes, an “excellent platform for growth”.

Leagold Mining Corporation engages in the acquisition of gold mining properties and advanced-stage development projects in Latin America. The company was formerly known as HTI Ventures Corp. and changed its name to Leagold Mining Corporation in August 2016.

Leagold Mining Corporation is headquartered in Vancouver, Canada.

According to company materials, “Leagold is building a new mid-tier gold producer with a focus on opportunities in Latin America. Leagold is based in Vancouver, Canada and is listed on the TSX under the trading symbol “LMC” and trades on the OTCQX market as “LMCNF”. The 2017 acquisition of the Los Filos mine, a low-cost gold producer in Mexico, provides an excellent platform for growth.”

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The gold market is an attractive place right now for M&A as inflation fears and interest rates are on the rise, and the dollar is acting consistently extremely weak. We have seen a number of key data points suggesting a shift in inflation data and inflation expectations. Part of this is about US fiscal stimulus and deficits. But part of it is also firmly about the application of stimulus at a point when the US is already at full employment.

Leagold CEO, Neil Woodyer, stated, “We are pleased to have reached a friendly agreement with the board and management of Brio. While Leagold was highly confident in the future success of the shareholder supported take-over process, we sought the opportunity to go friendly in order to accelerate the completion of the transaction by approximately 70 days, providing greater certainty to Brio’s employees and shareholders and allowing us to unlock value for Brio shareholders sooner. We will also be better positioned to implement and communicate the business integration plan to Brio’s employees and the communities in which Brio operates. Importantly, it is envisioned that Brio’s operating procedures and reporting relationships within Brazil will be largely unaffected by the transaction. To enhance this integration plan, Leagold will be pleased to welcome Gil Clausen as Brio’s nominee to Leagold’s Board of Directors.”

Earning a current market cap value of $316.2M, LMCNF has a significant war chest ($66.1M) of cash on the books, which stands against virtually no total current liabilities. LMCNF is pulling in trailing 12-month revenues of $167.1M. However, the company is seeing recent declines on the top-line on a sequential quarterly basis, with revenues falling at -15.8% as of its latest reporting period. You can bet we will update this one again as new information comes into view. Sign-up for continuing coverage on shares of $LMCNF stock, as well as other hot stock picks, get our free newsletter today and get our next breakout pick!

Disclosure: we hold no position in $LMCNF, either long or short, and we have not been compensated for this article.

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