The Capital Gold Takeover
Posted by commoditywatch on March 15th, 2009
Capital Gold (US:CGLD; CA:CGC) is a junior mining company, producing about 60,000 ounces of gold per year from their El Chanate mine in Northern Mexico. They put their mine into production cheaply and quickly, encountering few of the problems that seem to afflict other companies. Their cash costs are about $300 per ounce. Their market cap is around US$130 million.
This week it was announced that Gammon Gold (CA:GAM, US:GRS) - a mid-tier producer in the nearby Mexico area, market cap about US$920 million - were making an all-share takeover bid that values Capital at a 20-30% premium. Is this a good deal for Capital’s shareholders? Capital’s COO John Brownlie discusses:
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March 15th, 2009 at 11:21 am
Hmmm, sounds like CGLD may know something about their mine that’s not so great. Why else would they sell to GAM? The logic sounded less than convincing to me.
March 15th, 2009 at 4:15 pm
Thanks for the interview Dominic. I too share your disdain for this deal as a CGLD shareholder. It sounds to me like the mgmt. team has received some poor advice.
April 14th, 2009 at 6:19 pm
OH well-that didn’t last long. Deal is kaput